Unity Dyechem (P) Ltd., Anand V. The Deputy Commissioner of Income Tax, Circle-1(3), Baroda

MA 117/AHD/2020

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 0598 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 16-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 05-06-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R R MAKWANA
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (VIRTUAL COURT) BEFORE: SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI AMARJIT SINGH, ACCOUNTANT MEM BER UNITY DECHEM (P.) LTD. GOLANA ROAD, AT. SOKHADA, TA.- KHAMBHAT, DIST: ANAND PAN: AAACU5068R (APPELLANT) VS THE DY. CIT, CIRCLE-1(3), BARODA (RESPONDENT) REVENUE BY: SHRI R.R. MAKWANA, SR. D.R. ASSESSEE BY: SHRI JAYMIN SHAH, A.R. DATE OF HEARING : 05-02-2021 DATE OF PRONOUNCEMENT : 16-02-2021 /ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- THE MISCELLANEOUS APPLICATION IS FILED BY THE ASSE SSEE POINTING OUT THAT THERE IS APPARENT ERROR IN THE ITAT ORDER DATE D 21 ST FEB, 2020. THE ASSESSEE HAS MAINLY POINTED OUT IN THE MISCELLANEOU S APPLICATION THAT ITS ALTERNATIVE GROUND THAT IF THE ITAT NOT DELETE THE ADDITION OF RS. 8 LACS MADE ON ACCOUNT OF VALUATION OF CLOSING STOCK THEN SET O FF AS OPENING STOCK IN THE SUBSEQUENT YEAR WAS NOT CONSIDERED. M.A. NO. 117/AHD/2020 (IN ITA NO. 3394/AHD/2016) ASSESSMENT YEAR 2012-13 M.A. 117/AHD2020 (IN I.T.A NO. 3394/AHD/2016) A.Y. 2012-13 PAGE NO UNITY DECHEM (P). LTD. VS. DY. CIT 2 2. HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. THE ASSESSING OFFICER HAS MADE ADDITION OF RS. 8 LACS O N ACCOUNT OF UNDER VALUATION OF CLOSING STOCK. THE ITAT VIDE ORDER DA TED 21 ST FEB, 2020 HAS RESTRICTED THE ADDITION TO THE EXTENT OF RS. 4 LACS AND THE RELEVANT PART OF THE DECISION OF ITAT IS REPRODUCED AS UNDER:- 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSING OFFICER HAS MADE ADDITION OF RS. 8 LACS ON ACCOUNT OF UNDER VALUATION OF CLOSING STOCK. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE ID. CIT(A), THE ASS ESSEE HAS SUBMITTED THAT RAW MATERIAL PRICES HAVE INCREASED DURING THE YEAR COMPARED TO IMMEDIAT ELY PRECEDING YEAR. IT IS ALSO SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION SALES HAS BEEN INCREASED BY RS. 2,14,35,224 IN COMPARISON TO IMMEDIATELY PRECEDING YEAR AND THERE WAS A KEEN COM PETITIVE IN THIS LINE OF BUSINESS WHICH RESULTED IN REDUCTION OF GROSS PROFIT @ 4.62%. REGA RDING SHOWING CERTAIN ITEMS OF MATERIAL AT THE SAME PRICE IN THE STOCK STATEMENT AS IN THE PRECEDI NG ASSESSMENT YEAR, THE ASSESSING OFFICER EXPLAINED THAT SAME WAS ON ACCOUNT OF OLD STOCK LYI NG IN THE INVENTORY TO WHICH OLD RATE WAS APPLIED. IT WAS ALSO SUBMITTED THAT NO INSTANCES OF SALE MADE OUTSIDE THE BOOKS OF ACCOUNT WAS DETECTED BY THE ASSESSING OFFICER. HOWEVER, IT IS O BSERVED THAT THE ASSESSEE HAS SUBMITTED DETAIL IN RESPECT OF 13 ITEMS OF FINISHED STOCK OUT OF TOTAL 34 ITEMS OF FINISHED STOCK. THE ASSESSEE HAS ALSO NOT FULLY EXPLAINED THE DEFICIENCY POINTED OUT IN V ALUATION OF FINISHED STOCK/SEMI-FINISHED STOCK OR RAW MATERIAL BY THE ASSESSING OFFICER. THE ASSESSEE HAS ALSO FAILED TO RE-CONCILE THE VARIATION IN VALUATION OF RAW MATERIAL FORMING PART OF INVENTORY AT LOWER RATE AS COMPARED TO EARLIER YEAR AND VARIATION IN VALUATION OF SEMI-FINISHED AND FINISHE D STOCK AT A LOWER RATE THAN THE EARLIER YEAR. CONSIDERING THE ABOVE ANOMALIES, WE ARE OF THE VIEW THAT IT WILL APPROPRIATE TO RESTRICT THE DISALLOWANCE TO THE AMOUNT OF RS. 4 LACS AS AGAINST ESTIMATION MADE BY THE ASSESSING OFFICER AT RS. 8 LACS. THEREFORE, THIS APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. IT IS CLEAR FROM THE FINDING GIVEN IN THE ITAT ORDE R AS CITED ABOVE THAT ASSESSEE HAS FAILED TO RECONCILE THE VARIOUS VARIAT IONS AND DISCREPANCIES DETECTED IN THE VALUATION OF FINISHED/SEMI FINISTED STOCK. HOWEVER, AFTER CONSIDERING THE RELEVANT FACTS AND MATERIAL THE DIS ALLOWANCE WAS RESTRICTED TO THE AMOUNT OF RS. 4 LACS AS AGAINST ADDITION OF RS. 8 LACS MADE BY THE ASSESSING OFFICER. WE CONSIDER THAT THE THERE IS N O APPARENT MISTAKE IN THE ORDER OF THE ITAT SINCE ALL THE ISSUES IN THE GROUN DS OF APPEAL FILED BY THE ASSESSEE PERTAINING TO ADDITION OF RS. 8 LACS WERE CONSIDERED TOGETHER AS MENTIONED IN PARA 3 OF THE ITAT ORDER. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE WERE PERTAINED TO THE ASSESSMENT YEAR 2012 -13 DIRECTED AGAINST THE ORDERS BELOW THE AUTHORITIES FOR THE A.Y. 2012-13. THE ISSUE OF OPENING M.A. 117/AHD2020 (IN I.T.A NO. 3394/AHD/2016) A.Y. 2012-13 PAGE NO UNITY DECHEM (P). LTD. VS. DY. CIT 3 STOCK REFERRED BY THE ASSESSEE IS ARISED SUBSEQUENT LY IN THE A.Y. 2013-14 AND THE ASSESSING OFFICER HAS TO TAKE SPONTANEOUS ACTIO N AT HIS OWN LEVEL THAT CLOSING STOCK BECOMES THE OPENING STOCK ON SUBSEQUE NT YEAR AS PER THE PRINCIPLE OF ACCOUNTING. THEREFORE, THIS MISCELLAN EOUS APPLICATION IS DISPOSED OF. 3. IN THE RESULT, THE MISCELLANEOUS APPLICATION OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16-02-2021 SD/- SD/- (RAJPAL YADAV) (AMARJIT SINGH) VICE PRESIDENT A CCOUNTANT MEMBER AHMEDABAD : DATED 16/02/2021 / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,