9911796707
TMI Blog2017 (11) TMI 797X X X X Extracts X X X X X X X X Extracts X X X X ..... The appeal filed by the assessee is against the order of Commissioner of Income Tax-11, Kolkata dated 23.11.2016 relating to assessment year 2012-13 against the order passed u/s 263 of the Income Tax Act, 1961. Shri K.M. Roy, Ld. Authorized Representative appeared on behalf of assessee and Shri G.Mallikarjuna, Ld. Departmental Representative appeared on behalf of Revenue. 2. The assessee has raised the following grounds of appeal:- 1. That the order u/s. 263, passed in pursuance to audit objection is unsustainable in eyes of law. 2. That the Ld CIT has failed to appreciate that AO had applied his mid to the details of purchase while passing the assessment order. 3. That the Ld CIT has erred in coming to the conclusion that there is undervaluation in closing stock when he has misinterpreted the method of ascertainment of cost as apparent from the ground. 4. That appellant deserves right to raise additional ground during hearing. 3. Solitary issue raised by assessee in this appeal is that Ld. CIT erred in holding the order of Assessing Officer passed u/s 143(3) of the Act as erroneous in so far prejudicial to the interest of revenue u/s 263 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the yearend i.e. 98776.410 kg. Thus, the total value of closing stock was shown at ₹2,27,18,574 (98776.510 x 230/-) whereas the purchase during the year was shown at ₹298.10 per kg. The Ld. Pr CIT further observed that in case assessee is following FIFO method then the closing stock has been undervalued by ₹67,17,784/- [98776.410 x 68.10 (298.10 230)]. It is because the opening stock of the valued at ₹138.84 per kg for its quantity 100223.94 kg must have been sold during the year. Accordingly Ld. Pr. CIT issued notice u/s. 263 of the Act vide dated 07.04.2016 for invoking the provision of section 263 of the Act. The assessee in compliance thereto submitted that : In relation to closing stock a) It has never valued its closing stock on the basis of weighted average cost. Therefore, the value adopted for ₹298.10 per kg for determining the closing stock is not correct. b) The closing stock in the instant case has been valued at cost on year-to-year basis consistently. The valuation of closing stock representing the actual cost incurred on the purchase of tea. c) The method of valuation adopted by the assessee has been accepted in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered the position of law and facts and circumstances of the instant case, the assessment order passed by the AO is found to be erroneous and prejudicial to the interest of revenue and hence the assessment order passed by the AO is set aside in respect of both the points stated in Para-2 above. The Assessing Officer is accordingly directed to initiate fresh assessment proceedings and carry out necessary enquiries / verification and thereafter a fresh assessment order is to be passed in accordance with the relevant provisions of law. Aggrieved by this, the assessee has come up in appeal before us. 6. Ld. AR for the assessee before us submitted that the proceedings u/s. 263 of the Act was initiated on the basis of audit objection and there was no application of mind of Ld. Pr CIT in ariving at the conclusion that the order of AO is erroneous in so far as prejudicial to the interest of Revenue. Ld. AR in support of assessee s claim relied on the judgment of Hon'ble jurisdictional High Court in the case of Jeewanlal limited vs. ACIT (1929) reported in 108 ITR 407 (Cal) wherein the Hon'ble court has held:- Further, in instant case, the Commissioner purporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of on hand Ld. CIT has applied his mind as he has not made any reference in his order to the audit objection raised by the Audit Wing of the Income Tax Department. Thus, Ld. CIT after verifying independently has invoked the provision of Section 263 of the Act. 6.2 Certain differences were observed form the assessment folders, therefore the action u/s. 263 of the Act was initiated. Ld. DR heavily relied on the order of Ld. Pr. CIT. 7. We have heard the rival contentions and perused the records. In the instant case, it is an undisputed fact that the audit objection was raised. But we note that the proceedings were not initiated merely on the basis of audit objection. It is because no reference has been made by Ld. Pr. CIT in his impugned order to the audit objection as discussed above. We rather find that Ld. Pr CIT has given categorically finding which reads as under:- 2. The assessment record of the assessee was called for and on the basis of the verification of the materials available on record, it was found that the order of assessment was erroneous in so far as it is prejudicial to the interest of revenue on the following grounds: From the above, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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