Khandelia Oil & General Mills Ltd., Chandigarh V. DCIT, Chandigarh

ITA 1067/CHANDI/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1624 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 25-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDER KANTA
• Section: 143(3); 154; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO. 1067/CHD/2013 ASSESSMENT YEAR: 2008-09 M/S KHANDELIA OIL & VS THE DCIT, GENERAL MILLS LTD., CIRCLE 1(1), 23, INDUSTRIAL AREA, CHANDIGARH. PHASE II, CHANDIGARH. PAN: AAACK6655N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANIL KHANNA RESPONDENT BY : MS. CHANDER KANTA, DR DATE OF HEARING : 08.12.2015 DATE OF PRONOUNCEMENT : 10.12.2015 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS) CHANDIGARH DATED 18.09.20 13 FOR ASSESSMENT YEAR 2008-09, CHALLENGING THE ADDITI ON OF RS. 36,97,206/- ON ACCOUNT OF UNDER VALUATION OF CLOSING STOCK OF RAW MATERIAL. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SING OFFICER HAD NOTICED AT THE TIME OF SCRUTINY ASSESSM ENT PROCEEDINGS THAT THERE WAS UNDER VALUATION OF CLOSI NG STOCK. THE ASSESSING OFFICER FOUND THAT ASSESSEE H AD PURCHASED MUSTERED SEEDS FROM ITS SISTER CONCERN M/ S 2 GAURI SHANKAR & SONS., HUF AT THE AVERAGE RATE OF R S. 2638.24 PER QUINTAL, BUT WHILE VALUING THE CLOSING STOCK, THE MUSTERED SEEDS WERE VALUED @ RS. 2472/- PER QUINTAL. THE ASSESSING OFFICER MADE THIS OBSERVATI ON IN PARA 7.4 OF THE ASSESSMENT ORDER BUT NO ADDITION WA S MADE ON THIS ACCOUNT IN THE COMPUTATION OF INCOME. IN ORDER TO RECTIFY THIS MISTAKE, ASSESSING OFFICER IS SUED NOTICE UNDER SECTION 154 OF THE INCOME TAX ACT TO M AKE ADDITION OF RS. 36,97,206/- ON ACCOUNT OF IMPUGNED UNDER VALUATION OF CLOSING STOCK OF MUSTERED SEEDS. THE ASSESSEE SUBMITTED THAT ISSUE OF UNDER VALUATION OF CLOSING STOCK WAS DISCUSSED IN PARA 7 TO 7.6 OF THE ASSESSMENT ORDER AND PARA 7.4 IS PART OF THE SAME. IT WAS SUBMITTED THAT AS PER REPLY FILED BY THE ASSESS EE BEFORE ASSESSING OFFICER, CLEAR FINDING IS GIVEN IN PARA 7.7 WHICH WAS THE OPERATIVE PORTION OF THE ORDER. IT WAS ALSO SUBMITTED THAT MUSTERED SEEDS WERE PROPERLY VALUED ON FIFO BASIS. THE ASSESSING OFFICER WAS NO T SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND MADE ADDITION OF RS. 36,97,306/-. 3. THE ASSESSEE CHALLENGED THE ADDITION BEFORE LD. CIT(APPEALS) AND IT WAS CONTENDED THAT NO SUCH ADDI TION SHOULD BE MADE IN PROCEEDINGS UNDER SECTION 154 OF THE INCOME TAX ACT, HOWEVER, APPEAL OF THE ASSESSEE HAS BEEN DISMISSED. 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS. IN THIS CASE, ASSESSMENT ORDER WAS PASSED ON 27.12.2010 UND ER 3 SECTION 143(3) OF THE INCOME TAX ACT. THE ASSESSIN G OFFICER DISCUSSED THE ISSUE OF UNDER VALUATION OF C LOSING STOCK IN PARAS 7 TO 7.7 AND MADE ADDITION OF RS. 61,53,868/-. THE ASSESSING OFFICER DISCUSSED THE I SSUE OF MUSTERED SEEDS IN THESE PARAS AND ULTIMATELY MAD E ADDITION OF RS. 61,53,868/- ON ACCOUNT OF UNDER VALUATION OF STOCK. THE ASSESSING OFFICER IN PROCE EDINGS UNDER SECTION 154 OF THE INCOME TAX ACT WAS OF THE VIEW THAT THOUGH THE ISSUE OF UNDER VALUATION OF CLOSING TOCK OF MUSTERED SEEDS HAVE BEEN DISCUSSED IN THESE PARA S BUT ADDITION OF RS. 36,97,206/- COULD NOT BE MADE I N THE COMPUTATION OF INCOME. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ISSUE OF UNDER VALUATION OF CLOSING STOCK WAS CONSIDERED BY ITAT CHANDIGARH BEN CH IN THE APPEAL OF THE ASSESSEE IN ITA 778/2012 AND T HE ORDER OF THE ASSESSING OFFICER HAS BEEN SET ASIDE A ND ENTIRE ADDITION OF RS. 61,53,868/- HAVE BEEN DELETE D VIDE ORDER DATED 06.11.2015. WE DO NOT FIND ANY JUSTIFICATION TO SUSTAIN THE ORDER OF THE AUTHORITI ES BELOW IN PROCEEDINGS UNDER SECTION 154 OF THE INCOM E TAX ACT. IT IS ADMITTED FACT AS PER ORDER UNDER SE CTION 154 THAT THE ISSUE OF UNDER VALUATION OF STOCK OF MUSTERED SEEDS HAVE BEEN CONSIDERED IN PARA 7 TO 7. 7 OF THE ASSESSMENT ORDER DATED 27.12.2010 AND NO SEPARA TE ADDITION COULD BE MADE. HOWEVER, THE ORDER OF THE ASSESSING OFFICER ON ACCOUNT OF UNDER VALUATION OF THE CLOSING STOCK VIDE ORDER DATED 27.12.2010 HAVE BEEN SET ASIDE BY THE TRIBUNAL VIDE ORDER DATED 06.11.2015 A ND 4 ENTIRE ADDITION HAS BEEN DELETED. THEREFORE, WHEN THE ORDER OF THE ASSESSING OFFICER HAS BEEN SET ASIDE I N APPEAL OF THE ASSESSEE, THERE WOULD BE NO JUSTIFICA TION TO MAKE FURTHER ADDITION IN THE PROCEEDINGS UNDER SECTION 154 OF THE INCOME TAX ACT ON THE SAME ISSUE . WE, THEREFORE, FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF SAME ASSESSEE DATED 06.11.2015 (SUPRA) SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELET E THE ADDITION. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (ANNAPURNA MEHROTRA ) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10 TH DECEMBER, 2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD