PRINCIPAL COMMISSIONER OF INCOME TAX 4 vs. TORRENT CABLE LIMITED

By this appeal under section 260A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), the appellant has challenged the order dated 11.06.2018 made by the Income Tax Appellate Tribunal, Ahmedabad Bench “D”, Ahmedabad (hereinafter referred to as “the Tribunal”) in C.O. No.18/Ahd/2013, by proposing the following two questions stated to be substantial questions of law: “[A] Whether the Appellate Tribunal has erred in law and on facts in granting relief to the extent of Rs.39,502 in relation to disallowance of Rs.6,08,330 made u/s. 14A r.w. Rule 8D? [B] Whether the Appellate Tribunal has erred in law C/TAXAP/1333/2018 ORDER and on facts in deleting the addition made on account of under valuation of closing stock?”

Heard Mr. M.R. Bhatt, Senior Advocate, learned counsel with Mrs. Mauna Bhatt, learned senior standing counsel for the appellant.

Insofar as the proposed question “A” is concerned, the amount involved is to the extent of Rs.39,502/-. Under the circumstances, considering the smallness of the amount involved, the court is not inclined to enter into the merits of the said question, leaving it open to the appellant to raise the same in an appropriate case.

Insofar as the proposed question “B” is concerned, the Assessing Officer has noted that the assessee had shown value of closing stock at the end of the financial year 31.03.2009 as per balance sheet at Rs.27,10,52,734/-, whereas the value of stock declined as per stock statement given to bank at Rs.27,18,38,000/-. According to the Assessing Officer, the assessee had undervalued the stock in its books of accounts by Rs.7,85,266/-. The assessee carried the matter in appeal before the Commissioner (Appeals), but did not succeed.

The Tribunal, in the impugned order, has recorded that the value of the closing stock was an amount of Rs.27.10 crores and and that the discrepancy was of a meagre amount of Rs.7.85 lakhs. According to the Tribunal, the closing stock statement filed with the bank was provisional and there is always room for such small variations, inasmuch as, the stock statement is ordinarily given immediately at the end of the C/TAXAP/1333/2018 ORDER financial year, whereas it is the case of the assessee that the finalization of account and audit takes place after a time lag which may give rise to some small differences in a business of this scale.

Having regard to the quantum of stock and the smallness of the addition, the Tribunal was of the view that merely based on a stock statement filed with the bank, the Assessing Officer was not justified in making the addition.

Considering the fact that the discrepancy between the two statements is very meagre and the reasons assigned by the Tribunal, this court does not find any infirmity in the impugned order warranting interference.

The appeal, therefore, fails and is, accordingly, dismissed. (HARSHA DEVANI, J) (A. P. THAKER, J) B.U. PARMAR