COMMISSIONER OF INCOME TAX Vs. PARAMOUNT COMMUNICATIONS LTD

JUDGEMENT

(1.) The present Appeal by the Income Tax Department has been filed under Section 260 A of the Income Tax Act,1961 (for brevity "Act 1961") challenging the order of Income Tax Appellate Tribunal (in short "ITAT") in ITA No. 3242/DEL/2007 dated 12-12-2008 for the Assessment Year 2003-2004. By the impugned order, ITAT has deleted the addition of Rs. 27,60,000/- made by the Assessing Officer (hereinafter referred as "AO") on account of excess stock .

(2.) Briefly stated the relevant facts of this case are that on 24th December, 2002, a survey operation under Section 133A of Act 1961 was carried out on the respondent-assessee which resulted in surrender of excess stock and excess scrap amounting to Rs. 75, 00,000/- This amount was added by the AO as unexplained investment in stock under Section 68 of the Act 1961 as this amount was neither added as the surrendered amount to the total income nor was mentioned in the audit report. However, the respondent assessee contended that at the time of survey operation under Section 133A, administrative, financial and other expenses were not considered and excess stock and scrap was eventually duly recorded in the books of accounts. Respondent-assessee further contended that sale of such stock and scrap was also recorded during the regular course of business after the survey operation.

(3.) An appeal was filed by the respondent assessee against the order of AO before Commissioner of Income Tax (Appeals) [for short "CIT(A)"] and it was observed by the CIT(A) that there was excess valuation of Rs 47, 40,000/- in the closing stock inventory prepared during the course of survey. A relief of Rs.47,40,000/- was thus granted to the assessee as it was a mistake on the part of the survey team. However, CIT (A) confirmed the addition of Rs. 27,60,000/- i.e (Rs.75, 00,000 - Rs.47,40,000).