Facts of the Case

The assessee, Jitubhai Shamaldas Tokle, proprietor of Tokle Timbers, filed an appeal for Assessment Year 2022-23 against the order dated 17.10.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. The Assessing Officer had made an addition of ₹31,38,096 under Section 69 on account of alleged difference in valuation of closing stock, though there was no difference in the quantity of closing stock.

Before the CIT(A), the assessee submitted a reconciliation explaining that incorrect auto-updated data from Tally had been uploaded by mistake and sought admission of additional evidence under Rule 46A. The CIT(A) did not admit the additional evidence and confirmed the addition. Aggrieved, the assessee approached the Tribunal.

Issues Involved

Whether the addition under Section 69 for alleged difference in valuation of closing stock was sustainable when the quantity of stock was not in dispute, whether rejection of reconciliation and non-admission of additional evidence under Rule 46A was justified, and whether the matter required fresh verification of stock valuation.

Petitioner’s Arguments

The assessee submitted that there was no discrepancy in the quantity of closing stock and that the difference arose solely due to an inadvertent error in uploading auto-updated data from Tally. It was argued that proper reconciliation along with bills and vouchers was furnished and ought to have been examined. Alternatively, it was contended that even if a higher value was adopted for closing stock, the same should be taken as opening stock of the subsequent assessment year.

Respondent’s Arguments

The Revenue supported the order of the CIT(A) and contended that the assessee failed to properly substantiate the reconciliation during appellate proceedings.

Court Order / Findings

The ITAT Ahmedabad observed that the core issue pertained to valuation of closing stock and that the quantity of closing stock was admittedly not in dispute. Considering the explanation furnished by the assessee regarding erroneous uploading of data and the need to examine bills, vouchers and stock records, the Tribunal held that the matter required fresh verification.

In the interest of justice, the Tribunal remanded the issue to the file of the Assessing Officer to examine the valuation of closing stock de novo after verifying opening stock, purchases during the year, bills, vouchers and other relevant records. The assessee was directed to submit all relevant details and comply with notices without seeking unnecessary adjournments.

Important Clarification

The Tribunal clarified that where the dispute relates only to valuation of closing stock and not to quantity, the issue must be examined holistically with reference to opening stock, purchases and supporting records. Mechanical confirmation of additions without such verification is not sustainable.

Final Outcome

The appeal filed by the assessee was allowed for statistical purposes. The issue relating to addition of ₹31,38,096 under Section 69 on account of valuation of closing stock was remanded to the Assessing Officer for fresh adjudication in accordance with law after proper verification.

Link to Download Order- https://www.mytaxexpert.co.in/uploads/1769062630_JITUBHAISHAMALDASTOKLEBHAVNAGARVS.THEITOWARD110BHAVNAGAR.pdf

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