M/s Stori Fashions Pvt ltd , Bangalore V. The Deputy Commissioner of Income Tax Circle-6(1)(2), Bangalore

ITA 2405/BANG/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7261 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 27-03-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 20-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SALE OF SUCH UNACCOUNTED STOCK
• Keywords: Opportunity of being heard
• Section: 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER I TA NO. 2405 / BANG/201 8 ASSESSMENT YEAR : 20 1 5 - 1 6 M/S. STORI FASHIONS PVT. LTD., NO. 2/5, 3 RD CROSS, OPP. TO OLD TOLL GATE, MYSORE ROAD, BANGALORE. PAN: AACCC1173B VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 6 (1) (2), BANGALORE. APPELLANT RESPONDENT ASSESSEE BY : SHRI PANKAJ MOGRA, CA REVENUE BY : DR. P.V. PRADEEP KUMAR, ADDL. CIT (DR) DATE OF HEARING : 1 0 .0 7 .2019 DATE OF PRONOUNCEMENT : 25 .0 7 .2019 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-6, BANGALORE DATED 21.05.2018 FOR ASSESSMENT YEAR 2015-16. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) ERRED IN MAINTAINING AN ADDITION OF RS. 18,20,927/- MADE BY THE A.O. TO THE TOTAL INCOME OF THE ASSESSEE COMPANY ON ACCOUNT OF NET PROFIT ON SALE OF ALLEGED UNACCOUNTED STOCK FOR LAST YEAR I.E. A.Y. 2014- 15 SOLD DURING THE YEAR UNDER CONSIDERATION I.E. A.Y. 2015-16 WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND SUBMISSION MADE BEFORE HER. AND MORE SO EVEN WHEN IT WAS EXPLAINED BY THE ASSESSEE THAT ONLY ESTIMATED STOCK STATEMENT IS SUBMITTED TO BANK FOR AVAILING HIGHER LIMIT AND REGULAR BOOKS OF ACCOUNTS MAINTAINED AND WHICH WERE ALSO DULY AUDITED. 2. THE ASSESSEE RESERVE ITS RIGHT TO ADD, ALTER, MODIFY OR AMEND THE GROUNDS OF APPEAL AS AND WHEN REQUIRED. 3. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT THE APPEAL FOR ASSESSMENT YEAR 2014-15 IS PENDING BEFORE THE LD. CIT(A) IN WHICH THE ADDITION WAS MADE BY THE AO ON ACCOUNT OF ALLEGED UNACCOUNTED STOCK AND IN THE PRESENT YEAR, THE ITA NO. 2405/BANG/2018 PAGE 2 OF 3 ADDITION MADE IS REGARDING ALLEGED NET PROFIT ON THE SALE OF SUCH ALLEGED UNACCOUNTED STOCK. AT THIS JUNCTURE, IT WAS PROPOSED BY THE BENCH THAT UNDER THESE FACTS, THE MATTER IN THE PRESENT YEAR SHOULD ALSO GO BACK TO THE FILE OF LD. CIT(A) FOR SIMULTANEOUS DECISION BECAUSE UNLESS THE ISSUE REGARDING THE ADDITION ON ACCOUNT OF ALLEGED UNACCOUNTED STOCK FOR ASSESSMENT YEAR 2014- 15 IS FINALIZED, THE ISSUE IN RESPECT OF ALLEGED NET PROFIT ON ALLEGED SALE OF SUCH ALLEGED UNACCOUNTED STOCK CANNOT BE DECIDED. IN REPLY, THE LD. AR OF ASSESSEE AGREED TO THIS PROPOSITION PUT FORWARD BY THE BENCH. THE LD. DR OF REVENUE SUPPORTED THE ORDER OF LD. CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE FACTS IN THE PRESENT YEAR ARE NOTED BY LD. CIT(A) IN PARA NO. 5 OF HIS ORDER WHICH IS REPRODUCED HEREINBELOW FOR READY REFERENCE. 