Income Tax Appellate Tribunal - Indore
The Acit, 3(1), Bhopal vs M/S. Narmada Transmission Pvt. Ltd., ... on 31 May, 2018
Narmada Transmission
ITA 215/2015
IN THE INCOME TAX APPELLATE TRIBUNAL
INDORE BENCH, INDORE
Before Shri Kul Bharat, Hon'ble Judicial Member and
Shri Manish Borad, Hon'ble Accountant Member
ITA No. 215/Ind/2015
A.Y. 2007-08
Asstt. Commr. of Income Tax 3(1)
Bhopal ::: Appellant
Vs
M/s Narmada Transmission Pvt.Ltd.
Bhopal ::: Respondent
Appellant by Shri Satish Solanki
Respondent by Shri S.S. Deshpande
Date of hearing 29.5.2018
Date of pronouncement 31.5.2018
O R D E R
PER SHRI MANISH BORAD, AM
This appeal of the revenue relating to the assessment years 2007-08 is directed against the order of the Commissioner of Income Tax (Appeals)-2, Bhopal, dated 14.1.2015 which are arising out of order u/s 143(3) 1 Narmada Transmission ITA 215/2015 r.w.s. 147 of Income Tax Act (in short referred as 'Act') Act framed by the ACIT, 2(1), Bhopal.
2. The revenue has taken the following grounds :-
"On the facts and in the circumstances of the case, the CIT(A) has erred in -
1. Deleting the addition of Rs. 13,39,295/- on account of undervalatuion of closing stock due to non-inclusion of excise duty on the ground that A.O. has merely rejected appellants submissions without giving any justification on record any adverse supporting evidence.
2. Deleting the addition of Rs.13,39,295/- on account of undervaluation of closing stock due non-inclusion of excise duty on the ground that impugned addition is based on audit objection which is not accepted by the A.O. himself."
2
Narmada Transmission ITA 215/2015
3. Briefly stated, the facts, as culled out from record, are that the assessee company is engaged in the business of manufacturing of overhead transmission lines, cables and conductors. The income of Rs.2,24,066/- was disclosed in the return of income filed on 31.10.2007. After being selected for scrutiny assessment, income assessed at Rs.8,74,180/- vide order dated 29.11.2009 framed u/s 143(3) of the Act. Subsequently, on account of the audit objection by the audit party for the alleged undervaluation of closing stock, not including excise duty and taxes, a notice u/s 148 of the Act was served upon the assessee. It was followed by notice u/s 143(2) and 142(1) of the Act for the purpose of reassessment u/s 147 of the Act. The Assessing Officer observed that the assessee has not complied with the provisions of section 145A of the Act and has failed to include excise duty of Rs. 15,57,867/- while valuing the closing stock at the end of the year. It was 3 Narmada Transmission ITA 215/2015 submitted before the Assessing Officer that due taxes have been added both in the opening and closing stock and the assessee is basically carrying out contract work not involving much of the manufacturing activity. However, the Assessing Officer completed the assessment u/s 143(3) of the Act read with section 147 of the Act assessing total income at Rs. 24,32,047/-.
4. Aggrieved, the assessee preferred appeal before the learned Commissioner of Income Tax (Appeals) and partly succeeded as the learned Commissioner of Income Tax (Appeals) sustained the addition only to the extent of Rs.2,18,752/-. Thereafter, the revenue came in appeal against the addition deleted by the learned Commissioner of Income Tax (Appeals). This appeal of the revenue was dismissed by the Tribunal vide order dated 21.12.2015 on account of low tax effect vide Circular No. 21/2015 dated 10.12.2015. Thereafter, the revenue filed M.A. quoting that 4 Narmada Transmission ITA 215/2015 the addition was on account of audit objection and it was covered under the exceptions of para 8 of the CBDT Circular No. 21/2015 and the appeal was not liable to be dismissed on account of low tax effect. This M.A. was allowed by the Tribunal and the order of the Tribunal was recalled and again fixed for hearing on 29.5.2018.
5. The learned DR vehemently argued supporting the order of the Assessing Officer and the learned counsel for the assessee referred to the written submissions filed before the learned Commissioner of Income Tax (Appeals), paper book submitted on 29.5.2018 as well as the finding of the learned Commissioner of Income Tax (Appeals).
6. We have heard both the parties and perused the material available on record. The sole grievance of the assessee revolves round against deletion of addition of Rs.13,39,295/- on account of alleged under valuation of closing stock due to non-inclusion of excise duty. We find 5 Narmada Transmission ITA 215/2015 that the Assessing Officer took a view that the assessee has not complied with the provisions of section 145A and has not included excise duty and other taxes while valuing the closing stock. Further we find that the learned Commissioner of Income Tax (Appeals) partly allowed the assessee's appeal by deleting the addition to the extent of Rs. 13,39,295/- as against Rs. 15,57,867/- made by the A.O. observing as under :-
"4.2 Appellant's submissions along with assessment order and records have been considered carefully. Assessment records of the A.O. have also been perused. It is seen that original assessment in case of the appellant company has been completed u/s 143(3) vide order dt. 29.11.2009 assessing appellant's income at Rs. 8,74,180/- as against return income of Rs. 2,24,066/- by disallowing appellant's claim of set off of b/f losses of Rs. 6,50,114/- and treating declared interest of Rs. 6 Narmada Transmission ITA 215/2015 2,65,994/- earned on FDRs as income from other sources. A.O. has categorically mentioned in the said order that various aspects of the appellant's case has been discssed w.r.t. written submissions and supporting documents filed by the appellant. However, on receipt of audit objection regarding non inclusion of excise duty of Rs. 15,57,867/- in appellant's declared closing stock of Rs. 95,45,757/-, proceedings u/s 147 have been initiated by issue of notice u/s 148 after recording reasons therefor. The appellant has not objected to such initiationof reassessment proceedings at any stage - assessment as well as appeal. It has submitted details of working of valuation of its raw material as well as finished goods to the A.O. vide letter dt. 02.03.2012. These details are same as submitted during appeal also. The said working has been found certified by concerned CA also. It is pertinent to note that as per assessment 7 Narmada Transmission ITA 215/2015 records, A.O. himself has not found the said audit objection acceptable on the basis of of which notice u/s 148 been issued for A.Y. 2007-08 and impugned add made in the assessment order under appeal. It is further seen that stock of finished goods has been shown at Bhopal as well as at project site. Declared value ofn closing stock at Rs. 95,45,757/- includes excise duty of Rs. 13,39,295/-. The quantum of excise duty works out to Rs.15,57,867/-. The same has not been disputed by the appellant itself. Thus, the appellant has not shown excise duty of Rs. 2,18,572/- (Rs.15,57,867/- minus Rs.13,39,295/-). After perusal of entire material on record, appellant's submissions are found partly acceptable as A.O. also has rejected the appellant's submissions without giving any justification or bringing even a single piece of adverse supporting evidence on record. Accordingly, addition of Rs.2,18,572/- is found 8 Narmada Transmission ITA 215/2015 sustainable and, hereby, confirmed out of Rs.15,57,867/- made by the A.O. for A.Y. 2007-08 u/s 147/143(3)."
7. We further find that a certificate has been issued by the auditor Joshi Vinod & Co. on 2.3.2012 giving details of valuation of closing stock of the assessee. In the attached sheet at pages 15 & 16 we find that the value of closing stock has been arrived at after adding excise duty to the basic price of goods and further adding other charges. This system has been applied for valuing raw material as well as finished goods and it is clearly exhibiting that the excise duty has been included in the value of closing stock. We find that the Assessing Officer seems to have made a guess work just riding over the audit objection and making addition without bring any material on record to prove that opening and closing stock valued by the assessee company does not contain the element of excise duty and taxes. We, 9 Narmada Transmission ITA 215/2015 therefore, find no reason to interfere with the findings of the learned Commissioner of Income Tax (Appeals) and we accordingly uphold the same.
8. In the result, the appeal of the revenue is dismissed.
Pronounced in open Court on 31 May, 2018.
Sd/- sd/-
(KUL BHARAT) (MANISH BORAD)
JUDICIAL MEMBER ACCOUNTANT MEMBER
31 May, 2018
Dn/-
Copy to - Appellant/Respodent/Pr.CIT/CIT(A)/DR/Guard File By order Private Secretary 10