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Facts
The Assessing Officer (AO) made additions for shortage of stock and under Section 14A. The CIT(A) deleted the addition for stock shortage, holding that no further enquiry was done beyond stock statements. The CIT(A) also deleted the addition under Section 14A, stating the amendment was not retrospective.
Held
The Tribunal upheld the CIT(A)'s order, finding that the VAT returns were considered for stock shortage and for Section 14A, the amendment's prospective nature was correctly applied, citing a Calcutta High Court decision and a dismissed SLP.
Key Issues
Whether the additions made by the AO for stock shortage and under Section 14A were justified, considering the CIT(A)'s findings on inquiry and the retrospective applicability of amendments.
Sections Cited
14A
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Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK
Before: SHRI GEORGE MATHAN & SHRI RAJESH KUMAR
आदेश / O R D E R Per Bench : This is an Department appeal against the order of the Ld.CIT(A),National Faceless Appeal Centre(NFAC), Delhi dated 29/07/2024 passed in Appeal No. CIT(A),Sambalpur/10137/2019-20 for the assessment year 2017-2018. 2. It was submitted by the ld. Sr. DR that the AO in the course of assessment has made additions representing shortage of stock to an extent of Rs.1,47,52,112/- and an addition u/s.14A read with rule 8D to an extent of Rs.15,67,041/-. It was the submission that the ld. CIT(A) deleted the addition in respect of shortage of stock by holding that the AO has not done any further enquiry other than relied upon certain stock statements recorded by the Central Excise authorities. It was further submitted that the ld. CIT(A) in respect of the addition made u/s.14A of the Act had deleted the same by holding that the amendment to Section 14A w.e.f.01.04.2022 and the impugned assessment year was 2017-2018 and retrospective effect could not be granted to the same. It was the submission that the order of the ld. CIT(A) is required to be reversed and that of the AO should be restored.
In reply, ld. AR on behalf of the assesee vehemently supported to the order of the ld. CIT(A).
We have considered the rival submissions. A perusal of the order of the ld. CIT(A) in respect of deletion of the addition representing the shortage of stock clearly shows that the ld. CIT(A) has considered the fact that the VAT returns of the assesee for March, 2017 and April, 2017 had been considered and the VAT authorities had not taken any adverse views against the assesee and there is no claim of clandestine sales. A further perusal of the order of the ld. CIT(A) shows that the ld. CIT(A) has considered the decision of the Hon’ble Calcutta High Court in the case of Avantha Realty Limited, reported in [2024] 164 taxmann.com 376 (Cal.) in respect of issue of 14A read with rule 8D wherein the Hon’ble Calcutta High Court has categorically held that the amendment came into effect from 01.04.2022 and consequently the retrospective effect cannot be granted to the said amendment. Ld. CIT(A) has also considered that the SLP filed by the revenue has been dismissed by the Hon’ble Supreme Court. This being so, as it is noticed that the ld. CIT(A) has considered the