TaxTMI 
TaxTMI 
2015 (9) TMI 25
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....of Rs. 22,84,923/without considering that the assessee has not disclosed the aforesaid addition before the Settlement Commission as provided under section 245D(4). b. Whether ITAT was right in deleting the addition of Rs. 22,84,923/- added as undisclosed stock of gold & diamond jewellery on the strength of difference in physical verification of the stock found and its booked value by ignoring the physical verification which was available on record. c. Whether on the facts and in the circumstances of the case, the ITAT right in deleting the addition of Rs. 41,51,301/- added as undisclosed income for A.Y. 200203 on the strength of the seized document marked as A/JJ/6 with ITAT overlooked, ignoring the provisions of Evidence Act. d. Whether on the facts and in the circumstances of the case, ITAT without considering section 132(4A) read with section 158BB of the I.T. Act, right in deleting the addition of Rs. 41,51,301/- for the A.Y. 2002-03." 2. We have heard counsel for the appellant, who has submitted that deleting the addition of Rs. 22,84,923/by the ITAT was without appreciating the fact that the respondentassessee has not disclosed the said addition ....
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....verlooked or ignored and therefore, deletion of both these additions may be quashed and set aside by an order of this Hon'ble Court. 3. We have heard counsel for the respondent who has submitted that no error has been committed by the Commissioner of Income Tax (Appeals) nor by the ITAT in deleting both the aforesaid additions. Firstly on the ground that voluntarily disclosure made by Mr. P.P. Arya includes the aforesaid amount which is at Rs. 22,84,923/- and so far as addition of Rs. 41,51,301/- is concerned, it is submitted that the basic principles of accountancy have been properly appreciated by the Commissioner of Income Tax (Appeals) and the ITAT. There is no variance of stocks. Nonetheless, the closing stock was made as per cost price by the assessee and the said plea cannot be altered by the department. Since the assessee is valuing the closing stock on the basis of the cost price or market price whichever is lower and therefore, assessee has valued his stock at cost price which is also supported by the auditors report and therefore, this addition of Rs. 41,51,301/- has been rightly dealt by both the authorities under the Income Tax Act namely, Commissioner of Income....
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....ason that there was a difference in a physical verification of the stock found and its book value. Similarly, there is a major addition made by the Assessing Officer at Rs. 41,51,301/- as undisclosed income for the assessment year 2002-03 on the strength of seized documents marked as A/JJ/6. (iv) This order was challenged by the respondent before the Commissioner of Income Tax (Appeals) who decided the appeal in favour of the respondent vide his order dated 15th July, 2004. Both the aforesaid additions were deleted mainly relying upon the order passed by the Settlement Commission dated 8th January, 2004 based upon the disclosure made by Mr. P.P. Arya and on the ground of methodology of the account adopted by the respondent assessee or value of closing stock. (v) Against this order of Commissioner of Income Tax (Appeals) an appeal was preferred by this appellant-Department before the ITAT. There was also Cross Objection filed by the respondent before the ITAT and the appeal preferred by this appellant was dismissed by the ITAT vide order dated 23rd June, 2006 and therefore, the present Tax appeal has been preferred by this appellant raising the aforesaid substantia....
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....on (1) or subsection (3) of the said section. A "full and true" disclosure of income, which had not been previously disclosed by the assessee, being a precondition for a valid application under Section 245C(1) of the Act, the scheme of Chapter XIX-A does not contemplate revision of the income so disclosed in the application against Item 11 of the form. Moreover, if an assessee is permitted to revise his disclosure, in essence, he would be making a fresh application in relation to the same case by withdrawing the earlier application. In this regard, Section 245C(3) of the Act which prohibits the withdrawal of an application once made under subsection (1) of the said section is instructive inasmuch as it manifests that an assessee cannot be permitted to resile from his stand at any stage during the proceedings. Therefore, by revising the application, the applicant would be achieving something indirectly which he cannot otherwise achieve directly and in the process rendering the provision of subsection (3) of Section 245C of the Act otiose and meaningless. In our opinion, the scheme of said Chapter is clear and admits no ambiguity. 37. As aforestated, in the scheme of Chapter....
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....the Settlement Commission, the matter was settled and came to be disposed of finally and it could be reopened in the manner provided in that chapter itself or can be reviewed as provided in the chapter. Having not challenged the said decision and having accepted the same, because of some decision in some other case, is it open for the Revenue to approach the Settlement Commission, iner alia, requesting that the order is required to be rectified because of apparent error of law? 33. If the order was bad, it was open for the Revenue to challenge the same in the High Court. One may not discuss the scope of res judicata and the extent of its application to the tax proceedings. As pointed out by the apex Court in Express Newspapers Ltd.'s and Aujum Gashwala's case (supra), the order of the Settlement Commission being final, subject of course to constitutional remedies, and having not been challenged, in the opinion of this Court it would not be open for the Revenue to make an application under Section 154 of the Act. Despite the error of law, for a pretty long period of about four years, the decision was accepted. Having not challenged the decision and considering that ....
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....he Income Tax Act, 1961 has been accepted while passing order under Section 245D(4) of the Act, 1961 especially about his income aggregating Rs. 81,18,770/- which includes the addition made by the Assessing Officer and therefore, rightly it is deleted by the Commissioner of Income Tax (Appeals) as well as the ITAT. (ix) So far as addition of income which is at Rs. 41,51,301/- is concerned this is mainly for the reason that the Assessing Officer has not properly appreciated the accounting system followed by the respondent and about the valuation of stock. The assessee has calculated the valuation of the closing stock on the basis of the cost price or market price, whichever is lessor, which is always permissible as per the principle of accountancy. The documents which are exhibited A/JJ/6 contains the balance sheet, trading and profit and loss account, inventory of stock and valuation of stock for the period 01.04.2001 to 25.09.2001 showing net profit of the assessee at Rs. 41,81,301/- In fact, this is an error committed by Assessing Officer without appreciating the fact that what is the basic principles of valuation of the closing stock. Already guidance has been given by the Ho....
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.... valuation is admittedly a method of accounting the assessee Bank can claim the benefit of stock valuation "at cost or market value, whichever is lower" only if such method is actually followed and adopted by him in preparing the final accounts. Without following this method in preparing the accounts, which are required to be prepared and presented under Section 29 of the Banking Regulation Act, 1949 in the form set out in the Third Schedule thereto, the assessee Bank cannot be permitted to claim a loss on revaluation by claiming different method of stock valuation notionally for income tax purposes only. 26. In our view, as stated above, consistently for 30 years, the assessee was valuing the stock-in-trade at cost for the purpose of statutory balance-sheet, and for the income tax return, valuation was at cost or market value, whichever was lower. That practice was accepted by the Department and there was no justifiable reason for not accepting the same. Preparation of the balancesheet in accordance with the statutory provision would not disentitle the assessee in submitting income tax return on the real taxable income in accordance with a method of accounting adopted by ....