Form 3CD

IT IS REQIREMENT AS PER 44AB

Haven't come across any such cases.

In fact, I dont see how the 'quantitative details of stock' clause [clause 35] can brought to litigation. Its a disclosure requirement. There is no scope for litigation.

Any assessee who is carrying on a business of manufacture or trading, and he/she crosses the 44AB limits, then this clause shall apply. There is no way around it.

Assessees for whom this clause is NOT APPLICABLE:

- In case of an assessee carrying on technical consultancy services, stationery, papers, drawings, designs etc. constitute stores and they are not in the nature of raw materials. Therefore, details under clause 35 is not required to be given in case of such assessee.

Income Tax Appellate Tribunal - Ahmedabad

Mayank Jain, Surat vs Department Of Income Tax on 20 November, 2015

             IN THE INCOME TAX APPELLATE TRIBUNAL

               AHMEDABAD ''B'' BENCH - AHMEDABAD

Not in favour of assessee

In the above mentioned decision, i couldnt find any mention of the fact that 'quantitative details of stock' are not required to be disclosed in the Tax Audit Report. In this case, the assessee had not filled the stock details and the AO almost rejects the books of accounts due this point. 

The decision has also quoted a decision of SC in "S. N. Namasivayam Chettiar vs. CIT" where-in it is mentioned:

 "The want of a stock register was, in that particular case, not a very serious defect because the account books had been found and accepted as correct and disclosed a true state of affairs. It cannot, therefore, be said that that case laid down as a proposition of law that the want of a stock register by which a proper check could be made was not such a serious defect as to make the proviso to section 13 in- applicable." - The court acknowledges that not disclosing stock details is a defect eventhough not serious. 

But the importance of such a register was pointed out by the Nagpur High Court in Ghanshyamdas Permanand vs. CIT [1952] 21 ITR 79. 

"In cases such as the instant case, the keeping of a stock register is of great importance because that is a means of verifying the assessee's accounts by having a "quantitative tally". If, after taking into account all the materials including the want of a stock register, it is found that from the method of accounting the correct profits of the business are not deductible, the operation of the proviso to section 13 of the Income-tax Act would be attracted."

In fact, in the above decision, the assessee's Gross profit disclosed had fallen from 15% in preceding PY down to 10% in current PY. The AO noticed that the Tax Auditor had stated that Stock details had not been furnished. Eventually, SCN is issued and the assessee finally furnishes the stock details to the AO, after deliberately not submitting the stock records until the last moment. Anyway, the ITAT handed the case back to the AO for allowing him an opportunity to analyse the stock records submitted at the last moment. The ITAT has not said that the Stock records were not required.

Hence, Stock details are mandatory to be shown in the Form 3CD if your business was dealing in stock/ inventory. Also, petty items of stock need not be shown.