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Before: Shri A. Mohan Alankamony & Shri Duvvuru RL Reddy
O R D E R
PER DUVVURU RL REDDY, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) 3, Chennai dated 29.09.2017 relevant to the assessment year 2014-15. The only effective ground raised in the appeal of the assessee is that the ld. CIT(A) erred in confirming the addition of ₹.5,73,744/-.
Brief facts of the case are that the assessee is engaged in the business of electrical goods and also erection, commissioning and installation of electrical goods. The assessee filed its return admitting an income of ₹.28,25,740/- on 24.11.2014. The assessee also filed revised return on 10.12.2014 declaring an income of ₹.28,60,550/-. The return filed by the assessee was selected for scrutiny and the assessee filed details against statutory notices.
2.1 On verification of financials, the Assessing Officer found that the assessee could not produce the quantitative details of stocks as required under section 44AB of the Income Tax Act, 1961 [“Act” in short] and also the CA of the assessee has wrongly and wilfully entered value-wise details instead of quantitative details in column 35(a)(i) to (vi) in the Form 3CD. Therefore, by considering the month-wise VAT return statement, the Assessing Officer arrived at the closing stock at the end of the year at ₹.6,32,032/- against ₹.62,288/- admitted by the assessee. Hence, the Assessing Officer observed that the assessee has understated the closing stock to the tune of ₹.5,73,744/- and accordingly, brought the same to tax.
The assessee carried the matter in appeal before the ld. CIT(A) and filed certain details during the course of appellate proceedings. In the remand report, the Assessing Officer stated that the documents submitted as additional evidence before the ld. CIT(A) has not brought forth any documentary evidence to prove the value of closing stock arrived at by the assessee. After considering the remand report and since the assessee has not furnished the quantitative details of stock as required under section 44AB of the Act, the ld. CIT(A) confirmed the addition of under valuation of closing stock.
On being aggrieved, the assessee is in appeal before the Tribunal and filed details of month-wise opening stock/closing stock and prayed for one more opportunity of being heard to the assessee for filing the details before the Assessing Officer.
Per contra, the ld. DR submitted that sufficient opportunities were given to the assessee for filing complete details for verification and strongly supported the orders of authorities below.
We have heard both sides, perused the materials available on record and gone through the orders of authorities below. It is an admitted fact that the assessee has not produced the quantitative details of stocks as required under section 44AB of the Act and filed some working for arriving the closing stock at ₹.62,288/-. However, the Assessing Officer worked out the closing stock based on VAT returns field for each month and arrived at the closing stock at ₹.6,32,032/- and accordingly, the difference in closing stock of ₹.5,73,744/- was brought to tax, which was confirmed by the ld. CIT(A) since the assessee has not furnished the quantitative details of stocks as required under section 44AB of the Act. By filing month-wise opening stock/closing stock, the ld. Counsel for the assessee prayed for one more opportunity of being heard to the assessee for filing complete details as required by the Assessing Officer. Accordingly, we remit the matter back to the file of the Assessing Officer to verify the details as may be required to be filed under section 44AB of the Act and decide the issue afresh in accordance with law after allowing sufficient opportunities of being heard. If the assessee failed to furnish the details as required under section 44AB of the Act, then, the assessment made under section 143(3) of the Act stands sustained. Thus, the ground raised by the assessee is allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on the 21st May, 2018 at Chennai.