NCO EXTRUSIONS LTD, MUMBAI V. CIT 8, MUMBAI

ITA 3662/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2739 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 22-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI . . , , !' #$, % , & BEFORE SHRI R.C.SHARMA, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.3662/MUM/2014 ( %' ( / ASSESSMENT YEAR: 2009-10) NICO EXTRUSIONS LTD. (PREVIOUSLY KNOWN AS NICO EXTRUSIONS PVT. LTD.) 12, NIRAJ INDUSTRIAL ESTATE, OFF. MAHAKALI CAVES RD., ANDHERI (E), MUMBAI - 400093 ' / VS. COMMISSIONER OF INCOME TAX 8 AYAKAR BHAVAN, MUMBAI - 400020 ./ ./ PAN/GIR NO. : AAACN2104R ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 01.04.2016 !' /DATE OF PRONOUNCEMENT: 08.07.2016 #$ / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER DATED 25.03.2014 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 8, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO THE ASSESSEE BY: SHRI PARESH SHAPARIA DEPARTMENT BY: SHRI N. P. SINGH ITA NO.3662/M/2014 A.Y. 2009-10 2 A.Y.2009-10 PASSED IN VIEW OF THE PROVISION U/S.263 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LEARNED CIT ERRED IN TREATING THE ORDER PA SSED BY A.O. U/S.143(3) DATED 18.10.2011AS ERRONEOUS AND PREJUDI CIAL TO THE INTEREST OF REVENUE. 2. THE LEARNED CIT OUGHT NOT TO HAVE TREATED ORDER PASSED U/S.143(3) AS ERRONEOUS OR PREJUDICIAL TO THE INTER EST OF REVENUE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY FILED ITS E-RETURN FOR A.Y.2009-10 ON 19.09.2009 DECLARIN G LOSS OF RS.5,43,91,122/- OF THE ACT. THE ASSESSMENT U/S.14 3(3) OF THE ACT WAS COMPLETED ON 18.10.2011 REDUCING THE LOSS TO TH E TUNE OF RS.5,29,69,448/- AND BOOK PROFIT WAS COMPUTED TO TH E TUNE OF RS.66,78,263/-. ON EXAMINATION OF COMPUTATION OF I NCOME, IT WAS NOTICED THAT THE ASSESSEE HAD ADDED NOTIONALLY VALU ED CLOSING STOCK OF INVENTORIES AS PER ACCOUNTING STANDARD 2 AND DEDU CTED CLOSING STOCK INVENTORIES CREDITED IN THE BOOKS. THIS DEVIA TION IN VALUATION OF INVENTORY FOR INCOME TAX PURPOSE RESULTED IN UNDERV ALUATION OF CLOSING STOCK AND CONSEQUENT UNDER-ASSESSMENT OF INCOME BY RS.6,07,91,429/-. DETAILS OF THE SAID FIGURES HAVE BEEN MENTIONED BELOW:- ADD: CLOSING STOCK OF INVENTORIES AS PER ACCOUNTING STANDARD -II OF UNIT. I =531419238 ADD: CLOSING STOCK OF INVENTORIES AS PER ACCOUNTING STANDARD -II OF UNIT. II =131933211 TOTAL =663352449 ITA NO.3662/M/2014 A.Y. 2009-10 3 LESS: CLOSING STOCK OF INVENTORIES AS PER BOOKS UNIT. I =569994916 LESS: CLOSING STOCK OF INVENTORIES AS PER BOOKS UNIT. II =154148962 DIFFERENCE IN VALUATION OF STOCK OF INVENTORIES =60791429 4. IT WAS ALSO NOTICED THAT THE ASSESSING OFFICER W HILE COMPLETING THE ASSESSMENT U/S.143(3) OF THE ACT ON 18.10.2011, HAS OMITTED TO DISALLOW THIS NOTIONAL DIFFERENCE IN VALUATION OF INVENTORIES AS THE ASSESSEE HAD ADOPTED ONE SYSTEM OF VALUATION OF STO CKS IN ITS FINAL ACCOUNTS AND ANOTHER SYSTEM NATIONALLY FOR INCOME T AX PURPOSE WHICH IS CONTRARY TO THE PROVISIONS OF THE ACT. THEREFOR E NOTICE U/S.263 OF THE ACT WAS ISSUED AND AFTER GETTING THE REPLY THE CASE WAS REOPENED AND WAS ORDERED TO BE EXAMINED AS PER THE DIRECTION S GIVEN IN THE SAID ORDERS. FEELING AGGRIEVED THE ASSESSEE HAS FILED T HE PRESENT APPEAL BEFORE US. 5. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LEAR NED REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECOR D. THE LEARNED REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE ASSESSEE HAS ALREADY GIVEN THE INFORMATION IN ACCORDANCE WITH THE ACCOUN TING STANDARD WHILE PASSING THE ASSESSMENT ORDER DATED 18.10.2011 WHICH HAS BEEN EXAMINED BY THE ASSESSING OFFICER PROPERLY, THEREFO RE, IN THE SAID CIRCUMSTANCES WHERE TWO VIEWS ARE POSSIBLE THEN IN THE SAID CIRCUMSTANCES THE CASE IS NOT REQUIRED TO BE REOPEN ED IN VIEW OF THE PROVISION U/S.263 OF THE ACT. IT IS ALSO ARGUED TH AT THE ORDER PASSED BY THE ASSESSING OFFICER DATED 18.10.2011 WAS NOT ERRO NEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, THEREFORE, THE AUTHORITY WAS NOT ITA NO.3662/M/2014 A.Y. 2009-10 4 ENTITLED TO INVOKE THE PROVISION U/S.263 OF THE ACT . THE LEARNED REPRESENTATIVE OF THE ASSESSEE HAS ALSO ARGUED THAT THE ASSESSING OFFICER RAISED THE QUERY ABOUT THE FACTS WHICH HAS BEEN RAISED BY THE COMMISSIONER IN THE ORDER PASSED U/S.263 OF THE ACT AND THE ASSESSEE ALSO SUBMITTED THE REPLY IN THIS REGARD BY VIRTUE O F LETTER DATED 10.10.2011 LIES AT PAGE NO.30, 31, 32 & 33 OF THE P APER BOOK. THEREFORE THE CASE IS NOT ENTITLED TO BE TAKEN UP I N VIEW OF THE PROVISION U/S.263 OF THE ACT. IN SUPPORT OF HIS CO NTENTION THE LEARNED REPRESENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE UPON THE LAW SETTLED IN SPECTRA SHARES AND SCRIPTS (P.) LTD. VS. CIT HYD ERABAD [2013] 36 TAXMAN.COM 348 (AP) AND CIT VS. MAX INDIA LTD. 295 ITR 283 SC AND CIT VS. HONDA SIEL POWER PRODUCTS LTD. 235 CTR 336 (DELHI SC) AND CIT VS. MALABAR INDUSTRIAL CO. LTD. 243 ITR 83 (SC) AND CIT VS. LUCAS TVS LTD. 249 ITR 306 (SC). 6. ON THE OTHER HAND THE LEARNED REPRESENTATIVE OF THE DEPARTMENT HAS STRONGLY RELIED UPON THE ORDER PASSED BY THE LE ARNED CIT(A) IN QUESTION. KEEPING IN VIEW OF THE ARGUMENT ADVANCED BY THE LEARNED REPRESENTATIVE OF THE PARTIES AND PERUSING THE REC ORD, IT CAME INTO NOTICE THAT THE ASSESSING OFFICER DID NOT EXAMINE T HIS ISSUE IN HIS ORDER DATED 18.10.2011 PASSED BY THE ASSESSING OFFI CER IN VIEW OF THE PROVISION U/S.143(3) OF THE ACT. THE REPLY WHICH H AS BEEN ATTACHED BY THE REPRESENTATIVE OF THE ASSESSEE DATED 10.10.2011 NOWHERE SPEAKS ABOUT THE LETTER ISSUED BY THE ASSESSING OFFICER HO WEVER, THE LETTER ITA NO.3662/M/2014 A.Y. 2009-10 5 SPEAKS THAT THE ASSESSEE WAS FURNISHING THE RELEVAN T DETAILS AS REQUESTED. ANYHOW ON APPRAISAL OF ORDER DATED 18.1 0.2011 WE FOUND NOWHERE OBSERVATION IN THIS REGARD. THE LEARNED CI T(A) INVOKED THE PROVISION U/S.263 OF THE ACT AFTER DUE NOTICING THA T THE ASSESSEE HAD ADDED THE NOTIONALLY VALUED CLOSING STOCK