M/s Ganga Rasayanie (P) Ltd., Kolkata V. DCIT, Circle-12, Kolkata, Kolkata

ITA 2151/KOL/2016

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 4154 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 07-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Assessee Lawyers: SHRI R K SARAWGEE
• Keywords: Opportunity of being heard
• Section: 143(3); 14A

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 2151 / KOL / 20 16 ASSESSMENT YEAR :2010-11 M/S GANGA RASAYANIE (P) LTD., 50B, HRISH MUKHERJEE ROAD, KOLKATA-25 [ PAN NO.AAACG 2051 L ] V/S . DCIT, CIRCLE-12 AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI SHRI R.K. SARAWGEE, CA /BY RESPONDENT SHRI G. MALLIKARJUNA, CIT-DR /DATE OF HEARING 08-10-2018 /DATE OF PRONOUNCEMENT 12-10-2018 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2010-11 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-18, KOLKATAS ORDER DATED 09.09.2016, PASSED IN CASE NO.523/CIT(A)-18/2016-17/CIRCLE11/KO L, IN PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE A CT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE ASSESSEE HAS RAISED TWO SUBSTANTIVE GROUNDS IN THIS APPEAL IN SEEKING TO CHALLENGE BOTH THE LOWER AUTHORITIES UNA NIMOUSLY ACTION MAKING ADDITION OF 3,07,041/- REGARDING CLOSING STOCK VALUATION FOLLOW ED BY SEC. 14A R.W.S. RULE 8D DISALLOWANCE OF 1,01,369/- MADE IN ASSESSMENT AS AFFIRMED IN LOWER APPELLATE PROCEEDINGS. ITA NO.2151/KOL/2016 A.Y. 2010-1 1 M/S GANGA RASAYANIE (P) LTD. VS. DCIT, CI R-12 KOL. PAGE 2 3. MR. SARAWGEE (ASSESSEES AUDITOR) BEFORE US. HE DOES NOT PRESS FOR LATTER ISSUE OF SEC. 14A R.W. 8D DISALLOWANCE OF 1,01,369/-. THE SAME IS ACCORDINGLY CONFIRMED. 4. THE ASSESSEES FORMER SUBSTANTIVE GRIEVANCE CHAL LENGES CORRECTNESS CLOSING STOCK VALUATION IS NO MORE RES INTEGRA SINCE THIS TRIBUNAL CO-ORDINATE BENCHS ORDER IN PRECEDING ASSESSMENT YEAR 2009-10 IN ITA 1019 & 933/KOL/2014 DECIDED ON 07.06.2017 HAS RESTORED THE VERY ISSUE BACK TO THE ASSESSING OFFICER WITH THE FOLLOWING DIRECTIONS:- 7. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT THE DIFFERENCE IN THE VALUATION OF CLOSING STOCK OF FINISHED GOODS AS POI NTED OUT BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS WAS EXPLAINED BY THE ASSESSEE BY SUBMITTING THAT THE RELEVANT FINISHED G OODS LYING IN THE CLOSING STOCK WERE OF INFERIOR OR OFF-GRADE QUALITY. SINCE THE SAID EXPLANATION OFFERED BY THE ASSESSEE WAS NOT SUPPORTED BY ANY DOCUMENTAR Y EVIDENCE, THE ASSESSING OFFICER REJECTED THE SAME. DURING THE COU RSE OF APPELLATE PROCEEDINGS, AN ALTOGETHER DIFFERENT STAND, HOWEVER , WAS TAKEN BY THE ASSESSEE BY SUBMITTING THAT THE STOCK OF FINISHED G OODS WAS VALUED AT COST OR NET REALISABLE VALUE BY FOLLOWING THE ACCOUNTING ST ANDARD 2. THE WORKING OF COST OF SOME OF THE ITEMS OF FINISHED GOODS WAS ALS O FURNISHED BY THE ASSESSEE BEFORE THE ID. CIT(APPEALS) TO SHOW THAT T HE VALUE ADOPTED BY IT FOR SOME OF THE FINISHED GOODS LYING IN THE CLOSING STO CK WAS AT ACTUAL COST. IT WAS FURTHER SUBMITTED ON BEHALF OF THE ASSESSEE BEFORE THE ID. CIT(APPEALS) THAT THE AVERAGE SELLING PRICE ADOPTED BY