Sri. Siva Priya Shelters Pvt. Ltd., Bangalore V. DCIT, Bangalore

CO 56/BANG/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7317 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-06-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-01-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 26-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ETWA MUNDA CITIIIDR
• Assessee Lawyers: S RAM JOGI REDDY
• Keywords: Search and seizure
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N. BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI N.V. VASUDEVAN , JUDICIAL MEMBER ITA NOS.1449 TO 1451/BANG/2010 ASSESSMENT YEARS : 2004-05, 2005-06 & 2007-08 THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(3), BANGALORE. VS. M/S. SRI SIVAPRIYA SHELTERS PVT. LTD., 71, 2 ND FLOOR, 2 ND CROSS, R.J. GARDEN, OUTER RING ROAD, MARATHAHALLI, BANGALORE. PAN: AAICS 3835L APPELLANT RESPONDENT C.O. NOS.54 TO 56/BANG/2011 (IN ITA NOS.1449 TO 1451/BANG/2010) ASSESSMENT YEARS : 2004-05, 2005-06 & 2007-08 M/S. SRI SIVAPRIYA SHELTERS PVT. LTD., 71, 2 ND FLOOR, 2 ND CROSS, R.J. GARDEN, OUTER RING ROAD, MARATHAHALLI, BANGALORE. PAN: AAICS 3835L VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(3), BANGALORE. CROSS OBJECTOR APPELLANT IN APPEAL ITA NOS.1499 TO 1451/BANG/10 & CO NOS.54 TO 56/BANG/11 PAGE 2 OF 18 REVENUE BY : SHRI ETWA MUNDA, CIT-III(DR) ASSESSEE BY : SHRI S. RAM JOGI REDDY, C.A. DATE OF HEARING : 07.06.2012 DATE OF PRONOUNCEMENT : 29.06.2012 O R D E R PER BENCH ITA NOS.1449/BANG/10 TO 1451/BANG/10 ARE APPEALS BY THE REVENUE AGAINST THREE ORDERS ALL DATED 13.10.2010 O F CIT(A)-IV, BANGALORE, RELATING TO A.Y.04-05, 05-06 & 07-08. THE ASSESSEE HAS FILED CROSS OBJECTIONS AGAINST THE VERY SAME ORDERS OF TH E CIT(A). 2. IN ITS APPEALS, THE REVENUE HAS CHALLENGED THE ORDERS OF CIT(A) WHEREBY THE CIT(A) DELETED THE ADDITION MADE BY THE AO ON ACCOUNT OF UNDERVALUATION OF CLOSING STOCK. THE FACTS AND CIR CUMSTANCES UNDER WHICH THE ABOVE ADDITION WAS MADE BY THE AO AND DELETED B Y THE CIT(A) ARE IDENTICAL IN ALL THE THREE YEARS. 3. ITA NO.1449/BANG/10 (A.Y.2004-05) : THE ASSESSEE IS A COMPANY. IT IS IN THE BUSINESS OF DEVELOPING RESIDENTIAL LAY OUTS. IT BUYS LANDS AND CONVERTS THEM INTO RESIDENTIAL LAY-OUTS AFTER PROVI DING ALL AMENITIES LIKE SEWERAGE TREATMENT PLANT, PROVIDING FACILITY FOR LA YING UNDERGROUND ELECTRICITY AND DRAINAGE, LAND SCAPE/GARDENS ETC., AND GETTING APPROVAL FROM BMRDA/PANCHAYAT FOR SUCH LAY-OUTS. THE ASSESSEE CO MMENCED ITS OPERATIONS IN DECEMBER, 2002. IT ENTERED INTO A MO U DATED 1.12.2002 WITH SRI SIVA PRIYA TOWNSHIP PROMOTERS (P) LTD., WHEREBY THE LATTER TRANSFERRED ITA NOS.1499 TO 1451/BANG/10 & CO NOS.54 TO 56/BANG/11 PAGE 3 OF 18 19 ACRES AND 34 GUNTAS OF LAND TO THE ASSESSEE AT A PRICE OF