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Income Tax Appellate Tribunal, “C”, BENCH KOLKATA
Before: SHRI N.V.VASUDEVAN, JM & DR. A.L.SAINI, AM
O R D E R
Per Dr. Arjun Lal Saini, AM:
The captioned appeal filed by the assessee, pertaining to the assessment year 2008-2009, is directed against the order passed by ld. Commissioner of Income Tax, Kolkata u/s.263 of the I.T.Act, dated 26.03.2013, which in turn arises out of an order passed by the Assessing Officer (AO) u/s.143(3) of the Income Tax Act, 1961, ( In short ‘the Act’) dated 27.12.2010
Brief facts of the case qua the assessee are that the assessee filed return of income for assessment year 2008-2009 on 30.09.2008 declaring a total income of Rs.43,39,270/- which was assessed u/s 143(3) of the Income Tax Act, 1961, on 27.12.2010 at an income of Rs. 47,89,120/-. On examination of assessment record it is observed that the assessee had debited an amount of Rs. 21,87,651/- being 'Diminution in value of Stock in Trade' in the Profit & Loss A/c for the A.Y. 2007-08, which was allowed by the Assessing Officer. However, as per Notes on Accounts [Sch.16(1)(F)], securities acquired with the intention to trade are categorized as Stock in Trade and are valued at lower of cost and fair market value and it is observed from 'Schedule 7:- “Stock-In-Trade (At lower of cost and fair value)”. As per the Balance Sheet as on 31st March, 2008, the market value and book value of Stock-In-Trade is the same i.e. Rs.1,05,83,434/-. Hence, apparently any deduction of 'diminution in value of stock in trade' does not arise. The A.O. failed to observe such fact and examine the issue resulting in underassessment of income by Rs.21,87,651/-. Ld. Commissioner of Income Tax held that on examination of assessment records it is further observed from Clause 21(B) of Tax Audit Report that the assessee debited Rs.4,87,967/- on account of Provision for Leave Encashment and paid only Rs.32,200/-.
But in its computation of income Rs.4,36,866/- and Rs.1,19,978/- were added and subtracted from the income by the assessee which was accepted by the A.O. without application of mind. Ld. CIT has also observed that assessee had claimed in computation of income rebate u/s 88E to the extent of Rs.8,91,083/- and in the return of income to the extent of Rs.12,41,978/-. However, in the assessment order the Assessing Officer allowed rebate of Rs.12,43,092/-. Thus excess allowance of rebate resulted in undercharge of tax resulting into the assessment order being erroneous and prejudicial to the interest of the revenue. Therefore, the ld. CIT has exercised the jurisdiction u/s.263 of the Income Tax Act and has passed the order observing the followings :-
“16. Considering the above facts and the judicial pronouncements it is concluded that the AO had failed to apply his mind to the facts and relevant law and therefore order passed by the AO is erroneous and pre-judicial to the interest of revenue. Therefore, the same is set-aside with the direction to the AO to carry out the necessary examination and verifications of the facts and provision of law and assess the income of the assessee de-novo including the issue of allowance of deduction of 'diminution in the value of stock', allowance of provision for gratuity and rebate u/s 88E as discussed in paragraph 1, 2 & 3 above. The A.O. should give detailed reasons for his findings and keep all relevant evidences on record for future reference. The A.O. shall give reasonable opportunity to the assessee.”
Aggrieved from the order of CIT, passed u/s.263, the assessee is in appeal before us and has taken the following grounds of appeal :-
1) That the Commissioner of Income-tax was wrong in holding the Assessment Order dated 27-12-2010 passed u/s 143(3) for the Assessment Year 2008-09 as allegedly erroneous and prejudicial to the interest of Revenue and thus he erred in setting aside the said Assessment Order by way of Revision under section 263. 2) That without prejudice to the contention raised in Ground No.1 above, the Commissioner of Income-tax was wrong in directing the Assessing Officer to assess the income of the appellant de novo. 3) That without prejudice to the contentions raised in Grounds Nos. 1 and 2 above, the Commissioner of Income-tax was wrong in not properly appreciating the appellant's explanations in regard to the Diminution in Value of Stock-in-trade and thus he erred in observing that alleged lack of application of mind and proper exercise of caution by the Assessing Officer had allegedly rendered the Assessment Order to be liable for revision u/s 263. 4) That without prejudice to the contentions raised in Grounds Nos. 1 and 2 above, the Commissioner of Income-tax was wrong in not appreciating the fact that there had not been any case for disallowance of Rs.1,39,079 in relation to Leave Encashment and thus he erred in considering the Assessment Order as allegedly erroneous and prejudicial to the interest of Revenue. 5) That without prejudice to the contentions raised in Grounds Nos. 1 and 2 above, the Commissioner of Income-tax was wrong in not appreciating the fact that there had not occurred any excess allowance of Rebate u/s 88E to the extent of Rs.7,55,125 and thus he erred in holding the Assessment Order to be allegedly erroneous and prejudicial to the interest of Revenue. 6) That the appellant craves leave to add, alter or withdraw any ground or grounds of appeal at or before the hearing of the appeal.”
4. Ld. AR for the assessee has submitted before us that the assessee has filed an appeal before the Commissioner of Income Tax (Appeals) against the order passed by the authorities below u/s.143(3)/263. The AO has passed the fresh order, after giving an opportunity to the assessee, as per the directions given by the ld. CIT. Therefore, assessee is in appeal before the CIT(A) against the order passed by the AO as per the direction given to him by the CIT u/s.263. As the CIT has directed to the AO to make a fresh assessment after giving reasonable opportunity to the assessee, therefore, the assessee is in appeal before the CIT(A) against the order of AO, which was passed by the AO as per the direction given by the CIT u/s.263.
4.1 Ld. AR for the assessee has submitted that order u/s.263 of the Act is not in accordance with law.
On the other hand, ld. DR for the revenue even agreed with the submission made by the ld. AR for the assessee.
Having heard the rival submissions, perused the material available on record, we are of the view that the appeal under consideration needs to be dismissed, as the assessee has already filed an appeal before the CIT(A) against the order passed by the AO u/s.143(3), as per the direction given by the ld. CIT in the order passed u/s.263 of the Act. Considering the above factual position, we dismiss the appeal filed by the assessee.
In the result, the appeal filed by the assessee on all the grounds is dismissed.
Order pronounced in the open court on this 07/12/2016. Sd/- Sd/- (N.V.VASUDEVAN) (DR. A.L.SAINI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER कोलकाता /Kolkata; �दनांक Dated 07/12/2016 �काश �म�ा/Prakash Mishra,�न.स/ PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant-Peerless Securities Ltd. 2. ��यथ� / The Respondent.-CIT, Kolkata-I, Kolkata 3. आयकर आयु�त(अपील) / The CIT(A), Kolkata. 4. आयकर आयु�त / CIT �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, कोलकाता / DR, ITAT, Kolkata 5. 6. गाड� फाईल / Guard file. स�या�पत ��त //True Copy// आदेशानुसार/ BY ORDER,