AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (11) TMI 1055
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....stated in schedule 28b-B of Form No. 3CD. In para 10.3, the CIT(A) stated that "the quantitative details of the closing stock as mentioned in Form 3CD of the audit report need not be relied upon since a mistake had crept inadvertently as a result of which the same has wrongly been mentioned as 7,75,398 Kg instead of 90,620 Kg. In this connection, the CIT(A) ought to have noticed the scope and effect of the provisions of section 44AB of the Income tax Act 1961, at the time of insertion of this section, which is explained by the Board in the Circular no.387 dated 06.07.1984: "17.2. A proper audit for tax purposes would ensure that the books of accounts and other records are properly maintained, that they faithfully reflect the income of the tax payer and claims for deduction are correctly made by him. Such audit would also help in checking fraudulent practices. It can also facilitate the administration of tax laws by a proper presentation of the accounts before the tax authorities and considerably saving the time of assessing officers in carrying out routine verifications, like checking correctness of totals and verifying whether purchases and sales are properly vouched or n....
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....report filed before him, the assessee suppressed the quantity of shrimp purchased, by 3,69,516 Kg (1459106-1089590) and inflated the quantity of shrimp sold, by 4,84,481 Kg (859705- 375224) without changing the purchase and sale values in the P&L account. This ought to have been taken as a wilful attempt to suppress the quantity of shrimp at the closing stock. 8. For these and other grounds that may be advanced at the time of hearing the order of the learned Commissioner of Income tax (Appeals), Thiruvananthapuram on the above points may be set aside and that of the Assessing Officer restored." 3. Briefly stated the facts of the case are as under:- 3.1 It all started with reopening the assessment u/s 148 which in turn has resulted in making an addition of Rs. 13,47,71,926/- on account of under valuation of closing stock. The assessment got reopened based on the observation that the closing stock as per the audit report is 7,75,398 kg and its value was taken at Rs. 2,49,56,300/-. The assessee had valued the same at Rs. 32.19 per kg which is very much on the lower side. As per the method of valuation regularly followed by the assessee, the closing stock should have bee....
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.... 2240 14240 159120 August 2010 159120 12000 6000 165120 September 2010 165120 9915 15215 159820 October 2010 159820 10700 37340 133180 November 2010 133180 3555 31055 105680 December 2010 105680 1000 23000 83680 January 2011 83680 0 18500 65180 February 2011 65180 41500 42000 64680 March 2011 64680 83660 92340 56000 344570 369570 Shrimp Total 2) Tiger H/O Opening Stock (kg.) Production Sales Balance (kg.) April 2010 106612 19515 9000 117127 May 2010 117127 10000 35928 91199 June 2010 91199 32335 27500 96034 July 2010 96034 18378 30400 84012 August 2010 84012 73261 24542 132731 September 2010 132731 37200 32750 137181 October 2010 137181 1612 20400 118393 November 2010 118393 0 21600 96793 December 2010 96793 8188 14188 90793 January 2011 90793 17237.6 17000 91030.6 February 2011 91030.6 18589 18....
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....f foregoing, I am also convinced with the figures of production and sales furnished originally were wrong and the total production and sales as per the copies of the registers and documents furnished for further consideration during the course of appeal hearing leaves behind only a closing stock of 90,620 kg as on 31.03.2011. When the production quantity is added to the opening stock and the export sales quantity is reduced therefrom then, the resultant quantity is 90,620 kg only which is nothing but the closing stock as on 31.03.2011 but not 7,75,398 kg as considered for making the addition of Rs. 13,47,71,926/-. Accordingly the CIT(A) was of the opinion that the quantitative details of the closing stock as mentioned in Form 3CD of the audit report need not be relied upon since a mistake had crept inadvertently as a result of which the same has wrongly been mentioned as 7,75,398 kg instead of 90,620 kg. Hence, the addition made on account of difference in closing stock need be deleted since the same has not been justified by the Assessing Officer. 3.4 Another argument of the Assessing Officer that the assessee had valued the closing stock at Rs. 32.19/- per kg which is very muc....
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....year 2010-2011 7,62,713 3,51,80 11,14,514 9,50,325 3,51,801 13,02,126 Less : Export (Actual Qty) (-)8,59,705 (-)3,51,801 (-)12,11,506 Closing stock as on 31.03.2011 90,620 Nil 90,620 Original Purchases Qty shown 14,59,106 4,34,726 18,93,832 Actual Purchase Qty 10,89,590 4,34,725 15,24,315 There is no change in value. Difference is only in Quantity. 4.2 The learned AR has also filed a quantitative reconciliation statement as on 31.03.2011, as follows:- Quantity of stock disclosed shrimps originally as on 31.03.2011 7,75,398 kg. Actual quantity as per revised claim shrimps as on 31.03.2011 90,620 kg. Difference in quantity of stock excess Qty disclosed between original return and revised return 6,48,778 kg. Quantity of Shrimp Production quantity of shrimp as per original return 90,63,010 kg. Actual quantity of production of shrimp (Ref. revised claim) during the year (-)7,62,713 kg. Excess quantity shrimp of production disclosed originally. (A) 2,00,297 kg. Quantity of shrimp exported shown....
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....edings required the assessee's Bankers to submit a copy of the stock statement furnished by the assessee and they have given the same to the Assessing Authority who verified the same before passing the reassessment order. In fact, after verifying the purchase bills , export bills, production register, sales register and the bank stock statement, the A.O. was convinced that the quantitative particulars furnished in Form No. 3CD was a mistake itself. In para 5, page 4 and 5 , the A.O. specifically mentioned about this, however, as the Revenue Audit Party did not drop their Audit Query, he was compelled to proceed with the re-assessment, which is evident from page 5 of his reassessment order itself. Further, the registers maintained in respect of production and exports along with bills, were produced as additional evidence to prove that the quantitative particulars in Form No. 3CD was wrong. The A.O's admission in the re-assessment order is also valid evidence in support of the assessee's contentions and it was only because of compelling situations, the re-assessment was completed by him making an addition of Rs. 13,47,71,926/- to the income already assessed as per order da....