RS.89,33,387/-. THERE WAS A SEARCH AND SEIZURE ACT ION U/S.132 OF THE INCOME TAX ACT, 1961 (THE ACT) CARRIED OUT IN THE CASE OF THE ASSESSEE BY THE REVENUE ON 11.1.2008. CONSEQUENT TO THE SEARCH ACTION, ASSESSMENTS FOR AYS 2003-04 TO 2007-08 WERE MADE U/S.153A OF TH E ACT. 4. IN THE COURSE OF POST SEARCH INVESTIGATION, THE ASSESSEE BY A LETTER DATED 28.2.2008 SURRENDERED A SUM OF RS.60,87,229/- ON ACCOUNT OF UNDERVALUATION OF STOCK. 5. FOR AY 2003-04, IN THE ORIGINAL RETURN OF INCOME FILED U/S.139(1) OF THE ACT BY THE ASSESSEE DID NOT REFLECT THE VALUE O F STOCK OF LAND OF RS.89,33,387/- PURCHASED FROM SRI SIVA PRIYA TOWNSH IP PROMOTERS (P) LTD. THE VALUE OF CLOSING STOCK DECLARED BY THE ASSESSEE FOR THAT YEAR WAS RS.34,69,919/-. IN THE RETURN OF INCOME FILED U/S. 153A OF THE ACT FOR AY 2003-04, THE ASSESSEE DECLARED CLOSING STOCK OF RS. 1,12,18,102/-. THE ABOVE VALUE WAS DECLARED AFTER DULY TAKING INTO ACC OUNT THE STOCK OF RS.89,69,919/- WHICH THE ASSESSEE PURCHASED FROM S RI SIVA PRIYA TOWNSHIP PROMOTERS (P) LTD. THE MANNER IN WHICH T HE AFORESAID SUM OF RS.1,12,18,102/- WAS WORKED OUT BY THE ASSESSEE IS GIVEN AS ANNEXURE-1 TO THIS ORDER. 6. THE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS F OR AY 2003-04 BASED ON COMPUTATION OF CLOSING STOCK SUBMITTED BY THE ASSESSEE BEFORE THE INVESTIGATION WING NOTICED THAT THE CLOSING STO CK AS ON 31.3.2003 HAD BEEN DECLARED BY THE ASSESSEE AT RS.1,20,23,742/-. HE THEREAFTER NOTICED THAT THE ASSESSEE HAD DECLARED CLOSING STOCK OF RS. 34,69,919 IN THE RETURN ITA NOS.1499 TO 1451/BANG/10 & CO NOS.54 TO 56/BANG/11 PAGE 4 OF 18 OF INCOME FILED FOR AY 2003-04 U/S.139(1) OF THE AC T. HE THEREFORE ADDED THE DIFFERENCE VIZ., RS.85,53,826/- TO THE TOTAL IN COME FOR AY 2003-04 WHILE COMPLETING ASSESSMENT FOR AY 2003-04 U/S.153A OF TH E ACT. 7. ON APPEAL BY THE ASSESSEE, THE CIT(A) AFTER TAKI NG COGNIZANCE OF THE STATEMENT ENCLOSED AS ANNEXURE-1 TO THIS ORDER, HELD THAT THE ASSESSEE HAS DULY ACCOUNTED FOR THE STOCK PURCHASED FROM SRI SIVA PRIYA TOWNSHIP PROMOTERS (P) LTD., ON 1.12.2002 IN AY 2003-04. HE FOUND THAT OUT OF LAND VALUED AT RS.89,33,387/- PURCHASED FROM SRI SIVA PR IYA TOWNSHIP PROMOTERS (P) LTD., RS.11,85,201/- WAS ONLY AN ADVA NCE AND NOT A PAYMENT FOR PURCHASES AND THEREFORE THE SAME WERE N OT ADDED TO THE CLOSING STOCK. THUS A SUM OF RS.77,48,186/- WAS AD DED TO THE VALUE OF CLOSING STOCK FOR AY 2003-04 BY THE ASSESSEE AND OF FERED TO TAX IN ASSESSMENT U/S.153A OF THE ACT. THE ADDITION MADE BY THE AO WAS DELETED. WE WERE INFORMED AT THE BAR AT THE TIME O F HEARING THAT THE ORDER OF CIT(A) HAS BEEN ACCEPTED BY THE REVENUE FOR AY 2 003-04 AND NO APPEAL FILED BEFORE THE TRIBUNAL. 