Savita Construction Pvt.Ltd., Valsad V. The Addl.CIT.,Valsad Range, Valsad

ITA 375/AHD/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6359 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 01-07-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 11-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Assessee Lawyers: SAKAR SARMA
• Keywords: Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND D. C. AGRAWAL , AM) ITA NO.375/AHD/2011 A. Y.: 2007-08 SAVITA CONSTRUCTION PVT. LTD., 341, NEW GIDC INDUSTRIAL ESTATE, GUNDALV, VALSAD VS THE ADDL. C. I. T., VALSAD RANGE, VALSAD PA NO. AAFCS 3408 Q (APPELLANT) (RESPONDENT) APPELLANT BY SHRI SAKAR SARMA, AR RESPONDENT BY SHRI H. K. LAL, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A), V ALSAD DATED 15 TH NOVEMBER, 2010, FOR ASSESSMENT YEAR 2007-08, ON THE FOLLOWING GROUNDS: 1. THE LD. CIT (A) ERRED ON FACTS AND IN LAW IN NO T GRANTING SET OFF OF ADJUSTMENT IN VALUE OF OPENING STOCK APPLYING THE SAME METHOD ON WHICH CLOSING STOCK WAS VALUED RESULTING INTO ADDITION OF RS.17,00,000/- 2. THE LD. CIT (A) ERRED ON FACTS AND IN LAW IN NOT ISSUING ANY DIRECTIONS TO THE ASSESSING OFFICER TO MAKE ADJUSTMENT IN THE VALUE OF OPENING STOCK IN THE NEXT ASSESSMENT YEAR AS A CONSEQUENCE OF ADDITION MADE IN THIS ASSESSMENT YEAR. ITA NO.375/AHD/2011 SAVITA CONSTRUCTION PVT. LTD. VS ADDL. CIT, VALSAD RANGE, VALSAD 2 2. THE AO NOTED THAT THE ASSESSEE COMPANY IS ENGAG ED IN THE BUSINESS OF CIVIL CONSTRUCTION AND SPECIFICALLY ENG AGED IN THE BUSINESS OF TAKING CONTRACT FOR CONSTRUCTION OF VESSELS, TAN KS AND POWER PLANTS ETC. DURING THE YEAR UNDER CONSIDERATION, THE ASSES SEE COMPANY HAS ACHIEVED TURNOVER OF RS.8,36,87,065/- AND DECLARED A BOOK PROFIT OF RS.56,25,520/- WHICH WAS WORKED OUT TO 6.72% OF THE GROSS TURN OVER. THE BOOKS OF ACCOUNTS WERE EXAMINED BY THE AO AND I T WAS FOUND THAT THE ASSESSEE HAS NOT SHOWN ANY CLOSING WORK IN PROGRESS WHICH HAS ADVERSELY AFFECTED THE TAXABLE PROFIT OF THE AS SESSEE. THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE ASSESSEE HAS BEEN CONSISTENTLY FOLLOWING THE PRACTICE OF ACCOUNTING F OR BILLS OF LABOUR CHARGES AS AND WHEN RAISED TO THE CUSTOMERS. THIS I S BECAUSE IT IS PRACTICALLY NOT POSSIBLE TO MEASURE THE VALUE OF UN FINISHED AND UN- BILLED WORK AS ON THE YEAR END DATE. MEASUREMENT OF THE WORK DONE HAD BEEN TAKEN ONLY ONCE IN A MONTH ONLY ON RAISING THE INVOICES. IT WAS SUBMITTED THAT TAKING INTO CONSIDERATION THE FA CT THAT LAST BILLING DATE BEFORE THE YEAR ENDED ON 26-03-2007, IT CAN BE ESTIMATED THAT THE VALUE OF WORK IN PROGRESS AS ON THE YEAR END DA TE IS RS.17,00,000/- WHICH THE ASSESSEE OFFERED VOLUNTARI LY FOR TAXATION AND ALSO PROMISED TO IMPROVE