Appeal details
Counselvise Citation
39423514 RSA 2012
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 month(s) 8 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
20-07-2012
Appeal Filed By
Department
Bench Allotted
C
Assessment Year
2005-2006
Appeal Filed On
12-03-2012
Judgement Text
, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH C, KOLKATA () BEFORE , ,, , , SHRI MAHAVIR SINGH, JUDICIAL MEMBER. /AND . .. . ! ! ! !. .. . , '# SHRI C.D.RAO, ACCOUNTANT MEMBER $ $ $ $ / ITA NO . 394/KOL/2012 %& '(/ ASSESSMENT YEAR : 2005-06 (*+ / APPELLANT ) D.C.I.T., CIRCLE-8, KOLKATA (,-*+/ RESPONDENT ) M/S.SEMALL IMPEX PRIVATE LIMITED, KOLKATA (PAN:AADCS 6554 P). *+ . / '/ FOR THE APPELLANT: SHRI S.P.LAHIRI,SR.DR ,-*+ . / '/ FOR THE RESPONDENT: NONE 0%1 . !# /DATE OF HEARING : 05.07.2012. 2' . !# /DATE OF PRONOUNCEMENT : 20.07.2012. '3 / ORDER . .. . ! ! ! !. .. . , '# PER SHRI C.D.RAO, AM THE ABOVE APPEAL IS FILED BY THE REVENUE AGAINST OR DER DATED 22.12.2011 OF THE LD. CIT(A)-VIII, KOLKATA PERTAINING TO A.YR. 2005 -06. 2. NO ONE APPEARED ON BEHALF OF ASSESSEE. HOWEVER A FTER CAREFUL PERUSAL OF THE IMPUGNED ORDER WE DECIDED TO DISPOSE OF THIS APPEAL FILED BY THE REVENUE AFTER HEARING THE LD. DR. 3. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE IN THIS APPEAL IS AS UNDER :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY AO ON ACCOUNT OF UNDE RVALUATION OF CLOSING STOCK FINISHED 2 GOODS WHEN ASSESSEE COULD NOT PRODUCE ANY RECONCILI ATION OF CLOSING STOCK OTHER THAN MERE STATEMENT THAT THE VALUE OF FINISHED GOODS WAS ERRONEOUSLY SHOWN. 4. THE BRIEF FACTS OF THIS ISSUE ARE THAT WHILE DO ING THE SCRUTINY ASSESSMENT THE AO MADE AN ADDITION OF RS,.17,17,098/- BY OBSERVING AS UNDER :- ON PERUSAL OF THE RETURN OF INCOME AND ANNEXURES T O IT, IT IS SEEN THAT IN SCHEDULE 15 CLOSING STOCK OF FINISHED GOODS IS SHOWN AS RS.23,8 8,986/- BUT IN THE CLOSING INVENTORIES THE AMOUNT SHOWN AGAINST FINISHED GOODS (AS ON 31.03.05) IS RS.6,71,888/-. THUS, THE CLOSING STOCK OF FINISHED GOODS IS UNDERV ALUED TO THE EXTENT OF RS.17,17,098/- (RS.23,88,986 RS.6,71,808/-). AS A RESULT OF SUCH UNDERVALUATION, THE ASSESSEE HAS SUPPRESSED ITS INCOME BY RS.17,17,098/-. 4.1. ON APPEAL THE LD. CIT(A) HAS DELETED THE SAME BY OBSERVING THAT I HAVE CONSIDERED THE SUBMISSION ALONG WITH THE WO RKING DETAILS OF STOCK OF DIFFERENT ITEMS FURNISHED BY THE APPELLANT, PERUSED THE ENTIR E FACTS OF THE CASE AND IMPUGNED ASSESSMENT ORDER. A CLOSE ANALYSIS OF THE FIGURES S HOWS THAT GROSS PROFIT MARGIN AND NET PROFIT MARGIN WERE HIGHER IN THE RELEVANT YEAR IN WHICH THE A.O. SUSPECTED THAT THE STOCK HAS BEEN UNDERVALUED. HAD THE STOCK VALUATION BEEN INCREASED BY RS. 17,17,098/- THE GROSS PROFIT WOULD HAVE BEEN RS. 7586680/- WITH G.P. MARGIN OF 9.45% WHICH THE COMPANY NEVER SHOWN IN ANY OF THE YEAR. IT IS ALSO NOTICED THAT ONE FACT HERE HAS BEEN OVERLOOKED BY THE A.O THAT IN NEXT YEARS FINANCIAL STATEMENT OPENING