8. IN AY 2004-05, THE ASSESSEE DECLARED CLOSING STO CK OF 92,21,475/- IN THE RETURN FILED U/S.139(1) OF THE ACT. IN THE PROFIT AND LOSS ACCOUNT FILED ALONG WITH THE RETURN FILED U/S.153A OF THE ACT, TH E ASSESSEE DECLARED CLOSING STOCK OF RS.1,27,65,311/-. THIS CLOSING ST OCK WAS ARRIVED AT BY THE ASSESSEE AFTER DULY TAKING OPENING STOCK AS ON 1.4. 2003 OF RS.1,12,18,102/- WHICH WAS THE CLOSING STOCK AS ON 31.3.2003 DECLARED FOR AY 03-04. THE WORKING OF THE CLOSING STOCK VARIA NCE AS WORKED OUT BY THE ASSESSEE IS GIVEN AS ANNEXURE-2 TO THIS ORDER. AS P ER THE SAID ANNEXURE-2, IT CAN BE SEEN THAT THERE WAS AN UNDERVALUATION OF CLOSING STOCK OF ITA NOS.1499 TO 1451/BANG/10 & CO NOS.54 TO 56/BANG/11 PAGE 5 OF 18 RS.35,43,836/-. THE PROFIT AS PER PROFIT AND LOSS ACCOUNT AS ON 31.3.2004 WAS RS.1,24,518/- WITHOUT GIVING EFFECT TO THE OPEN ING AND CLOSING STOCK AS PER ANNEXURE-1 AND ANNEXURE-2 OF THIS ORDER. THE A SSESSEE FILED A REVISED PROFIT AND LOSS ACCOUNT AS ON 31.3.2004 AFT ER DULY CONSIDERING THE OPENING AND CLOSING STOCK AS PER ANNEXURES-1 & 2 TO THIS ORDER. THE PROFIT AS PER PROFIT AND LOSS ACCOUNT AS PER THIS PROFIT A ND LOSS ACCOUNT WAS RS.24,25,713. THIS WAS THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FILED FOR AY 2004-05. IT CAN BE SEEN FRO M ANNEXURE-2 TO THIS ORDER THAT THE DIFFERENCE IN CLOSING STOCK AS ON 31 .3.2004 BETWEEN THE ORIGINAL PROFIT AND LOSS ACCOUNT AND THE REVISED PR OFIT AND LOSS ACCOUNT WAS A SUM OF RS.35,43,836/- AND THIS HAS BEEN OFFERED T O TAX IN THE RETURN OF INCOME. 9. THE AO ON THE BASIS OF THE STATEMENT FILED IN TH E COURSE OF POST SEARCH INVESTIGATION WAS OF THE VIEW THAT THE VALUE OF CLOSING STOCK AS ON 31.3.2004 WAS RS.1,98,61,189 WHEREAS THE ASSESSEE H AD DECLARED CLOSING STOCK OF ONLY RS.92,21,475/-. IN HIS SHOW CAUSE NO TICE DATED 17.8.2009, THE AO INFORMED THE ASSESSEE THAT THE DISCREPANCY I N THE CLOSING STOCK WAS DUE TO THE FACT THAT ADVANCE FOR PURCHASE OF PR OPERTY HAVE BEEN SHOWN AS CLOSING STOCK WHEREAS SUCH ADVANCES CANNOT BE CO NSIDERED FOR VALUATION OF CLOSING STOCK. HE THEREFORE CONCLUDED THAT THERE WAS SUPPRESSION OF CLOSING STOCK TO THE EXTENT OF RS.1, 06,39,714. HE FURTHER NOTICED THAT STOCK OF RS.85,53,826/- WAS ALREADY AD DED IN AY 03-04. HE GAVE CREDIT TO THE SAME AND ADDED THE DIFFERENCE VI Z., RS.20,85,888/- (RS.1,06,39,714 RS.85,53,826) AS SUPPRESSED VALUE OF CLOSING STOCK. THE MANNER IN WHICH THE AO ARRIVED AT THE CLOSING S TOCK OF ITA NOS.1499 TO 1451/BANG/10 & CO NOS.54 TO 56/BANG/11 PAGE 6 OF 18 RS.1,98,61,189/- IS ON THE BASIS OF STATEMENT SAID TO HAVE BEEN FILED IN THE COURSE OF POST SEARCH INVESTIGATION. THOSE DETAILS WERE NOT FILED BEFORE US. THE METHOD OF COMPUTATION OF CLOSING STOCK AS ON 31 .3.2004 BY THE ASSESSEE AT RS.1,27,65,311/- IS GIVEN IN ANNEXURE-2 TO THIS ORDER. 