TMI Blog2020 (6) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... aside the order of the learned CIT (A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. Addition on account of under valuation of closing stock of Yarn - HELD THAT:- All the necessary details were available before the authorities below and none of the authorities have pointed out any defect in such details. Besides the above, it is the established practice that the opening stock of one year becomes the closing stock of another year. On this reasoning, we find that there is no impact on the income of the assessee over a period of time. Assuming, the assessee has shown less value of the closing stock in the year under consideration which will eventually become the opening stock of the subsequent year at the lesser value having no impact on the income of the assessee. We also note that none of the authorities below have given direction to revise the value of the opening stock of the subsequent year. Thus in the absence of such direction, addition made for the year under consideration will again be taxed in the subsequent assessment year which is not desirable as the same income should not be taxed twice under the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D/2016 - - - Dated:- 1-6-2020 - Shri Rajpal Yadav, Vice President And Shri Waseem Ahmed, Accountant Member For the Appellant : Shri Deepak R. Shah, A.R. For the Respondent : Shri Deelip Kumar, Sr. D.R. ORDER PER WASEEM AHMED, ACCOUNTANT MEMBER 1. This appeal filed by the Assessee is directed against the order of the Ld. CIT(A)-8, Ahmedabad dated 15.02.2016 pertaining to A.Y. 2012-13. 2. The assessee has raised following grounds of appeal: 1. The learned CIT(A)-8 erred in upholding the action of the AO of making addition of ₹ 70,45,751/-considering to be the excess deduction claimed by inflating value of opening Stock. 2. The learned CIT(A)-8 erred in upholding the action of the AO of making addition of ₹ 73,62,762/- on account of undervaluation of closing stock of Yarn. 3. The learned CIT(A)-8 erred in upholding the action of the AO of making addition of ₹ 26,38,836/- on account of understatement of closing stock and/or sales not recorded in the books of accounts. 4. The learned CIT(A)-8 erred in upholding the action of the AO of making disallowed ₹ 98,767/- on account of shortage of stock. 3. The first i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded to the AO for remand report after verification of evidences but the assessee did not cooperate with the AO despite giving multiple opportunities. The learned CIT (A) in view of the above confirmed the order of the AO. 9. Being aggrieved by the order of the learned CIT (A) the assessee is in appeal before us. 10. The learned AR for the assessee before us filed a paper book running from pages 1 to 112 and submitted that the opening stock shown by the assessee was carried forward from the immediate preceding assessment year. As such closing stock of the immediate preceding assessment year became the opening stock for the year under consideration. Therefore, the opening stock cannot be disturbed without disturbing the closing stock of the immediate preceding assessment year. 11. The learned DR, on the contrary, vehemently supported the order of the authorities below. 12. We have heard the rival contentions of both the parties and perused the materials available on record. The addition made by the AO for ₹ 70,45,751/- represents the amount of opening stock which was overvalued in the manner as discussed above. It is the established practice that the closing stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aused the assessee purposing the addition of ₹ 51,44,679/- on account of under valuation of closing stock. 18. The assessee in response to such notice submitted that the quantitative statement of stock as 31-3-2012 includes Yarn as well as Fabrics. Accordingly the assessee filed fresh inventory register showing value of Raw Material at ₹ 77,30,035/- including Yarn weighing 18449 unit valued at ₹ 56,92,435/- as appearing in the balance sheet as on 31-3-2012. 19. The AO after considering the submission of assessee concluded that the assessee has not stated anything about balance unit of 26399 (i.e. 44848 18449) but filed a fresh statement showing the value of yarn at ₹ 56,92,435/-. The AO accordingly worked out the value of balance unit of yarn i.e. 26399 unit at ₹ 48,95,103/- @ of average cost of purchase of Yarn i.e. ₹ 188.85/ kg. 20. The AO besides the above also worked the undervaluation of the Yarn weighing 18449 unit by ₹ 23,67,569/- (56,92,435 value as per fresh submission 33,24,866 value as per previous chart). Accordingly the AO made total addition of ₹ 73,62,761/- on account of under valuation of Yarn material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground of appeal on this point is dismissed. 24. Being aggrieved by the order of the learned CIT (A), the assessee is in appeal before us. 25. The learned AR before us reiterated the contentions made before the learned CIT (A) and drew our attention on page 103 of the paper book where the valuation of yarn was shown. 