TaxTMI 
TaxTMI 
TaxTMI 
2020 (6) TMI 204
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....e learned CIT(A)-8 erred in upholding the action of the AO of making disallowed Rs. 98,767/- on account of shortage of stock. 3. The first issue raised by the assessee is that the learned CIT (A) erred in upholding the addition made by the AO for Rs. 70,45,751/- on account of over valuation of opening and closing stock. 4. The facts in brief are that the assessee is a public company and engaged in the business of Manufacturing of woolen carpets. The assessee for the year under consideration has filed its return of income declaring loss at Rs. 2,43,70,272/- only. The auditor in his audit report mentioned that the assessee for the year under consideration has over valued its closing stock by Rs. 53,62,469/- only. Similarly, the auditor in the audit report for the immediate preceding AY also mentioned that the assessee has over valued its closing by Rs. 1,24,08,220/- only which is the violation of Accounting Standard- 2 as notified under section 211 of the Companies Act 1956. Accordingly the auditor was of the opinion that the assessee has decreased its loss by the amount of Rs. 53,62,469 in the current year and by the amount of Rs. 1,24,08,220/- in the immediate preceding assessme....
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....manner as discussed above. It is the established practice that the closing stock of one year becomes the opening stock of the subsequent year. However if there is any defect in the opening stock which is representing the closing stock of the earlier assessment year cannot be disturbed in the year under consideration without disturbing the closing stock of the immediate preceding assessment year. The learned DR has not brought anything on record suggesting that the Revenue has revised the closing stock of the earlier assessment year. 13. It is also pertinent to note that if the assessee has overvalued its closing stock of the earlier assessment year which suggests that amount of profit was increased by that amount or the loss was decreased by the same amount of that assessment year. As such the effect of the closing stock of the earlier assessment year has already been given effect in that particular year which cannot be challenged in the year under consideration. 14. We also note that the assessee before the learned CIT (A) has contended that it has valued its closing stock at the market rate being lower than the cost as per the Accounting Standard 2 notified under the Companies ....
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....n material to the total income of the assessee. 21. Aggrieved assessee preferred an appeal before learned CIT (A). 22. The assessee before the leaned CIT (A) submitted that the inventory for the yarn is inclusive of Raw materials, WIP, waste, ready to sale, stores and finished goods. Therefore, the cumulative quantity of the stock statement put together matches with the figures shown in the balance sheet. 23. However, the learned CIT (A) disregarded the contention of the assessee and confirmed the order of the AO by observing as under: The appellant has tried to justify the valuation of raw material taken by him but has not submitted any material substance to support his claim. He has wrongly clubbed work in process and finished goods in the valuation of raw material and has wrongly shifted the stock to the raw material and has valued the same on the adhoc basis as mentioned by the AR in his submission dated 13.10.2015. In view of the casual approach of the appellant regarding valuation of different stocks (even the opening and closing stock is not valued properly as mentioned in foregoing paras on ground no.2), and in absence of any material on record to verify the claim of t....
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....KG. The assessee during the year purchased the quantity of yarn at a higher value. As such the total quantity for the purchases of the yarn is 34964 whereas the total quantity of yarn sold/consumed during the year is 58902. Thus it is evident that the opening quantity of the stock was very much available in the closing quantity of the yarn shown by the assessee in its books of accounts. But the AO has not considered the opening value of the yarn stock while determining the closing value of the yarn as on 31 March 2012 which is not correct as per the valuation rules prescribed under the accounting standard as per the provisions of section 211 of the companies Act. All these facts can be verified from the order of the AO as recorded on page 7 of the assessment order. Accordingly, we are not convinced with the finding of the authorities below that the assessee has undervalued its closing stock. 30. Regarding the mismatch in the quantity of stock, we note that the assessee is maintaining the quantity of stock for the yarn in different categories such as raw material, P/c yarn on warping Beams, processes stock, wool dyed/ undyed stock which is matching with the balance sheet as evident....
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....reflect the quantity of sales return. Accordingly, he forwarded the details filed by the assessee to the AO for the Remand report. The AO in his remand report submitted that the assessee has not furnished the necessary documentary evidence in support of its contention. 37. The learned CIT (A) after considering the submission of the assessee and the remand report of the AO confirmed the order of the AO by observing as under: Even after providing more than required opportunity at the time of assessment proceedings and again at the time of appellate proceedings, the appellant could not explain his methodology of valuing his stocks which is done in a very casual manner without any supporting evidence as is evident from the findings in grounds of appeal no 2 & 3 also. In the light of these facts and circumstances, I have no basis to accept the submission of the appellant and confirm the addition made by the AO as he has rightly taken the view that 'sales return' has not been taken to the closing stock and income has been reduced by the same amount. Accordingly, this ground of appeal is dismissed. 38. Being aggrieved by the order of the learned CIT (A) the assessee is in appe....
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....47. However the AO disagreed with the contention of the assessee and held that there is almost no possibility of shortage in the production of Woolen carpet as it is very easy to measure the quantity in this line of production. Accordingly the AO added Rs. 98,767 to the total income of the assessee. 48. Aggrieved assessee preferred an appeal to the learned CIT (A) who confirmed the addition made by the AO by observing as under: The AO has given sufficient opportunity to explain the shortage so claimed valued based upon the average cost. But neither at the time of assessment proceedings nor at the time of appellate proceedings and also not at the time of remand proceedings, the appellant could give any acceptable reply for this shortage. The only response of the assessee at all stages is that such minor shortage is possible due to some minor variance while measuring and calculating during production and sales. In absence of any proper submission on the point, the AO has rightly added the amount of the shortage. In view of these facts the addition so made is confirmed and appeal on this ground is dismissed. 49. Being aggrieved by the order of the learned CIT (A) the assessee is i....
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....se of JSW Limited Vs Deputy Commissioner of Income Tax in ITA No. 6103/MUM/2018 vide order dated 14-5-2020 extended the time for pronouncing the order within 90 days of time by observing as under: 9. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon'ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon'ble Supreme Court of India, in an unprecedented order in the history o....
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.... the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon'ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon'ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed "while calculating the time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly". The extraordinary steps taken suo motu by Hon'ble jurisdictional High Court and Hon'ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in forc....