10. AGGRIEVED BY THE AFORESAID ADDITION THE ASSESSE E PREFERRED APPEAL BEFORE CIT(A). THE CIT(A) DELETED THE ADDITION MAD E BY THE AO HOLDING AS FOLLOWS: 2.1.3 THE PERUSAL OF THE ASSESSMENT ORDER REVE ALS THAT THE ASSESSING OFFICER AS PER NOTICE DATED 17.08.2009 (R EPRODUCED IN PARAGRAPH 6.2 OF THE ASSESSMENT ORDER) ASKED THE AS SESSEE TO EXPLAIN AS TO WHY THE DIFFERENCE IN THE CLOSING STO CK WORKS OUT AT RS.73,77,098/- SHOULD NOT BE ADDED TO THE TOTAL INC OME OF THE APPELLANT. THE APPELLANT IN RESPONSE TO ABOVE NOTI CE SUBMITTED THAT THE STOCK VARIANCE AND LAND PAYMENTS/ADVANCES REVERSAL WERE OFFERED IN THE RESPECTIVE ASSESSMENT YEAR. THE PER USAL OF THE ASSESSMENT ORDER ALSO REVEALS THAT THE ASSESSING OF FICER WORKED OUT THE DIFFERENCE OF RS.73,77,098/- IN CLOSING STO CK TAKING INTO CONSIDERATION THE CLOSING STOCK SHOWN IN THE RETURN OF INCOME FILED UNDER SECTION 139(1) OF THE INCOME TAX ACT, I GNORING THE FACT THAT IN THE COMPUTATION OF THE INCOME FILED AL ONG WITH THE RETURN OF INCOME UNDER SECTION 153A OF THE INCOME T AX ACT, THE APPELLANT OFFERED AN AMOUNT OF RS.1,64,45,345/- ON ACCOUNT OF THE VARIATION OF CLOSING STOCK WHICH MEANS THAT THE CLO SING STOCK IN THE RETURN FILED UNDER SECTION 153A HAS BEEN TAKEN AT RS.77,64,952/- + RS.1,64,45,345/- = RS.2,42,10,297 WHICH MEANS THAT THE APPELLANT HAS DISCLOSED THE SUPPRESSION OF THE CLOSING STOCK FOR THE ASSESSMENT YEAR AT RS.1,64,45,345/- I N THE RETURN OF INCOME FILED UNDER SECTION 153A OF INCOME TAX ACT W HICH IS MORE THAN THE SUPPRESSION OF STOCK WORKED OUT BY TH E ASSESSING OFFICER, HENCE THE ASSESSING OFFICER WAS NOT JUSTIF IED IN MAKING ADDITION OF RS.73,77,098/- TO THE TOTAL INCOME OF THE APPELLANT , THE SAME IS ACCORDINGLY DELETED. 11. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVEN UE HAS PREFERRED APPEAL BEING ITA NO. 1449/BANG/2010. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED DR WHO REITERATED THE STAND OF THE AO I N THE ORDER OF ITA NOS.1499 TO 1451/BANG/10 & CO NOS.54 TO 56/BANG/11 PAGE 7 OF 18 ASSESSMENT. THE LEARNED COUNSEL FOR THE ASSESSEE R ELIED ON THE ORDER OF THE CIT(A). 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE SUM AND SUBSTANCE OF THE CASE OF THE AO AS REFLECTED IN THE GROUNDS O F APPEAL BEFORE THE TRIBUNAL IS THAT WHILE ADDING A SUM OF RS.35,43,836 /- TO THE VALUE OF CLOSING STOCK AS ON 31.3.2004, THE ASSESSEE HAS ALSO ADDED TO THE VALUE OF OPENING STOCK AS ON 31.3.2003 THE SUM OF RS.77,48,1 86. THIS ACCORDING TO THE REVENUE SHOULD NOT BE PERMITTED. WE FAIL TO SE E ANY JUSTIFICATION FOR THE GRIEVANCE PROJECTED BY THE REVENUE IN THIS APPE AL. THE STARTING POINT OF THE DISPUTE REGARDING VALUATION OF CLOSING STOCK WAS THE FAILURE ON THE PART OF THE ASSESSEE TO SHOW THE VALUE OF LAND PURC HASED FROM SRI SIVA PRIYA TOWNSHIP PROMOTERS (P) LTD. THAT WAS REMEDIE D BY THE ASSESSEE. OUT OF LAND VALUED AT RS.89,33,387/- PURCHASED FROM SRI SIVA PRIYA TOWNSHIP PROMOTERS (P) LTD., RS.11,85,201/- WAS ONL Y AN ADVANCE AND NOT A PAYMENT FOR PURCHASES AND THEREFORE THE SAME WERE NOT ADDED TO THE CLOSING STOCK. A SUM OF RS.77,48,186/- WAS ADDED T O THE VALUE OF CLOSING STOCK FOR AY 2003-04 BY THE ASSESSEE AND OFFERED TO TAX IN ASSESSMENT U/S.153A OF THE ACT. THE CLOSING STOCK SO OFFERED HAS TO NECESSARILY FORM PART OF THE OPENING STOCK AS ON 1.4.2003 FOR AY 200 4-05. THE VARIANCE IN THE CLOSING STOCK AS A RESULT OF ADVANCE AMOUNTS HA VING BEEN CONSIDERED AS PART OF THE CLOSING STOCK OF RS.35,43,836/- HAS BEEN OFFERED TO TAX BY THE ASSESSEE IN AY 2004-05. AS FAR AS THE COMPUTATION OF CLOSING STOCK AS ON 31.3.2004 AT RS.1,27,65,311/- IS CONCERNED, THE SAM E IS FOUND TO BE CORRECT. THE CIT(A) WAS THEREFORE JUSTIFIED IN DEL ETING THE ADDITION MADE BY ITA NOS.1499 TO 1451/BANG/10 & CO NOS.54 TO 56/BANG/11 PAGE 8 OF 18 THE AO. WE FIND NO GROUNDS TO INTERFERE WITH THE O RDER OF THE CIT(A). CONSEQUENTLY THE APPEAL BEING ITA NO.1449/BANG/10 I S DISMISSED. 13. ITA NOS.1450 & 1451/BANG/2010 (A.YS. 2005-06 & 2007-08) : THE GRIEVANCE PROJECTED BY THE REVENUE IN THESE APPEALS IS IDENTICAL TO THE ONE PROJECTED IN AY 2004-05 WHICH WE HAVE DECIDED IN EA RLIER PART OF THIS ORDER. 14. IN AYS 2005-06 & 2007-08, THE ASSESSEE DECLARED CLOSING STOCK OF RS.77,64,952 & RS.1,57,09,980 RESPECTIVELY IN THE R ETURN FILED U/S.139(1) OF THE ACT. IN THE PROFIT AND LOSS ACCOUNT FILED ALON G WITH THE RETURN FILED U/S.153A OF THE ACT, THE ASSESSEE DECLARED CLOSING STOCK OF RS.2,42,10,297/- AND 2,02,58,139/- RESPECTIVELY. T HIS CLOSING STOCK WAS ARRIVED AT BY THE ASSESSEE AFTER DULY TAKING OPENIN G STOCK AS ON 1.4.2004 AND 1.4.2006 OF RS.1,27,65,311 AND RS.1,93,95,699/- RESPECTIVELY, WHICH WAS THE CLOSING STOCK AS ON 31.3.2004 AND 31.3.2006 RESPECTIVELY DECLARED FOR AYS 2004-05 AND 2005-06 RESPECTIVELY. THE WOR KING OF THE CLOSING STOCK VARIANCE AS WORKED OUT BY THE ASSESSEE IS GI VEN AS ANNEXURE-3, 4 & 5 THIS ORDER. AS PER THE SAID ANNEXURES, IT CAN BE SEEN THAT THERE WAS A UNDERVALUATION OF CLOSING STOCK OF RS.1,64,45,345 F OR AY 2005-06 AND RS. 45,48,159 FOR AY 2007-08 RESPECTIVELY. THE PROFIT AS PER PROFIT AND LOSS ACCOUNT AS ON 31.3.2005 & 31.3.2007 WAS RS.6,18,4 05 AND 4,30,404 RESPECTIVELY WITHOUT GIVING EFFECT TO THE OPENING A ND CLOSING STOCK AS PER ANNEXURES-3, 4 AND 5 OF THIS ORDER. THE ASSESSEE F ILED A REVISED PROFIT AND LOSS ACCOUNT AS ON 31.3.2004 AFTER DULY CONSIDERING THE OPENING AND CLOSING STOCK AS PER ANNEXURE-3, 4 AND 5 TO THIS OR DER. THE PROFIT AS PER PROFIT AND LOSS ACCOUNT AS PER THESE PROFIT AND LOS S ACCOUNT WAS RS.1,98,45,858 AS ON 31.3.2005 AND RS.16,57,827 AS ON 31.3.2007 ITA NOS.1499 TO 1451/BANG/10 & CO NOS.54 TO 56/BANG/11 PAGE 9 OF 18 