The ACIT Circle - 1, Nellore V. Shri T. Venkata Ramana Reddy, Nellore

ITA 44/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66339 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-06-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 10-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMISHA S GUPT
• Section: 143(3); 142(1); 80HHC; 133A; 148; 6; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.44/HYD/2011 ASSESSMENT YEAR : 2007-08 ACIT, CIR-1, NELLORE. .... APPELLANT VS. SRI T. VENKATA RAMANA REDDY, NELLORE. RESPONDENT PAN: ABIPT 6808 N APPELLANT BY : SMT. AMISHA S. GUPT RESPONDENT BY : NONE DATE OF HEARING : 13-9-2012 DATE OF PRONOUNCEMENT : 28 -9-2012 ORDER PER SAKTIJIT DEY, J.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST ORDER DATED 1-9-2010 OF CIT (A), GUNTUR PAS SED IN ITA NO.0027/CIT (A)/GNT/10-11 AND IT PERTAINS TO TH E ASSESSMENT YEAR 2007-08. 2. DESPITE NOTICE, THERE WAS NO APPEARANCE ON BEHAL F OF THE ASSESSEE-RESPONDENT DURING THE COURSE OF HEARIN G OF THIS 2 ITA NO. 44 OF 2011 VENKATA RAMANA REDDY,NELLORE. APPEAL. HENCE, WE PROCEED TO DISPOSE OF THE APPEAL EX PARTE ON MERITS AFTER HEARING THE LEARNED DR. 3. THE SOLE ISSUE INVOLVED IN THE PRESENT APPEAL IS THE DELETION OF PENALTY IMPOSED U/S 271(1)(C). BRIEFLY THE FACTS ARE THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME F ROM HOUSE PROPERTY AND INTEREST. A SURVEY IN THE CASE OF THE ASSESSEE WAS CONDUCTED U/S 133A ON 4-3-2008. IN COURSE OF S URVEY OPERATION, IT WAS FOUND THAT THE ASSESSEE HAS SOLD IMMOVABLE PROPERTY SITUATED AT ROAD NO.86, JUBILEE HILLS, HYD ERABAD FOR A CONSIDERATION OF RS.1,72,38,140 ON 18-10-2006. I T WAS ALSO FOUND THAT THE SAID PROPERTY WAS PURCHASED BY THE ASSESSEE ON 26-9-1995. THE ASSESSEE FILED ITS RETU RN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 28-3-2008 BY DECLARING LONG TERM CAPITAL GAINS FROM THE SALE OF THE PROPERTY AND ALSO PAID TAX OF RS.47,12,208. THE AO PASSED AN ORDER U/S 143(3) ON 29-12-2009 AFTER THOROUGH VERIFICATION AND ACCEPTED THE INCOME DECLARED BY TH E ASSESSEE. HOWEVER, THE AO INITIATED PROCEEDINGS FO R IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT BY I SSUING A SHOW CAUSE NOTICE. THE ASSESSEE IN HIS EXPLANATION SUBMITTED THAT THE IMMOVABLE PROPERTY WAS SOLD AND SALE CONSIDERATION WAS GIVEN BY THE ASSESSEE TO HIS SON FOR INVESTING IN HIS BUSINESS. BECAUSE OF FINANCIAL CRU NCH AND LIQUIDITY PROBLEM, HIS SON COULD NOT REPAY THE AMOU NTS ADVANCED TO HIM. THERE WERE NO FUNDS WITH THE ASSE SSEE TO PAY CAPITAL GAINS TAX OF AROUND RS.4O LAKHS WITH IN TEREST AND THEREFORE HE COULD NOT FILE A RETURN OF INCOME WITH IN THE DUE DATE U/S 139(1). THE AO WAS NOT SATISFIED WITH THE 3 ITA NO. 44 OF 2011 VENKATA RAMANA REDDY,NELLORE. EXPLANATION SUBMITTED BY THE ASSESSEE. THE AO HOLD ING THAT SINCE THE ASSESSEE BEING A REGULAR TAX PAYER AND HA VING KNOWLEDGE