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Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri Mahavir Singh, JM & Shri Waseem Ahmed, AM]
Per Shri Mahavir Singh, JM:
This appeal by assessee is arising out of revision order of CIT-I, Kolkata vide M. No. CIT,Kol-1,Kol/263/2013-14/10942-44 dated 31.03.2014. Assessment was framed by ITO, Wd- 1(4), Kolkata u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Year 2009-10 vide his order dated 26.12.2011.
The only issue in this appeal of assessee is against the order of CIT passed u/s. 263 of the Act revising the assessment framed u/s. 143(3) of the Act by the AO.
Briefly stated facts are that the assessee is engaged in manufacture of M.S Tor, Ribbed Bars and Angles etc. The assessee is following mercantile system of accounting. The assessee during the course of assessment proceedings produced complete books of account like ledger, vouchers, stock register etc., which were test checked by the AO. Original assessment was completed by AO u/s. 143(3) of the Act vide his order dated 26.12.2011. Subsequently, CIT-1, Kolkata issued show cause notice u/s. 263 of the Act for revising the assessment vide show cause notice (in short SCN) dated 12/14.02.2013 stating the following reasons: “1. In this case the assessee filed its Return of income for Assessment Year 2009-10 on 25.02.2010 showing a total income at Rs.36,01.960/-. The case was duly processed u/s 143(1) and subsequently, the assessment was completed u/s 143(3) on 26.12.2011 at a total income of Rs.69,66,890/-. 2. During the relevant previous year pertaining to A. Y. 2009-10 the assessee was engaged in the business of manufacturing of 'M. S. Tor, Ribbed Bars, Angles etc. It is observed from the Profit & Loss Account for the year ended 31st March, 2009 that the assessee had debited an amount of Rs.33,60,25,649/- towards Cost of Materials (Raw Materials Consumed) at Schedule-8. As per
Schedule 13B (S1.No.3b) of Notes on Accounts-Quantitative Information of Raw Materials (ingots, Billets) during the A.Y 2009-10 of the audited accounts were shown as under : - Particulars Quantity Value Opening Stock 1910.92 M.T. Rs. 40,129,320/- Purchases 16989.53 M.T. Rs.384,300,671/- Consumption 15330.00 M.T. - Closing Stock 3570.45 M.T. Rs.89,546,886/- 3. From the above, consumption value of Raw Materials would come to Rs.33,48,83.105/- i.e. (Rs.4.01,29,320/-. + Rs. 38,43,00,671/- - Rs.8,95,46.886/-). Whereas, as per Schedule -8 of the Profit & Loss Account for the year ended 31.03.2009 Cost of Materials (Raw Materials consumed) is shown at Rs.33,60,25,649/-, instead of Rs.33,48,83,105/-. Thus, there was an excess allowance of Rs.11,42,544/- on account of raw materials consumption (Rs.33.60,25,649/- - Rs.33,48,83,105/-) which was required to be disallowed and added back to the total income of the assessee. This has resulted in underassessment of income to the extent of Rs. 11,42,544/-.”
The only reason stated in the above SCN was that there was difference in the accounts in regards to consumption of raw material recorded to the tune of Rs.33,48,83,105/- as against the cost of material i.e. raw material consumed in the accounts maintained as per companies act at Rs.33,60,25,649/-. According to CIT, there is excess allowance of Rs.11,42,544/- on account of raw material consumption. Hence, he issued above SCN to revise the assessment. The assessee explained that there has been typographical error in the accounts maintained as per Companies Act, 1956 and i.e. while drafting the Balance Sheet in the closing stock mentioned in quantity of raw material. According to assessee, the closing stock was wrongly mentioned at Rs.8,95,46,886/- instead of correct closing stock of Rs.8,84,04,342/-. The assessee has given the raw material consumed as under:
“Opening stock 4,01,29,320 Add: Purchases 38,43,00,671 Less: Closing stock 8,84,04,342 Consumption - 33,60,25,649” But CIT was not convinced with the explanation and he set aside the assessment and directed the AO to verify/scrutinize the details vide para 13 of his order as under:
“13. I have gone through the issues on hand and the submissions of the assessee company. The main issue is that the AO has failed to apply his mind to the specific facts of the case and has not scrutinized/verified the details in respect of the issues raised vide notice date 12/14.02.2014. The order passed is, therefore, part set aside to the file of AO with the direction that the detailed facts should be brought on record, scrutinized and verified. Thereafter, a decision should be arrived at 3 Aanchal Ispat Pvt. Ltd., AY 2009-10 as per provisions and to arrive at a conclusion as per I. T. Law. The assessment is, thus, set aside on the limited issue to be completed de novo.” Aggrieved, assessee preferred second appeal before Tribunal.