IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: `C' NEW DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
&
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
ITA No. 531/Del/2016
Assessment Year: 2011-12
Gaurav Garg, vs ITO
Near Sharma Pathology, Ward 3(1)
Jarcha Road, Dadri, Gautam Budh Nagar, Noida.
Uttar Pradesh.
PAN No. AFLPG4724P
APPELLANT RESPONDENT
Assessee by Shri K.P. Garg, CA
Revenue by Ms. Rakhi Vimal, Sr. DR
Date of Hearing 09.10.2019
Date of Pronouncement 15.10.2019
ORDER
PER SHRI BHAVNESH SAINI, J.M.
This appeal by assessee has been directed against the order
of Ld. CIT(Appeals)-1, Noida dated 30.11.2015 for AY 2011-12,
challenging the addition of Rs. 61,62,426/- on account of opening
stock as unexplained investment.
2
ITA No. 531/Del/2016
2. Briefly the facts of the case, are that assessee filed return of
income on 28.09.2012 declaring an income of Rs. 4,68,560/-. The
assessee is engaged in the business of processing and trading of
rice. The assessee during the year under consideration, has
declared gross sales of Rs. 6,33,76,996/- and declared net profit of
Rs. 5,31,867/-. The main contention between the assessee and
the Revenue is the discrepancies in the value of closing stock as
shown on 31.03.2011 and as taken on 01.04.2010 as opening
stock. The AO stated that in the return filed for preceding AY
2010-11, the assessee has claimed that he was not liable for audit
its books of account u/s 44AB of the Act and, therefore, there was
no need to mention the name of the auditor signing the tax audit
report. The AO has stated in the order that the closing stock was
specifically shown to be nil in the return of income for preceding
AY 2010-11. In view of the same, the AO has treated the opening
stock as on 01.04.2010 of Rs. 61,62,426/- as unexplained
investment u/s 69 of the Act and made the addition.
3. The assessee challenged the addition before Ld. CIT(A) and it
was submitted that return for preceding AY 2010-11 was filed by
some other professional and by mistake and oversight the said
professional did not fill up the particulars of closing stock
correctly. It was further argued by the Counsel that the case of
the assessee for AY 2010-11 was liable for audit u/s 44AB and the
audit was also done as per law but the professional filing the
return of income incorrectly mentioned that the assessee was not
liable for such audit and no such audit having been done there
3
ITA No. 531/Del/2016
was no need to disclose the particulars of statutory auditor. The
assessee submitted that he is not much educated and though he
authenticated the return of income filed on his behalf but he could
not make out the errors committed by the said professional. The
assessee filed affidavit explaining the discrepancy on account of
difference in the closing stock as is explained in the audit report
u/s 44AB of the Act.
4. The Ld. CIT(A) found that in the return for preceding AY
2010-11, the value of the closing stock has been shown as nil.
The assessee also stated that he was maintaining regular books of
account but in return it is stated that he is not liable for audit u/s
44AB of the Act. Therefore, particulars are not filed. The Ld.
CIT(A) did not accept the contention of the assessee and affidavit
filed by him. Ld. CIT(A) also noted that on the date of filing of the
return audit report for assessment year under appeal as well as
for preceding assessment years were available, therefore, if any,
mistake has been committed the figures would not have tallied.
The Ld. CIT(A) rejected the contention of the assessee and
confirmed the addition.
5. Ld. Counsel for the assessee reiterated the submissions
made before authorities below and submitted that it was a mistake
in the return filed for preceding AY 2010-11 in not mentioning the
value of closing stock though complete details are available. The
assessee maintained complete details of closing stock of earlier
years and assessee maintained regular books of account which are
4
ITA No. 531/Del/2016
also audited. Copy of the audit report is also filed in the paper
book. He has submitted that in the audited account for preceding
assessment year assessee has shown value of closing stock of the
impugned amount. Details of which are also maintained. Copy of
the details of the opening stocks of last three years are filed at
page 84 of the Paper Book. Ld. Counsel for assessee submitted
that assessee is willing to produce books of accounts and other
details of closing stock of preceding AY 2010-11 before AO for
verification.
6. On the other hand, Ld. DR relied upon the orders of the
authorities below and submitted that assessee has mentioned in
the audit report for this year as well as preceding year that no
stock registered has been maintained. Ld. DR submitted that
assessee has unnecessary blamed the professional and that when
assessee says accounts of assessee are not liable for audit, there
was no reason to produce the copy of the audit report before the
authorities below.
7. We have considered the rival submission and perused the
material on record. The assessee has claimed opening stock of the
impugned amount in assessment year under appeal. However, no
closing stock of the similar amount has been shown in the return
for preceding AY 2010-11. It has created doubt in the mind of the
AO that assessee has made undisclosed investments in the stock.
The assessee, however, claimed that there was a mistake by the
professional in not showing the closing stock in preceding AY
5
ITA No. 531/Del/2016
2010-11. The assessee filed affidavit along with audit report for
preceding AY 2010-11 to show that accounts are maintained by
assessee which are also audited in which value of the closing
stock as on 31.03.2010 has been shown. The assessee has also
filed details of the closing stock as well as details of closing stock
for last preceding three assessment years. Ld. Counsel for
assessee submitted that assessee maintained regular books of
account and is willing to produce the same before the AO for
verification. Considering it to be a mistake in not disclosing the
value of the closing stock in preceding assessment year, we are of
the view that one more chance could be given to the assessee to
explain the value of the closing stock of preceding assessment year
before AO on production of the relevant record to the satisfaction
of the AO. In this view of the matter, we set aside the orders of the
authorities below and restore the matter in issue to the file of the
AO with a direction to re-decide the issue in accordance with law
by giving reasonable sufficient opportunity of being heard to the
assessee. Assessee is directed to produce complete books of
account and details of closing stock of preceding AY 2010-11
before AO for his verification. Since, AO doubted audit report for
AY 2010-11, therefore, in case any need arise, AO may also record
statement of the auditor who has prepared the audit report for
preceding AY 2010-11 for verification of the above issue. The
assessee is directed to cooperate with the AO for finalization of the
matter. In view of the above discussion, we allow the appeal of the
assessee for statistical purposes.
6
ITA No. 531/Del/2016
8. In the result, the appeal of assessee is allowed for statistical
purposes.
Order pronounced in the open Court.
Sd/- Sd/-
(PRASHANT MAHARISHI) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 15/10/2019
*Kavita Arora
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
TRUE COPY
ASSISTANT REGISTRAR
ITAT NEW DELHI
Date of dictation 10.10.2019
Date on which the typed draft is placed before the dictating 14.10.2019
Member
Date on which the typed draft is placed before the Other Member
Date on which the approved draft comes to the Sr. PS/PS 15.10.2019
Date on which the fair order is placed before the Dictating Member 15.10.2019
for pronouncement
Date on which the fair order comes back to the Sr. PS/PS 15.10.2019
Date on which the final order is uploaded on the website of ITAT 15.10.2019
Date on which the file goes to the Bench Clerk 15.10.2019
Date on which the file goes to the Head Clerk
The date on which the file goes to the Assistant Registrar for
signature on the order
Date of dispatch of the Order
7
ITA No. 531/Del/2016
|
