TaxTMI 
TaxTMI 
2017 (1) TMI 1253
X X X X Extracts X X X X
X X X X Extracts X X X X
....05/15. 2. M/s Virupa Township Vs. ACIT, ITA Nos. 614 & 615/Vizag/13, dated 23/05/15. 3. The ld. DR, on other hand, strongly objected for condonation of delay. He submitted that assessee has not proved the bonafides and there cannot be a case for ignorance of law. According to him, Assessee has come before the ITAT on a second thought after receiving the consequential order u/s 263, therefore, there is no case for condonation of delay. 4. In the case of M/s Virupa Township, the coordinate bench of ITAT, Vizag condoned the delay of 603 days relying on the decision of Hon'ble Bombay High Court in the case of Remex Constructions/Remex Electricals Vs. First Income-tax Officer and others, 166 ITR 18, wherein the Bombay High Court has held as under: The grievance of Shri Pandit that the Tribunal was, very technical in not condoning the delay of about three years in filing the appeals against the orders passed under s. 263 of the Act is not without merit. The Tribunal held that the petitioner ought to have filed an application for condonation of delay duly supported by an affidavit at the time of presentation of appeal, but instead of that, merely appeals were lodge....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e business of purchase and selling of Tobacco and Tobacco products and filed its return of income for the assessment year 2007-08 on 19.11.2007 admitting total income of Rs. 2,81,595/-. The Income Tax Officer, Ward -16(2) had completed the assessment on 30.06.2009 u/s.143(3) determining the total income at a sum of Rs. 4,17,600/- 6. On examination of the assessment record relating to the assessee company for the asst.year 2007-08, the CIT noticed that in the balance sheet under the head" Current Assets, Loans & Advances" (Schedule 'D') for the year ending on 31.03.2007, a sum of Rs. 2,39,87,333/- was reflected as closing stock of material. It is stated in the schedule to the Balance Sheet that the value of closing stock was verified and certified by the Management. In the P&L account for the year ending on 31.03.2007, the cost of goods was reflected at a sum of Rs. 3,89,42,519/-. During the course of scrutiny assessment, the assessee furnished the cost of goods sold as under: Opening stock Add: Purchases:- Rs. 1,40,22,952/- (a) dealers Rs. 4,32,90,855/- (b) farmers Rs. 56,16,545/- Total Rs. 6,29,30,352/- Less: Closing stock Rs.2,39,87,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sing Officer ought to have examined the issue thoroughly and ascertained the reasons for such huge variance. By passing the order u/ s.143(3) without examining the issue the order of the Assessing Officer resulted in an erroneous order and understatement of total income. You are, therefore, requested to show cause why the profit should not be recomputed taking the correct value of closing stock at Rs, 49.26 per Kg." 6.3 Against the said notice, submissions made by the AR of the assessee were as under: (i) Tobacco leaf being an agricultural crop is very sensitive to climatic conditions, moisture content, sunshine etc., and the final quality of tobacco depends on many factors. In processing and cleaning of tobacco 3% to 5% is lost as wastage. He submitted that closing stock comprises of stems, bits, scrap and elimination. The company has been consistently following the principle of 'cost or market price" whichever is less and there has been no deviation in the same. The concept of average cost of goods sold does not have any relationship or bearing on the average cost of closing stock. The value of closing stock is based on the actual qualities and quantities of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the company claims that it had lost 62,117 kgs of tobacco in processing. At no point of time the assessee had explained how it had sustained the loss, before the Assessing Officer. As a matter of fact, the assessee did not disclose the fact of 'loss in processing of Tobacco' before the Assessing Officer and the assessment record does not contain any details of loss on processing of tobacco. The details of purchases of tobacco were furnished during the course of assessment proceedings. In the details furnished before the Assessing Officer, the assessee did not inform that there were by-products such as scrap, elimination, SLS, LS2 etc. 6. The details available on the assessment record indicate that the assessee had purchased tobacco of the following varieties only: (a) VFC/Leaf, (b) VFC / STRIPES (c) VAC/STRIPES (d) VFC/RTL (e) BITS' The quantity of tobacco and varieties of tobacco purchased by the assessee are on assessment record and the same are reflected in the following table for convenience: Sl.No Month Variety of tobacco Quantity Price 1 April,2006 VFC/Leaf 798 30,087 2 May,....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2. The learned Commissioner of Income-Tax erred in holding that there is any error which is prejudicial to the interest of the Revenue in the assessment order passed u/s 143(3) dated 30.6.2009 passed by the lncome-Tax officer, Ward-16(2), Hyderabad; 3. The learned Commissioner of Income-Tax ought to have seen that the Assessing Officer while considering the valuation of the closing stock considered the claim made by the' assessee and came to correct conclusion. 4. The learned Commissioner of Income- Tax is not justified in holding that the process, adopted by the Assessing Officer in arriving at the closing stock is in any way erroneous. 5. The learned Commissioner of Income-Tax erred in setting aside the assessment order passed by the Assessing Officer u/s 143(3) and also erred in directing the Assessing officer to value the closing stock once again. 6. The learned Commissioner of Income-Tax ought to have seen that the loss of tobacco to the tune of 62,117 kg. was allowed after due consideration of the facts by the Assessing Officer and hence the learned Commissioner of Income-Tax should not have set aside the order to the fil....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the reason assessee has given information in form 3CD relating to trading business only. He further submitted that stock registers are part of book keeping, all the stock registers were submitted before the AO and all these were already examined by the AO. He contended that there is no new material was found by the CIT in the revisionary proceedings to invoke the provisions of section 263. 14. Considered the rival submissions and perused the material facts on record as well as the decisions cited at bar. The issue in dispute before us is whether the CIT is right in treating the assessment order passed by the Assessing Officer u/s 143(3) of the Act, erroneous and prejudicial to the interests of revenue by invoking the provisions of section 263 of the Act. The mute question before us is whether the closing stock valued are proper and if so, how it is prejudicial to the interests of revenue. Looking at the business model of the assessee, he procures the leaves and process the leaves. Based on the result of processing, it sells the same to the vendors. The valuation of stock depends on the results of the processing. The assessee will adjust the standard loss on the marketable produ....