Firdose Ahmed, CHENNAI V. ITO, CHENNAI

ITA 1216/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8851 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 04-05-2016
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: S SRIDHAR
• Section: 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH : CHENNAI . . . , [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER ] ./ I.T.A.NO.1216/MDS/2016 / ASSESSMENT YEAR : 2010-11 SHRI FIRDOSE AHMED PROP. BOSTON LEATHER EXPORTS 75/5 PERIANNA MAISTRY STREET PERIAMET, CHENNAI 600 003 VS. THE INCOME TAX OFFICER WARD X(4) CHENNAI [PAN AAGPF 0454 P ] ( ! / APPELLANT) ( '# ! /RESPONDENT) / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE /RESPONDENT BY : SHRI N. MADHAVAN, JCIT / DATE OF HEARING : 17 - 0 6 - 2016 / DATE OF PRONOUNCEMENT : 15 - 0 7 - 2016 / O R D E R THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-5, CHENNA I, DATED 10.3.2016 AND PERTAINS TO ASSESSMENT YEAR 2010-11 . 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS DISALLO WANCE OF ` 13,43,264/- BEING THE FOREIGN AGENCY COMMISSION ON THE GROUND THAT THE ASSESSEE FAILED TO DEDUCT TAX AS REQUIRED U/S 195 OF THE ACT. ITA NO.1216/16 :- 2 -: 3. SHRI S. SRIDHAR, LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE ASSESSING OFFICER DISALLOWED THE FOREIGN AGENCY COMMISSION WHICH WAS PAID FOR PROCURING ORDERS ON BEHALF OF THE ASS ESSEE OUTSIDE THE COUNTRY. ON APPEAL, THE ASSESSEE HAS NOT PRODUC ED COPY OF THE AGREEMENT SAID TO BE ENTERED INTO BETWEEN THE FOREI GN AGENCY FOR PAYING THE COMMISSION. IN THE ABSENCE OF ANY MATER IAL WITH REGARD TO THE SERVICES RENDERED BY THE FOREIGN AGENCY, THE CI T(A) CONFIRMED THE ADDITION. ACCORDING TO THE LD. COUNSEL, AN OPPORTU NITY MAY BE GIVEN TO THE ASSESSEE TO PRODUCE NECESSARY EVIDENCE TO ESTA BLISH THE SERVICES RENDERED BY THE FOREIGN AGENCY OUTSIDE THE COUNTRY. 4. ON THE CONTRARY, SHRI N. MADHAVAN, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT EVEN THOUGH THE ASSE SSEE CLAIMS THAT COMMISSION WAS PAID FOR PROCURING ORDERS OUTSIDE TH E COUNTRY, NO MATERIAL WAS PRODUCED BEFORE THE ASSESSING OFFICER OR THE CIT(A) WITH REGARD TO THE SERVICES RENDERED BY THE FOREIGN AGEN CY. IN THE ABSENCE OF ANY MATERIAL, ACCORDING TO THE LD. DR, THE CIT(A ) HAS RIGHTLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER S IDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE IN THE ABSENC E OF ANY MATERIAL ITA NO.1216/16 :- 3 -: WITH REGARD TO THE SERVICES RENDERED BY THE FOREIGN AGENCY. THE CIT(A) ALSO CONFIRMED THE ORDER OF THE ASSESSING OF FICER IN THE ABSENCE OF ANY MATERIAL. NOW THE ASSESSEE CLAIMS BEFORE T HIS TRIBUNAL THAT AN OPPORTUNITY MAY BE GIVEN TO PRODUCE THE NECESSARY M ATERIAL BEFORE THE ASSESSING OFFICER. THIS TRIBUNAL IS OF THE CONSID ERED OPINION THAT GIVING ONE MORE OPPORTUNITY FOR PRODUCING THE MATE RIAL BEFORE THE ASSESSING OFFICER MAY NOT PREJUDICE THE INTEREST OF THE REVENUE IN ANY WAY. THIS TRIBUNAL IS OF THE CONSIDERED OPINION T HAT GIVING SUCH AN OPPORTUNITY TO THE ASSESSEE WOULD DEFINITELY PROMO TE THE CAUSE OF JUSTICE. ACCORDINGLY, BY KEEPING THE INTEREST OF J USTICE IN MIND, THE ORDER OF THE LOWER AUTHORITIES ARE SET ASIDE AND TH E ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL REEXAMINE THE ISSUE IN THE LIGHT OF T HE MATERIAL THAT MAY BE FILED BY THE ASSESSEE AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH THE LAW AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 6. THE NEXT ISSUE IS ADDITION OF ` 5,99,840/- BEING THE DIFFERENCE IN THE VALUE OF STOCK. 