5. THE APPELLANT ALSO FILED A STATEMENT OF FACTS ALONG WITH GROUNDS OF APPEAL. RELEVANT PORTION OF THE SAME IS REPRODUCED AS UNDER:- 'THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF TEXTILE GARMENTS/HANDLOOMS / POWER LOOMS. THE INCOME TAX RETURN FOR THE A. Y. 2015-16 WAS DULY FILED BY THE COMPANY ON 26.09.2015 DECLARING TOTAL INCOME AT RS. 1,36,89,460/-. THE CASE OF THE COMPANY WAS SELECTED UNDER SCRUTINY AND LATER ON ORDER U/S143(3) FOR THE A.Y. 2015-16 WAS PASSED BY THE A.O. ON 20.12.2017WHEREIN TOTAL ADDITION OF RS. 18,20,927/- WAS MADE TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF NET-PROFIT ON SALE OF UNACCOUNTED STOCK FOR A. Y. 2014-15 SOLD DURING THE YEAR FOR THE REASON THAT THERE WAS DIFFERENCE IN THE STOCK STATEMENT AS SUBMITTED TO BANK AS AGAINST THE STOCK AS SHOWN IN THE BOOKS OF ACCOUNTS IN A.Y. 2014-15 AND THE SAME HAS BEEN REDUCED IN THE CURRENT YEAR. AGAINST THE SAID ADDITION AS MADE BY THE LD. A.O. THE ASSESSE PREFERS THE PRESENT APPEAL BEFORE YOUR HONOUR' 5. FROM THE ABOVE PARA, IT IS SEEN THAT AS PER THE FACTS OF THE PRESENT CASE, THE ADDITION WAS MADE IN ASSESSMENT YEAR 2014-15 ON THIS BASIS THAT THERE IS UNACCOUNTED STOCK BECAUSE IT WAS FOUND THAT THERE WAS DIFFERENCE IN STOCK STATEMENT AS SUBMITTED TO BANK AS AGAINST THE STOCK AS SHOWN IN THE BOOKS OF ACCOUNTS IN ASSESSMENT YEAR 2014-15. IN THE PRESENT YEAR ALSO, THE BOOK STOCK WAS LESS BY THE SAME AMOUNT FOR WHICH ADDITION WAS MADE IN ASSESSMENT YEAR 2014-15 AND THEREFORE, IT WAS HELD BY THE AO AND LD. CIT(A) THAT SUCH STOCK WAS SOLD IN THE PRESENT YEAR AND AO MADE ADDITION BY ALLEGING THAT NET PROFIT WAS EARNED BY THE ASSESSEE BY SALE OF SUCH UNACCOUNTED STOCK AND IN THIS MANNER, HE MADE ADDITION OF RS. 18,20,927/- BEING 1.75% OF SUCH ALLEGED SALE OF SUCH ALLEGED UNACCOUNTED STOCK OF RS. 1040.53 LAKHS. IT HAS ITA NO. 2405/BANG/2018 PAGE 3 OF 3 BEEN SUBMITTED BY LD. AR OF ASSESSEE BEFORE US THAT THE APPEAL FOR ASSESSMENT YEAR 2014-15 IS PENDING BEFORE LD. CIT(A) AND HENCE, IT IS SEEN THAT THE ISSUE REGARDING SUCH ADDITION OF ALLEGED UNACCOUNTED STOCK IS NOT FINALIZED AND IT IS STILL PENDING BEFORE LD. CIT(A). DURING THE PENDENCY OF SUCH ADDITION, THE ISSUE REGARDING PROFIT ON SALE OF SUCH ALLEGED UNACCOUNTED STOCK CANNOT BE DECIDED. IN OUR CONSIDERED OPINION, IT WILL BE IN FITNESS OF THINGS IF THIS ISSUE IS ALSO RESTORED BACK TO THE FILE OF LD. CIT(A) FOR SIMULTANEOUS DECISION AND IN CASE, BY THE TIME THIS REACHES TO THE FILE LD. CIT(A), THE APPEAL FOR THE SAID ASSESSMENT YEAR 2014-15 IS ALREADY DECIDED BY HIM, THEN IN THE PRESENT YEAR, HE SHOULD DECIDE THE ISSUE AFRESH IN THE LIGHT OF DECISION IN ASSESSMENT YEAR 2014-15 BUT IF THE APPEAL IN ASSESSMENT YEAR 2014-15 IS PENDING, THEN BOTH THE APPEALS SHOULD BE DECIDED SIMULTANEOUSLY AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. IN VIEW OF THIS DECISION, WE MAKE NO COMMENT ON THE MERIT OF THE CASE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (PAVAN KUMAR GADALE) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 25 TH JULY, 2019. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.