In the instant appeal, which is directed against order dated 13.05.2011 of the Income Tax Appellate Tribunal, `B' Bench, Ahmedabad, in ITA No.2492 of 2010, the Revenue has raised the following question proposing the same as a substantial question of law: “Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs.30,47,400/- made on account of value of stock to the extent as well as quashing of the re-opening of the assessment?”
2. We heard learned advocate Ms. Paurami Sheth for the appellant.
3. The assessment of respondent assessee for the assessment year 2004-05 was finalised. Subsequently, in the scrutiny of records, it was noticed that there was underassessment of closing stock of Rs.30,47,400/- being difference between the closing stock of the last year and the opening stock of previous year. As a result, the assessment was reopened and therein addition of aforesaid amount of Rs.30,47,400/- was made in the total income of the assessee.
4. The Commissioner of Income Tax (Appeals) allowed assessee's appeal and deleted the addition, by relying upon the Apex Court decision in CIT v. Kelvinator of India (256 ITR 1) and other decisions on the point that a change of opinion could not be a ground for exercising powers under section 148 of the Income Tax Act, 1961 (hereinafter referred to as `the Act' for sake of brevity). The Department preferred appeal before the Income Tax Appellate Tribunal which was dismissed and the order of CIT(A) was confined, that order is impugned in the present appeal.
5. In the impugned order, the Tribunal observed and held as under:
“The AO made addition of Rs.30,47,400/- on account of under-valuation of the stock. The assessee explained the history of importing the material in question in earlier years and also explained that the inventory of the said material has reduced its commercial value, therefore, in several preceding years the value of the stock was reduced considerably. Identical claim was considered by the AO in preceding assessment year 2003-04 and accepted the claim of the assessee. Therefore, there is no reason to take a different view in the assessment year under appeal. The learned CIT(A) on proper appreciation of the facts and material on record rightly deleted the addition. The learned DR submitted that principle of res judicata does not apply in the Income Tax Act. However, though it is true that principles of res judicata does not apply, the rule of consistency does apply. The AO failed to point out those facts and circumstances are different in the assessment year under appeal. .... Since the AO has considered identical issue in the preceding assessment year 2003-04 and accepted the claim of the assessee and did not make the similar addition, would prove, the learned CIT(A) rightly deleted the addition in the assessment year under appeal. The departmental appeal has no merit and the same is dismissed. This was the only addition made by the A.O., therefore, there is no need to consider whether quashing of the reassessment by the learned CIT(A) was justified or not because it would be having academic interest only.”
6. It was shown to the Tribunal that in the preceding assessment year 2003-04, the Assessing Officer had accepted the claim of the assessee on similar issue. He had then accepted all the reasons and explanation for deletion. No change of circumstances in the year under consideration were brought out , and therefore, following the doctrine of consistency, the CIT(A) and thereafter the Tribunal were justified in deleting the addition made by the Assessing Officer on the basis of stock valuation. It is an accepted principle that eventhough strictly speaking in Income Tax proceedings, the principle of res judicata does not apply, the principle of consistency is required to be followed. Furthermore, the assessee had explained the inventory and differentiation in the figures of stock with satisfactory reasons.
6.1 The findings and conclusion recorded by the Tribunal are proper. It rightly treated justifiability or otherwise of the reopening of assessment to be academic as the addition itself was deleted. Even viewing the legality of action of reopening by the assessing Officer, he acted on same facts and material which was before him and had also raised query on the issue in course of assessment under section 143(3) of the Act. Therefore, he was not justified in assuming the power to reopen the concluded assessment.
7. For the aforesaid reasons and discussion, the appeal is devoid of merits. No substantial question of law arises for consideration. Accordingly, the appeal is dismissed.
(V.M. SAHAI, J.) (N.V. ANJARIA, J.)
(SN DEVU PPS)