Mohd. Shahid Prop., Aligarh V. I.T.O., Ward-2, Aligarh

ITA 460/AGR/2010

• Counselvise Citation: 46020314 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-04-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 20-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHRI
• Keywords: Unexplained cash credit
• Section: 143(3); 133(6); 68; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 05/AGRA/2011 ASSTT. YEAR : 2005-06 INCOME-TAX OFFICER, VS. MOHD. SHAHID, WARD (2), ALIGARH. PROP. M/S. AZIM BUILDERS, BEHIND ZAKARIA MARKET, MEDICAL ROAD, ALIGARH. (PAN : AGYPS 2858 N) ITA NO. 460/AGRA/2010 ASSTT. YEAR : 2005-06 MOHD. SHAHID, VS. INCOME-TAX OFFICER, PROP. M/S. AZIM BUILDERS, WARD (2), ALIGARH. BEHIND ZAKARIA MARKET, MEDICAL ROAD, ALIGARH. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI WASEEM ARSHAD, SR. DR ASSESSEE BY : SHRI PANKAJ GARGH, ADVOCATE. DATE OF HEARING : 04.04.2012 & 09.04.12 DATE OF PRONOUNCEMENT OF ORDER : 13.04.2012 ORDER PER BHAVNESH SAINI, J.M.: BOTH THE CROSS APPEALS ARE DIRECTED AGAINST THE ORD ER OF THE LD. CIT(A), GHAZIABAD DATED 25.10.2010 FOR THE ASSESSMENT YEAR 2005-06. ITA NO. 05/AGRA/2011 & ITA NO. 460/AGRA/2010 2 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND CONSIDERED TH E MATERIAL AVAILABLE ON RECORD. BOTH THE APPEALS ARE DECIDED AS UNDER : DEPARTMENTAL APPEAL: 3. THE REVENUE ON GROUND NO. 1 CHALLENGED THE DELET ION OF ADDITION OF RS.35,40,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDI TS U/S. 68 OF THE IT ACT. THE ASSESSEE ON GROUND NO. 6 OF HIS APPEAL CHALLENGED T HE SUSTENANCE OF ADDITION OF RS.1,70,000/- U/S. 68 OF THE IT ACT. 4. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE HAD SHOWN ADVANCES FROM CUSTOMERS AT RS.1,55,55,130/- AS ON 31.03.2005. NOT ICE U/S. 133(6) WERE ISSUED TO 73 CUSTOMERS AND ENQUIRIES WERE ALSO GOT MADE BY TH E INSPECTOR. THE DISCREPANCIES NOTED HAVE BEEN MENTIONED BY THE AO ON PAGES 19, 20 & 21 OF THE ASSESSMENT ORDER. EVEN FROM THE REPLIES RECEIVED FROM THE CUST OMERS, THE TRANSACTIONS WERE NOT FOUND TALLYING AND DIFFERENCE AGGREGATING TO RS.37, 10,000/- WAS HELD TO BE UNEXPLAINED CASH CREDITS AND WAS ADDED TO THE INCOM E OF THE ASSESSEE U/S. 68 OF THE IT ACT IN RESPECT OF 9 PARTIES. THE DETAILS OF THE SAME HAVE BEEN NOTED AT PAGES 23 & 24 OF THE ASSESSMENT ORDER AND PAGES 9 & 12 OF TH E APPELLATE ORDER. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT(A) AND D ETAILED SUBMISSIONS WERE MADE AS HAVE BEEN INCORPORATED IN THE APPELLATE ORDER IN WHICH THE ASSESSEE EXPLAINED ITA NO. 05/AGRA/2011 & ITA NO. 460/AGRA/2010 3 THROUGH THE ACCOUNTS OF THESE 9 PARTIES THAT THE SA LE DEEDS HAVE BEEN EXECUTED AGAINST THESE PERSONS EXCEPT IN THE CASE OF IFFAT Z AHIRUDDIN, IN WHOSE CASE ADVANCE WAS REFUNDED AND NO SALE DEED WAS EXECUTED. IT WAS FURTHER SUBMITTED THAT THE ADDITION IS CLEARLY UNJUSTIFIED. THE LD. CIT(A) REF ERRED THE SUBMISSIONS OF THE ASSESSEE AND EVIDENCES ON RECORD TO THE AO FOR FILI NG THE REMAND REPORT. THE AO IN HIS REMAND REPORT