Raj Kumar Puglia Vs ITO (ITAT Kolkata)
Kolkata: In a decision providing clarity on how discrepancies in stock reporting should be treated for income tax purposes, the Income Tax Appellate Tribunal (ITAT), Kolkata bench, has ruled that an addition to a taxpayer’s income cannot be made solely based on a difference between the stock disclosed in audited accounts and higher stock figures presented to a bank for securing credit facilities.
The ruling came in the case of Raj Kumar Puglia, who appealed against an order from the National Faceless Appeal Centre (NFAC), Delhi, acting as the Commissioner of Income Tax (Appeals) [CIT(A)]. The dispute pertained to the Assessment Year 2012-13 and centered on an addition of ₹12,10,038 made to Puglia’s income by the Assessing Officer (AO).
The background of the case involves Raj Kumar Puglia filing his return of income for AY 2012-13, declaring a total income of ₹2,74,604. The case was selected for scrutiny, and during the assessment proceedings conducted under Section 143(3) of the Income Tax Act, 1961, the AO scrutinised the financial details.
The AO noted that the assessee maintained a cash credit account with State Bank of India, Sainthia Branch. To verify the financial position presented to the bank, the AO issued a notice under Section 133(6) of the Act to the bank, requesting details of the securities pledged by the assessee for obtaining the cash credit limit, along with bank statements.
