M/s Radhey Shyam Trading Company, Hardoi V. Income Tax Officer-3(3), Hardoi

ITA 660/LKW/2017

AI Insights

The case involves M/s Radhey Shyam Trading Company appealing against the appellate order of the Commissioner of Income Tax (Appeals), Bareilly, which confirmed the Assessing Officer's decisions on several grounds related to the assessment year 2013-14. The primary issues in the appeal included the non-increase of the opening stock value by Rs.1,01,855 as per the under-valuation of closing stock in the previous assessment year, the non-deduction of Rs.1,08,691 for advance received towards 'Rake Handling & Storage Charges', and an adhoc disallowance of 10% on various expenses totaling Rs.20,733. The Tribunal found that the assessee was not given a reasonable opportunity during the assessment and appellate proceedings, leading to the decision to set aside these issues for a fresh assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113271 (ITAT-LUCKNOW)
• Duration Of Justice: 5 year(s) 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 16-05-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 04-10-2017
• Other Referred Cases: Mahendra Mills, M/s Shree Gopal Enterprises vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARISH GIDWANI
• Keywords: Set aside

Judgement Text

I.T.A. No.660/Lkw/2017 Assessment year:2013-14 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH ‘SMC’, LUCKNOW BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER I.T.A. No.660/Lkw/2017 Assessment Year: 2013-14 M/s Radhey Shyam Trading Company, Unnao Road, Sandila, Distt-Hardoi. PAN:AADFR0949N Vs. Income Tax Officer-3(3), Hardoi. (Appellant) (Respondent) O R D E R PER ANADEE NATH MISSHRA:A.M. (A) Appeal vide I.T.A. No.660/Lkw/2017 has been filed by the assessee for assessment year 2013-14 against impugned appellate order dated 19/07/2017 of Commissioner of Income Tax (Appeals) [“CIT(A)” for short]. The grounds of appeal are as under: “1. That the ld. Commissioner of Income Tax (Appeals), Bareilly erred on facts and in law in confirming the order of the A.O. in not increasing the value of opening stock by Rs.1,01,855/- on the basis of addition made in A.Y. 2012-13 towards under valuation of closing stock. Appellants by Shri Sanjay Saxena, C.A. Respondent by Shri Harish Gidwani, D.R. Date of hearing 17/05/2023 Date of pronouncement 22/05/2023 I.T.A. No.660/Lkw/2017 Assessment year:2013-14 2 2. That the ld. Commissioner of Income Tax (Appeals), Bareilly erred on facts and law in confirming the order of the A.O. in not deducting Rs.1,08,691/- being the advance received towards "Rake Handling & Storage Charges" brought to tax by the A.O. in A.Y. 2012-13 and the same should be allowed as deduction on its actual payment in A.Y. 2013-14. 3. That the ld. Commissioner of Income Tax (Appeals), Bareilly erred on facts and in law in confirming the order of the A.O. in adhoc disallowing 10% of the expenses under the heads 'Repairs & Maintenance', 'Misc. Expenses', 'Shop Expenses', 'Travelling & Conveyance' & 'Fright Expenses' aggregating to Rs.20,733/- on surmises.” (B) In this case assessment order dated 16/03/2016 was passed u/s 143(3) of the Income Tax Act, 1961 (“IT Act” for short) wherein the assessee’s total income was determined at Rs.1,79,254/-. In the aforesaid order an addition amounting to Rs.20,733/- was made on account of disallowance out of repair & maintenance, misc. expenses, shop expenses, travelling & conveyance and freight. The Assessing Officer rejected the assessee’s claim. The relevant portion of the assessment order as reproduced as under: “3. During the year under consideration, total turnover has been shown at Rs.16,38,41,111/- against which gross profit has been shown at Rs.12,31,442/-. The G.P. rate works out at 0.75% as against G.P. rate shown in the immediately preceding year i.e. assessment year 2012-13 at 0.44% on total sales of Rs.16,20,06,019/-. During assessment proceedings, AR of the assesses claimed that opening stock is to be substituted by the value of closing stock as on 31-03-2012 as computed in the assessment order for A.Y. 2012-13. In support of his claim learned AR has cited decision of Hon'ble Supreme Court in the case of Mahendra Mills and decision of Hon'ble ITAT, Lucknow in the case of M/s Shree Gopal Enterprises. It is pertinent to mention here that in the case of the assessee for AY 2012-13 audit report was revised and the assessee failed to explain the variations of original and revised audit reports. The case was referred for special audit and accordingly accounts of I.T.A. No.660/Lkw/2017 Assessment year:2013-14 3 the assessee were audited by the special auditor. Perusal of the decisions cited by the assessee revealed that these decisions are not squarely applicable to the facts and circumstances of this case. AR of the assessee also claimed that addition of Rs.1,08,691/- made in cement rake handling and storage account in A.Y. 2012-13 stating gross profit had been carried to next year to be taken under consideration while computing taxable income of the year under consideration. In this regard, it has been found that while revising audit report the amount of Rs.1,08,691/- (gross profit related to cement rake handling and storage account) has been shown as paid by the assessee in his cash book. The assessee was given opportunity to produce bills and vouchers as evidence of payment of these expenses. But assessee failed to produce the same. Since, addition