ARULJOTHI EXPORTS PVT LTD ,TIRUPUR vs. ACIT , CIRCLE - 2 , TIRUPUR

आयकर अपीलीय अिधकरण “बी” �ायपीठ चे�ई म�। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHENNAI माननीय �ी महावीर िसंह, उपा ! एवं माननीय �ी मनोज कुमार अ&वाल ,लेखा सद) के सम!। BEFORE HON’BLE SHRI MAHAVIR SINGH, VP AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ (िनधा*रण वष* / Assessment Year: 2014-15) M/s. Aruljothi Exports Private Limited ACIT, बनाम 70C, Karupparayan Koil Street, Circle-2, Main Road, Samalapuram, Tirupur. / Vs. Tirupur-641 663. �थायीलेखासं./जीआइआरसं./PAN/GIR No. AADCA-7439-F (अपीलाथ�/Appellant) : (� थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Shri S.Sridhar (Advocate-Erode)-Ld.AR � थ�कीओरसे/Respondent by : Shri D.Hema Bhupal (JCIT)- Ld. DR सुनवाईकीतारीख/Date of Hearing : 03-07-2023 घोषणाकीतारीख /Date of Pronouncement : 26-07-2023 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member)

1. 1. The order of the learned CIT(A) is bad and erroneous in law and against principles of natural justice.

2. The learned ClT(A) erred in not considering the replies and written submissions filed by the appellant in proper perspective.

4. The learned CIT(A) erred in not considering the fact that the addition was made by the Assessing officer without rejecting the books of accounts and without pointing out any defects in the books of accounts. 5. The learned CIT(A) erred, in not considering the fact that the Assessing officer, while accepting the similar method of valuation of stock in the immediately previous assessment year, erred in rejecting the same in the subsequent assessment year, thereby deviating from the rule of consistency. 6. The learned ClT(A) erred in not considering the material fact that there was an increase in revenue as well as increase in the net profit of the appellant in the immediately previous assessment year as well as in the impugned year.” As is evident, the sole grievance of the assessee is against confirmation of addition on account of valuation of stock. The assessee being resident corporate assessee is stated to be engaged in trading of cloth and job work. Having heard rival submissions and upon perusal of case records, the appeal is disposed off as under. Assessment Proceedings 2.1 During the course of assessment proceedings, the Ld. AO alleged that the assessee reflected low value of closing stock and therefore, there was shortage in closing stock to the extent of Rs.197.29 Lacs which was computed as under:- Opening Stock Rs.2,15,72,950.93 Add: Purchases Rs.3,36,95,968.00 Rs.5,52,68,918.93 Less: Sales Rs.2,53,99,182.00 Less: Closing Stock Rs.1,01,40,007.00 Shortage of closing stock Rs.1,97,29,730.00 The assessee’s claim that finished cloth was damaged due to heavy rain and flood in the month of December, 2013 was not accepted since no evidence could be furnished by the assessee in support of the same. The argument of the assessee that sales tax returns as filed with the commercial department were accepted and therefore, closing stock should be accepted as such, was also rejected on the ground that onus was on the assessee to substantiate its claim. It was not known when the commercial tax authority had scrutinized the trading activity and allowed closing stock and accordingly, impugned addition was made in the hands of the assessee. 2.2 The Ld. CIT(A) confirmed the action of Ld. AO against which the assessee is in further appeal before us. Our findings and Adjudication 3. From the records, it emerges that the assessee has maintained proper books of accounts and the same are subjected to Tax Audit. No infirmity has been pointed out by Ld. AO in the physical stock as maintained by the assessee. The assessee has valued the stock on the basis of net realizable value. The assessee’s submissions were that there was damage to the stock due to heavy rains and floods. It could also be seen that the assessee is registered with commercial tax department and filing its sales tax returns. Apparently, the trading results have been accepted by commercial department and there is no adverse material on record, in this regard. In such a case, shortage of stock as mathematically computed by Ld. AO could not be upheld. The decision of Hon’ble High Court of Madras in the case of CIT vs. Anandha Metal Corp. (152 Taxman 300) supports the case of the assessee wherein it was held that unless the competent authority under the Sales Tax Act differs with the closing stock of the assessee, the return accepted by the Commercial Tax Department is binding on the income-tax authorities. Therefore, Assessing Officer has no power to scrutinize the return submitted by the assessee to the commercial tax department which has been accepted. The Assessing Officer did not have any jurisdiction to go beyond the value of the closing stock declared by the assessee and accepted by the Commercial Tax Department. We find that similar fact exists in the present case. Therefore, following the same, we delete the impugned addition.