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Income Tax Appellate Tribunal, KOLKATA ‘A’ BENCH, KOLKATA
Before: Sri J. Sudhakar Reddy & Sri S.S. Viswanethra Ravi
Assessment Year: 2010-11 Luminous International………..............….……...........…………..……………….…...……..….…….......Appellant 41, Bangur Avenue Block-C 1st Floor Kolkata – 700 055 [PAN : AABFL 1857 F] Vs. Deputy Commissioner of Income Tax, Circle-49 Kolkata.……............………….…............Respondent Appearances by: Shri Subash Agarwal, Advocate, appeared on behalf of the assessee. Shri Kalyan Nath, Addl. CIT D/R. appearing on behalf of the Revenue. Date of concluding the hearing : December 11th, 2018 Date of pronouncing the order : January 09th , 2019 ORDER Per J. Sudhakar Reddy, AM :- This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals)-XXXII, Kolkata, (hereinafter the ‘Ld. CIT(A)’), dt. 17/09/2013, passed u/s 250 of the Income Tax Act, 1961 (hereinafter the ‘Act’), relating to Assessment Year 2010-11.
The assessee is a partnership firm and is in the business of export of gloves. It filed its return on 04/09/2010, declaring total income of Rs.37,25,099/-. The Assessing Officer completed the assessment u/s 143(3) of the Act, determining the total assessed income at Rs.63,30,299/-, interalia making an addition for under statement of value of closing stock at Rs.23,47,368/- and disallowance u/s 40(a)(ia) of Rs.2,57,831/-. The assessee carried the matter in appeal without success. 2.1. Further aggrieved, the assessee is before us, on the following grounds:- “1. (a) For that on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in confirming the addition of Rs. 23,47,367/- made by the A.O. on account of understatement of valuation of closing stock.
2 Assessment Year: 2010-11 Luminous International (b) For that the Ld. CIT(A) ought to have deleted the above-mentioned addition of Rs. 23,47,367/- made on account of alleged undervaluation of stock inasmuch as the addition has been made without granting the benefit of increase in the value of opening stock of the subsequent year. (c) Without prejudice to the ground mentioned in lea) above, a suitable direction may please be issued to the revenue authorities to allow the benefit of corresponding hike in the value of opening stock of the subsequent year and, accordingly, reduce the taxable income of the appellant assessee for the said year.
2. For that on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs. 2,57,8311- being transportation charges paid, u/s 40(a)(ia).
3. For that the appellant craves leave to add, alter or delete all or any grounds of appeal.”
The ld. Counsel for the assessee, Mr. Subash Agarwal, submitted that though the submitted an application for admission of additional evidence, in the form of a certificate from a CA, to state that the assessee was following FIFO (first in first out) method while evaluating closing stock of raw material and finished goods and that the firm maintains the quantitative details of its stock of the raw material including “Wet Blue Leather” separately in the manual stock register format since the ready accounting software (FACT), by which the firm maintains its regular books of account does not value closing stock correctly. He drew the attention of the Bench to the various submissions made on the issue of addition on account of under-statement of value of closing stock. Written submissions were also filed. Nevertheless, the ld. Counsel for the assessee submits that if the alternative grounds of the assessee that the value of closing stock adopted for the impugned Assessment Year is taken as the value of the opening stock for the subsequent Assessment Year 2011-12, then, he would not press Ground No. 1(a), for adjudication.
4.1. The ld. D/R, on the other hand, admitted that the value of the closing stock of one year should automatically become the value of the opening stock of the subsequent year but wanted the Bench to grant time to call for a report in this regard from the Assessing Officer.
3 Assessment Year: 2010-11 Luminous International 5. After hearing rival contentions, we are of the considered opinion that time need not be granted to the department for obtaining a report from the Assessing Officer in this regard. The value of closing stock of the impugned Assessment Year is to be necessarily taken as the value of the opening stock for the immediately succeeding Assessment Year 2011-12. We direct the Assessing Officer accordingly.
5.1. In the result, Ground No. 1(a) is dismissed as not pressed and Ground No. 1(b) and 1 (c) are allowed.
Ground No. 2 is on the disallowance of Rs.2,57,831/-, u/s 40(a)(ia) of the Act. The assessee relied on the decision of the Kolkata ‘B’ Bench of the ITAT, in the case of Soma Rani Ghosh vs. DCIT in Assessment Year 2012-13, order dt. September 9th , 2016, and submitted that as the PAN No. of the transporter has been furnished, no disallowance can be made u/s 40(a)(ia) of the Act. We find from page 12 of the ld. CIT(A)’s order that the assessee has mentioned different PAN Nos. of the transporter. While mentioning PAN No. of the transporter, in the grounds of appeal, the PAN No. was mentioned as AALPA 1312 N, while he mentioned the PAN No. as AASFS 5308 P, in the written submissions. This aspect is not clarified by the assessee. Hence, we uphold the finding of the ld. CIT(A) that the grounds of appeal was clearly defective and indicates that the submission of the assessee on PAN is an afterthought. Hence, this ground of the assessee is dismissed.
In the result, appeal of the assessee is allowed in part.