The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) held that the addition under Section 69B of the Income Tax Act, 1961 cannot be made by the Assessing Officer purely based upon the conjectures/surmises and without considering the evidence produced.
The assessee is engaged in the business of liquor trading and during the year filed the return of income declaring a total income of Rs. 17,34,910/-. The case of the assessee was selected for scrutiny under Computer-Assisted Scrutiny Selection (CASS) and statutory notices were duly issued and served upon the assessee.
The Assessing Officer during the course of assessment proceedings observed from the sale bills and sale ledger that sales were not properly accounted for and some sales were accounted for on earlier dates whereas the earlier dates were accounted for on the subsequent dates however there was no instance of non-recording of sales by the assessee.
Thereafter the Assessing Officer calculated the suppressed value in the stocks by taking a few items at Rs. 29,33,243/- on the basis of information furnished by the assessee and estimated the suppression in the value of stock at 50% of the total suppressed value of stocks at Rs. 14,66,622/- and added the same to the income of the assessee. In the appellate proceedings, the Commissioner of Income Tax Act (Appeal) [CIT(A)] simply affirmed the order of the Assessing Officer on the same reasoning.
The assessee has maintained a stock register recording therein opening stocks, purchases, sales, and closing stocks including item-wise identification of each brand. Similarly, the assessee has maintained the excise register.
The Single-member bench comprising of Rajesh Kumar (Accountant member) held that the addition made by the Assessing Officer is purely based upon conjectures and surmises as the Assessing Officer has failed to take note of the evidence filed by the assessee before the Assessing Officer in the form of purchase bills, stock register, etc. and also the fact that the wastage and breakage sustained by the assessee in the ordinary course of business.
Thus, the order of the Commissioner of Income Tax Act (Appeal) was set aside and the Assessing Officer was directed to delete the addition which was made under Section 69B of the Income Tax Act. Therefore, the appeal of the assessee was allowed.
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