DEPUTY COMMISSIONER OF INCOME TAX, CHENNAI vs. ALINA PRIVATE LIMITED, CHENNAI

The Revenue has raised the following grounds:- (i) The Ld.CIT(A) has erred while deleting the protective addition of unaccounted stock of Rs.1,02,50,933/- made by the AO on the grounds that the addition of this amount for AY 2022-23 was confirmed by the CIT(A) order in DIN ITBA/APL/S/250/2025-26/1076458566(1) dated 26.05.2025, without considering the fact that the assessee has not extinguished their right to appeal against the decision of the Ld.CIT(A) on this issue for AY 2022-23 and hence the issue has not reached finality.

We have heard rival submissions and perused the material available on record. A search and seizure action was carried out u/s.132 of the Act on 17.01.2023 at the business premises of the assessee company and its related entities / persons. During the course of search, certain excel sheets containing stock statements were found and seized from a computer located in :- 3 -: assessee’s business premises. These excel sheets contained stock details as on 31.03.2019, 31.03.2020, 31.03.2021, 31.03.2022 and 31.12.2022. Upon verification, it was observed that the stock figures in these excel sheets did not match with the stock records recorded in the assessee’s regular books of account. The assessee company for the assessment year 2023- 24 filed its regular return on 30.10.2023 declaring total income of Rs.46,65,65,730/-.

The Ld.CIT(A) adjudicated the entire dispute by observing as under:- 5.3. Ground no.2 is against the addition of Rs.1,02,50,933/-, not considering that this quantum of amount of non-moving stock was consumed by them in to production after the date of search to end of the financial year on protective basis.

3.1 During the course of search on 17.01.2023, suppression of stock, inter-alia, for the period 31.03.2022 was found at Rs.11,86,50,933/-. While agreeing with the said findings in principle, the appellant offered Rs.10.84 Crores for the subject assessment year as additional income in the computation of total income and claimed that balance of non-moving stock of Rs.1.02 Crores was consumed into production after the date of search. However, going by the search findings, the total suppression of Rs.11.86 Crores was considered for addition by the Assessing Officer in the assessment for the Asst. Year 2022-23 and the appeal filed by the appellant was decided upholding the treatment given by the Assessing Officer vide DIN & Order No: ITBA/APL/S/250/2025-26/1076458566(1) dated 26/05/2025. Since the total quantum of suppression of stock amounting to Rs.11.86 Crores was taxed and confirmed for the Asst. Year 2022-23, the protective addition of Rs.1.02 Crores made by the Assessing Officer for the :- 5 -: subject assessment year is directed to be deleted. Accordingly, the ground no.2 is allowed. 5.4. In all the additional / alternate grounds, it is the claim of the appellant that since suppression of closing stock was found to the extent of Rs.11,86,50,933/- the addition be restricted to such amount in any of the years, i.e., Asst. 2022-23 or 2023- 24, and if the addition was confirmed as on 31.03.2022, then the admission made by them in the subject assessment year be reduced by the confirmed amount of closing stock.

4.1 As was brought out earlier, the appellant has admitted Rs.10,83,96,474/- towards provision for obsolescence and slow moving and movement in inventories. As the total suppression of stock as on 31.03.2022 made out during the course of search was added and confirmed for the assessment year 2022-23, the admission made by the appellant to this effect has to be reduced. Therefore, the AO is directed to reduce the income admitted for the subject assessment year by Rs.10,83,96,474/-. Accordingly, the additional / alternate grounds raised by the appellant are allowed.

In the result, the appeal is allowed.

In view of the above letter, we hold that the Revenue’s appeal for assessment year 2023-24 need to be dismissed as infructuous in view of the assessee’s undertaking withdrawing its appeal for assessment year 2022-23. Either way, we find the income has been added and considered in assessment year :- 7 -: 2022-23 itself by the Revenue, which had been accepted by the assessee now. Since the addition has been already made in assessment year 2022-23, there is no scope for making any addition in assessment year 2023-24 for the very same sum. Hence, the income offered by the assessee in assessment year 2023-24 on the impugned issue need to be restored. The assessee is also directed to duly bring to the notice of this Tribunal as and when its appeal for assessment year 2022-23 in ITA No.2271/CHNY/2025 is listed for hearing stating that the same need to be withdrawn.

In the result, the appeal of the Revenue is dismissed.

प्रत्यर्थी/Respondent 3. आयकर आयुक्त /CIT, Chennai 4. ववभागीय प्रयतयनधि/DR

गार्ा फाईल/GF.