OF DISCHARGING THE TAX LIABILITY BEING AW ARE OF THE PROVISIONS OF INCOME-TAX LAW, HAS NEITHER OPTED TO PAY THE TAXES IN TIME NOR FILED HIS RETURN OF INCOME BEFORE THE DUE DATE. THE AO FURTHER OBSERVING THAT THE FACT THAT H E HAS DEPOSITED A SUM OF RS.40 LAKHS IN CAPITAL GAINS S CHEME OF SBI, NELLORE ON 30-6-2007INDICATES THAT HE WAS WEL L AWARE OF THE FACT THAT HE HAS TO PAY TAX ON LONG TERM CA PITAL GAINS. HOWEVER, IN SPITE OF THAT THE ASSESSEE DID NOT CHOO SE TO PAY ADVANCE TAX AND ONLY WHEN THE SURVEY WAS CONDUCTED, THE ASSESSEE CAME FORWARD TO FILE HIS RETURN OF INCOME DECLARING CAPITAL GAINS. THE AO ON THE AFORESAID CONCLUSION P ASSED AN ORDER U/S 271(1)(C) IMPOSING PENALTY OF RS.38,48,75 5/-. THE ASSESSEE CHALLENGED THE PENALTY ORDER BY FILING AN APPEAL BEFORE THE CIT (A). IN COURSE OF HEARING, THE AR O F THE ASSESSEE SUBMITTED THAT EVEN THOUGH THE DUE DATE FO R FILING OF RETURN U/S 139(1) WAS UP TO 31-7- 2007 STILL THE ASSESSEE WAS ENTITLED TO FILE HIS RETURN OF INCOME ON OR BEF ORE 31-3- 2009 AS PER THE PROVISIONS CONTAINED U/S 139(4) OF THE ACT. THE ASSESSEE FURTHER CONTENDED THAT HE HAS FILED HI S RETURN OF INCOME ON 28-3-2008 DECLARING INCOME FROM CAPITAL G AINS AND PAID THE TAX DUE ALONG WITH INTEREST BEFORE ISS UANCE OF ANY NOTICE U/S 148 OR U/S 142(1) OF THE ACT. THEREF ORE, IT CANNOT BE SAID THAT THE ASSESSEE HAS EITHER CONCEAL ED PARTICULARS OF HIS INCOME OR HAS FURNISHED INACCURA TE PARTICULARS OF INCOME. 4 ITA NO. 44 OF 2011 VENKATA RAMANA REDDY,NELLORE. 4. THE CIT (A) AFTER CONSIDERING THE SUBMISSIONS MA DE ON BEHALF OF THE ASSESSEE AND EXAMINING THE MATERIALS ON RECORD, FOUND THAT THE ASSESSEE HAS VOLUNTARILY FIL ED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 28-12- 2008 DECLARING THE INCOME FROM CAPITAL GAINS AND HA S ALSO PAID TAX DUE AS ON THE DATE. THE RETURN OF INCOME WAS ALSO FILED PRIOR TO ISSUANCE OF ANY NOTICE EITHER U/S 14 2(1) OR U/S 148 CALLING FOR A RETURN FROM THE ASSESSEE. THE CI T (A) THEREFORE HELD THAT THE ASSESSEE HAVING FILED HIS R ETURN OF INCOME WITHIN THE TIME ALLOWED U/S 139(4) BEFORE IS SUANCE OF NOTICE U/S 142(1) OR 148 AND HAVING PAID TAX AND IN TEREST AS WAS DUE ON THE DECLARED INCOME, THERE IS NO CONCEAL MENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCO ME BY THE ASSESSEE. MORE SO, WHEN THE AO HAS ACCEPTED THE INC OME DECLARED IN THE RETURN FILED BY THE ASSESSEE. 5. THE LEARNED DR WHILE STRONGLY SUPPORTING THE REA SONING OF THE AO SUBMITTED THAT ONLY BECAUSE OF THE DISCO VERY OF SALE OF IMMOVABLE PROPERTY AS A RESULT OF SURVEY, T HE ASSESSEE CAME FORWARD FOR FILING OF THE RETURN OF I NCOME FOR THE ASSESSMENT YEAR 2007-08, OTHERWISE, HE WOULD HA VE CONCEALED THE INCOME. IN THE CIRCUMSTANCES, IMPOSI TION OF PENALTY U/S 271(1)(C ) WAS JUSTIFIED. THE LEARNED D R IN SUPPORT OF HER CONTENTION RELIED ON THE FOLLOWING D ECISIONS:- I) CIT VS. LAL CHAND TIRATH RAM (225 ITR 675) ( P & H) 5 ITA NO. 44 OF 2011 VENKATA RAMANA REDDY,NELLORE. II) CIT VS. KP SAMPATH REDDY (197 ITR 232) (KARNATAKA) III) BILAND RAM HARGAN DASS VS. CIT (171 ITR 390) IV) CIT VS. A. SREENIVASA PAI (242 ITR 29) (KERALA) V) LMP PRECISION ENGG. CO. LTD. VS. DCIT (330 ITR 93) (GUJ.) VI) CIT VS. DR. R.C. GUPTA AND CO. (122 ITR 567) (RAJ.) 6. WE HAVE HEARD LEARNED DR AND PERUSED THE MATERIA L ON RECORD. THOUGH IN COURSE OF SURVEY, IT WAS FOUND THAT THE ASSESSEE HAS SOLD IMMOVABLE PROPERTY FOR CONSIDERA TION OF RS.1,72,38,140/- BUT THE FACT REMAINS THAT THE ASSE SSEE HAS VOLUNTARILY FILED HIS RETURN OF INCOME ON 28-3-2008 BY DECLARING LONG TERM CAPITAL GAINS AND HAS ALSO FUL LY DISCHARGED HIS TAX LIABILITY INCLUDING INTEREST. TH E RETURN WAS FILED BEFORE ISSUANCE OF ANY NOTICE EITHER U/S 142( 1) OR 148 OF THE ACT. THEREFORE, THE CONTENTION OF THE ASSES SEE THAT THE RETURN WAS FILED VOLUNTARILY WITHIN THE TIME PE RMITTED U/S 139(4) OF THE ACT HAS TO BE ACCEPTED. WHEN THE ASS ESSEE HAS VOLUNTARILY FILED HIS RETURN OF INCOME BEFORE I SSUANCE OF ANY NOTICE FROM THE DEPARTMENT DECLARING INCOME FR OM LONG TERM CAPITAL GAINS WHICH WAS ALSO ACCEPTED BY THE A O NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME CAN BE ATTRIBUTED TO THE ASSESSEE. THE A LLEGED DISCOVERY OF SALE OF IMMOVABLE PROPERTY AT THE TIME OF SURVEY BY ITSELF WILL NOT LEAD THE DEPARTMENT TO PRESUME THAT THE ASSESSEE WOULD NOT HAVE DISCLOSED THE INCOME WHEN TIME FOR FILING OF RETURN WAS STILL AVAILABLE TO THE ASSESSE E U/S 139(4) 6 ITA NO. 44 OF 2011 VENKATA RAMANA REDDY,NELLORE. OF THE ACT AND IN FACT THE RETURN WAS FILED WITHIN THAT TIME VOLUNTARILY BEFORE ANY NOTICE U/S 142(1) OR U/S 148 WAS ISSUED BY THE DEPARTMENT. IN THE CIRCUMSTANCES, TH E EXPLANATION OF THE ASSESSEE THAT HE COULD NOT FILE THE RETURN OF INCOME WITHIN THE DUE DATE AS PROVIDED U/S 139(1 ) DUE TO NON RETURN OF MONEY BY HIS SON, HAS TO BE ACCEPTED. THE HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROLEUM PRODUCTS LTD.,(322 ITR 158) HAS HELD THAT BEFORE IM POSING PENALTY, IT HAS TO BE SHOWN THAT THE CONDITIONS U/S 271(1)(C) EXIST. THE CONDITIONS ARE, THERE MUST BE CONCEALME NT OF PARTICULARS OF INCOME AND THE ASSESSEE MUST HAVE FU RNISHED INACCURATE PARTICULARS OF HIS INCOME. THEREFORE, W HEN THE RETURN FILED BY THE ASSESSEE DOES NOT REVEAL ANY CO NCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS O F INCOME, NO PENALTY UNDER SECTION 271(1)(C) CAN BE IMPOSED. UNDISPUTEDLY, IN THE PRESENT CASE, THE ASSESSEE HAS FILED RETURN OF INCOME VOLUNTARILY WITHIN THE TIME ALLOWE D UNDER S. 139(4) OF THE ACT PRIOR TO ISSUANCE OF ANY NOTICE U /S 142(1) OR 148. THAT BESIDES THE INCOME DECLARED IN THE RE TURN HAS BEEN ACCEPTED BY THE AO WITHOUT ANY VARIATION. IN THE CIRCUMSTANCES, THE ASSESSEE CANNOT BE HELD LIABLE F OR IMPOSITION OF PENALTY EITHER FOR CONCEALING PARTICU LARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCO ME. WE ARE ALSO FORTIFIED IN OUR VIEW BY THE DECISION OF H ONBLE SUPREME COURT IN CASE OF CIT VS. SURESH CHANDRA MIT TAL (251 ITR 9). THE DECISIONS RELIED UPON BY THE LEARNED D R ARE FACTUALLY DISTINGUISHABLE AND DO NOT FIT INTO THE F ACTS OF THE PRESENT APPEAL. CONSIDERING THE TOTALITY OF FACTS AND THE CIRCUMSTANCES, WE FIND THE ORDER PASSED BY THE CIT (A) 7 ITA NO. 44 OF 2011 VENKATA RAMANA REDDY,NELLORE. DELETING THE PENALTY TO BE IN ACCORDANCE WITH LAW A ND NEEDS NO INTERFERENCE FROM US. THE GROUNDS RAISED BY THE DEPARTMENT ARE THEREFORE DISMISSED. 7. IN THE RESULT, WE UPHOLD THE FINDINGS OF THE CIT (A) AND DISMISS THE APPEAL FILED BY THE REVENUE. ORDER PRONOUNCED IN THE COURT ON 28-9-2012. SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE 28 TH SEPT. 2012. COPY TO:- 1) ACIT, CIR-1, GNT ROAD, DARGAMITTA, NELLORE. 2) SHRI T. VENKATA RAMANA REDDY, 16-44/12, RAMAMURTHY NAGAR, NELLORE. 3) THE CIT(A), GUNTUR. 4) CIT CONCERNED, HYDERABAD. 5)THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. JMR* 8 ITA NO. 44 OF 2011 VENKATA RAMANA REDDY,NELLORE. IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER 9 ITA NO. 44 OF 2011 VENKATA RAMANA REDDY,NELLORE. ITA NO.509/HYD/2012 ASSESSMENT YEAR : 1996-97 SPM INSTRUMENT INDIA PVT. LTD., HYDERABAD. .... APPELLANT PAN/GIR S-55 VS. JCIT, RANGE-3(1), HYDERABAD. RESPONDENT APPELLANT BY : SHRI K.A. SAI PRASAD RESPONDENT BY : SMT. NIVEDITA BISWAS DATE OF HEARING : 27-08-2012 DATE OF PRONOUNCEMENT : -09-2012 ORDER PER SAKTIJIT DEY, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATED 28-3-2002 OF CIT (A)-IV, HYDERA BAD PASSED IN APPEAL NO. 376/JC/SR-4/CIT(A) IV/2001-02 AND IT PERTAINS TO THE ASSESSMENT YEAR 1996-97. 2. AFTER BEING RECALLED THIS APPEAL IS REHEARD FOR DECIDING THE FOLLOWING THREE GROUNDS:- 5. THE CIT (A) ERRED IN NOT DIRECTING THE AO TO DEDUCT CHIT DIVIDEND OF RS.59,700/- AGAINST CHIT LO SS OF 10 ITA NO. 44 OF 2011 VENKATA RAMANA REDDY,NELLORE. RS.70,000 THUS NOT REDUCING THE ELIGIBLE PROFITS FO R COMPUTING DEDUCTION U/S 80HHC AND 80HHE OF THE ACT. 6. THE CIT (A) ERRED AND DISALLOWING RS.4,07,405/- CLAIMED BY THE APPELLANT AS PART OF OPENING STOCK O F FINISHED GOODS AS ON 1 ST APRIL, 1995 AND SOLD IN THE PREVIOUS YEAR ENDED 31 ST MARCH, 1996. 7. THE CIT (A) ERRED IN INCLUDING EXCISE DUTY AND SALES TAX COLLECTIONS OF RS.31,35,989/- AS PART OF TOTAL TURNOVER (DENOMINATOR) WHILE CALCULATING DEDUCTION U/S 80HHC AND 80HHE OF THE ACT. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT HE DOE S NOT WANT TO PRESS GROUND NO.7. HENCE, GROUND NO.7 IS D ISMISSED AS NOT PRESSED. 3. SO FAR AS GROUND NO.5 IS CONCERNED, LD. DR RAISE D A PRELIMINARY OBJECTION THAT SINCE THE ASSESSEE HAS N OT RAISED ANY GROUND IN THIS RESPECT BEFORE THE CIT (A) AND S INCE THIS ISSUE DOES NOT ARISE OUT OF THE ORDER OF CIT (A), T HE GROUND RAISED BY THE ASSESSEE FOR THE FIRST TIME CANNOT BE ENTERTAINED. 