to this effect has already been made in the assessment order of the assessee for A.Y. 2012-13, hence, the same is not being disallowed again.” (B.1) the assessee filed appeal against the assessment order in the office of learned Commissioner of Income Tax (Appeals), Bareilly [“CIT(A)” for short]. Vide impugned appellate order dated 19/07/2017, the assessee’s appeal was dismissed by learned CIT(A). The present appeal has been filed by the assessee against the aforesaid impugned appellate order dated 19/07/2017. (B.2) At the time of hearing before us, the assessee was represented by Shri Sanjay Saxena, C.A. and Revenue was represented by Shri Harish Gidwani, learned Sr. D.R. (B.3) We have heard both the sides and perused the materials on record. Representatives of both the sides were in agreement as regards ground 2 of the present appeal before us, that the assessee did not get reasonable opportunity before the Assessing Officer during the assessment proceedings and before the learned CIT(A) during appellate proceedings; and further, that therefore, this issue should be set aside to the file of the Assessing Officer with the direction to pass fresh order in accordance with law after I.T.A. No.660/Lkw/2017 Assessment year:2013-14 4 providing reasonable opportunity to the assessee. In view of the foregoing and as representatives of both the sides are in agreement with this, we restore the issue regarding Rake handling & Storage charges, amounting to Rs.1,08,691/-, to the file of the Assessing Officer with the direction to pass fresh order in accordance with law after providing the assessee reasonable opportunity. (C.) As regards ground no. 3 of the appeal regarding disallowance aggregating to Rs.20,733/-, the learned A.R. of the assessee submitted that this ground was not being pressed. Accordingly, ground No. 3 of the appeal is dismissed, being not pressed by the appellant assessee. (D.) As regards ground No. 1 of the appeal, learned Sr. D.R. for the Revenue submitted that this issue should also be set aside to the file of the Assessing Officer for fresh decision in accordance with law after giving due consideration to the fact that the assessee has accepted the additions made in assessment year 2012-13 by opting for the Direct Tax Vivad Se Viswas Scheme-2020. However, the learned A.R. for the assessee submitted that the Assessing Officer should be directed to increase the value of opening stock by Rs.1,01,855/- on the basis of addition made in assessment year 2012-13 towards under valuation of closing stock. He also placed reliance on order dated 28 th May 2004 of Lucknow Bench of the Income Tax Appellate Tribunal in I.T.A. No.541/Lkw/2001 in the case of Shree Gopal Enterprises vs. ITO. In response, learned Sr. D.R. for Revenue submitted that facts of the present appeal are distinguishable from facts of the aforesaid order dated 28 th May, 2004 of Income Tax Appellate Tribunal. I.T.A. No.660/Lkw/2017 Assessment year:2013-14 5 (D.1) After hearing both the sides and on perusal of records, we find that the Assessing Officer had observed that the aforesaid decision was not applicable to the facts and circumstances of this case. Further the learned CIT(A) also, in his impugned appellate order dated 19/07/2017, has observed that the case law relied upon by the appellant assessee was different on facts. We have perused the assessment order in the case of the assessee for assessment year 2012-13 as well as the aforesaid order dated 28/04/2004 of Lucknow Bench of the ITAT and we are of the view that facts are not identical with the facts of the present appeal before us. In this regard, we note the distinguishing facts in the present appeal which have been noted by learned CIT(A) in his impugned order dated 19/07/2017 (last paragraph at page 2 of his order). Moreover, in assessment order dated 29/06/2015 for assessment year 2012-13; the Assessing Officer has stated that addition on account of under valuation of closing stock was upexplained investment. However, we are cognizant of the fact that at present there is a material change in circumstances, because the assessee opted for aforesaid VSVS for assessment year 2012-13 and Revenue has already issued Form-5 under VSVS, thereby settling the dispute for assessment year 2012-13 when the Assessing Officer and learned CIT(A) passed their respective orders in the present appeal before us for assessment year 2013-14; the dispute for assessment year 2012-13 had not been settled under VSVS. In view of the material change in facts and circumstances as aforesaid, we are in agreement with the submissions made by learned Sr.D.R. that this issue should be set aside to the file of the Assessing Officer for fresh decision in accordance with law after providing reasonable opportunity to the assessee. Accordingly, we restore the issue in the first ground of appeal in the present appeal before us, to the file of the I.T.A. No.660/Lkw/2017 Assessment year:2013-14 6 Assessing Officer with the direction to decide the issue afresh in accordance with law after providing reasonable opportunity to the assessee. (E) In the result, the appeal of the assessee stands partly allowed for statistical purposes. (Order pronounced in the open court on 22/05/2023) Sd/. Sd/. (SUDHANSHU SRIVASTAVA) (ANADEE NATH MISSHRA) Judicial Member Accountant Member Dated:22/05/2023 *Singh Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. D.R., I.T.A.T., 5. CIT(A) Assistant Registrar