OF INVENT ORY AS PER ACCOUNTING STANDARD -2 AND DEDUCTED CLOSING STOCK I NVENTORIES CREDITED IN THE BOOKS. THE AUTHORITY IS ALSO OF TH E VIEW THAT THIS DEVIATION IN THE VALUATION OF INVENTORY FOR INCOME TAX PURPOSE RESULTED IN UNDER VALUATION OF CLOSING STOCK AND CONSEQUENT UNDER ASSESSMENT OF INCOME BY RS.6,07,91,429/- AS MENTIONED BELOW:- ADD: CLOSING STOCK OF INVENTORIES AS PER ACCOUNTING STANDARD -II OF UNIT. I =531419238 ADD: CLOSING STOCK OF INVENTORIES AS PER ACCOUNTING STANDARD -II OF UNIT. II =131933211 TOTAL =663352449 LESS: CLOSING STOCK OF INVENTORIES AS PER BOOKS UNIT. I =569994916 LESS: CLOSING STOCK OF INVENTORIES AS PER BOOKS UNIT. II =154148962 DIFFERENCE IN VALUATION OF STOCK OF INVENTORIES =60791429 7. ON APPRAISAL OF ORDER DATED 18.10.2011 WE NOWHER E FOUND ANY OBSERVATION IN THIS REGARD. THE REPLY FILED BY THE ASSESSEE ALSO NOWHERE DISCUSSED IN THE ORDER DATED 18.10.2011. N O VIEW OF ANY KIND WAS TAKEN BY THE ASSESSING OFFICER ON THIS ISS UE. THERE IS NO DISPUTE WITH REGARD TO THE LAW RELIED BY THE LEARNE D REPRESENTATIVE OF THE ASSESSEE IS CONCERNED BUT THE FACTS AND CIRCUMS TANCES OF THE PRESENT CASE ARE TOTALLY DIFFERENT. THEREFORE, THE ABOVE SAID LAW IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE BEING N ON-IDENTICAL. ON APPRAISAL OF THE ORDER IN QUESTION, IT CAME INTO TH E NOTICE THAT THE ITA NO.3662/M/2014 A.Y. 2009-10 6 CIT(8) MUMBAI HAS GIVEN THE SPECIFIC FINDING WHICH IS REPRODUCED BELOW:- 6. IN VIEW OF THE FOREGOING, THE ASSESSMENT ORDER DATED 18.10.2011 IS SET ASIDE WITH THE DIRECTIONS T O THE ASSESSING OFFICER TO EXAMINE AND PASS A FRESH ASSES SMENT DISALLOWING THE DIFFERENCE IN VALUATION OF INVENTOR Y IN THE BOOKS OF ACCOUNTS AND THE VALUATION ADOPTED FOR TAX PURPOSES, WHICH IS STATED TO BE ON ACCOUNT OF THE E LEMENT OF EXCHANGE FLUCTUATION, AFTER AFFORDING THE ASSESS EE AN OPPORTUNITY OF BEING HEARD. 8. IN VIEW OF THE SAID DIRECTION, IT IS QUITE CLEAR THAT THE ASSESSING OFFICER HAS TO DO THE REASSESSMENT IN ACCORDANCE WI TH THE DIRECTIONS PASSED BY THE CIT(8) MUMBAI WHILE PASSING THE ORDER U/S.263 OF THE ACT. THE SAID DIRECTION NOWHERE LEAVES THE ROOM FO R THE ASSESSING OFFICER TO EXAMINE THE MATTER OF CONTROVERSY AFRESH IN THE LIGHT OF THE MATERIAL AVAILABLE BEFORE HIM. WE ARE OF THE VIEW THAT THE ISSUE IN QUESTION IS REQUIRED TO BE EXAMINED AFRESH INDEPEND ENTLY BY THE ASSESSING OFFICER AND TO PASS THE FRESH ORDER IN AC CORDANCE WITH LAW. THE DIRECTION GIVEN BY THE CIT(8) IN QUESTION IS HE REBY MODIFIED ACCORDINGLY. HOWEVER, THE APPEAL FILED BY THE ASSE SSEE IS HEREBY ORDERED TO BE DISMISSED. ITA NO.3662/M/2014 A.Y. 2009-10 7 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JULY , 2016. SD/- SD/- (R.C.SHARMA) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED : 8 TH JULY, 2016 MP MP MP MP * +%'#, -,(' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. ' / BY ORDER, - & //TRUE COPY// ./$ ! /(DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI