DCIT Vs Pearl Precision Products Pvt. Ltd (ITAT Delhi)
No Physical Stock Taking, Excel Sheet Alone Insufficient: Stock Difference Addition u/s 69A Deleted
The Delhi Bench of the ITAT, in DCIT v. Pearl Precision Products Pvt. Ltd. (AY 2020-21), upheld the order of the CIT(A) deleting an addition of ₹1,82,87,179 made under section 69A on account of alleged excess stock found during survey proceedings.
The Tribunal noted that, despite the Assessing Officer’s claim, no actual physical stock verification was carried out during the survey under section 133A. Instead, the survey team relied solely on an impounded Excel sheet showing inventory values as on 25.02.2020, which was neither part of the regular books of account nor updated on a real-time basis and did not even contain quantitative details. The ITAT accepted the assessee’s explanation that the apparent difference arose due to sales of about ₹1.63 crore effected on 24–25 February 2020, which were recorded in the books and supported by GST-compliant sale invoices, e-way bills and receipt of sale proceeds.
Holding that additions for excess stock require reliable evidence of quantity-wise discrepancy established through physical verification, and that valuation differences based on a control Excel sheet cannot substitute such verification, the Tribunal affirmed that the AO’s conclusions were unsustainable. As the factual findings of the CIT(A) remained uncontroverted, the Revenue’s appeal was dismissed and the assessee’s cross-objection was allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