7. SHRI S. SRIDHAR, LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE ASSESSING OFFICER MADE ADDITION OF ` 5,99,840/- TOWARDS DIFFERENCE IN THE VALUATION OF STOCK. ACCORDING TO THE LD. CO UNSEL, THE DIFFERENCE ITA NO.1216/16 :- 4 -: IN VALUATION WAS ADDED BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE COULD NOT OFFER ANY EXPLANATION. ACCORDIN G TO THE LD. COUNSEL, THE ASSESSING OFFICER ADOPTED THE VALUE OF THE OPENING STOCK AS CLOSING STOCK WITHOUT ANY BASIS. THEREFORE, IT IS NOT CORRECT TO SAY THAT THE ASSESSEE COULD NOT OFFER ANY PROPER EXPLA NATION. THE LD. COUNSEL SUBMITTED THAT THE DIFFERENCE WAS DUE TO VA LUING THE CLOSING STOCK BY THE ASSESSING OFFICER @ ` 155/-. THE FINISHED LEATHER GOODS WAS VALUED BY THE ASSESSEE BY TAKING THE VALUE @ 1 09/-. THE ASSESSING OFFICER WITHOUT ANY BASIS, MADE THE ADDIT ION. 8. ON THE CONTRARY, SHRI N. MADHAVAN, LD. DR SUBMITTED THAT THE ASSESSING OFFICER WHILE PERUSING THE TRADING AC COUNT AS ON 31.3.2010, FOUND THAT THE OPENING STOCK OF LEATHER GOODS WAS SHOWN AT ` 2,28,625/- @ ` 155/- FOR 1475 PIECES. HOWEVER, WHILE VALUING THE CLOSING STOCK, THE FINISHED LEATHER GOODS WAS VALUE D @ ` 109/-. WHEN THE ASSESSING OFFICER QUESTIONED THE DIFFERENCE, TH E ASSESSEE COULD NOT EXPLAIN PROPERLY, THEREFORE, THE ASSESSEE AGRE ED FOR ADDITION BEFORE THE ASSESSING OFFICER. HENCE, THE ASSESSEE CANNOT CONTEST THE ADDITION BEFORE THIS TRIBUNAL. 9. I HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER S IDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AS RIGHTLY SUBMITTED BY ITA NO.1216/16 :- 5 -: THE LD. DR THE OPENING STOCK OF FINISHED LEATHER GO ODS WAS SHOWN AS 1475 PIECES AND THE SAME WAS VALUED @ ` 155/- PER PIECE. THE CLOSING STOCK OF FINISHED GOODS WAS 13040 PIECES AN D THE SAME WAS VALUED @ ` 109/- PER PIECE. THEREFORE, THE CONTENTION OF THE ASSESSEE THAT THE ASSESSING OFFICER HAS ADOPTED THE OPENING STOCK VALUE AS CLOSING STOCK VALUE IS NOT CORRECT. THE D IFFERENCE WAS APPARENTLY DUE TO ADOPTION OF DIFFERENT VALUE PER P IECE FOR VALUING THE OPENING STOCK AND ALSO FOR THE CLOSING STOCK. THI S TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CLOSING STOCK HAS TO BE VALUED ONLY AT COST PRICE OR AT MARKET PRICE WHICH IS LESS AT THE OPTIO N OF THE ASSESSEE. BOTH THE AUTHORITIES BELOW HAVE NOT BROUGHT ON RECO RD THE METHOD WHICH WAS REGULARLY EMPLOYED BY THE ASSESSEE. THE REFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATE R NEEDS TO BE RECONSIDERED BY THE ASSESSING OFFICER. ACCORDINGL Y, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE OF DI FFERENCE IN VALUATION OF CLOSING STOCK IS ALSO REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RECONSIDER TH E ISSUE AFRESH IN THE LIGHT OF THE MATERIAL THAT MAY BE FILED BY THE ASS ESSEE AND AFTER DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. ITA NO.1216/16 :- 6 -: 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JULY, 2016, AT CHENNAI. SD/- ( . . . ! ) (N.R.S. GANESAN) / JUDICIAL MEMBER '# / CHENNAI $% / DATED: 15 TH JULY, 2016 RD %&'' ()'*) / COPY TO: ' 1 . / APPELLANT 4. ' + / CIT 2. / RESPONDENT 5. ),-' . / DR 3. ' +'/! / CIT(A) 6. -0'1 / GF