4. THE LD. AR FAIRLY SUBMITTED THAT SPECIFIC GROUN D ON THIS ISSUE WAS NOT RAISED BEFORE THE CIT (A). WE ALSO F IND FROM THE GROUNDS OF APPEAL FILED ALONG WITH MEMORANDUM O F APPEAL BEFORE CIT (A) NO SUCH GROUND WAS RAISED BEF ORE CIT (A). CONSIDERING THE FACT THAT THIS GROUND WAS NO T RAISED BEFORE THE CIT (A) AND THE ISSUE DOES NOT ARISE OUT OF THE ORDER OF THE CIT (A) WE ARE NOT INCLINED TO ENTERTA IN THIS 11 ITA NO. 44 OF 2011 VENKATA RAMANA REDDY,NELLORE. GROUND RAISED FOR THE FIRST TIME BEFORE US. THE GRO UND RAISED BY THE ASSESSEE IS THEREFORE DISMISSED. 5. GROUND NO.6 RELATE TO DISALLOWANCE OF DEDUCTION OF OPENING STOCK OF RS.4,07,405 FROM THE PROFIT. 6. BRIEFLY THE FACTS ARE IN COURSE OF THE ASSESSMEN T PROCEEDING THE ASSESSEE SUBMITTED A LETTER BEFORE T HE AO CLAIMING CERTAIN ADDITIONAL DEDUCTIONS FROM PROFIT. ONE OF THEM BEING AN AMOUNT OF RS.4,07,405 BEING THE CLOSI NG STOCK DISCLOSED UNDER VDIS 1997 FOR THE YEAR ENDED ON 31 -3-1995 AND TREATED AS OPENING STOCK FOR THE ASSESSMENT YEA R 1996- 97. THE AO FOUND THAT IN COURSE OF ASSESSMENT PROC EEDING FOR THE ASSESSMENT YEAR 1995-96 WHEN THE ASSESSING OFFICER NOTICED DIFFERENCE IN THE QUANTITY OF CLOSING STOCK OF FINISHED GOODS SHOWN IN THE AUDITED ACCOUNTS AND THE RG-I RE GISTER THE ASSESSEE OPTED FOR VDIS AND DISCLOSED AN AMOUNT OF RS.4,07,405 TOWARDS CLOSING STOCK OF FINISHED GOODS AS ON 31-3-1995 AS PER THE RG-I REGISTER MAINTAINED FOR C ENTRAL EXCISE PURPOSE. THE AO THEREFORE DID NOT ACCEPT TH E CLAIM OF THE ASSESSEE SINCE THE ASSESSEE HAS NOT DECLARED AN Y EXCESS SALE FOR THE ASSESSMENT YEAR UNDER DISPUTE. THERE IS ALSO NO DIFFERENCE BETWEEN THE RG-I REGISTER AND THE BOOKS OF ACCOUNTS FOR THE ASSESSMENT YEAR 2006-07 WITH REGAR D TO SALES AND NUMBER OF ITEMS PRODUCED. DIFFERENCE IS ONLY WITH REGARD TO THE VALUATION OF STOCK. WHILE THE ASSESS EE HAS SHOWN IT AS FINISHED GOODS IN THE CLOSING STOCK, IN RG-I REGISTER, WHEREAS HE HAS SHOWN IT AS WORK IN PROGRE SS IN THE BOOKS OF ACCOUNTS IN THE ASST. YEAR 1995-96. ON TH E 12 ITA NO. 44 OF 2011 VENKATA RAMANA REDDY,NELLORE. AFORESAID FINDING THE AO DISALLOWED THE ADDITIONAL CLAIM OF DEDUCTION OF RS.4,07,405.00. 7. THE ASSESSEE CHALLENGED THE DISALLOWANCE BY FILI NG AN APPEAL BEFORE THE CIT (A). BEFORE THE CIT (A) THE ASSESSEE CONTENDED THAT SINCE THE AO IN AN EARLIER PREVIOUS YEAR DISALLOWED ASSESSEES CLAIM TO TREAT THE GOODS AS P ER RG-1 REGISTER AS PART OF WORK IN PROGRESS THE ASSESSEE TAKING ADVANTAGE OF VDIS DECLARED THE STOCK LYING IN RG-1 REGISTER AS PART OF THE CLOSING STOCK. HOWEVER, THE STOCKS WERE SOLD IN THE ASSESSMENT YEAR 1996-97 AND OFFERED FOR TAXA TION. 8. THE CIT (A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ALSO MATERIALS ON RECORD SUSTAINED THE DISALLOWANCE BY OBSERVING THAT