DATED 16.04.2009 EXPLAINED THA T THE AMOUNT OF RS.22,25,000/- DOES NOT RELATE TO THE ASSESSMENT YEAR UNDER APPEAL BECAUSE IT WAS RECEIVED IN EARLIER YEAR. THEREFORE, NO SUCH ADDITION COULD BE MADE OF THAT AMOUNT AND COULD BE CONSIDERED IN EARLIER YEAR. COPY OF THE REMAND R EPORT IS FILED IN ASSESSEES PAPER BOOK AT PAGE 25. THE AO FURTHER FILED REMAND REPORT DATED 18.09.2009 AND DISCUSSED ALL THE EVIDENCES FILED BY THE ASSESSEE A ND THE MATERIAL ON RECORD IN RESPECT OF THE 9 PARTIES FROM WHOM ADVANCES HAVE BE EN RECEIVED, IN WHICH THE AO FOUND THE CONTENTION OF THE ASSESSEE TO BE CORRECT EXCEPT IN THE CASE OF CUSTOMER, MRS. JAHAN AARA. IN THE CASE OF SMT. JAHAN AARA, TH E AO WAS OF THE VIEW THAT RS.1,30,000/- HAS BEEN EXPLAINED AS AGAINST RECEIPT OF RS.3,00,000/-. THE REMAND REPORT IS REPRODUCED IN THE APPELLATE ORDER AND WAS HANDED OVER TO THE ASSESSEE FOR FURTHER COMMENTS. THE LD. CIT(A) CONSIDERING THE MA TERIAL ON RECORD, REMAND REPORT AND THE COMMENTS OF THE ASSESSEE, HELD THAT SINCE THE AO ACCEPTED THAT RS.22,25,000/- DID NOT PERTAIN TO THE ASSESSMENT YE AR UNDER APPEAL AND IT COULD BE CONSIDERED ONLY IN EARLIER YEARS, THEREFORE, TO THA T EXTENT NO ADDITION COULD BE MADE ITA NO. 05/AGRA/2011 & ITA NO. 460/AGRA/2010 4 IN THE HANDS OF THE ASSESSEE. FURTHER, THE DISCREPA NCIES WERE CONSIDERED BY THE AO IN THE SECOND REMAND REPORT AND ON EXAMINATION OF T HE SAME, IT WAS FOUND THAT ADDITION OF RS.1,70,000/- SHOULD BE CONSIDERED ONLY IN THE CASE OF SMT. JAHAN AARA. THE LD. CIT(A), THEREFORE, RESTRICTED THE ADDITION U/S. 68 OF THE IT ACT TO THE EXTENT OF RS.1,70,000/- IN THE CASE OF SMT. JAHAN AARA AND DELETED THE ADDITION OF RS.35,40,000/- OUT OF TOTAL ADDITION OF RS.37,10,00 0/-. THE REVENUE AS WELL AS THE ASSESSEE ARE IN CROSS APPEALS, AS NOTED ABOVE. 5. THE LD. DR RELIED UPON THE ORDER OF THE AO. ON T HE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND RELIED UPON THE REMAND REPORTS OF THE AO, COPIES OF WHICH ARE FILED IN THE PAPER BOOK AND SUBMITTED THAT SINCE THE AO ACCEPTED THE R ECONCILIATION OF THE ALLEGED DISCREPANCIES AND FOUND THE CLAIM OF THE ASSESSEE A S CORRECT, THEREFORE, NO ADDITION COULD BE MADE AGAINST THE ASSESSEE. IN THE CASE OF SMT. JAHAN AARA, ADDITION OF RS.1,70,000/- WAS SUSTAINED BY THE LD. CIT(A). THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO PAGE 16 OF THE ASSESSEES PAPER BOOK, W HICH IS COPY OF ACCOUNT OF SMT. JAHAN AARA TO SHOW THAT RS.3,00,000/- HAVE BEEN REC EIVED FROM HER AND DETAILS OF THE SAME ARE THAT ON 01.09.2004 RS.34,000/- HAVE BE EN RECEIVED IN CASH. ON 25.09.2004, CHEQUE OF RS.1,36,000/- HAS BEEN RECEIV ED AND FURTHER ON 07.12.2004, CHEQUE OF RS.1,30,000/- HAS BEEN RECEIVED. HE HAS A LSO REFERRED TO PAGE 17 OF THE ITA NO. 05/AGRA/2011 & ITA NO. 460/AGRA/2010 5 ASSESSEES PAPER BOOK, WHICH IS CONFIRMATION FILED BY SMT. JAHAN AARA DIRECTLY TO THE AO IN RESPONSE TO NOTICE U/S. 133(6) OF THE IT ACT IN WHICH IT WAS CLEARLY EXPLAINED THAT SHE HAS ADVANCED RS.3,00,000/- TO TH E ASSESSEE