RESPECTIVELY. THESE AMOUNTS WERE THE INCOME DECLAR ED BY THE ASSESSEE IN THE RETURN OF INCOME FILED FOR AY 2005-06 AND 2007- 08 RESPECTIVELY. IT CAN BE SEEN FROM ANNEXURES-3, 4 & 5 TO THIS ORDER THAT THE DIFFERENCE IN CLOSING STOCK AS ON 31.3.2005 AND 31.3.2007 BETWEEN THE ORI GINAL PROFIT AND LOSS ACCOUNT AND THE REVISED PROFIT AND LOSS ACCOUNT WAS A SUM OF RS.1,64,45,345 AND RS.45,48,159 RESPECTIVELY AND T HESE SUMS HAVE BEEN OFFERED TO TAX IN THE RETURN OF INCOME FOR AY 2005- 06 AND 2007-08 RESPECTIVELY. 15. THE AO ON THE BASIS OF THE STATEMENT FILED IN T HE COURSE OF POST SEARCH INVESTIGATION WAS OF THE VIEW THAT THE VALUE OF CLOSING STOCK AS ON 31.3.2005 AND 31.3.2007 WAS RS.2,57,81,764 AND RS.2 ,21,35,963 RESPECTIVELY WHEREAS THE ASSESSEE HAD DECLARED CLOS ING STOCK OF ONLY RS.77,64,952 AND RS.64,25,983 RESPECTIVELY. IN HIS SHOW CAUSE NOTICE DATED 17.8.2009, THE AO INFORMED THE ASSESSEE THAT THE DISCREPANCY IN THE CLOSING STOCK WAS DUE THE FACT THAT ADVANCE FOR PUR CHASE OF PROPERTY HAVE BEEN SHOWN AS CLOSING STOCK WHEREAS SUCH ADVANCES C ANNOT BE CONSIDERED FOR VALUATION OF CLOSING STOCK. HE THER EFORE CONCLUDED THAT THERE WAS SUPPRESSION OF CLOSING STOCK TO THE EXTEN T OF RS.1,80,16,312 FOR AY 2005-06 AND RS.64,25,983 FOR AY 2007-08 RESPECTI VELY. HE FURTHER NOTICED THAT STOCK OF RS.1,06,39,714 AND RS.32,71,0 23/- WAS ALREADY ADDED IN AY 2004-05 AND 2006-07 RESPECTIVELY. HE GAVE CR EDIT TO THE SAME AND ADDED THE DIFFERENCE VIZ., RS.73,77,098 IN AY 2005- 06 (RS.1,80,16,812- RS.1,06,39,714 AND RS.31,54,960 IN AY 2007-08 (RS.6 4,25,983- 32,71,023) AS SUPPRESSED VALUE OF CLOSING STOCK. T HE MANNER IN WHICH THE AO ARRIVED AT THE CLOSING STOCK IS ON THE BASIS OF STATEMENT SAID TO HAVE ITA NOS.1499 TO 1451/BANG/10 & CO NOS.54 TO 56/BANG/11 PAGE 10 OF 18 BEEN FILED IN THE COURSE OF POST SEARCH INVESTIGATI ON. THOSE DETAILS WERE NOT FILED BEFORE US. THE METHOD OF COMPUTATION OF CLOSING STOCK AS ON 31.3.2005 AND 31.3.2007 BY THE ASSESSEE AT RS.2,42, 10,297 AS ON 31.3.2005 AND RS.2,02,58,139 IS GIVEN IN ANNEXURES- 3 & 5 TO THIS ORDER. 16. AGGRIEVED BY THE AFORESAID ADDITION THE ASSESSE E PREFERRED APPEAL BEFORE CIT(A). THE CIT(A) DELETED THE ADDITION MAD E BY THE AO FOR IDENTICAL REASONS AS GIVEN IN AY 2004-05. 17. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVEN UE HAS PREFERRED APPEAL BEING ITA NOS. 1450 & 1451/BANG/2010. WE HA VE HEARD THE SUBMISSIONS OF THE LEARNED DR WHO REITERATED THE ST AND OF THE AO IN THE ORDER OF ASSESSMENT. THE LEARNED COUNSEL FOR THE A SSESSEE RELIED ON THE ORDER OF THE CIT(A). 