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Income Tax Appellate Tribunal, KOLKATA ‘B’ BENCH, KOLKATA
Before: Sri Rajpal Yadav & Sri Manish Borad
IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘B’ BENCH, KOLKATA (Before Sri Rajpal Yadav, Vice President & Sri Manish Borad, Accountant Member) I.T.A. Nos.: 578 & 579/Kol/2020 Assessment Years: 2014-15 & 2015-16 DCIT, Circle-13(1), Kolkata......................................................Appellant Vs. M/s. Ambuja Realty Development Limited…….......................Respondent [PAN: AAFCA 4593 G] Appearances by: Sh. Amol Kamat, CIT, appeared on behalf of the Revenue. Sh. N.S. Saini, A/R & Smt. Priyanka Salarpuria, A/R, appeared on behalf of the Assessee. Date of concluding the hearing : April 19th, 2022 Date of pronouncing the order : April 22nd, 2022 ORDER Per Manish Borad, Accountant Member:
Both these appeals filed by the Revenue pertaining to the Assessment Years (in short “AY”) 2014-15 & 2015-16 are directed against separate orders of ld. Commissioner of Income Tax (Appeals)-5, Kolkata [in short ld. “CIT(A)”] u/s 250 of the Income Tax Act, 1961 (in short the “Act”) dated 01.09.2020.
The assessee is in appeal before the Tribunal raising the following grounds for AY 2014-15:
“1. Whether on the basis of facts and circumstances of the case and in law the ld. CIT(A) has erred in deleting the addition of Rs.18,64,79,925/- made on account of undervaluation of closing stock of finished product without considering the observation of the assessing officer and relying on fresh evidence brought by the assessee during the course of appellate proceedings in violation of provisions of Rule 46A of the I.T. Rules, 1961.
2. That the Department craves leave to add, modify or alter any of the grounds of appeal and/or adduce additional evidence at the time of hearing of the case.”
.: 578 & 579/Kol/2020 Assessment Years: 2014-15 & 2015-16 M/s. Ambuja Realty Development Limited.
2.1 The assessee is in appeal before the Tribunal raising the following grounds for AY 2015-16:
“1. Whether on the basis of facts and circumstances of the case and in law the ld. CIT(A), Kolkata has erred in deleting the addition of Rs.23,39,03,711/- made on account of undervaluation of closing stock of finished product without considering the observation of the assessing officer and relying on fresh evidence brought by the assessee during the course of appellate proceedings in violation of provisions of Rule 46A of the I.T. Rules, 1961.
2. That the Department craves leave to add, modify or alter any of the grounds of appeal
and/or adduce additional evidence at the time of hearing of the case.”
3. From perusal of the grounds, we find that the common ground raised by the Revenue is that ld. CIT(A) deleted the addition made by the Assessing Officer (in short ld. “AO”) on account of undervaluation of closing stock of finished product for AY 2014-15 and AY 2015-16 without considering the observation of the ld. AO and relying on fresh evidence brought by the assessee during the course of appellate proceedings in violation of provisions of Rule 46A of the Income Tax Rules, 1962 (in short the “Rules”)
4. Ld. D/R reiterated the contents of the grounds alleging that the ld. CIT(A) has violated the provisions of Rule 46A of the Rules.
5. Per contra, ld. Counsel for the assessee submitted that no new fresh material or evidence were filed before the ld. CIT(A). All the documents including the Audited Financial Statements and other submissions which were placed before the AO were only placed before the ld. CIT(A) and, therefore, there was no occasion to call for any remand report from the Ld. AO and, therefore, there is no violation of Rule 46A of the Rules.
We have heard rival contentions and perused the records placed before us. The common grievance of the Revenue is that the ld. CIT(A) has violated the provisions of Rule 46A of the Rules by not considering the observation of the AO and relying on fresh evidence brought by the assessee during the course of appellate proceedings before deleting the addition made on account of undervaluation of closing stock of finished product. .: 578 & 579/Kol/2020 Assessment Years: 2014-15 & 2015-16 M/s. Ambuja Realty Development Limited.
