Sitaram Gupta Vs ACIT (ITAT Jaipur Bench)
Accounts Cannot Be Believed for Profit but Disbelieved for Stock—No Addition Merely Because a Stock Register Was Not Maintained
Summary: The Jaipur Bench of the ITAT has held that stock found during a survey cannot be treated as unexplained merely because the assessee did not maintain a stock register or produce item-wise purchase bills, when the stock was supported by contemporaneous financial statements and the Revenue had not identified any defect in those statements. The AO could not accept the trading results emerging from the financial accounts and simultaneously reject the closing stock reflected in the very same accounts.
The assessee, Sitaram Gupta, was engaged in the business of dealing in cloth under the name M/s Sita Ram Bhagwan Das HUF. He filed his return for AY 2018-19 declaring a total income of ₹2.98 lakh. A survey u/s 133A was conducted at his business premises on 01.11.2017, during which stock valued at ₹27,01,745 was physically found.
In the statement recorded during the survey itself, the assessee explained that stock worth approximately ₹7.05 lakh belonged to his own concern, while the balance stock of ₹19.97 lakh belonged to his son’s proprietary concern, M/s Sita Ram Vijay Kumar.
