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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: HON’BLE SHRI MAHAVIR SINGH & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
आयकरअपीलसं./ (िनधा�रणवष� / Assessment Year: 2016-17) M/s. Jaishni Packs Pvt. Ltd. ACIT बनाम/ No.21/1, Palaniyappa Nagar, Corporate Ward-2, Ukkadam-Selvapuram Bye-Pass Road Coimbatore. Vs. Coimbatore – 641 026. �थायीलेखासं./जीआइआरसं./PAN/GIR No. AACCJ-6489-M (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Shri T. Vasudevan (Advocate)-Ld. A.R ��थ�कीओरसे/Respondent by : Shri ARV Sreenivasan (Addl. CIT) – Ld. Sr. DR सुनवाईकीतारीख/ : 12-04-2022 Date of Hearing घोषणाकीतारीख / : 18-04-2022 Date of Pronouncement आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member): 1. Aforesaid appeal by assessee for Assessment Year (AY) 2016-17 arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [in short CIT(A)] dated 25.06.2021 in the matter of assessment framed by the Ld. Assessing Officer [AO] u/s. 143(3) of the Act dated 30.11.2018. The grounds raised by the assessee read as under:
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1. 1. The order of the NFAC dismissing the appeal is contrary to law erroneous and unsustainable on the facts of the case.
2. The NFAC erred in confirming the addition of Rs.19,40,306 as the difference in closing stock arrived at by the officer.
3. The NFAC failed to appreciate that the entire amount pertains to the stock of packing tapes, adhesive and paper core that were rejected by the customers and lying with the assessee in the godown as waste material and hence did not carry any value to be considered in the closing stock valuation.
4. The NFAC further failed to appreciate that defects arising in the manufacturing process and which does not meet the specifications of customers are unusable and rejects and therefore any value on such items would show an artificial figure without those goods actually available for sale.
5. The NFAC further failed to appreciate that these are unsaleable inventory which had to be destroyed and so the assessee was justified in valuing the stock at Nil as against the officer imputing value to such discarded material and therefore confirming the addition to the closing stock was wholly unjustified and unsustainable on the facts of the case.
6. The NFAC further failed to appreciate that the valuation of the closing stock was in accordance with Accounting Standards, AS-2 and that none of the submissions addressed by the assessee were considered before confirming the addition and that a proper appreciation of the facts placed on record would show that the addition was uncalled for and needs to be deleted.
7. The NFAC, in any event, was not justified in confirming the addition to the closing stock without taking cognizance of the explanations given by assessee and that the addition is to be deleted in its entirety.
As evident, the assessee is aggrieved by confirmation of certain addition on account of valuation of stock.
Having heard rival submissions and after due consideration of orders of lower authorities, our adjudication would be as under.
The assessee being resident corporate assessee is stated to be engaged in manufacturing and selling of self-adhesive tapes and packing tapes which is used as packing material. During assessment proceedings, the assessee could not tally the stock figures and accordingly, Ld. AO made addition of Rs.19.40 Lacs on account of valuation of stock. The impugned addition was made on account of the fact that there was difference in closing stock figures as on 31.03.2015 and opening value as on 01.04.2015. The reasons were stated to be vague and irrelevant. There was difference in stock value as given to the bank as against the value reflected in the income tax return. The 3 - assessee could not furnish any stock register. Though the assessee preferred further appeal, however, the assessment was confirmed against which the assessee is in further appeal before us. The Ld. AR submitted that closing stock included rejected / waste stock and pleaded for another opportunity to substantiate its case.
Considering the submissions made before us, we set aside the impugned order and restore the matter back to the file of Ld. CIT(A) for re-adjudication by way of speaking order with a direction to the assessee to reconcile the stock differences. Needless to add that adequate opportunity of hearing shall be granted to the assessee.
The appeal stands allowed for statistical purposes. Order pronounced on 18th April, 2022.