2015 (10) TMI 162 - AT - Income Tax

Addition on under valuation of closing stock of gold and silver - furnishing inaccurate particulars of stock - reopening of assessment - CIT(A) deleted the addition - Held that - Undisputedly the assessee had disclosed all material information before the Assessing Officer in its return of income. The reopening of assessment is stated to be after four years, this fact is not rebutted by the Revenue. Hence, we do not find any infirmity in the order of ld.CIT(A), same is hereby upheld - Decided against revenue.

Summary

Issues:
1. Under valuation of closing stock of gold and silver.
2. Admission of additional evidence.
3. Upholding the order of the Assessing Officer.

Issue 1: Under valuation of closing stock of gold and silver

The Revenue appealed against the deletion of an addition of Rs. 17,13,958 on account of under valuation of closing stock of gold and silver. The AO had made this addition during the reassessment, alleging undervaluation of gold and silver stock. The CIT(A) allowed the appeal and deleted the addition based on the submissions made by the assessee. The assessee argued that the gold and silver ornaments belonged to partners and relatives, were kept for display, and were not part of the purchase stock. The assessee provided names, agreements, and wealth tax returns to support this claim. The CIT(A) found the AO unjustified in rejecting the evidence without proper verification. The Tribunal upheld the CIT(A)'s decision, noting that the assessee had disclosed all material information, and the reopening of assessment after four years was not rebutted by the Revenue.

Issue 2: Admission of additional evidence

The Revenue contended that the CIT(A) erred in admitting additional evidence related to the under valuation of closing stock. The Tribunal decided that Ground Nos. 1 & 2 were inter-connected and thus decided together. The CIT(A) had considered the submissions made by the assessee regarding the ownership and display of gold and silver ornaments, which were crucial in deciding the under valuation issue. The Tribunal found no infirmity in the CIT(A)'s decision to admit and consider the additional evidence, as it was essential in determining the ownership and valuation of the stock.

Issue 3: Upholding the order of the Assessing Officer

The Revenue argued that the CIT(A) should have upheld the Assessing Officer's order regarding the addition made on account of under valuation of closing stock. The Tribunal, after considering the facts and submissions, found that the CIT(A) had correctly analyzed the evidence and circumstances. The Tribunal upheld the CIT(A)'s decision to delete the addition, emphasizing that the AO had not properly verified the ownership and valuation of the stock. Ground Nos. 3 & 4 were deemed general in nature and required no independent adjudication, leading to the dismissal of the Revenue's appeal.

In conclusion, the Appellate Tribunal ITAT Ahmedabad upheld the CIT(A)'s decision to delete the addition of Rs. 17,13,958 on account of under valuation of closing stock of gold and silver. The Tribunal found that the assessee had provided sufficient evidence to establish ownership and non-inclusion of the ornaments in the closing stock. The decision highlighted the importance of proper verification by the Assessing Officer and the disclosure of all material information by the assessee. The Tribunal dismissed the Revenue's appeal, emphasizing the correctness of the CIT(A)'s analysis and decision-making process.