Addition Made Solely on Basis of Excel Sheet Without Actual Verification is Unsustainable: ITAT:

Addition Made Solely on Basis of Excel Sheet Without Actual Verification is Unsustainable: ITAT The Income Tax Appellate Tribunal (ITAT) rejected Revenue's appeal, holding that the addition made by the AO based on the Excel Sheet found at the survey instead of actual physical verification is not sustainable. The assessee company, Pearl Precision Products Pvt Ltd, filed its return declaring an income of Rs 21,65,37,670. During a survey conducted at the assessee's office, the tax authority compared the value of stock shown in an Excel sheet with the stock recorded in the stock register and found a difference of Rs 1,82,87,179.

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The assessee was asked to explain this difference, where it was submitted that the assessee had dispatched goods of Rs 1.63 crore, which was not shown in the Excel sheet. The assessee submitted a copy of the account of the parties to whom goods were dispatched. However, the AO observed that the assessee did not submit e-way bills, and the vehicle numbers submitted by the assessee were either not registered or were found to be invalid. Based on this, the AO treated the amount of unexplained investment and made an addition under Section 69A read with Section 115BBE of the Income Tax Act. The assessee filed an appeal before the CIT(A) challenging this addition. The assessee explained that there was no physical stock that was taken during the survey, and the survey team only relied on the Excel sheet, which did not have the quantitative details of the several inventory items and was maintained for cross-checks. The assessed company also submitted the complete e-way bill and the sale invoices. The assessee's submission was accepted by CIT(A), holding that no physical stock was taken in the survey proceedings and the Excel sheet could not be treated as proof of actual stock. It further noted that the AO failed to give enough opportunity to submit e-way bills. Therefore, the addition made by the AO was deleted by CIT(A).

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The revenue filed an appeal before the Income Tax Appellate Authority (ITAT), Delhi, challenging the CIT(A)'s Decision of deleting an addition towards the stock difference. The Tribunal agreed with CIT(A) and observed that the revenue could not controvert the findings of CIT(A), and the books of account were not rejected. Further, the addition was made only on the basis of an Excel Sheet without the actual physical verification of inventory. Therefore, the Tribunal rejected Revenue's appeal, upholding CIT(A)'s order.