ACIT, CENTRAL CIRCLE-2(3), PUNE, PUNE V. MOTA COLLECTION, BARAMATI, PUNE

ITA 2115/PUN/2024

AI Insights

The case involves an appeal by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals), Pune-12, which had deleted additions made by the Assessing Officer (AO) regarding unexplained excess stock and non-moving stock. The Revenue contended that the CIT(A) erred in allowing the assessee's appeal without providing the AO an opportunity under Rule 46A of the Income Tax Rules, 1962, to verify documents and additional evidences submitted by the assessee. The assessee argued that the income from the excess stock had already been declared under the Income-tax Disclosure Scheme, 2016 (IDS) in a sister concern's books. The Tribunal found that the CIT(A) had not called for a remand report from the AO, which resulted in a lack of opportunity for the AO to examine the new evidences and details provided by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 773648 (ITAT-PUNE)
• Duration Of Justice: 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Appeal Filed On: 04-10-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAMESH P. MURKUNDE
• Assessee Lawyers: DEVEN ARUN SHETH; SAMRAT GARULE
• Keywords: Additional evidence; Corroborative evidences
• Section: 142(1); 133A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE “B” BENCH : PUNE BEFORE DR. MANISH BORAD, ACCOUNTANT MEMBER AND Ms. ASTHA CHANDRA, JUDICIAL MEMBER I.T.A.No.2115/PUN/2024 (Assessment Year 2018-2019) ACIT, Central Circle-2(3), Pune. vs. Mota Collection, Girnar Cinema Road, Baramati, Pune District. PAN : AACFM 1024 G (Appellant) (Respondent) For Assessee : Shri Deven Arun Sheth & Shri Samrat Garule, CAs For Revenue : Shri Ramesh P. Murkunde, DR Date of Hearing : 21.07.2025 Date of Pronouncement : 08.09.2025 ORDER PER DR. MANISH BORAD, AM: This appeal at the instance of the Revenue is directed against the order of Ld. Commissioner of Income Tax (Appeals), Pune-12 [“CIT(A)”] dated 26/07/2024 framed under section 250 of the Income Tax Act, 1961 (“Act”) for the Assessment Year (AY) 2018-19. 2. The Revenue has raised the following grounds of appeal:- ‘1) On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in allowing the appeal of the assessee without providing opportunity to the AO under Rule 46A of the Income Tax Rule 1962, to verify the Printed from counselvise.com 2 ITA.No.2115/PUN/2025 (Mota Collection) documents and additional evidences submitted by the assessee during the appellate proceedings in respect additions made on account of excess stock amounting to Rs. 1,25,00,000/-. 2) On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has failed to appreciate the fact that the excess stock of Rs. 1,25,00,000/- declared under IDS, 2016 was already included in the assessee's stock value as on 11.10.2017 found in the parallel books of accounts maintained in Tally' software during the survey action, therefore, it was not required to be reduced from the difference of stock value found in 'Retailware & shopper' software and Tally' software at the time of survey. 3) The Ld. CIT(A) has erred in deleting the additions of Rs.69,17,050/- made on account of non-moving stock/obsolete without appreciating the fact that the assessee failed to substantiate its claim with supporting evidences during the assessment proceedings as well as appellate proceedings & no comments on the treatment of obsolete /non-moving stock were made in the Tax Audit Report by the Auditor. 4) The appellant craves leave to add, amend, modify or alter any of the grounds of appeal.” 3. Brief facts of the case are that assessee is a partnership firm, engaged in the business of wholesale of cloths and other garments. The income of Rs. 1,30,25,520/- declared in the return for A.Y. 2018-19 furnished on 29/09/2018. During the financial year 2017-18 relevant to the A.Y. 2018-19, a survey u/s. 133A of the Act conducted on the business premises of the assessee on 11/10/2017 and certain discrepancies were noticed with respect to physical inventory of stock taken on the date of survey and the stock as per the books of accounts maintained in the tally software. Return of income filed by the assessee selected for scrutiny followed by validly serving notices u/s. 143(2) & 142(1) of the Act. Various submissions Printed from counselvise.com 3 ITA.No.2115/PUN/2025 (Mota Collection) were made. The Assessing Officer („AO') firstly observed that Rs. 1.25 crore declared under Income-tax Disclosure Scheme, 2016 (IDS) in the hands of M/s.Motawollen House has been accounted for in the books of accounts for the F.Y. 2016-17. Therefore, the discrepancy in the stock of Rs.1.25 crore found during the course of survey remains unexplained. Secondly, Ld.AO made addition of Rs.69,17,050/- for non-moving stock and assessed the income at Rs. 3,24,42,570/-. 4. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) and partly succeeded. The Ld.CIT(A) deleted the addition of Rs. 1.25 crore observing that the appellant has made revaluation of IDS stock in the closing stock at the time of filing of the return of income for A.Y. 2017-18 and not at the time of survey declaration. Further, Ld.CIT(A) also deleted the addition of Rs. 69,17,050/- made in respect of non-moving stock observing that the appellant has consistently computed the stock by reducing the value of obsolete items @ 15% on year of year basis and excess stock of Rs. 1,30,25,520/- has been offered to tax after reducing 15% of stock in respect of non-moving/obsolete stock. 5. Aggrieved, the Revenue is in appeal before this Tribunal. 6. Ld. Departmental Representative (DR) submitted that Ld.CIT(A) erred in allowing the assessee‟s appeal and deleting the impugned additions without providing opportunity to the Printed from counselvise.com 4 ITA.No.2115/PUN/2025 (Mota Collection) Ld.AO under Rule 46A of the Income Tax Rules, 1962, to verify the documents and additional evidences submitted by the assessee during the appellate proceedings in respect of addition made on account of excess stock as well as addition made on account of non-moving stock. 7. On the other hand, learned counsel for the assessee vehemently argued referring to the various details filed in the paper book running into 162 pages and also submitted that the alleged sum of Rs. 1.25 crore had already been offered to tax by sister concern-M/s.Motawollen House during the A.Y. 2016-17 and reference was made to the audited trading account wherein Rs. 50.00 lakhs was shown under the head „cloth account‟ and Rs. 75.00 lakhs was shown under the head „readymade garment account‟ after duly declaring income of Rs. 1.25 crore in IDS 2016. He, however, fairly submitted that the assessment for the A.Y. 2018-19 of M/s. Motawollen House has not been taken up for scrutiny and certain details have been filed for the first time before the Ld.CIT(A). 8. We have heard the rival contentions and perused the records placed before us. The revenue is aggrieved with the findings of the Ld.CIT(A) deleting the addition for unaccounted stock of Rs. 1.25 crore and the addition for non-moving/ obsolete moving items at Rs. 69,17,050/-. We notice that the assessee has claimed that during the F.Y. 2016-17 relevant to Printed from counselvise.com 5 ITA.No.2115/PUN/2025 (Mota Collection) the A.Y. 2017-18, Rs. 1.25 crore income was declared in IDS 2016 and the equal amount of stock was shown as purchases in the trading account of the sister concern-M/s. Motawollen House. We also note that while calculating the total stock of the assessee and other sister concern at the time of survey, the income declared in IDS 2016 has not been accounted in the books which resulted in variation. We also observe that after the survey proceedings, only the assessee‟s case is selected for scrutiny, but the sister concern M/s. Motawollen House remained to be selected for scrutiny. Due to this reason, the submission of the assessee about the combined stock of both the concerns and the income declared in IDS 2016 in M/s. Motawollen House could not be placed before the Ld.AO. We also observe that certain other details were filed for the first time before the Ld.CIT(A). 9. It is well established that if any new evidence is filed before the Ld.CIT(A) for the first time, then for such documents and new evidences, the Ld.CIT(A) is required to call for a remand report from the Ld.AO which could further facilitate the Assessing Officer to make necessary examination and verification and place the remand report before the Ld.CIT(A) for necessary consideration and deciding on the grounds of appeal raised by the assessee. It seems that this exercise has not been taken up by the Ld.CIT(A), as a result thereof, a fair opportunity could not be provided to the Ld.AO. It is also an Printed from counselvise.com 6 ITA.No.2115/PUN/2025 (Mota Collection) admitted fact that certain details of the IDS 2016 which are very crucial for deciding the issues of addition made for unexplained stock of Rs. 1.25 crore remained to be examined by the Ld.AO. 10. Under these given facts and circumstances, we restore the issues raised by the Revenue to the file of the Ld. Jurisdictional Assessing Officer (JAO) before whom the assessee shall file the details and necessary written submissions. Ld.JAO shall grant fair opportunity to the assessee and thereafter adjudicate the issues on merits and decide in accordance with law. The effective grounds of appeal raised by the Revenue stands allowed for statistical purposes. 11. In the result, appeal of the Revenue is allowed for statistical purposes. Order pronounced in the open Court on 08.09.2025. Sd/- Sd/- [ASTHA CHANDRA] [MANISH BORAD] JUDICIAL MEMBER ACCOUNTANT MEMBER Pune, Dated 08th September, 2025 vr/- Printed from counselvise.com 7 ITA.No.2115/PUN/2025 (Mota Collection) Copy to 1. The appellant 2. The respondent 3. The CIT(A), Pune concerned. 4. D.R. ITAT, “B” Bench, Pune. 5. Guard File. By Order //True Copy // Sr. Private Secretary, ITAT, Pune Benches, Pune. Printed from counselvise.com "