6.1. We notice that the addition referred in the grounds of appeal for AY 2014-15 and AY 2015-16 is undervaluation of closing stock. To examine this issue we will take the facts for AY 2014-15. From perusal of the assessment order, we find that the AO has made the addition for undervaluation of closing stock of finished product by referring to the Audited Balance Sheet and Profit & Loss Account and taking the figures of work-in-progress, direct construction cost, value of closing stock of finished goods and computed the undervaluation of closing stock of finished product in the following manner:
“The assessee recognise the revenue on percentage completion method. When the flats are booked, only the revenue from that flats are considered for revenue purpose. The balances are transferred to the Work in progress or Finished units. On perusal of Balance Sheet and the P & L Account the following discrepancies are found: Work-in Progress as on 31.03.2013: Rs. 218,55,14,898/- Add: Direct Construction cost debited to the P&L Account during the Previous year: Rs. 87,00,43,803/- Rs. 305,55,58,701/- Less: Transferred to fixed assets; Rs. 37,34,17,552/- Less: Work- in -Progress as on 31.03.2014: Rs. 113,17,32,388/- Rs. 155,04,08,761/- The Finished unit at the beginning of the year was Rs. 78,56,35,920/- & The Finished unit at the end of the year was Rs. 2,14,95,64,756/- Rs. 136,39,28,836/- So, against Rs. 155,04,08,761/- the finished product has been increased for Rs. 136,39,28,836/- only i.e. the assessee undervalued his closing finished products by Rs. (155,04,08,761- 136,39,28,836 ) = Rs. 18,64,79,925/-. Considering the above Rs. 18,64,79,925/- is added back to the total income of the assessee.” 6.2. Thereafter, when the issue was raised before the ld. CIT(A), he examined the financial statements and came to a conclusion that ld. AO has wrongly analysed the figures and the calculation made for making the addition contains apparent mistakes and accordingly deleted the addition.
.: 578 & 579/Kol/2020 Assessment Years: 2014-15 & 2015-16 M/s. Ambuja Realty Development Limited.
6.3. We, further find that all the documents including the Audited Financial Statements which were placed before ld. AO have only been placed before the ld. CIT(A). Ld. Counsel for the assessee has stated the same in the certified paper book and the index of the same is mentioned below:
Sl. No. PARTICULAR LD. A.O. LD. CIT(A) N.A. N.A. 1 WRITTEN SUBMISSION FORM-36 & GROUNDS AS FILED BY N.A. N.A. 2 THE ASSESSEE FORM-35, FACT & GROUNDS AS N.A. YES 3 FILED BY THE ASSESSEE N.A. YES 4 APPEAL ORDER DATED 13/05/2016 BANK STATEMENT OF THE YES YES 5 ASSESSEE FOR THE AY. 12-13 COPIES OF THE LETTER IN YES YES 6 RESPONSE TO THE NOTICES US. 133(6) AS FILED BEFORE THE LD. AO COPY OF THE JUDGEMENT PRINCIPAL COMMISSIONER OF N.A. N.A. 7 INCOME-TAX V. CHAIN HOUSE INTERNATIONAL (P.) LTD. [2019] 103 TAXMANN.COM 435 (SC) 6.4. Further, when the ld. CIT(D/R) was confronted with the correctness of the certified paper book, he could not controvert the same nor could prove that which new material was placed before the ld. CIT(A) which has not been examined by the AO. Similar facts are there for AY 2015-16 also.
We, therefore, under the given facts and circumstances of the case, are of the considered view that since no fresh evidence or documents were placed before the ld. CIT(A) during the course of appellate proceedings and the decision of ld. CIT(A) is purely based on examination of facts of the case on the basis of material and Audited Financial Statements which were placed before the ld. AO and were subsequently placed before ld. CIT(A) during appellate proceedings, there is no case of violation of Rule 46A of the Rules. Therefore, this common ground raised
by the Revenue for AY 2014- 15 and AY 2015-16 is dismissed. .: 578 & 579/Kol/2020 Assessment Years: 2014-15 & 2015
16. M/s. Ambuja Realty Development Limited.
In the result, both the appeals filed by the Revenue are dismissed. Kolkata, the 22nd April, 2022.