Appeal allowed for remand to CIT (A) for comprehensive adjudication, ensuring fair hearing.

The appeal was allowed for statistical purposes, with the issues remanded back to the CIT (A) for comprehensive adjudication, ensuring that the assessee is afforded adequate opportunity of being heard.

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Issues Involved:
1. Dismissal of the appeal by the CIT (A).
2. Inclusion of excise duty in the value of the closing stock.
3. Ignoring judicial precedents and consistency in accounting methods.
4. Additions without adjustments in the opening stock.
5. Ad-hoc addition of Rs. 1,50,000/- in travelling expenses.

Detailed Analysis:

1. Dismissal of the Appeal by the CIT (A)
The assessee's appeal was dismissed by the CIT (A). The Tribunal did not specifically adjudicate on this issue as it was deemed general in nature and not requiring separate adjudication.

2. Inclusion of Excise Duty in the Value of the Closing Stock
The assessee contested the addition of excise duty to the closing stock, arguing that it should not be included based on the Supreme Court judgment in the case of Torrent Cables Ltd. and the guidance of the Institute of Chartered Accountants of India (ICAI). The CIT (A) upheld the Assessing Officer's (AO) decision to include excise duty in the closing stock valuation as per Section 145A of the Income Tax Act, 1961, which mandates that inventory valuation should include any tax, duty, cess, or fee paid or incurred by the assessee.

The Tribunal agreed with the CIT (A) that the assessee should follow Section 145A of the Act. However, it disagreed with the selective application of Section 145A only to the closing stock. The Tribunal emphasized that the effect of taxes or duties should be given to purchases, sales, and inventory, including both opening and closing stock. Consequently, the issue was remanded back to the CIT (A) for comprehensive adjudication.

3. Ignoring Judicial Precedents and Consistency in Accounting Methods
The assessee argued that the CIT (A) ignored judicial precedents and the consistent method employed in earlier and subsequent years. The CIT (A) maintained that the AO has the right to substitute the correct method for a wrong one, even if the wrong method was consistently followed in the past. The Tribunal upheld this view, citing the Supreme Court's decision in CIT Vs. British Paints (India) Ltd., which stated that the AO is not bound by the method followed in earlier years if it does not disclose the true state of accounts.

4. Additions Without Adjustments in the Opening Stock
The assessee contended that if the excise duty is added to the closing stock, a corresponding adjustment should be made to the opening stock. The Tribunal agreed that both opening and closing stock should be valued on the same basis as per Section 145A. Therefore, the issue was remanded back to the CIT (A) for comprehensive adjudication, including adjustments to both opening and closing stock.

5. Ad-hoc Addition of Rs. 1,50,000/- in Travelling Expenses
The AO disallowed Rs. 1,50,000/- out of the total travelling expenses of Rs. 20,07,565/- on the grounds of personal use by the directors. The CIT (A) upheld this disallowance. The assessee argued that the disallowance was incorrect as the expenses were not of a personal nature and that such expenses should be treated as perquisites in the hands of the directors if deemed personal.

The Tribunal found that the CIT (A) did not consider the assessee's objections and factual claims. It stated that if the expenses were not incurred wholly and exclusively for business purposes, they could be disallowed under Section 37(1) of the Act. The issue was remanded back to the CIT (A) for reconsideration, taking into account the assessee's objections and verifying the factual claims.

Conclusion
The appeal was allowed for statistical purposes, with the issues remanded back to the CIT (A) for comprehensive adjudication, ensuring that the assessee is afforded adequate opportunity of being heard. The decision was pronounced in the open court on 6th Oct., 2017.

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