TMI Blog2018 (3) TMI 734X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee : Shri K.A. Sai Prasad For Revenue : Smt. B.K. Vishnu Priya, DR ORDER PER D. MANMOHAN, VP. This appeal is filed at the instance of the assessee-firm and it arises out of the order passed by the Ld. CIT(A)-2, Hyderabad. 2 At the outset, it may be noticed that the first appellate authority has not adjudicated one of the grounds raised before him i.e., reopening of assessment, which lead the assessee to contest before us that the order passed by the first appellate authority is not correct on facts as well as in law. In other words, the assessee challenges before us the validity of reopening of the assessment as well as the justification in confirming the addition of ₹ 12,35,384/-. 3. Brief facts necessary for disposal of the appeal are as under. The assessee-firm is engaged in purchase and sale of Maize and it carries on business on its own account as well as a commission agent. For the year under consideration, assessee declared a total income of ₹ 2,31,910/- and the same was processed u/s 143(1) on 21.07.2009. Thereafter the case was converted into scrutiny and a notice u/s 143(2) was issued and while making assessment u/s 143( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f of the principal / consignor and keep the same stock in different godowns. When the stock is purchased on behalf of the principal / consignor, the entry for the same purchase will be as under: Durshed godown or other godowns A/c Dr To the Farmers A/c. To be more clear when the stock is purchased and kept in a particular godown, wherein the stock is kept, that Godown account is debited by giving credit to the farmers Accounts. When the assessee raises the Consignment bill the principal / consignor account will be debited and maize for consignment account is credited. At the end of the year debit balance in the Godown account will be transferred to Maize for consignment account by crediting Godown account and debiting the maize for consignment A/c . The debit balance in the maize for consignment account standing at the end of the year will be shown as consignment stock in the balance sheet as the assessee has purchased that stock only for the principal / consignor. The consignment bills are raised on the principle / consignor which includes value of the stock transferred from the godowns plus the hamali, market fee, bardan etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and sale. It can be seen that the total quantity to the debit of trading account is only 6,263.60 quintals which is tallied with quantity of sale and closing stock of 5,624.30 and 639.30 respectively. When the alleged stock of 1,515.10 quintals of maize is taken as closing stock of the assessee the purchase would also be increased by same quantity of 1,515.10 quintals. Then the profit or loss in the trading account shall not have any effect and it does not effect the profitability of the assessee. In these circumstances, the assessee firm submits that the consignment stock shown in the balance sheet is correct and shall not have any effect to profitability of the assessee-firm. 5. Again vide letter dated 23.03.2016 it was submitted that the purchases related to the consignment stock, as shown in the balance sheet, was not debited to the purchases account shown in the trading account of maize. It was further submitted that the closing stock of the maize consignment is considered as the stock belonging to the assesseefirm, relevant purchase is also to be considered in the hands of the assessee and if the same is considered, there will be no bearing on the gross or net p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended before the Ld. CIT(A) that the A.O. erred in observing that it was not debited to the assessee s own purchases accounts shown in the own trading account of the assessee-firm. It was further contended that the stock having been debited to the purchase account, it cannot be shown in the closing stock since closing stock consists of assessee s own stock and not the consignment stock. It was also contended that the A.O erred in not taking cognisance of the detailed explanation provided vide letter dated 23.03.2016. Vide Ground no.4 it was contended that the A.O. erred in reopening the case without having any additional information, after the completion of original assessment u/s 143(3) of the Act by the then Assessing Officer. 8. Ld. CIT(A) rejected the appeal filed by the assessee without going into the technical aspect as to whether the reopening of assessment was justified or not. No doubt, the Ld. CIT(A) reproduced the grounds filed by the assessee which includes the challenge to the validity of the reopening of the assessment but the fact remains that the order contains virtual reproduction of the grounds of appeal, statement of facts filed by the assessee, order passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is well settled that reassessment is not permissible in the absence of failure on the part of the assessee to disclose fully and truly all the material facts necessary for assessment of income, particularly after lapse of four years and this view has been affirmed by various Courts and in line with the view taken by the Courts wherein it was held that in the absence of proving that there was sufficient material, reassessment proceedings are not valid. (i) ITA No.515/H/2015 (A.Y. 2005-06) in the case of ACIT vs. M/s. TNS India Private Ltd and (ii) Decision of the Hon ble Madras High Court in the case of CIT vs. Arvind Remedies Ltd (378 ITR 547) (Mad.) 12. In fact Hon ble Andhra Pradesh High Court in the case of Tecumseh Products India Pvt Ltd vs. ACIT (361 ITR 429) (AP) observed that before any notice is issued after expiry of four years, the officer concerned must be satisfied that there has been an escapement in assessment of income, which is chargeable to tax and this is because of the failure on the part of the assessee to disclose proper income. It should not be done mechanically to recompute the deductions despite the fact that there was no failure by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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