ITAT rectifies AO error in stock valuation, excludes bank balances. Appeal partly allowed.

The ITAT partly allowed the appeal, rectifying the AO's error in including the closing balance of bank accounts in the total amount of closing stock of shares. The ITAT upheld the additions towards the value of closing stock of shares at the correct total amount, excluding the amount attributed to the closing balance of bank accounts. The appeal was partly allowed, and the order was pronounced in Chennai on the 1st day of July, 2022.

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Issues involved:
Assessment year 2004-05 - Addition towards value of closing stock - Dispute over total amount of closing stock of shares added by AO.

Analysis:
The judgment pertains to an appeal filed against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2004-05. The case originated from a survey conducted in the partnership firm of the assessee's husband, leading to scrutiny and completion of assessment under section 144 of the Income Tax Act. The First Appellate Authority partly allowed the appeal, prompting the Department to appeal further to the ITAT, which remitted the issue back to the Assessing Officer for fresh consideration. Subsequently, the AO made additions towards deposits in bank accounts and valuation of closing stock of shares, which the assessee challenged before the First Appellate Authority, without success.

Upon hearing both parties and examining the assessment order, the ITAT noted that the assessee did not dispute the additions towards the value of closing stock of certain securities but contested the total amount of closing stock of shares added by the AO. The AO had included a sum for closing balance of various bank accounts, despite acknowledging in the assessment order that no addition was warranted in that regard. Consequently, the ITAT found a mistake in the AO's calculation and directed the exclusion of the amount attributed to the closing balance of bank accounts. The ITAT upheld the additions towards the value of closing stock of shares at the correct total amount, thereby partly allowing the appeal filed by the assessee.

In conclusion, the ITAT's judgment rectified the error in the AO's calculation concerning the closing balance of bank accounts, ensuring the proper determination of additions towards the value of closing stock of shares. The appeal was partly allowed, and the order was pronounced in Chennai on the 1st day of July, 2022.

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