2013 (12) TMI 658 - AT - Income Tax

Mistake apparent from record Valuation of stock on the date of survey - Held that - The value of stock as physically found at the time of survey was short by Rs. 14, 21, 168/- than the value of stock recorded in the books - Some sales have been made outside the books due to which the stock is found lower in value - The action of the AO in estimating the sales outside the books at Rs. 18.00 lakhs does not seem to be arbitrary or unreasonable on the facts of the case Decided against assessee.

Summary

Issues:
Appeal against ITA No. 918/Chd/2009 for assessment year 2006-07 regarding valuation of stock, rejection of book version, estimation of sales outside books, and dismissal of appeal.

Valuation of Stock Issue:
The appellant disputed the valuation of stock at the time of survey, arguing that the difference was only in the valuation method. The appellant contended that the stock was valued based on actual purchase bills, not estimated cost. However, the Bench found that the stock valuation discrepancy was correctly assessed by the AO. The Bench noted that the inventory was physically verified during the survey, and the appellant did not dispute the valuation at that time. The Bench upheld the AO's decision based on the incomplete and incorrect nature of the appellant's books of account.

Rejection of Book Version Issue:
The AO rejected the book version and estimated sales outside the books at Rs. 18,00,000, as the stock found during the survey was substantially lower than the stock recorded in the books. The Bench confirmed the AO's decision, stating that the incomplete and inaccurate books of account did not reflect the correct stock position found during the survey. The AO's estimation of sales outside the books was deemed fair and reasonable based on the factual circumstances of the case.

Dismissal of Appeal Issue:
The Bench dismissed the appeal after considering the contentions raised by the appellant and the findings of the AO and CIT(A). The Bench's decision was based on a thorough appreciation of the factual and legal aspects of the case. The appellant's attempt to re-argue the case through a Miscellaneous Application was rejected, as the legislative intent of section 254(2) of the Income-tax Act does not allow for a review of the order passed on merit. The Bench emphasized that issues adjudicated on merit do not constitute mistakes apparent from records, as per legal provisions and established judicial precedents.

Conclusion:
The impugned Miscellaneous Application was dismissed as it did not align with the legislative intent of the Income-tax Act. The Bench found no merit in re-opening the issues already adjudicated on merit in the appellate order. The dismissal of the Miscellaneous Application upheld the original decision and emphasized the limitations on re-hearing or re-arguing a case once it has been decided on merit.