18. WE HAVE CONSIDERED THE RIVAL SUBMISSION. THE B ASIS ON WHICH THE AO MADE THE IMPUGNED ADDITION AND THE BASIS ON WHIC H THE CIT(A) DELETED THE ADDITION ARE IDENTICAL TO THE ONE DISCUSSED IN ITA NO.1449/BANG/2010. THE REASONS GIVEN FOR CONFIRMING THE ORDER OF CIT(A ) WILL EQUALLY APPLY TO THESE APPEALS ALSO. FOR THE REASONS GIVEN WHILE DE CIDING ITA NO.1449/BANG/2010, WE ARE OF THE VIEW THAT THE CIT( A) WAS JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO. WE FIND NO G ROUNDS TO INTERFERE WITH THE ORDERS OF THE CIT(A). CONSEQUENTLY THE APPEAL BEING ITA NO.1450 & 1451/BANG/10 ARE DISMISSED. 19. C.O.NO.54/BANG/2010 TO 56/BANG/10 (AY 04-05, 05 -06 AND 07-08) : THE COMMON ISSUE THAT ARISES FOR CONSIDERATION IN T HESE CROSS OBJECTIONS ITA NOS.1499 TO 1451/BANG/10 & CO NOS.54 TO 56/BANG/11 PAGE 11 OF 18 FILED BY THE ASSESSEE IS WITH REGARD TO CHARGING OF INTEREST U/S.234-A AND 234-B OF THE ACT. 20. ON THE ABOVE ISSUE, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SEIZED MATERIAL WERE MADE AVAILABLE ONLY I N JULY, 2009 AFTER REPEATED REQUESTS AND THEREFORE THE RETURNS U/S.153 A WERE FILED ONLY ON RECEIPT OF THE SEIZED MATERIAL. OUR ATTENTION WAS DRAWN TO THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF T.P.INDRAKUMAR VS. ITO ITA NO.596 OF 2004 DATED 9.7.2009 WHEREIN THE HONBLE HIGH COURT HAS TAKEN THE VIEW THAT INTEREST U/S.234-A AND B CANNOT BE CHARGED. WE HAVE PERUSED THE AFORESAID JUDGMENT OF THE HONBLE KARNA TAKA HIGH COURT AND WE FIND THAT THE HONBLE COURT WAIVED INTEREST TAKI NG INTO ACCOUNT THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE. AS R IGHTLY CONTENDED ON BEHALF OF THE REVENUE BY THE LEARNED DR, LEVY OF IN TEREST IS MANDATORY AS LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF M.S.GHASWALA 251 ITR 1 (SC) AND IT IS ONLY THE AUTHORITIES UNDER THE ACT IN EX ERCISE OF THEIR ADMINISTRATIVE CAPACITY HAVE THE POWERS TO WAIVE LE VY OF INTEREST. REGARDING THE COMPLAINT OF THE ASSESSEE THAT SEIZED MATERIALS WERE NOT AVAILABLE AND THEREFORE RETURNS COULD NOT BE FILED, THE ASSESSEE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE ABS ENCE OF SEIZED MATERIAL OR THE FACT THAT THERE WAS A DELAY ON THE PART OF T HE REVENUE IN GIVING THE SEIZED MATERIAL, WAS THE REASON FOR THE DELAY IN FI LING THE RETURN OF INCOME. AS ALREADY STATED, THE ASSESSEE IS AT LIBERTY TO IN VOKE THE POWERS OF THE REVENUE AUTHORITIES FOR WAIVER OF INTEREST, IF THEY SO DESIRE. CONSEQUENTLY, THE RELEVANT GROUNDS RAISED IN THE C.O. ARE DISMISS ED. ITA NOS.1499 TO 1451/BANG/10 & CO NOS.54 TO 56/BANG/11 PAGE 12 OF 18 21. AS FAR AS AY 2005-06 IS CONCERNED, THE ASSESSEE HAS RAISED A GROUND OF CROSS OBJECTION BEING AGGRIEVED BY THE AC TION OF THE REVENUE AUTHORITIES IN NOT GIVING DEDUCTION OF RS.1,15,77,8 40/- WHILE COMPUTING INCOME FOR AY 05-06. THE AFORESAID EXPENDITURE WAS CLAIMED ON THE BASIS OF ESTIMATE OF PROBABLE DEVELOPMENT EXPENDITURE WHI CH THE ASSESSEE HAS TO INCUR ON THE PLOTS ALREADY SOLD AND THE SALE PRO CEEDS WERE ALREADY CONSIDERED WHILE DETERMINING INCOME. IT IS THE CLA IM OF THE ASSESSEE THAT THESE EXPENSES HAVE TO BE CERTAINLY INCURRED AND AR E A CHARGE ON THE PROFITS ALREADY OFFERED TO TAX. IT IS ALSO THE ASS ESSEES CLAIM THAT THE AO IN ASSESSMENT FOR AY 2006-07 AND 2007-08 ALLOWED SIMIL AR EXPENSES AND THERE IS NO REASON FOR NOT ALLOWING SUCH EXPENSES I N AY 2005-06. 