INDUS MOBILE DISTRIBUTION P LTD, CHENNAI V. ACIT ,CC-1(1), CHENNAI

ITA 388/CHNY/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 7189 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 12-10-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Set aside

Judgement Text

आयकर अपीलीय अिधकरण, ‘बी’ ᭠यायपीठ, चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI Įी महावीर ͧसंह, उपाÚय¢ एवं Įी मनोज क ु मार अĒवाल, लेखा सदèय के सम¢ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.:388 & 522/CHNY/2021 िनधाᭅरण वषᭅ /Assessment Year:2009-10 Indus Mobile Distribution P Ltd., No.20, First Floor, Deivasigamani Street, Muthamizh Nagar, Pammal, Chennai – 600 075. PAN: AABCI 6304D v. The ACIT, Central Circle 1(1), Chennai. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri B. Ramakrishnan, FCA ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Ms. Sheila Parthasarathy, Addl.CIT स ु नवाई कȧ तारȣख/Date of Hearing : 13.06.2022 घोषणा कȧ तारȣख/Date of Pronouncement : 15.06.2022 आदेश /O R D E R PER MAHAVIR SINGH, VP: These two appeals by the assessee, one against the quantum and one against penalty u/s.271(1)(c) of the Income Tax Act, 1961 (hereinafter the ‘Act’), are arising out of the orders of Commissioner of Income Tax (Appeals)-18, Chennai in ITA No.756/16-17/CIT(A)- 18 & 360/2019-20/CIT(A)-18, order dated 19.08.2021 & 2 ITA Nos.388 & 522/Chny/2021 28.09.2021. The assessment was framed by the ACIT, Central Circle 1(1), Chennai for the assessment year 2009-10 u/s.143(3) r.w.s. 147 of the Act vide order dated 18.11.2016. The penalty under dispute was levied by the ACIT, Central Circle 1(1), Chennai u/s.271(1)(c) of the Act vide order dated nil. 2. First, we will deal with assessee’s appeal in ITA No.388/Chny/2021. The only issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of AO in making addition of stock pending with service centers and not treating the same as closing stock. For this, assessee has raised various argumentative grounds, which need not to be reproduced. 3. Brief facts are that a survey u/s.133A of the Act was conducted on the assessee on 06.01.2014 and AO while adjudicating the case made addition to the closing stock on the basis of statement recorded during the course of survey. The AO noticed that during survey it was noticed that defective mobiles lying with service centers was not included in the closing stock. According to him, such pending quantity as on 31.03.2009 was 1271 mobiles valued at Rs.16,71,673/-. The AO has not accepted 3 ITA Nos.388 & 522/Chny/2021 the reconciliation statement submitted by assessee. The relevant reconciliation submitted by assessee before CIT(A) reads as under:- “It is submitted that during the subject assessment year 1271 were not taken into account as closing stock the breakup of which is as under: ITEMS QUANTITY AMOUNT Accessories 67 68,940 Bluetooth headset 2 3,173 Gift 955 56,803 Handsets 237 15,42,422 Recharge Pack 8 - Scratch Guard 2 334 GRAND TOTAL 1271 16,71,673 It is submitted that out of the total 1271 items 237 were handsets and the others were accessories. Out of the total PRN Value of Rs.16,71,673/-:  Debit Note on the supplier was raised for 1148 PRN valuing Rs.8,58,560/-  The balance 123 PRN valuing Rs.4,48,564/- were not received from the service centre. The detailed pending purchase return stock report was submitted during the assessment proceedings substantiating the appellant’s reasons for not adding these items in the closing stock. Further, a copy of the submissions made vide letter dated 17.11.2016 before the Assessing Officer explaining the accounting process is enclosed as Annexure – 2.” The CIT(A) also not considered the reconciliation and confirmed the addition. 4. Before us, the ld.AR for the assessee agreed that in case matter is set aside to the file of the AO, he can explain the quantity 4 ITA Nos.388 & 522/Chny/2021 of stock included in the closing stock and matter can be sorted out. When a query was put to ld. Senior DR, she only relied on the assessment order and that of the CIT(A). 5. After hearing rival contentions and going through the facts of the case, we noted that reconciliation is to be considered and hence, we set aside the order of AO and that of the CIT(A) and remand the matter back to the file of the AO for re-deciding after considering the re-conciliation submitted by the assessee. The appeal of the assessee is allowed for statistical purposes. 6. Coming to penalty appeal in ITA No.522/CHNY/2021, we noted that penalty is levied by the AO u/s.271(1)(c) of the Act and confirmed by CIT(A) on this very addition on account of discrepancy in stock amounting to Rs.16,71,673/-. Since, we have set aside the assessment order and the order of CIT(A) in quantum, penalty will not survive and hence, penalty is deleted. Since, we have deleted the penalty and matter in regard to quantum addition is set aside to the AO, we caution the AO to reinitiate the penalty proceedings during the course of framing of set aside assessment proceedings, in case he finds there is any concealment of particulars of income or 5 ITA Nos.388 & 522/Chny/2021 furnishing of inaccurate particulars of income. Accordingly, the penalty is deleted and appeal of the assessee is allowed. 7. In the result, the appeals filed by the assessee in ITA No.388/CHNY/2021 is allowed for statistical purposes and in ITA No.522/CHNY/2021 is allowed. Order pronounced in the open court on 15 th June, 2022 at Chennai. Sd/- Sd/- (मनोज कुमार अᮕवाल) (MANOJ KUMAR AGGARWAL) लेखा सद᭭य /ACCOUNTANT MEMBER (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 15 th June, 2022 RSR आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकर आयुᲦ (अपील)/CIT(A) 4. आयकर आयुᲦ /CIT 5. िवभागीय ᮧितिनिध/DR 6. गाडᭅ फाईल/GF.