AS IS MENTIONED IN THE COPY OF THE ACCOUNT OF ASSESSEE. THE LD. COUNSE L FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT SINCE THE CUSTOMER ACCEPTED GIVING O F RS.3,00,000/- TO THE ASSESSEE, THEREFORE, BALANCE ADDITION OF RS.1,70,000/- SHOULD NOT HAVE BEEN MADE. HE HAS ALSO FILED CHART OF ALL THE CREDITORS ALONG WITH PA GE NUMBERS TO SHOW THAT THE AMOUNTS WERE RECEIVED SUBSTANTIALLY IN EARLIER YEAR AND WHATEVER AMOUNT HAS BEEN RECEIVED IN THE ASSESSMENT YEAR UNDER APPEAL, HAS B EEN FULLY EXPLAINED THROUGH COPY OF ACCOUNTS AND THE SALE DEEDS EXECUTED IN FAV OUR OF THE CUSTOMERS. HE HAS REFERRED TO THE ASSESSMENT ORDER PAGE 24 TO SHOW TH AT THE AO RECEIVED THE REPLY FROM THE CUSTOMER U/S. 133(6) OF THE IT ACT. HE, TH EREFORE, SUBMITTED THAT PART ADDITION IN THIS CASE IS CLEARLY UNJUSTIFIED. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD AND DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE OR DER OF THE LD. CIT(A) IN DELETING THE SUBSTANTIAL ADDITION. THE ASSESSEE RECEIVED ADV ANCES FROM 9 CUSTOMERS, FOR WHICH ADDITION IS SUBJECT MATTER IN APPEAL. THE ASS ESSEE SUBMITTED COPY OF THE ACCOUNT AND SALE DEEDS BEFORE THE AUTHORITIES BELOW TO SHOW THAT THE AMOUNTS RECEIVED FROM THE CUSTOMERS AS ADVANCES HAD BEEN AD JUSTED AGAINST THE SALE ITA NO. 05/AGRA/2011 & ITA NO. 460/AGRA/2010 6 CONSIDERATION OF THE FLATS. THE COPIES OF SALE DEED S OF THESE PARTIES SUPPORT THE CASE OF THE ASSESSEE. IT WAS ALSO CLARIFIED THAT SUBSTAN TIAL AMOUNTS WERE RECEIVED IN EARLIER YEARS. THEREFORE, NO ADDITION COULD BE MADE AGAINST THE ASSESSEE IN THE YEAR UNDER APPEAL. IN THE CASE OF IFFAT ZAHIRUDDIN, THE CUSTOMER, BOOKING AMOUNT WAS REFUNDED BACK. THE AO IN BOTH THE REMAND REPORTS AC CEPTED THE CONTENTION OF THE ASSESSEE THAT SUBSTANTIAL AMOUNTS OF RS.22,25,000/- HAVE BEEN RECEIVED IN EARLIER YEARS AND IN SUBSEQUENT REMAND REPORT, ALL THE DISC REPANCIES NOTED BY THE AO WERE FOUND TO BE EXPLAINED. THEREFORE, THE LD. CIT(A) ON PROPER APPRECIATION OF FACTS AND MATERIAL ON RECORD RIGHTLY DELETED THE ADDITION . THE AO IN THE REMAND REPORT HAS MENTIONED THE AMOUNTS PAID AS ADVANCES BY THE P ARTIES THROUGH CHEQUES AND DEMAND DRAFTS AND DATE OF RECEIPTS & SALE DEEDS. CO PIES OF ACCOUNTS AND SALE DEEDS HAVE BEEN FILED IN THE PAPER BOOK, OF THE PARTIES F ROM WHOM THE ADVANCES HAVE BEEN RECEIVED. SINCE THE AO ACCEPTED THE CLAIM OF T HE ASSESSEE IN THE REMAND REPORT, THERE WAS NO JUSTIFICATION FOR THE REVENUE DEPARTMENT TO CHALLENGE THE FINDING OF THE LD. CIT(A) IN THE DEPARTMENTAL APPEA L. THE DEPARTMENTAL APPEAL, THEREFORE, HAS NO MERIT AND IS, ACCORDINGLY, DISMIS SED. 7. AS REGARDS ASSESSEES APPEAL, THE LD. CIT(A) SUS TAINED THE ADDITION OF RS.1,70,000/- IN THE CASE OF SMT. JAHAN AARA. ADMIT TEDLY, THE AO CALLED FOR INFORMATION FROM THIS CUSTOMER DIRECTLY U/S. 133(6) OF THE IT ACT AND THE CUSTOMER ITA NO. 05/AGRA/2011 & ITA NO. 460/AGRA/2010 7 HAS REPLIED DIRECTLY TO THE AO VIDE LETTER DATED 21 .11.2007 (PB-17 OF ASSESSEE) AND CONFIRMED GIVING OF