2019 (5) TMI 1963 - AT - Income Tax

Reopening of assessment u/s 147 - Ground on reopening was argued by ld. AR and bench has not adjudicated - HELD THAT - As we checked our records and found that ld. AR has argued the issue briefly and not made elaborate submission, mainly focussed on the merit of the case. After considering the affidavit of the ld. AR, in our view, for the sake of natural justice, assessee deserves one more opportunity. Therefore, we are inclined to re-fix this issue for rehearing to both the parties for the limited purpose of submissions on reopening of the assessment. Whether ITAT has erroneously took up new issue without giving an opportunity to assessee while adjudicating the issue? - As we have already adjudicated this issue, may be it was not understood by the parties, this issue is not new but culminated out of the books of account prepared by assessee - Consider the actual stock of opening closing i.e. A C are same. The inflated stock of opening i.e. B is an additional expenditure absorbed in the AY 2010-11, which will reduce the actual profit for the Ay 2010-11 and ultimately reducing the taxable income of the assessee for the AY 2010-11 - Therefore, we have explained the issue of merit in our order. Accordingly, we refix the case for limited purpose of adjudicating on reopening of the assessment. The registry is directed to fix the case for rehearing in due course and inform the parties accordingly.

Summary

Issues involved:
1. Rectification/modification of the order of the Tribunal dated 29/11/2018 in ITA Nos. 1622 to 1624/Hyd/2017.
2. Grounds pertaining to reopening not adjudicated and new issue taken up without giving an opportunity to the appellant.

Analysis:

Issue 1: Rectification/Modification of Tribunal Order
The assessee filed Miscellaneous Applications seeking rectification/modification of the Tribunal's order under section 254(2) of the Income Tax Act. The assessee contended that the Tribunal had erroneously taken up a new issue without providing an opportunity for the appellant to address it. The assessee argued that the grounds related to the reopening of assessment were not adjudicated, despite the submission of relevant data and objections to the reopening. The Authorized Representative had argued that the reopening of assessment under section 147 was not valid, as the trading and profit & loss account disclosed had been accepted in an assessment under section 143(3). The Tribunal was urged to recall and rehear the impugned order in the interest of justice.

Issue 2: Adjudication of Grounds Relating to Stock Valuation
The Tribunal's order highlighted a discrepancy regarding the impact of additional income disclosed in the earlier assessment year on the stock valuation for the current assessment year. The Tribunal observed that the inflated value of the opening stock would result in fictitious expenditure for the current year, affecting the actual profitability and taxable income of the assessee. The assessee argued that the Tribunal's view on the inflation of expenditure was not supported by the orders of the Assessing Officer and the Commissioner of Income Tax (Appeals). The assessee contended that the opening stock should not be considered as expenditure, as it merely represented a transfer from the previous year. The Tribunal acknowledged the need for clarification and decided to re-fix the issue for rehearing to ensure natural justice.

In conclusion, the Tribunal partly allowed the Miscellaneous Applications, providing the appellant with an opportunity to address the issue of reopening the assessment. The Tribunal clarified the issue of stock valuation and directed a rehearing to adjudicate on the reopening of the assessment. The decision aimed to uphold the principles of natural justice and ensure a fair resolution of the issues raised by the appellant.