THE ASSESSING OFFICER FOR WORKING OUT THE 'DIFFERENCE IN THE VALUE OF CLOSING STOCK OF FINISH ED GOODS WAS NOT CORRECT. THE WORKING IN THIS REGARD WAS ALSO FURNISHED BY THE AS SESSEE TO SHOW THE AVERAGE SELLING PRICE OF THE CORRESPONDING ITEMS OF FINISHED GOODS LYING IN THE OPENING STOCK ON THE BASIS OF SALES MADE IN THE MON TH OF MARCH. IN THE WORKING SO FURNISHED, THE GROSS PROFIT @ 12% WAS RE DUCED BY THE ASSESSEE FROM THE AVERAGE SELLING PRICE WORKED OUT BY IT TO SHOW THAT THE NET REALISABLE VALUE SO DETERMINED WAS CORRECTLY TAKEN FOR THE PUR POSE OF VALUATION OF CLOSING STOCK OF FINISHED GOODS. AS RIGHTLY CONTEND ED BY THE ID. D.R., ALL THESE WORKINGS PREPARED AND FURNISHED BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE ID. CIT(APPEALS) IN SUPPORT OF AN ALTOGETHER NEW ST AND TAKEN TO EXPLAIN THE DIFFERENCE IN THE VALUATION OF CLOSING STOCK OF FIN ISHED GOODS WAS NOT FORWARDED BY HIM TO THE ASSESSING OFFICER FOR GIVIN G AN OPPORTUNITY TO VERIFY THE SAME, AS REQUIRED BY RULE 16A OF THE INCOME TAX RULES, 1962 AND THERE IS THUS A CLEAR VIOLATION OF THE SAID RULE BY THE I D. CIT(APPEALS) WHILE GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE. WHEN THIS POS ITION WAS CONFRONTED TO THE ID. COUNSEL FOR THE ASSESSEE AND HE WAS ASKED TO OF FER HIS EXPLANATION IN THE MATTER, HE HAS SUBMITTED THAT THE RELEVANT STOCK RE CORDS ARE MAINTAINED BY THE ASSESSEE AND IT IS POSSIBLE TO ASCERTAIN THE EXACT COST OF THE RELEVANT FINISHED GOODS LYING IN THE CLOSING STOCK. THE ID. REPRESENT ATIVES OF BOTH THE SIDES HAVE ALSO AGREED THAT IF THE ACTUAL COST OF THE REL EVANT FINISHED GOODS LYING IN THE OPENING STOCK CAN BE ASCERTAINED FROM THE RELEV ANT STOCK RECORDS, THE ITA NO.2151/KOL/2016 A.Y. 2010-1 1 M/S GANGA RASAYANIE (P) LTD. VS. DCIT, CI R-12 KOL. PAGE 3 SAME HAS TO BE ADOPTED FOR THE PURPOSE OF VALUATION OF CLOSING STOCK UNLESS THE ASSESSEE IS IN A POSITION TO SHOW THAT CERTAIN ITEMS OF FINISHED GOODS LYING IN THE CLOSING STOCK, THE NET REALISATION VALUE IS LOWER THAN THE COST SO ASCERTAINED. KEEPING IN VIEW THIS SUBMISSION MADE B Y BOTH THE SIDES, WE SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR DEC IDING THE SAME AFRESH AFTER VERIFYING THE ACTUAL COST OF THE RELEVANT ITEMS OF FINISHED GOODS LYING IN THE CLOSING STOCK FROM THE RELEVANT STOCK RECORD MAINTA INED BY THE ASSESSEE. NEEDLESS TO OBSERVE THAT THE ASSESSING OFFICER SHAL L AFFORD PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. WE ADOPT THE ABOVE DETAILED REMAND DIRECTION MUTATI S MUTANDIS TO RESTORE THE INSTANT FORMER ISSUE BACK TO THE ASSESSING OFFICER IN THE SAME TERMS FOR SIMULTANEOUS ADJUDICATION. 5. THIS ASSESSEES APPEAL IS PARTLY ACCEPTED FOR ST ATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT 12/10/2018 SD/- SD/- ( %) (' %) (DR. A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 12 / 10 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S GANGA RASAYANIE (P) LTD., 50B, HARIS H MUKHERJEE RD. KOL-25 2. /RESPONDENT-DCIT, CIRCLE-12 AAYAKAR BHAWAN, P-7, CH OWRINGHEE SQ. KOLKATA-69 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 3,