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TMI Blog2019 (5) TMI 1963X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 to 5 regarding reopening of assessment u/s 147, the ld. AR of the assessee has not argued on these grounds and, accordingly, the same are dismissed.), the ld. AR. of the assessee submitted that while providing the data sheet in relation to the facts of the case, the grounds relating to the reopening of assessment were disclosed and also presented the facts relating to the issue of notice u/ s 148, date of completion of original assessment, reasons for reopening, objections to reopening of assessment, closing stock as on 31/03/2009 and opening stock as on 01/04/2009 were tabulated and filed. 3.1 Further, he submitted that the Authorized Representative did make a submission that the reopening of assessment u/ s 147 was not valid, as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income will be declared by increasing the gross revenue, but, in the given case, assessee chose to increase the closing stock. It is fine for the AY 2009-10. But, when it comes to AY 2010-11, the assessee carried forward the stock and records the same as opening stock. It includes the inflated value of Rs. 35 lakhs. When the P L Account is drawn for the current AY, the assessee will record actual stock without any artificial value in the closing stock. In the result, the artificial value inflated in the opening stock will become fictitious expenditure for the current AY to the extent of Rs. 35 lakhs. This expenditure is not real but not relevant for the current AY i.e. 2010-11. Therefore, in our considered view, the artificial increase in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and all credits are not incomes/profits. Only cost of goods sold, being a trading firm, is an expenditure. Thus, the ITAT has erroneously considered the opening stock as expenditure. The fact that corresponding stock was included in closing stock has missed the attention of the bench and there is no impact on actual profitability in this year. Appellant submits that the ITAT has taken a new ground while confirming the order and assessee submissions are not considered at all. The issue of inflation of expenditure being a new issue and has not been confronted to assessee, thus violating the principles of natural justice. 3.5 Ld. AR submitted that the Authorised Representative of the appellant during the course of the hearing has brought o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... With regard to issue on merit, 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. In order to clarify the same, we explain the same as under: Assessee has actual stock ( say A ) of value and makes an adjustment (say B ) by inflating the stock. Therefore, the closing stock of AY 2009-10 is (A+B). The same stock is opening stock for AY 2010-11. In the AY 2010-11, assessee declares the actual closing stock (say C). when it is presented in the P L A/c form, it will be : P L A/c Opening stock A+B Sales 100 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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