CLOSING STOCK DECLAR ED UNDER VDIS WAS SOLD IN THE ASST. YEAR 1996-97 AND SALES W ERE INCORPORATED IN THE P & L A/C. THE CIT (A) HELD T HAT IN ABSENCE OF SUCH PROOF IF ASSESSEES CLAIM WILL BE A LLOWED THEN THERE WILL BE UNDERSTATEMENT OF INCOME FOR THE ASSE SSMENT YEAR UNDER DISPUTE. THE FINDING OF THE CIT (A) IS EXTRACTED HEREUNDER:- THE AO EXAMINED THE APPELLANTS CONTENTION AND FOUND THAT THERE IS A VARIATION IN THE VALUATION OF THE CLOSING STOCK AND NOT IN THE QUANTITIES AFFECTED. THE APPELLANT CLASSIFIED THE FINISHED GOODS IN THE RG-1 REGISTER AS WORK-IN-PROGRESS. AFTER THE AO NOTICED THE DISCREPANCY IN ADOPTION OF THE VALUATION, THE APPEL LANT OPTED FOR VDIS. NO EVIDENCE WAS FURNISHED BEFORE T HE ASSESSING OFFICER OR DURING THE APPEAL PROCEEDINGS TO SUBSTANTIATE THAT THE ADDITIONAL CLOSING STOCK DISC LOSED 13 ITA NO. 44 OF 2011 VENKATA RAMANA REDDY,NELLORE. UNDER VDIS IS SOLD FOR 96-97 AND THE SALES ARE INCORPORATED IN THE PROFIT & LOSS ACCOUNT. IN THE ABSENCE OF SUCH PROOF, ADOPTING THE DISCLOSURE OF T HE PREVIOUS YEAR AS THE OPENING STOCK OF THIS YEAR WOU LD NULLIFY THE DISCLOSURE MADE BY THE APPELLANT. IN OT HER WORDS, THE INCOME OF THE YEAR 96-97 WOULD BE UNDERSTATED IF THE SET OFF OF THE STOCK VALUE UNDER VDIS IS CONSIDERED FOR THIS YEAR. THE APPELLANT FA ILED TO ESTABLISH THAT THE CLOSING STOCK VALUE ADOPTED I S PROPERLY INCORPORATED IN THE BOOKS OF ACCOUNT AND T HE SALES REFLECTED IN THE P & L ACCOUNT. IN THE ABSEN CE OF SATISFACTORY EVIDENCE, THE APPELLANTS CLAIM IS NOT ACCEPTABLE. THE AOS ACTION IS CORRECT AS PER LAW AND HENCE UPHELD. THIS GROUND OF APPEAL FAILS AND IS REJECTED. 9. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. IT IS A FACT THAT THE ASSESSE ES ACCOUNTS ARE AUDITED AND PROFIT HAS BEEN SHOWN ON THE BASIS OF THE SALES RECORDED IN THE BOOKS OF ACCOUNTS. THEREFORE , IT IS FOR THE ASSESSEE TO PROVE WITH STRONG SUPPORTING EVIDEN CE THAT THE ADDITIONAL CLOSING STOCK DISCLOSED UNDER VDIS W AS SOLD DURING THE ASSESSMENT YEAR 1996-97 AND WAS PART OF THE SALES SHOWN IN THE P & L A/C AND THEREFORE SHOULD B E REDUCED FROM THE PROFIT DECLARED FOR THE ASSESSMENT EAR. T HE LEARNED AR HAS NOT PRODUCED ANY EVIDENCE TO DEMONSTRATE THI S FACT BEFORE US. IN THE AFORESAID CIRCUMSTANCES, WE UPHO LD THE FINDING OF THE CIT (A). THE GROUND RAISED BY THE A SSESSEE IS DISMISSED. 14 ITA NO. 44 OF 2011 VENKATA RAMANA REDDY,NELLORE. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON -9-2012. (CHANDRA POOJARI) ACCOUNTANT MEMBER (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE SEPT. 2012. COPY TO:- 1) SPM INSTRUMENT INDIA (P) LTD., 7-1-27/1, 1 ST FLOOR, SRINIVASA COMPLEX, AMEERPET, HYDERABAD. 2) DCIT, RANGE-3(1), HYDERABAD. 3) THE CIT(A)-IV, HYDERABAD 4) CIT CONCERNED, HYDERABAD. 5)THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. JMR* 15 ITA NO. 44 OF 2011 VENKATA RAMANA REDDY,NELLORE.