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Shri N. Viswanath and Others Versus The Deputy Commissioner of Income-tax, Central Circle-IV (1) , Chennai

2016 (6) TMI 587 - ITAT CHENNAI

Scope of rectification of mistake - Addition to the closing stock - adopting cost of goods at the year end OR Cost or realisable value -Held that:- The Tribunal in earlier occasion fairly considered the entire arguments of the assessee and has given a finding and decided the issue against the assessee. Now, the assessee’s counsel wants to re-argue the settled issue by putting some arguments. In our opinion, if we consider the arguments of the assessee’s counsel, it will amount to review of our e .....

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r of review conferred on this Tribunal. Even otherwise, the scope of review does not extend to rehearing of the case on merit.In view of the above, we are inclined to reject the arguments of the assessee’s counsel on the issue of valuation of closing stock in all these Misc. Applications. - Decided against assessee

Addition towards stock discrepancies - Held that:- Tribunal has considered the issue in dispute and categorically given a finding and decided the issue against the assessee .....

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se of business. Hence, it is decided against the assessee. Now, the assessee’s counsel wants to re-argue the case and it cannot be possible. As discussed in earlier para, we are inclined to reject the arguments of the ld. AR in all these three Misc. Applications, on this issue also. - Decided against assessee

Addition towards unexplained jewellery - Held that:- As unsigned copy of grounds on our records, wherein the assessee raised unexplained jewellery u/s.69A of the Act. Being so, w .....

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ut of the common order of the Tribunal in ITA Nos.1769/Mds/2014 & Others dated 28.8.2015. 2. The first grievance of the assessee in all these M.As is with regard to giving the direction in respect of addition to the closing stock by adopting cost of goods at the year end instead of adopting cost or realisable value followed by the assessee in para 5 of Tribunal s order is as follows : 5. We have heard both the sides and perused the material on record. The assessee has valued the unsold stock .....

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n for such kind of arbitrary reduction of either 25% or 50%. There is no consistency in the method followed by the assessee for valuing the closing stock. The closing stock is to be valued at market price or cost whichever is less and that should be consistent from year to year. The assessee is not disputed that it has been followed the same method. However, consequent to search action, the assessee wanted to change the method of stock valuation for the first time, which is nothing but an after- .....

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g deep discounts can the assessee hope to sell some of the old stocks. If the assessee is not able to sell stock for more than three years, even by offering discounts, such stocks are hardly likely to fetch any price. Thus, the valuation of the stock by the assessee based on the experience cannot be rejected without any valid reason. 3.1 The ld. AR, also submitted that the method of valuation is reflected in the closing stock valuation in the audited balance sheet and profit and loss filed along .....

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d that the assessee wants to review the earlier order of the Tribunal, which is not possible. 5. We have heard both the sides and perused the material on record. The Tribunal in earlier occasion fairly considered the entire arguments of the assessee and has given a finding and decided the issue against the assessee. Now, the assessee s counsel wants to re-argue the settled issue by putting some arguments. In our opinion, if we consider the arguments of the assessee s counsel, it will amount to r .....

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ould not re-adjudicate the matter under section 254(2). It is well settled that a statutory authority cannot exercise power of review unless such power is expressly conferred. There was no express power of review conferred on the Tribunal. Even otherwise, the scope of review did not extent to rehearing a case on the merits. Neither by invoking inherent power nor the principle of mistake of court not prejudicing a litigant nor by involving doctrine of incidental power, could the Tribunal reverse .....

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of a fresh order. That does not appear to be the legislative intent. The order passed by the Tribunal under section 254(1) is the effective order so far as the appeal is concerned. Any order passed under section 254(2) either allowing the amendment or refusing to amend gets merged with the original order passed. The order as amended or remaining un-amended is the effective order for all practical purpose. An order under section 254(2) does not have existence de hors the order under section 254( .....

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d ex parte. Judged in the above background the order passed by the Tribunal is indefensible. 8. The words used in section 254(2) are shall make such amendment, if the mistake is brought to its notice . Clearly, if there is a mistake, then an amendment is required to be carried out in the original order to correct that particular mistake. The provision does not indicate that the Tribunal can recall the entire order and pass a fresh decision. That would amount to a review of the entire order and t .....

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ved as under:- Under section 254(2) of the IT Act, 1961, the Tribunal has the power to rectify mistakes in its order. However, it is plain that the power to rectify a mistake is not equivalent to a power to review or recall the order sought to be rectified. Rectification is a species of the larger concept of review. Although it is possible that the pre-requisite for exercise of either power may be similar) a mistake apparent from the record), by its very nature the power to rectify a mistake can .....

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parties and perused the material on record. It is seen from the records that there was difference between physical closing stock and books of accounts. The Managing partner, Shri Shiva Kumar admitted that there was deficit stock of Rs. 1,27,64,281/- as a whole. He further admitted that there was an error in valuation of stock in their system for some products and offered the difference in stock value for taxation as income in the financial year relevant to the assessment year. The assessee admit .....

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search operation have been double checked and it is correct. Similarly, the physical stock of goods lying in Vannarapettai shop and also town shop was taken with the active participation of their staff under their own supervision and valuation thereof has also been checked, the same is found to be correct. Hence, subject to any duplicate entries or change in the dates as stated above, he accepted the value of excess stock found during the course of search to be out of their unrecorded income an .....

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facts of the case, added Rs. 9,43,980/- as discrepancy found in the stock for this assessment year at Chennai Branch and determined at Rs. 1,11,827/- at Tirunelveli Branch and the same was brought to tax as unrecorded sales. Being so, we do not find any infirmity in the orders of the lower authorities. We reject this ground of appeal in ITA No. 1780/Mds/2014. Similarly, we reject this ground in ITA No.1776/Mds/ 2014 also on the same reasoning. The same ratio was applied in respect of ITA Nos.17 .....

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s made out on the date of search. Therefore it is not possible at this point of time to verify whether the items with specific by-numbers claimed by the Assessee formed part of the physical inventory on the day of search but subsequently either sold before 31/0312009 or continue to remain unsold as on 31/03/2009 . According to the ld. AR, it is apparent from the above that AO did not have the full particulars of inventory available on the date of search. It is the contention of the Assessee that .....

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. As the figures of Purchases, sales and value closing stock after search has been accepted as returned by the assessee, there cannot be addition to closing day stock. 12.1 The ld. AR, further, submitted that having accepted that they do not have the particulars of the search day stock, there can be no addition on that count. According to the ld. AR, the Tribunal has not appreciated the confirmation by the AO that they do not have particulars of search day stock taken by the department. Hence th .....

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articulars of the inventory on the date of search or the inventory list taken by them and in possession of the Department suffered from serious short comings. Accordingly, he prayed that the Tribunal may be appreciated the above aspects and facts of the case. 13. The ld. DR relied on the order of the Tribunal. 14. As discussed earlier, the Tribunal has considered the issue in dispute and categorically given a finding and decided the issue against the assessee and there is no reason to recall the .....

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hing on record to indicate that the assessee has acquired any business advantage out of such expenditure. 16. Now, the ld. AR, submitted before us, that the assessee has explained in the business exigency in obtaining the lease. It was to obtain the access to land for parking cars of the customers coming to the shop for purchasing clothes. Parking space for customers is one of the important facility which will directly improve and help the business of the assessee. According to the ld. AR, the e .....

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licit understanding that the commercial exploitation of the above properties will be enjoyed by the Rm.KV.group of concerns and neither Sri K Mahesh nor the other co-owners had envisaged any business interest of their own at any point in the same. In essence, the entire transaction was conceived only to benefit the "RmKV group" of business concerns." (para No.1 of the Statement of facts made to CIT (Appeals). According to the ld. AR, the same facts were reiterated before the Tribu .....

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rd both the parties and perused the material on record. On this issue also, the Tribunal has given a finding that the expenditure of Rs. one crore incurred by the assessee towards lease commitment charges cannot be considered as wholly and exclusively for the purpose of business. Hence, it is decided against the assessee. Now, the assessee s counsel wants to re-argue the case and it cannot be possible. As discussed in earlier para, we are inclined to reject the arguments of the ld. AR in all the .....

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