22. ON THE ABOVE ISSUE WE FIND THAT IN AY 2006-07 A ND 2007-08, THE ASSESSEE HAS CLAIMED DEDUCTION OF SIMILAR EXPENSES ON ESTIMATE BASIS AND THE AO HAS ALLOWED THE SAME. IN THE PRESENT ASSESS MENT YEAR, THE AO DID NOT ALLOW THE SAME ON THE GROUND THAT IT IS A CONTI NGENT LIABILITY AND CANNOT BE ALLOWED. THE CIT(A) HELD THAT IN PROCEEDINGS U/ S.153A IT IS ONLY ESCAPED INCOME THAT HAS TO BE BROUGHT TO TAX AND TH E ASSESSEE CANNOT MAKE A CLAIM FOR ANY DEDUCTION WHICH HE OUGHT TO HA VE MADE IN THE ORIGINAL RETURN OF INCOME. 23. WE ARE OF THE VIEW THAT PROCEEDINGS U/S.153A OF THE ACT ARE NOT AKIN TO PROCEEDINGS U/S.147 OF THE ACT AND THEREFORE THE ARGUMENT THAT ONLY INCOME WHICH ESCAPES ASSESSMENT CAN BE BROUGHT TO T AX IN ASSESSMENT U/S.153A OF THE ACT AND THE ASSESSEE CANNOT CLAIM A NY NEW DEDUCTION, CANNOT BE ACCEPTED. THE TOTAL INCOME HAS TO BE COM PUTED IN ACCORDANCE WITH LAW AND THE REVENUE CANNOT BE HEARD TO SAY THA T A LEGITIMATE ITA NOS.1499 TO 1451/BANG/10 & CO NOS.54 TO 56/BANG/11 PAGE 13 OF 18 DEDUCTION WHILE DETERMINING INCOME CANNOT BE ALLOWE D. WE HOWEVER FIND THAT THE QUESTION WHETHER THE LIABILITY IS CERTAIN AND THAT IT IS QUANTIFIED ON A REASONABLE BASIS HAS NOT BEEN GONE INTO BY THE AO O R CIT(A). IN THE CIRCUMSTANCES, WE DEEM IT FIT AND PROPER TO REMAND THE ISSUE TO THE AO FOR FRESH CONSIDERATION. THE AO WILL ASCERTAIN IF THE INCURRING OF THE LIABILITY IS CERTAIN AND THAT IT HAS BEEN ESTIMATED ON A REASONA BLE BASIS. HE WILL ALLOW THE DEDUCTION SUBJECT TO SATISFACTION OF THE AFORES AID CONDITIONS. FOR STATISTICAL PURPOSES THE GROUND OF CROSS OBJECTION IS TREATED AS ALLOWED. 24. IN THE RESULT, THE APPEALS BY THE REVENUE AND C .O. 54 AND 56/BANG/11 ARE DISMISSED. C.O.55/BANG/11 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF JUNE, 2012. SD/- SD/- ( N. BARAVATHAJA SANKAR ) ( N.V. VASU DEVAN ) VICE PRESIDENT JUDICIA L MEMBER BANGALORE, DATED, THE 29 TH JUNE , 2012. DS/- ENCL: ANNEXURES 1 TO 5. COPY TO: 1. REVENUE 2. ASSESSEE 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE. ITA NOS.1499 TO 1451/BANG/10 & CO NOS.54 TO 56/BANG/11 PAGE 14 OF 18 ANNEXURE-1 ITA NOS.1499 TO 1451/BANG/10 & CO NOS.54 TO 56/BANG/11 PAGE 15 OF 18 ANNEXURE-2 ITA NOS.1499 TO 1451/BANG/10 & CO NOS.54 TO 56/BANG/11 PAGE 16 OF 18 ANNEXURE-3 ITA NOS.1499 TO 1451/BANG/10 & CO NOS.54 TO 56/BANG/11 PAGE 17 OF 18 ANNEXURE-4 ITA NOS.1499 TO 1451/BANG/10 & CO NOS.54 TO 56/BANG/11 PAGE 18 OF 18 ANNEXURE-5