ADVANCE OF RS.3,00,000/- TO THE ASSESSEE. THE CONFIRMATION OF THE CUSTOMER SUPPORTS THE COPY OF THE LEDGER ACCOUN T OF THE CUSTOMER SHOWN IN THE BOOKS OF THE ASSESSEE. THEREFORE, THERE WAS NO JUST IFICATION TO SUSTAIN THE ADDITION OF RS.1,70,000/-. IN VIEW OF THE CLINCHING EVIDENCE S ON RECORD, WE DO NOT FIND ANY JUSTIFICATION TO SUSTAIN THE PART ADDITION MAINTAIN ED BY THE LD. CIT(A). WE, ACCORDINGLY SET ASIDE THE ORDER OF THE LD. CIT(A) T O THAT EXTENT AND DELETE THE ADDITION OF RS.1,70,000/-. IN THE RESULT, GROUND NO . 1 OF THE APPEAL OF THE REVENUE IS DISMISSED AND GROUND NO. 6 OF ASSESSEES APPEAL IS ALLOWED. 8. THE REVENUE ON GROUND NO. 2 FURTHER CHALLENGES T HE DELETION OF ADDITION OF RS.12,07,000/- ON ACCOUNT OF UNDER HAND TRANSACTION . THE AO EXAMINED THE FLAT- WISE DETAILS OF SELLING PRICE/BOOKING PRICE AND FOU ND THAT THERE ARE SUBSTANTIAL DIFFERENCES IN THE SELLING PRICE OF THE FLATS. SOME GLARING INSTANCES HAVE BEEN MENTIONED AT PAGE 25 AND 26 OF THE ASSESSMENT ORDER . IN THE ABSENCE OF ANY EXPLANATION TO THE DISCREPANCIES, THE AO HELD THAT THE ASSESSEE IS INDULGED IN UNDER HAND TRANSACTIONS, BEING A COMMON PRACTICE IN THIS LINE OF THE TRADE AND, THEREFORE, THE DIFFERENCE WAS COMPUTED TO THE EXTENT OF RS.7,0 7,000/- AND HELD THAT THE ADDITION SHOULD BE MADE TO THAT EXTENT. HOWEVER, CO NSIDERING THAT THE UNEXPLAINED CASH SO GENERATED BY THE ASSESSEE COULD BE TREATED TO BE INVESTMENT IN THE BUSINESS ITA NO. 05/AGRA/2011 & ITA NO. 460/AGRA/2010 8 IN THE FORM OF EXCESS CLOSING STOCK, THE AO DID NOT MAKE ANY SEPARATE ADDITION ON THIS ACCOUNT (BUT IN COMPUTATION, ADDITION HAS BEEN SHOWN IN A SUM OF RS.12,07,000). THE ASSESSEE CHALLENGED THE FINDING OF THE AO BEFORE THE LD. CIT(A). THE ASSESSEE FILED STATEMENT OF SALE OF FLA TS IN THE RELEVANT ASSESSMENT YEAR AND EXPLAINED THAT DURING THE RELEVANT PREVIOUS YEA R, TOTAL 10 SALE DEEDS WERE EXECUTED FOR RS.47,93,000/- AND ACCORDING TO THE CI RCLE RATE, VALUE OF THESE FLATS COMES TO RS.49,15,000/-. THUS, THERE IS NOMINAL DIF FERENCE OF RS1,22,000/-. IT WAS SUBMITTED THAT THE ADDITION IS IMAGINARY AND WITHOU T ANY BASIS. IT WAS FURTHER SUBMITTED THAT THE ESTIMATE OF ADDITION WAS MADE AT RS.7,07,000/-, BUT IN THE ASSESSMENT ORDER, THE ADDITION IS MADE OF 12,07,000 /-. THE LD. CIT(A) CALLED FOR THE REMAND REPORT FROM THE AO, WHO IN HIS REMAND RE PORT DATED 16.04.2009, MENTIONED WITH REGARD TO UNDER-HAND TRANSACTIONS TH AT NO ADDITION HAS BEEN MADE AND THE QUANTUM IS DIFFERENCE CONSIDERED FOR THE PU RPOSE OF LEVY OF PENALTY. THEREFORE, NO COMMENTS ARE REQUIRED. THE LD. CIT(A) CONSIDERING THE EXPLANATION OF THE ASSESSEE FOUND THAT THE ASSESSEE HAS BEEN AB LE TO EXPLAIN THE DIFFERENCE IN SELLING RATE OF VARIOUS FLATS AND NO CONCRETE EVIDE NCES HAVE BEEN BROUGHT ON RECORD TO PROVE ANY UNDER-HAND DEALING. THE ADDITION IS MA DE MERELY ON GUESS WORK. THEREFORE, THE LD. CIT(A) DECIDED THE ISSUE IN FAVO UR OF THE ASSESSEE. ITA NO. 05/AGRA/2011 & ITA NO. 460/AGRA/2010 9 9. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). NO BASI S HAS BEEN SHOWN BY THE AO FOR CONSIDERING THE ADDITION OF THIS NATURE ON ACCOUNT OF UNDER-HAND TRANSACTIONS. NO MATERIAL IS BROUGHT ON RECORD TO SUPPORT THE FINDIN GS OF THE AO. THERE WAS NO PURPOSE FOR CONSIDERING THE ADDITION. FURTHER, THE AO WAS NOT SATISFIED THAT THE SEPARATE ADDITION SHOULD BE MADE ON THIS ISSUE, WOU LD CLEARLY PROVE THAT THE ADDITION WAS RIGHTLY DELETED BY THE LD. CIT(A). THE ASSESSEE EXPLAINED BEFORE THE LD. CIT(A) THAT THE TOTAL SALE CONSIDERATION AND TH E SALE CONSIDERATION SHOWN FOR THE PURPOSE OF CIRCLE RATE WOULD DISCLOSE THAT THERE IS A NOMINAL DIFFERENCE. THE REMAND REPORT FROM THE AO WAS CALLED FOR ON THE EXP LANATION OF THE ASSESSEE, BUT THE AO DID NOT GIVE ANY COMMENT ON THE SAME, WOULD STRENGTHEN THE FINDING OF THE LD. CIT(A) THAT THERE WAS NO BASIS TO MAKE THIS ADD ITION. IN THE ABSENCE OF ANY EVIDENCE OR MATERIAL ON RECORD TO SUPPORT THE FINDI NG OF THE AO ON THIS ISSUE, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). GROUND NO. 2 OF THE APPEAL OF THE REVENUE HAS NO MERIT AND IS, ACCORDINGLY, DISMISSED. THERE IS NO OTHER POINT ARGUED OR PRESSED IN THE DE PARTMENTAL APPEAL. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMISSED. ASSESSEES APPEAL: 10. THE ASSESSEE ON GROUND NO.1, CHALLENGED THE REJ ECTION OF BOOKS OF ACCOUNT AND ON GROUND NO. 2 TO 5 CHALLENGED THE ADDITION OF RS.62,95,813/- ON ACCOUNT OF ITA NO. 05/AGRA/2011 & ITA NO. 460/AGRA/2010 10 VALUATION OF THE CLOSING STOCK. SINCE ALL THESE GRO UNDS RELATE TO ONE ISSUE, THEREFORE, WE PROPOSE TO DECIDE THE SAME TOGETHER. 11. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE AO DURING THE EXAMINATION OF THE BOOKS OF ACCOUNT, NOTICED VARIOUS DISCREPANCIES WHI CH HAVE BEEN MENTIONED ON PAGES 7 TO 11 OF THE ASSESSMENT ORDER, ON THE BASIS OF WHICH THE AO HELD THAT HE WAS NOT SATISFIED ABOUT THE CORRECTNESS AND COMPLET ENESS OF THE BOOKS OF ACCOUNT AND, THEREFORE, BOOKS ARE LIABLE TO BE REJECTED U/S . 145 OF THE IT ACT. THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN CONSTRUCTION AND SALE O F RESIDENTIAL FLATS. SUCH DISCREPANCIES WERE IN THE NATURE OF THAT VOUCHERS F OR PURCHASE OF MATERIAL ARE NOT RELIABLE, IN SOME OF THE CASES, SALE CONSIDERATION HAVE BEEN SHOWN LESSER THAN THE AMOUNT RECEIVED BY THE ASSESSEE THROUGH CHEQUES, VA LUATION OF THE CLOSING STOCK NOT SATISFACTORILY EXPLAINED, THE VALUE OF COST OF CONSTRUCTION OF AZIM ESTATE-2 WAS FOUND RS.5/- PER SQ.FT., WHICH IS NOT POSSIBLE AND VALUE OF LAND HAS NOT BEEN SHOWN IN THE INVENTORY OF THE CLOSING STOCK FURNISHED BY THE ASSESSEE ON 5 TH DECEMBER, 2007. THE AO ALSO FOUND THAT NORMS LAID DOWN BY THE ALIGARH DEVELOPMENT AUTHORITY HAD NOT BEEN FOLLOWED BY THE ASSESSEE AND HENCE, IT WAS NOT POSSIBLE TO ASCERTAIN THE CORRECT FACTS ABOUT THE PLINTH AREA, COVERED AREA, DESIGN AND DRAWING OF CONSTRUCTION, TYPE AND QUALITY OF CONSTRUCTION, PERIOD OF CONSTRUCTION ETC. EVEN FROM ALIGARH DEVELOPMENT AUTHORITY. THESE VIOLATION S ARE ALSO NOTED IN THE ITA NO. 05/AGRA/2011 & ITA NO. 460/AGRA/2010 11 ASSESSMENT ORDER AT PAGES 12 TO 14. THE AO HAD NO O PTION BUT TO RE-WORK OUT THE CLOSING STOCK BY THE METHOD OF FIRST VALUING THE TO TAL CLOSING STOCK AS PER SELLING PRICE AND THEN DEDUCTING THE AVERAGE GROSS PROFIT. SUCH WORKING IS GIVEN AT PAGES 16, 17 AND 18 OF THE ASSESSMENT ORDER. THE CLOSING STOCK WORKED OUT BY THE AO COMES TO RS.2,04,24,313/- WHILE THE ASSESSEE HAD SH OWN CLOSING STOCK AT RS.1,41,28,500/-. CONSEQUENTLY, ADDITION OF RS.62,9 5,813/- WAS MADE FOR THE PURPOSE OF ASCERTAINING AGGREGATE PROFIT. THE ASSES SEE CHALLENGED THE ADDITION BEFORE THE LD. CIT(A) AND IT WAS BRIEFLY EXPLAINED THAT THE AO HAS NOT CONSIDERED THE FACTS OF THE CASE PROPERLY AND ADDITION IS MADE PURELY ON THE BASIS OF ASSUMPTIONS AND PRESUMPTION. THE VALUE OF THE CLOSI NG STOCK SHOWN BY THE AO IS ON HIS OWN ASSUMPTIONS AND NOT BASED ON TRUE FACTS AND CIRCUMSTANCES OF THE CASE. THE ASSESSEE EXPLAINED EACH AND EVERY DISCREPANCY I N WRITTEN SUBMISSIONS, WHICH IS INCORPORATED IN THE IMPUGNED ORDER, IN WHICH THE ASSESSEE EXPLAINED THAT THE PAYMENTS ARE MADE BY THE VOUCHERS WHICH WERE DULY S IGNED BY THE RECIPIENTS OF THE AMOUNTS AND PAYMENTS ARE SUPPORTED BY VOUCHERS CANNOT BE A BASIS FOR REJECTION OF BOOKS OF ACCOUNT. MOREOVER, ALL THE EX PENSES IN CONSTRUCTION DURING THE YEAR HAVE BEEN ACCEPTED BY THE AO. REGARDING TH E CASES, IN WHICH THE SALE CONSIDERATION WAS STATED TO BE LESS THAN THE AMOUNT RECEIVED BY THE ASSESSEE AS MENTIONED AT PAGES 8 & 9 OF THE ASSESSMENT ORDER, T HE ASSESSEE DISCUSSED EACH AND EVERY CASE AND IT WAS EXPLAINED THAT COPY OF ACCOUN TS HAVE BEEN FILED AND SALE ITA NO. 05/AGRA/2011 & ITA NO. 460/AGRA/2010 12 DEEDS HAVE BEEN EXECUTED AND AFTER MEETING OUT NECE SSARY EXPENSES FOR REGISTRATION OF THE SALE DEEDS ETC. BALANCE AMOUNT HAS BEEN REFU NDED. IT WAS EXPLAINED THAT SINCE SALE DEEDS WERE EXECUTED IN EARLIER YEAR, THE REFORE, THESE CANNOT BE TREATED AS SALE INSTANCES OF THE YEAR UNDER APPEAL. COPIES OF ACCOUNTS AND SALE DEEDS WERE FILED IN SUPPORT OF THE CONTENTION. IT WAS FURTHER EXPLAINED THAT THE REASONS FOR DIFFERENCE IN THE SALE PRICE OF DIFFERENT FLATS WER E ON ACCOUNT OF SIZE OF THE FLATS, LOCATION, FLOOR AREA AND LOCATION OF EACH APARTMENT . IT WAS SUBMITTED THAT CLOSING STOCK WAS VALUED AT COST, I.E., OPENING STOCK ADDED BY COST OF MATERIAL PURCHASED WITH DIRECT EXPENSES, DEBITED TO TRADING ACCOUNT MI NUS SALE CONSIDERATION AFTER DEDUCTING GROSS PROFIT. IT WAS SUBMITTED THAT NO DI SCREPANCY OR SPECIFIC DEFECTS HAVE BEEN POINTED OUT IN THE BOOKS OF ACCOUNT OF TH E ASSESSEE. THE ASSESSMENT FOR THE SUBSEQUENT ASSESSMENT YEAR 2006-07 HAS BEEN COM PLETED U/S. 143(3) AND BOOK RESULTS AND OPENING AND CLOSING STOCK VALUATION ON THE SAME METHOD OF VALUATION HAVE BEEN ACCEPTED BY THE AO. IT WAS FURTHER EXPLAI NED THAT COST OF CONSTRUCTION OF AZIM ESTATE-2 WAS NOT RS.5/- PER SQ.FT. AS NOTED BY THE AO, BUT IT WAS ONLY THE DIGGING CHARGES WHICH IS NOT COST OF CONSTRUCTION. THE