STOCK OF FINISHED GOODS HAS BEEN TAKEN AS RS. 6,71,888/- ONLY. HAD TH E APPELLANT TOOK THE OPENING STOCK AS 23,88,986/- THE PROFIT FOR THE YEAR 2005-06 WOUL D HAVE BEEN REDUCED BY RS. 17,17,098/- AND THEREBY REDUCING TAX LIABILITY OF T HE APPELLANT. I ALSO FIND THAT THE SAME A.O: HAS IN FACT N OT CONSIDERED OPENING STOCK AT RS. 23, 88,986/- IN THE ASSESSMENT YEAR 2006-07 IN WHICH HE HAS NOT GIVEN ANY BENEFIT FOR DIFFERENCE IN OPENING STOCK. DESPITE OF THE FACT TH AT ORDER FOR ASSESSMENT YEAR 2006-07 WAS PASSED ON 28.11.2008 AND NOTICE U/S 147 FOR A.Y . 2005-06 WAS ISSUED ON 09.09.2008. EXPLANATION FOR DIFFERENCE WAS SUBMITTE D TO HIM ON 23.09.2008 AND FINALLY THE ORDER WAS PASSED ON 11.12.2008.THUS, IF ANY ADD ITION IS MADE ON ACCOUNT OF UNDER VALUATION OF STOCK IN AN ASSESSMENT YEAR THE ASSESS EE IS ENTITLED TO GET THE BENEFIT OF HIGHER VALUE OF OPENING STOCK IN THE NEXT ASSESSMEN T YEAR AND WHICH NULLIFY THE EFFECT OF SUCH ADDITION MADE. IN VIEW OF THE ABOVE OBSERVATION AND CONSIDERI NG THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, IT HELD THAT THE ADDITIO N MADE BY THE AO ON ACCOUNT OF UNDER VALUATION OF STOCK OF FINISHED STOCK WAS NOT JUSTIF IED BEING DONE ON WRONG FOOTING WITHOUT PROPER APPRECIATION OF THE FACTS OF THE CAS E. THUS, THE ADDITION SO MADE IS DIRECTED TO BE DELETED. HENCE, THESE GROUNDS OF APP EAL ARE ALLOWED. 5. AT THE TIME OF HEARING THOUGH THE LD. DR APPEAR ING ON BEHALF OF REVENUE RELIED ON THE ORDER OF AO COULD NOT CONTRADICT THE FINDING S MADE BY LD. CIT(A) AS NARRATED ABOVE. HE FURTHER OBSERVED THAT THE AO AT PARA 5 OF PAGE NO.5 WENT AHEAD WITH THE ADDITION DESPITE OF WRITTEN SUBMISSION EXPLAINING T HE REASONS FOR DIFFERENCE ALONG WITH REVISED NOTES TO ACCOUNTS DULY SIGNED BY THE AUDITO RS, GIVEN TO HIM AT THE TIME OF 3 HEARING. IT IS FURTHER OBSERVED THAT THE AO HAS NOT CONSIDERED THE OPENING STOCK OF RS.23,88,986/- IN A.YR.2006-07 IN WHICH HE HAS NOT GIVEN ANY BENEFIT FOR DIFFERENCE IN OPENING STOCK. DESPITE OF THE FACT THAT ORDER FO R ASSESSMENT YEAR 2006-07 WAS PASSED ON 28.11.2008 AND NOTICE U./S 147 OF THE IT ACT FOR A.Y. 2005-06 WAS ISSUED ON 9.9.2008. EXPLANATION FOR DIFFERENCE WAS SUBMITT ED TO HIM ON 23.09.2008. KEEPING IN VIEW OF THE ABOVE FACTS, WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A) TO BE INTERFERED WITH. WE CONFIRM THE SAME AND DISMISS TH E APPEAL OF REVENUE. 6. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 20.07.2012. SD/- SD/- , ,, , MAHAVIR SINGH, JUDICIAL MEMBER . .. . ! ! ! !. .. . , , , , '# '# '# '# , C.D.RAO, ACCOUNTANT MEMBER. ( (( (!# !# !# !#) )) ) DATE: 20.07.2012. R.G.(P.S.) '3 . ,4 5'4'6- COPY OF THE ORDER FORWARDED TO: 1. M/S.SEMALL IMPEX PRIVATE LIMITED, 12/1, LINDSAY STR EET, KOLKATA-700087. 2 D.C.I.T., CIRCLE-8, KOLKATA. 3. THE C.I.T. , KOLKATA 4. CIT(A)-VIII, KOLKATA. 5. THE CIT(DR), KOLKATA BENCHES, KOLKATA -4 ,/ TRUE COPY, '3%0/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES
