Sunilkumar M Jain , Mumbai vs Assessee

आयकर अपील य अ धकरण, मुंबई यायपीठ "ई" मुंबई IN THE INCOME TAX APPELLATE TRIBUNAL" E" BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND AMIT SHUKLA, (JM) सव ी बी.आर.बा करन, लेखा सद य एवं अ मत शु ला, या यक सद य के सम

आयकर अपील सं./I.T.A. No.455/Mum/2013 ( नधारण वष / Assessment Year :1998-99)

Shri Sunilkumar M Jain बनाम/ Income Tax Officer - 17(1)(1), (Prop: M/s S S Textiles Vs. Piramal Chamber, 218/220, Shindewadi No.2, Parel, Lalbaug, Dr.Ambedkar road, Mumbai-400012 Mumbai-400014 (अपीलाथ /Appellant) .. ( यथ / Respondent)

थायी ले ख ा सं . /जीआइआर सं . /PAN/GIR No. :AADPJI668E

अपीलाथ ओर से / Assessees by Shri Dinesh Rasiklal Shah यथ क ओर से/Revenue by Shri N V Nadkarni

सुनवाई क तार ख / Date of Hearing : 22.4.2015 घोषणा क तार ख /Date of Pronouncement : 24.4.2015

आदे श / O R D E R

PER B.R. BASKARAN (AM)

The assessee has filed this appeal challenging the order dated 06- 12-2012 passed by ld CIT(A)-17, Mumbai and it relates to the assessment year 1998-99. The assessee is aggrieved by the decision of Ld CIT(A) in confirming the addition of Rs.4,67,000/-.

2. The Ld.A.R submitted that there was a difference between the closing stock shown in the Trading account and Balance Sheet. In the Trading account, the assessee declared the value of Closing stock at Rs.7,17,307/-, where as it was shown as Rs.2,50,307/- in the Balance Sheet. The assessing officer assessed the difference of Rs.4,67,000/- as 2 I T A N o . 4 5 5 / Mu m / 2 0 1 3

income of the assessee. The assessee submitted that the difference actually represented consignment stock, but the same did not find favour with the tax authorities. He further submitted that the assessee is in retail business in cloth. He submitted that his turnover was less than Rs.40.00 lakhs during the year under consideration. Hence, as per the provisions of sec. 44AF of the Act, the profit should be estimated at 5% of the turnover. He submitted that the assessing officer did not consider this legal provision and simply assessed the difference as income of the assessee. He submitted that the assessing officer did not bring any other material to substantiate this addition. He submitted that the assessee has offered an explanation with regard to the difference, but the same has not been proved to be incorrect. Accordingly he submitted that the impugned addition should be deleted.

3. The Ld D.R, on the contrary, submitted that the assessee has shown the value of closing stock at a lower value in the Balance sheet and hence the impugned addition was made. She submitted that the value of closing stock should be same both in the Trading account and Balance Sheet.

4. We have heard the rival contentions and perused the record. We notice that the assessee has shown the closing stock value at Rs.7,17,307/- in the Trading account and at Rs.2,50,307/- in the Balance Sheet. If the value of closing stock as shown in the Balance sheet is substituted in the Trading account, the assessee would incur a loss equal to the addition, i.e., Rs.4,67,000/-, in which case no addition is required to be made. However, the very fact that there was difference in the value of stock in two financial statements would show that the said financial statements are not reliable. Hence, we are of the view that the assessing officer was not justified in making the addition by placing reliance on "incorrect financial statements". The AO has taken the view that the 3 I T A N o . 4 5 5 / Mu m / 2 0 1 3

difference in the value of stock, viz., Rs.4,67,000/- represents stock kept outside the books. However, the assessee has offered an explanation to the effect that the assessee had declared excess stock in the Profit and loss account and the different amount represents consignment stock. We notice that the said explanation of the assessee has been rejected without examining the same. In the alternative, the assessee has submitted that the provisions of sec. 44AF are applicable to it and hence the income should be computed in accordance with sec. 44AF of the Act that existed at relevant point of time. We find merit in the alternative submission of the assessee. Accordingly we set aside the order of Ld CIT(A) and direct the assessing officer to delete the addition of Rs.4,67,000/-, referred above and compute the income of the assessee u/s 44AF of the Act that existed at the relevant point of time.

5. In the result, the appeal filed by the assessee is allowed.

The above order was pronounced in the open court on 24th Apr, 2015.

th घोषणा खल ु े यायालय म दनांकः 24 Apr, 2015 को क गई ।

Sd sd (अ मत शु ला / AMIT SHUKLA) (बी.आर.बा करन / B.R. BASKARAN) या यक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER

मंब ु ई Mumbai: 24th Apr,2015.

व. न.स./ SRL , Sr. PS

आदे श क त ल प अ े षत/Copy of the Order forwarded to :

1. अपीलाथ / The Appellant

2. यथ / The Respondent.

3. आयकर आयु त(अपील) / The CIT(A)- concerned

4. आयकर आयु त / CIT concerned

5. वभागीय त न ध, आयकर अपील य अ धकरण, मब ुं ई / DR, ITAT, Mumbai concerned

6. गाड फाईल / Guard file.

आदे शानस ु ार/ BY ORDER, True copy सहायक पंजीकार (Asstt. Registrar) आयकर अपील य अ धकरण, मुंबई /ITAT, Mumbai