Challani Ranka Jewellery, Chennai v. Dcit Central Circle 3(4), Chennai

In this Miscellaneous Petition filed by the assessee against the order of the Tribunal in I.T.A. No. 3066/Chny/2017 dated 05.06.2018 for the assessment year 2012-13, its grievance is that the Tribunal dismissed the ground with regard to the addition towards undervaluation of stock as well as addition towards gross profit on unaccounted sales without considering the fact that any additions to the total income of the assessee should be based on materials found in proceedings initiated and should not be solely based M.P. No.163/Chny/18 2 on statements or offers in sworn statements without any underlying corroborative evidences and the stock must be valued at cost or net realizable value whichever is lower and cannot be valued at market price. It was further submitted that the petitioner had valued its closing stock at average cost price whereas, the Assessing Officer has sought to value the closing stock at market rate which is against the principles of accounting and would lead to determination of incorrect profits. The Tribunal has not considered the above facts while confirming the additions and thus, there is a mistake apparent on record and prayed for recalling and adjudicating the same.

2. Per contra, the ld. DR submitted that there was no mistake in the order of the Tribunal warranting interference under section 254(2) of the.

3. We have heard rival contentions and perused the order of the Tribunal. In this case, the Assessing Officer valued the unaccounted closing stock at market price and made the addition, which was confirmed by the Tribunal. By referring to the miscellaneous petition, the ld. Counsel has submitted that the following mistakes are apparent from the order of the Tribunal: (i) any additions to the total income of the assessee should be based on materials found in proceedings initiated and should not be solely M.P. No.163/Chny/18 3 based on statements or offers in sworn statements without any underlying corroborative evidences; (ii) Stock must be valued at cost or net realizable value whichever is lower and cannot be valued at market price.

4. With regard to the valuation of stock, the petitioner has not raised any specific ground either in the grounds of appeal before the Tribunal or during the course of appellate proceedings. However, we find force in the arguments of the ld. Counsel in view of the various decisions of the Honble Supreme Court. While passing in its order, the Tribunal has not considered the above facts, which is a mistake apparent on record and accordingly, we recall the order of the Tribunal dated 05.06.2018. The Registry is directed to fix the appeal for hearing on regular course by service of notice to both the sides.

5. In the result, the MP filed by the assessee is allowed. Order pronounced on the 02 nd January, 2019 at Chennai. Sd/- Sd/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER Chennai, Dated, the 02.01.2019 Vm/- /Copy to: 1. /Appellant, 2. / Respondent, 3. ( )/CIT(A), 4. /CIT,

5. /DR & 6. /GF.