Ajay Kumar Mittal, J. - (1.) THIS appeal has been preferred by the Revenue under section 260A of the Income -tax Act 1961 (in short, "the Act"), against the order dated November 27, 2012, annexure AIII passed by the Income -tax Appellate Tribunal, Chandigarh Bench "A" Chandigarh (in short, "the Tribunal") in I.T.A. No. 1282/CHD/2010 (Asst. CIT v. Satish Estate P. Ltd. : [2013] 22 ITR (Trib) 349 (Chandigarh)) for the assessment year 2006 -07, claiming the following substantial questions of law: (i) Whether, on the facts and in the circumstances of the case, the hon'ble Income -tax Appellate Tribunal was right in law in deleting the addition of Rs. 75,00,000 made by the Assessing Officer on account of undervaluation of closing stock of the land as the civil suit was filed in the civil court near the end of the financial year, i.e., March 18, 2006, which would have no impact on the value and that the events that took place in the subsequent year would have no hearing on the value of closing stock as on March 31, 2006? (ii) Whether, on the facts and in the circumstances of the case, the hon'ble Income -tax Appellate Tribunal was right in law in deleting the addition of Rs. 75,00,000 made by the Assessing Officer on account of undervaluation of closing stock of the land as the assessee has not given any basis as to how he arrived at this figure? Briefly, the relevant facts necessary for adjudication of the controversy involved, as narrated in the appeal, may be noticed. The assessee filed its return declaring income of Rs. 38,83,862 on November 30, 2006. Assessment under section 143(3) of the Act was completed on November 23, 2007, at an income of Rs. 45,47,330. The Commissioner of Income -tax (CIT), vide order dated November 18, 2008, under section 263 of the Act set aside the assessment. Again, assessment was framed, vide order dated October 13, 2009, annexure A.1 under section 143(3) of the Act at an income of Rs. 1,20,47,330 and an addition of Rs. 75,00,000 was made on account of undervaluation of closing stock of the land. Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income -tax (Appeals) (CIT (A)). Vide order dated August 30, 2010, annexure A. II, the Commissioner of Income -tax (Appeals) allowed the appeal and deleted the entire addition by relying upon the documentary evidence. It was further held that there was a legal dispute between the assessee and M/s. Amritsar Rayon and Silk Mills Pvt. Ltd. The said firm had filed a suit on March 11, 2006, against the assessee and as such the assessee had valued the closing stock at cost price or net realisation value, whichever was less. It was further held that the assessee had not changed the method of valuing the closing stock as was evident from the audit report "Details of deviation if any". Not satisfied with the order, the Revenue filed an appeal before the Tribunal. Vide order dated November 27, 2012, annexure A. III, the appeal was dismissed. Hence, the present appeal by the Revenue.
(2.) LEARNED counsel for the Revenue submitted that the civil suit was filed by M/s. Amritsar Rayon and Silk Mills Pvt. Ltd. on March 11, 2006, in which the assessee was made respondent No. 4 and the same was still pending at the end of the financial year, i.e., as on March 31, 2006, and, therefore, in such a situation, the valuation of the closing stock shown by the assessee by making reduction of Rs. 75 lakhs was improper. The Commissioner of Income -tax (Appeals) and the Tribunal had erred in granting the benefit of the same. On the other hand, the learned counsel for the assessee besides supporting the findings recorded by the Commissioner of Income -tax (Appeals) and the Tribunal on the strength of the judgment of this court in CIT v. Fazilka Co -operative Sugar Mills Ltd. : [2002] 255 ITR 411 (P & H) and of the Delhi High Court in CIT v. Continental Devices India Ltd. : [1992] 196 ITR 571 (Delhi) submitted that there was no loss to the Revenue on account of valuation of the closing stock for the assessment year 2006 -07 as in the subsequent assessment year 2007 -08, the valuation of the opening stock was taken after reducing the closing stock for the assessment year 2006 -07.
(3.) AFTER hearing the learned counsel for the parties, we do not find any merit in the appeal.;