INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER (Assessment Year: 2020-21)

(Assessment Year: 2020-21)

(Assessment Year: 2020-21)

(Assessment Year: 2020-21)

(Assessment Year: 2020-21)

(Assessment Year: 2020-21)

CO 131/Del/2023 (In ITA No. 2278/Del/2023)

(Assessment Year: 2020-21)

(Assessment Year: 2020-21)

(Assessment Year: 2020-21)

(Assessment Year: 2020-21)

(Assessment Year: 2020-21)

(Assessment Year: 2020-21)

(Assessment Year: 2020-21)

(Assessment Year: 2020-21)

(Assessment Year: 2020-21)

(Assessment Year: 2020-21)

(Assessment Year: 2020-21)

O R D E R

PER M. BALAGANESH, A. M.:

1. The appeal in ITA No. 2278/Del/2023 and CO 131/Del/2023 for AY 2020-21, arises out of the order of the ld Commissioner of Income Tax (Appeals)-3, Noida [hereinafter referred to as ‘ld. CIT(A)’, in short] in Appeal No. CIT(A)-III/Noida/11161/2009-10 dated 02.06.2023 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 29.09.2022 by the Assessing Officer, DCIT, Central Circle-II, Noida (hereinafter referred to as ‘ld. AO’).

2. Though the assessee has raised several grounds, the only effective issue to be decided in this appeal of the revenue is as to whether the ld CIT(A) was justified in deleting the addition of Rs. 1,82,87,179/- on account of alleged stock difference in the facts and circumstances of the instant case.

3. We have heard the rival submissions and perused the material available on record. The return of income for AY 2020-21 was filed by the assessee company on 15.02.2021, declaring total income of ₹21,65,37,670/-. The assessee company was incorporated on 01.03.2019 pursuant to the conversion of proprietary concern styled M/s. Pearl Precision Products to a company. The assessee company is involved in the manufacturing of cistern, seat covers, faucets, showers, sinks and household accessories. Survey action was carried out u/s 133A of the Act on 26/02/2020 at office and factory premises of the assessee situated at Noida. During the course of survey, physical stock was taken where total stock was worked out at ₹21,95,10,167/-. This was compared with the value of stock reflected in the stock register at ₹20,12,22,988. The assessee was directed to explain the difference in stock of ₹1,82,87,179/-.

4. During the course of assessment proceedings, it was submitted that the survey team took the printout of excel sheet in which rates of various items of inventory were not recorded up-to-date. It was due to this reason that excel sheet was showing value of inventory as on 25.02.2020 at ₹21,95,10,167/-, whereas the stock statement submitted was at ₹20,12,22,988/- thereby leading to a difference of ₹1,82,87,179/- . It was submitted that the assessee had dispatched goods worth ₹1.63 crores (detail of sale bills enclosed before the ld AO) during 24th and 25^th February 2020, which was not reflected in the excel sheet which was found at the time of survey. Hence, the difference of ₹1.82 crores was explained by stating that sale of ₹1.63 crores was not reflected in the excel sheet and the rates of various items of inventory reflected in the excel sheet were not up-to-date. The assessee had specifically stated before the ld AO that sales to the extent of ₹1.63 crores made on 24^th and 25^th February 2020, were reduced from the total inventory, but were lying in the factory area waiting for dispatch and meanwhile, the survey happened and the said stocks were also included by the survey team as a whole included in the physical inventory available as on the date of survey. Ld AO did not agree with the contentions of the assessee and observed that the assessee had not furnished any evidence of dispatch and transportation of goods in respect of sale made on 24^th and 25^th Feb 2020. The assessee was asked to furnish confirmation from the buyer of the goods that were alleged to have sold on 24^th and 25^th February 2020, so as