No Information as to Purchase in Books of Accounts was adjusted for Purchase Return: ITAT restores matter [Read Order]

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT), restored matter to the file of Assessing Officer (AO) on the ground that no information as to purchase in books of accounts was adjusted for purchase return.

The assessee, Vinodchandra Shanabhai Patel, is an individual and the premises of the assessee was subject to survey operation under section 133A of the Act carried out, wherein the unaccounted/ undisclosed inventory of Rs 1 crores ninety lakhs was found. The assessee during the survey operation agreed to make a disclosure of the impugned amount of undisclosed inventory in the income tax return.

As per the AO, the effect of unaccounted inventory found as on the date of survey has become NIL in so far as the taxable income of the assessee is concerned. Thus, the AO made the addition of Rs 1 crores ninety lakhs representing the unaccounted inventory to the total income of the assessee.

The assessee has duly offered other income for the amount of Rs 1 crore ninety lakhs on account of unaccounted inventory found at the time of survey

There remains no ambiguity to the fact that the assessee has duly offered other income for the amount of Rs 1 crore ninety lakhs on account of unaccounted inventory found at the time of survey. Admittedly, the assessee has disclosed net profit before tax in the profit and loss account amounting to Rs 1 crore eighty-five lakhs.

Hence it transpires that if other income as discussed above is excluded, then there will be a loss in the profit and loss account of the assessee. However, that loss may be on account of various reasons such as suppression of sales, higher amount of expenditure etc.

But the AO has not pointed out anything wrong in the books of accounts of the assessee except the unaccounted inventory found during the course of survey operation which to our understanding has been duly accounted for and therefore the same cannot be made subject to addition again.

A Bench comprising Suchitra Kamble, Judicial Member and Waseem Ahmed, Accountant Member observed that “However, at the time of hearing neither the AR nor the DR has brought anything to our notice about the fact that the purchase shown by the assessee in the books of accounts was adjusted on account of purchase return. In the absence of such information, we are setting aside the issue to the file of the AO to the extent of verifying whether the purchases shown by the assessee has been adjusted on account of purchase return.”

To Read the full text of the Order CLICK HERE

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