THE SYSTEM IN SUBSEQUE NT YEAR TO FILE THE REVISED RETURN. THE AO ACCEPTED THE OFFER OF TH E ASSESSEE AND MADE ADDITION OF RS.17,00,000/-. THE LEARNED CIT(A) CONS IDERING THE SUBMISSION OF THE ASSESSEE NOTED THAT THE ADDITION IS MADE ON AGREED BASIS. THE LEARNED CIT(A) WAS SURPRISED AS T O HOW THE APPEAL CAN BE FILED BY THE ASSESSEE ON THIS ISSUE WHEN ADD ITION IS MADE ON AGREED BASIS. THE APPEAL OF THE ASSESSEE WAS ACCORD INGLY DISMISSED. ITA NO.375/AHD/2011 SAVITA CONSTRUCTION PVT. LTD. VS ADDL. CIT, VALSAD RANGE, VALSAD 3 3. THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRE SS GROUND NO.1 AND SUBMITTED THAT ADDITION WAS MADE ON AGREED BASIS. HOWEVER, HE SUBMITTED THAT GROUND NO.2 MAY BE CONSI DERED AND DIRECTION MAY BE ISSUED FOR MAKING THE ADJUSTMENT I N THE VALUE OF THE OPENING STOCK IN THE NEXT ASSESSMENT YEAR. THE LEAR NED DR DID NOT DISPUTE THE CONTENTION OF THE LEARNED COUNSEL FOR T HE ASSESSEE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FIN D THAT THE ADDITION OF RS.17,00,000/- IS MADE BY THE AO ON ACC OUNT OF CLOSING WORK IN PROGRESS WHICH WAS NOT SHOWN BY THE ASSESSE E IN THE ACCOUNTS AND THE ASSESSEE LATER ON AGREED TO THE AB OVE ADDITION VOLUNTARILY. THE APPEAL OF THE ASSESSEE WAS DISMISS ED BY THE LEARNED CIT(A) BECAUSE THE APPEAL COULD NOT HAVE BEEN FILED ON AGREED BASIS. IT IS SETTLED LAW THAT AS ASSESSMENT IS MADE ON AGREED BASIS; THE ASSESSEE CANNOT APPEAL AGAINST SUCH ORDER. WE R ELY UPON THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CA SE OF CIT VS VAMADEVAN BHANU, 330 ITR 559 AND THE DECISION OF TH E HONBLE BOMBAY HIGH COURT IN THE CASE OF JIVATLAL PURTAPSHI , 65 ITR 261. THE LEARNED CIT(A) WAS, THEREFORE, RIGHT IN DISMISSING THE APPEAL OF THE ASSESSEE CONFIRMING THE ADDITION OF RS.17,00,00/- O N GROUND NO.1. HOWEVER, WE FIND THAT ALTERNATIVE CONTENTION OF THE ASSESSEE IS JUSTIFIED BECAUSE ONCE ADDITION IS MADE ON ACCOUNT OF CLOSING WORK IN PROGRESS IN THE ASSESSMENT YEAR UNDER APPEAL ON THE CLOSE OF THE FINANCIAL YEAR; IT WOULD BE THE OPENING STOCK IN TH E NEXT YEAR BECAUSE THE ASSESSEE HAS NOT SHOWN ANY CLOSING WORK IN PROG RESS. THE AO IS, THEREFORE, DIRECTED TO TAKE INTO CONSIDERATION THIS ASPECT IN THE NEXT ASSESSMENT YEAR AND SHALL ENHANCE THE OPENING STOCK BY THE AMOUNT ITA NO.375/AHD/2011 SAVITA CONSTRUCTION PVT. LTD. VS ADDL. CIT, VALSAD RANGE, VALSAD 4 OF RS.17,00,000/- FOR WHICH ADDITION IS CONFIRMED I N THE ASSESSMENT YEAR UNDER APPEAL. WITH THESE DIRECTIONS, THE APPEA L OF THE ASSESSEE IS ALLOWED PARTLY. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 05-07-2011 SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 05-07-2011 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD