ITO, WARD SAMANA AT, PATIALA V. M/S QUALITY RICE EXPORTS PVT. LTD., PATRAN

ITA 818/CHANDI/2018

AI Insights

The case involves an appeal by the Income Tax Officer, Samana at Patiala against M/s Quality Rice Exports Pvt. Ltd. concerning the assessment year 2010-11. The dispute centered on the addition of Rs.186.54 Lacs made by the Assessing Officer for alleged under-valuation of closing stock of paddy fine and rice fine. The Assessing Officer's addition was based on the higher stock value declared to bank authorities, whereas the assessee maintained that the stock was valued at cost or net realizable value, a method consistent with their accounting practices. The CIT(A) deleted the addition, referencing a decision by the jurisdictional High Court in Sheena Exports. The tribunal upheld the CIT(A)'s decision, emphasizing the consistency in the method of stock valuation and the lack of discrepancies in the quantitative details.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473947 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Other Referred Cases: Sheena Exports (207 Taxman 75), BT Steels Ltd (328 ITR 471)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RANJIT KAUR LD.
• Section: 143(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHANDIGARH BEFORE HON’BLE SHRI RAJPAL YADAV, VICE PRESIDENT AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं. / ITA No.818/CHANDI/2018 (िनधाŊरणवषŊ / Assessment Year: 2010-11) ITO Samana at Patiala. बनाम/ Vs. M/s Quality Rice Exports Pvt. Ltd. Nial Bye-pass Road, Patran, District Patiala. ̾थायीलेखासं./जीआइआरसं./PAN/GIR No. AAACQ-1395-D (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) अपीलाथŎकीओरसे/ Appellant by : None ŮȑथŎकीओरसे/Respondent by : Dr. Ranjit Kaur (Addl. CIT) – Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 26-03-2025 घोषणाकीतारीख /Date of Pronouncement : 03-04-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by Revenue for Assessment Year (AY) 2010-11 arises out of an order of learned Commissioner of Income Tax (Appeals), Patiala [CIT(A)] dated 27-03-2018 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 25-03-2013. At the time of hearing, none appeared for assessee. The Ld. Sr. DR pleaded for restoration of addition of closing stock as made by Ld. AO in the impugned order. Upon perusal of case records, the appeal is disposed-off as under. 2. The assessee is stated to be engaged in manufacturing of rice. In the assessment order, Ld. AO made addition of Rs.186.54 Lacs for alleged under-valuation of closing stock of paddy fine and rice fine. The same was primarily on the ground that the assessee submitted higher stock value to bank authorities though the assessee maintained that it valued the stock at cost or net realizable value which was recognized method of valuation of stock. 3. During first appeal, the assessee submitted that valuation of stock with the bank was approximate value only. The Ld. CIT(A), after due consideration of factual matrix, relied on the decision of jurisdictional High Court in the case of Sheena Exports (207 Taxman 75) to delete the impugned addition against which the revenue is in further appeal before us. 4. From the facts, it emerges that the assessee is a corporate entity and it is maintaining quantitative details of raw material and finished goods. The books of accounts of the assessee are duly audited under relevant laws. The assessee is following consistent method of valuing its stock. No defect has been found by Ld. AO either in quantitative details or in stock valuation as done by the assessee in its books of accounts. The prime reason to make the addition is the fact that the assessee has declared higher stock value to banking authorities. However, the said declaration, in our opinion could not substitute the stock valuation as arrived at by the assessee following consistent method of stock valuation particularly when no discrepancy in quantitative details has been pointed out by Ld. AO. On these facts, the adjudication of Ld. CIT(A) as well as reliance on the cited case law could not be faulted with. The case law of BT Steels Ltd (328 ITR 471) has rightly been distinguished by Ld. CIT(A) since in that case the assessee declared certain stock which was not reflected in the books of accounts. The same is not the case here. Accordingly, we find no infirmity in the impugned order. 5. The appeal stand dismissed. Order pronounced on 03-04-2025. Sd/- Sd/- (RAJPAL YADAV) (MANOJ KUMAR AGGARWAL) VICE PRESIDENT लेखा सद˟ /ACCOUNTANT MEMBER Dated: 03-04-2025. आदेश की Ůितिलिप अŤेिषत / Copy of the Order forwarded to : 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF ASSISTANT REGISTRAR ITAT CHANDIGARH "