26. The learned AR alternatively also contended that in case the value of the closing stock is decided on the higher value then, the value of the opening stock of the subsequent year should also be enhanced accordingly. 27. On the other hand the learned DR vehemently supported the order of the authorities below. 28. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion we note that the AO has made two additions. Firstly, for the under valuation of the closing stock amounting to ₹ 23,67,569/-and secondly mismatch in the quantity of closing stock amounting to ₹ 48,95,103/-. 29. Regarding the under valuation of the closing stock, we note that the assessee has shown its opening quantity of stock at 68785 KGs valued at ₹ 45,40,197 showing the average cost of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de the order of the learned CIT (A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. 32. Third issue raised by the assessee is that the learned CIT (A) erred in confirming the addition of ₹ 26,38,836/- on account of understatement of stock or unrecorded sale. 33. The assessee during the year under consideration has debited its sales account for ₹ 26,38,836/- on account of sales return. But the quantity of goods return was not added back to the inventory. Accordingly the AO show caused the assessee seeking clarification and purposing addition for the same on account of understatement of stock or unrecorded sale. But the assessee failed to reply or furnish any detail. Accordingly the AO added the same to the total income of the assessee. 34. Aggrieved assessee preferred an appeal before learned CIT (A). 35. The assessee before learned CIT (A) submitted that the closing stock of finished goods were shown after considering the quantity of the sales return. The assessee in support of its contention furnished a monthly stock movement detail of each category of stock. 36. The learned CIT (A) held that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the authorities below including during the remand proceedings. At the time of hearing before us, a specific query was raised to the learned AR for the assessee to show us from the documentary evidence that the assessee has accounted for the inventory of the sales return in the stock register. But the learned AR failed to furnish any detail in support of his contention. 43. We have also perused the relevant pages of the paper book of the stock register but note that there was no such entry for the quantity of the sales return shown by the assessee. 44. Thus in the absence of documentary evidence and after considering the concurrent finding of the authorities below, we uphold the addition made by them (lower authorities). Accordingly, we dismiss the ground of appeal raised by the assessee. 45. The last issue raised by the assessee is that the learned CIT (A) erred in upholding the disallowances of ₹ 98,767/- on account of shortage of stock. 46. The assessee in its inventory register claimed shortage of its finished goods of Carpet of 30.39 Sqmtrs valued at ₹ 98767/-. The assessee in this respect submitted that it has been producing huge quantity of carpet. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of hearing before us, the learned AR for the assessee failed to show us from the documentary evidence that the assessee has incurred such loss in the manufacturing process. 54. Thus in the absence of documentary evidence and after considering the concurrent finding of the authorities below, we uphold the addition made by them (lower authorities). Accordingly, we dismiss the ground of appeal raised by the assessee. 55. Before we part with the issue/appeal as discussed above, it is pertinent to note that the clause (c) of rule 34 of the Appellate Tribunal Rules 1963 requires the bench to make endeavour to pronounce the order within 60 days from the conclusion of the hearing. However the period of 60 days can be extended under exceptional circumstances but the same should not ordinarily be further extended beyond another 30 days. In simple words the total time available to the Bench is of 90 days upon the conclusion of the hearing. However, during the prevailing circumstances where the entire world is facing the unprecedented challenge of Covid 2019 outbreak, resulting the lockdown in the country, the orders though substantially prepared but could not be pronounced for the un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the coronavirus should be considered a case of natural calamity and FMC (i.e. force majeure clause) maybe invoked, wherever considered appropriate, following the due procedure . The term force majeure has been defined in Black s Law Dictionary, as an event or effect that can be neither anticipated nor controlled When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an ordinary period. 10. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while ..... X X X X Extracts X X X X X X X X Extracts X X X X
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