Mittal Hardware Store, New Delhi vs Department Of Income Tax

Appellant by : Shri P. Dam Kanunjha, Sr.DR. Respondent by : Shri D.R. Anthwal, Advocate.

Date of hearing : 11.03.2015 Date of pronouncement : 01.04.2015

ORDER

PER G.C. GUPTA, GUPTA, VP :

This appeal by the Revenue for the assessment year 2008-09 is directed against the order of learned CIT(A)-XXVI, New Delhi dated 22nd December, 2011.

2. Ground Nos.1 to 3 of the Revenue's appeal are as under:-

"1. Whether ld.CIT(A) was justified in deleting addition of Rs.27,86,788/- on a/c of excess stock when the assessee had himself accepted the undisclosed income in the statement on oath recorded during the course of survey operation.

2. Whether the ld.CIT(A) was justified in deleting addition of Rs.27,86,788/- on a/c of excess stock when it was admitted by the partner of the firm that goods were purchased from the various parties mainly situated in Chawri Bazaar, Delhi. However, to justify 2 ITA-1008/Del/2012

the claim of rebate/discount availed on the purchase price, assessee could not submit even a single bill from any of the parties located in Chawri Bazaar rather all the parties were located in the vicinity of the firm.

3. Whether ld.CIT(A) was justified in deleting addition of Rs.27,86,788/- when bills were not entered in regular books of a/c till the date of survey and the assessee had been doing business out of the books from wherein unaccounted cash as found during the survey was generated and this unaccounted cash has been accepted by the assessee firm as its additional source of income which had also been duly reflected in the return of income for AY 2008-09."

3. Learned DR referred to the relevant portion of the assessment order in support of the case of the Revenue. He submitted that the assessee himself has surrendered the amount of addition made by the Assessing Officer on account of excess stock found at the time of survey under Section 133A of the Act. He submitted that there was no valid reason to retract the said surrender made by the assessee. He relied on the order of the Assessing Officer.

4. Learned counsel for the assessee, on the other hand, submitted that the retraction was made within a very short period of ten days from the so-called surrender made by the assessee. He submitted that, in fact, the difference in stock was worked out by the Department at the time of survey on the basis of MRP of the goods. The learned counsel for the assessee submitted that it has availed 30% to 50% rebate on purchase price of the company and, therefore, the MRP value should have been reduced by the amount of rebate for arriving at the value of the closing stock found at the time of survey. The purchases and sales were fully vouched and with regard to disputed purchases, they were made against 'C' form and advance payments were made by cheques and final payment was also made by cheque. He relied on the order of the CIT(A).

3 ITA-1008/Del/2012

5. We have considered the submissions of both the sides and perused the order of the Assessing Officer and the CIT(A). We find that in this case, the difference in the value of closing stock at the time of search was due to the fact that the value by the search party was taken on the basis of MRP of the goods. The submission of the assessee, that it has availed 30% to 50% rebate on the purchase price of the company, could not be controverted on behalf of the Revenue. With regard to the disputed purchases, the CIT(A) has recorded a finding that these were made against 'C' form and advance payments were made by cheques and final payment was also made by cheque. The CIT(A) has further recorded that the Assessing Officer has not pointed out any item out of the closing stock or purchase bills which have not been found entered in the books of account of the assessee and that the retraction was with corroborative evidence. In these facts, we are of the view that since the very basis of determining the value of closing stock found at the time of survey on the basis of the MRP was clearly defective and not in accordance with law and the purchases were made against 'C' form and payments were made by cheques and the Assessing Officer could not point out any item out of closing stock or purchase bills which have not been found entered in the books of account of the assessee, no case for addition on account of excess stock could be made out by the Revenue and the CIT(A) was justified in deleting the addition made on this count and accordingly, the order of the CIT(A) is confirmed and ground Nos.1 to 3 are dismissed.

6. Ground No.4 of the Revenue's appeal is as under:-

"Whether ld.CIT(A) was justified in deleting addition of Rs.260325/- on a/c of bad debts debited in P & L A/c when there were no receipts outstanding against the 4 ITA-1008/Del/2012

assessee at the end of the financial year and therefore, there was no question of claiming bad debts."

7. We have heard the arguments of both the sides. The issue of allowability of bad debts is covered in favour of the assessee by the decision of Hon'ble Supreme Court in the case of T.R.F. Ltd. Vs. CIT - [2010] 323 ITR 397 (SC) and, accordingly, the order of learned CIT(A) is confirmed on this issue and ground No.4 of the Revenue's appeal is dismissed.

8. In the result, the appeal of the Revenue is dismissed.

Decision pronounced in the open Court on 1st April, 2015.

Sd/- Sd/- (T.S. KAPOOR) KAPOOR) (G.C. (G.C. GUPTA) GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT

VK.

Copy forwarded to: -

1. Appellant : Assistant Commissioner of Income Tax, Circle-

Circle-32(1), 32(1), New Delhi.

2. Respondent : M/s Mittal Hardware Store, D-8/1, Gurudwara Road, Kotla Mubarakpur, New Delhi.

3. CIT

4. CIT(A)

5. DR, ITAT

Assistant Registrar