ITAT allows Reconciliation with GST Records, deletes Addition on Alleged Unaccounted Gold Stock [Read Order]
The discrepancy of 145 grams, valued at ₹4,78,500, was admitted as unaccounted stock.
The Income Tax Appellate Tribunal (ITAT), Ahmedabad, has deleted an addition of ₹4,78,500 made under Section 69A of the Income Tax Act, 1961, on alleged unaccounted gold stock. The Tribunal accepted the assessee’s reconciliation supported by invoices and GST data, holding that the excess stock found during a survey was duly explained.
The assessee, a partnership firm engaged in trading and resale of gold ornaments under the name P. Maneklal & Co., was subjected to a survey. During physical verification, gold stock of 11,840 grams was found as against 11,695 grams recorded in books. The discrepancy of 145 grams, valued at ₹4,78,500, was admitted as unaccounted stock by Shri Narendrakumar M. Soni, partner of the firm, in a statement recorded under Section 131(1A).
The Assessing Officer treated the excess as undisclosed income under Section 69A, noting that the surrendered amount was not offered in the return of income. The Commissioner of Income-tax (Appeals) upheld the addition, relying on the survey statement and absence of immediate reconciliation.
The assessee submitted that the difference arose due to omission of two purchase invoices in the stock register, though both were duly recorded in the books of accounts and GST filings that 204.36 grams purchased from M/s. Anja Jewels Pvt. Ltd. on 25.08.2018, with payment made in advance on 23.08.2018. It was also submitted that 4.62 grams were purchased from M/s. Chains Corner Jewellers (I) Pvt. Ltd. on 04.02.2019.
It was contended that inclusion of these purchases reconciled the discrepancy, and the stock was in fact duly accounted for.
The Bench of Dr. B.R.R. Kumar (Vice President) and Shri Siddhartha Nautiyal (Judicial Member) observed that the invoices and payments were made before the survey date and reflected in GST data filed in August 2018 and February 2019. The omission in the stock register was a clerical oversight, not an undisclosed transaction.
The Tribunal noted that once invoices, payments, and GST entries supported the purchases, the alleged excess stock stood reconciled. Therefore, reliance on the surrender statement alone could not justify the addition.
Allowing the appeal, the Tribunal deleted the addition of ₹4,78,500, holding that the stock discrepancy was satisfactorily explained.
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