VALUE OF LAND IS INCLUDED IN THE OPENING STOCK AND FROM THE METHOD OF VALUATION AS MENTIONED BY HIM, THE VALUE OF LAND IS ITSELF INCLUDED IN THE CLOSING STO CK. IT WAS, THEREFORE, SUBMITTED THAT THERE WERE NO FOUNDATION FOR MAKING ADDITION. IT WA S FURTHER EXPLAINED THAT CONSTRUCTION OF FLATS OF AZIM RESIDENCY, AZIM ESTAT E-I AND AZIM APARTMENTS WERE ITA NO. 05/AGRA/2011 & ITA NO. 460/AGRA/2010 13 NOT COMPLETED IN THE YEAR UNDER CONSIDERATION, BUT THE CONSTRUCTION CONTINUED IN SUBSEQUENT YEAR, AS IS EVIDENT FROM THE SALE OF FLA TS OF THESE APARTMENTS, WHICH IS AS UNDER : FINANCIAL YEAR AMOUNT 2005-06 80,90,000 2006-07 40,40,000 2007-08 48,35,000 2008-09 24,75,000 --------------- 1,94,40,000 --------------- IT WAS , THEREFORE , SUBMITTED THAT THE BOOKS OF ACCOUNT HAVE BEEN REJEC TED WITHOUT ANY REASON. IT WAS FURTHER SUBMITTED THAT THE ADDIT ION IS MADE ON WRONG FACTS BECAUSE THE WORK OF ALL THE APARTMENTS WAS NOT COMP LETED DURING THE YEAR AND THE SALE INSTANCES SHOWN BY THE AO IN THE ASSESSMENT OR DER DO NOT PERTAIN TO THE ASSESSMENT YEAR UNDER APPEAL. THE ASSESSEE WORKED O UT THE VALUE OF THE CLOSING STOCK FOR THE ASSESSMENT YEAR 2006-07 AND 2007-08 A ND EXPLAINED THAT THERE IS NO DISCREPANCY BECAUSE THE ASSESSEE HAS ALSO SHOWN HIG HER G.P. RATE OF 9.33% AND 10.05% IN SUBSEQUENT YEARS. THEREFORE, THE ADDITION IS WHOLLY UNJUSTIFIED. THE SUBMISSIONS AND THE MATERIAL SUBMITTED BY THE ASSES SEE WERE FORWARDED TO THE AO FOR HIS COMMENTS. THE AO IN HIS REMAND REPORT DATED 16.04.2009 ALSO N OTED THAT THE TRADITIONAL METHOD OF VALUATION OF CLOSING STOC K, I.E., OPENING STOCK PLUS COST OF MATERIAL PURCHASED AND OTHER DIRECT EXPENSES MINUS SALE CONSIDERATION EXCLUDING ITA NO. 05/AGRA/2011 & ITA NO. 460/AGRA/2010 14 G.P. IS MORE ACCEPTABLE. THE AO, HOWEVER, NOTED THA T SINCE COMPLETE DETAILS WERE NOT SUBMITTED, THEREFORE, THE AO WAS JUSTIFIED IN M AKING THE ADDITION. THE AO ACCEPTED THE FACT THAT COST OF CONSTRUCTION OF AZIM ESTATE-2 AT RS.5/- PER SQ.FT. IS NOT CORRECT. THE LD. CIT(A) FORWARDED THE REMAND RE PORT OF THE AO TO THE ASSESSEE FOR FURTHER COMMENTS. THE ASSESSEE MAINTAINED THE S UBMISSIONS AND CONTENDED THAT SIMILAR VALUE OF CLOSING STOCK HAVE BEEN ACCEPTED B Y THE AO IN SCRUTINY ASSESSMENT U/S. 143(3) FOR THE ASSESSMENT YEAR 2006-07 AND 200 7-08 AND METHOD OF VALUATION OF THE CLOSING STOCK IS NO MORE IN DISPUTE. THE LD. CIT(A), HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND DIRECTED THE AO TO INFORM ALIGARH DEVELOPMENT AUTHORITY ABOUT THE VIOLATION COMMITTED BY THE ASSE SSEE IN CONSTRUCTION AND THAT THE WORKING OF THE CLOSING STOCK IS NOT EXPLAINED A ND, ACCORDINGLY, CONFIRMED THE ADDITION. HOWEVER, IT WAS DIRECTED THAT CLOSING STO CK WORKED OUT HAS TO BE TAKEN AS OPENING STOCK OF THE NEXT YEAR. 12. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE E XPLAINED EACH AND EVERY DISCREPANCY BEFORE THE LD. CIT(A). THE PAYMENTS OF CONSTRUCTION MATERIAL HAVE BEEN MADE THROUGH VOUCHERS WHICH HAVE BEEN SIGNED B Y THE RECIPIENTS AND COST OF CONSTRUCTION HAS NOT BEEN DISPUTED BY THE AO. THE A O HAS TAKEN SOME CASES OF LESSER SALE CONSIDERATION, BUT NONE OF THEM ARE APP LICABLE TO THE ASSESSMENT YEAR ITA NO. 05/AGRA/2011 & ITA NO. 460/AGRA/2010 15 UNDER APPEAL BECAUSE THE SALE DEEDS WERE EXECUTED I N EARLIER YEAR AND AFTER MEETING CERTAIN EXPENSES, AMOUNTS HAVE BEEN REFUNDED. THE D IFFERENCE IN SELLING PRICE OF DIFFERENT FLATS WAS BECAUSE OF THE DIFFERENT LOCATI ONS OF THE FLATS. THE METHOD OF VALUATION OF THE CLOSING STOCK ADOPTED BY THE ASSES SEE HAS BEEN ACCEPTED IN PRINCIPLE BY THE AO IN THE REMAND REPORT. THE DETAI LS OF SALES ADOPTED BY THE ASSESSEE WHICH ARE NOT RELEVANT TO THE ASSESSMENT Y EAR UNDER APPEAL HAVE BEEN FILED AT PAGE 9 TO 16 OF THE PAPER BOOK. SALES MADE BY TH E ASSESSEE HAVE BEEN ACCEPTED AND NO DIFFERENCE IN SALE WAS FOUND. SINCE THE SALE DEEDS HAVE BEEN EXECUTED IN NEXT YEAR AND THE PROFITS HAVE BEEN DISCLOSED IN TH E NEXT YEAR WITH HIGHER G.P. AND N.P. RATES, THEREFORE, THE ADDITION IS UNJUSTIFIED. THE ASSESSEE MAINTAINED SAME METHOD OF ACCOUNTING OF CLOSING STOCK VALUATION IN EARLIER YEAR ALSO WHICH HAVE NOT BEEN DISPUTED BY THE AO. HE HAS SUBMITTED THAT THE AO ACCEPTED IN THE REMAND REPORT (BP-26) THAT THE COST OF CONSTRUCTION OF AZI M ESTATE-2 IS NOT RS.5/- PER SQ. FT. IT WAS RS.503.90 PER SQ. FT. HE HAS SUBMITTED T HAT THE BOOKS OF ACCOUNT OF THE ASSESSEE HAVE BEEN AUDITED AND COPY OF THE AUDIT RE PORT IS FILED. COPIES OF TRADING AND PROFIT AND LOSS ACCOUNT FOR SUBSEQUENT ASSESSME NT YEARS 2006-07 AND 2007-08 HAVE BEEN FILED AT PAGES 18 AND 19 OF THE PAPER BOO K ALONG WITH ASSESSMENT ORDERS U/S. 143(3) AT PAGES 20 AND 31 OF THE PAPER BOOK. H E HAS ALSO REFERRED TO PB-35 TO 39 WHICH ARE THE DETAILS OF SALES NOTED BY THE AO A T PAGES 16 & 17 OF THE ASSESSMENT ORDER FOR THE PURPOSE OF TAKING THE SALE PRICE FOR VALUING THE CLOSING ITA NO. 05/AGRA/2011 & ITA NO. 460/AGRA/2010 16 STOCK. HE HAS SUBMITTED THAT COMPLETE DETAILS ARE F ILED WITH DATE OF REGISTRATION OF THE SALE DEEDS TO SHOW THAT NONE OF THE SALE INSTAN CES TAKEN BY THE AO IN THE ASSESSMENT ORDER ARE RELEVANT TO THE ASSESSMENT YEA R UNDER APPEAL BECAUSE THEY BELONG TO EARLIER YEARS AND SUBSEQUENT ASSESSMENT Y EAR AND AS SUCH, CANNOT BE TAKEN INTO CONSIDERATION FOR VALUATION OF CLOSING S TOCK FOR THE YEAR UNDER APPEAL. HE HAS SUBMITTED THAT ENTIRE METHOD ADOPTED BY THE AO FOR VALUING THE CLOSING STOCK IS CLEARLY UNJUSTIFIED. HE HAS SUBMITTED THAT SINCE CONSTRUCTION CONTINUED IN THE SUBSEQUENT YEAR AND SALE DEEDS WERE ALSO EXECUT ED IN OTHER YEARS, THEREFORE, SUCH FACTS SHOULD NOT BE TAKEN INTO CONSIDERATION F OR VALUING CLOSING STOCK, WHICH ARE THE PART OF THE CLOSING STOCK OF THE NEXT YEAR AND HAVE NOT BEEN DISTURBED BY THE ASSESSING OFFICER IN SCRUTINY ASSESSMENT IN SUBSEQU ENT ASSESSMENT YEARS U/S. 143(3) OF THE ACT. THE LD. COUNSEL FOR THE ASSESSEE , THEREFORE, SUBMITTED THAT THE ADDITION IS UNJUSTIFIED AND THERE IS NO BASIS FOR R EJECTION OF BOOKS OF ACCOUNT. THEREFORE, THE ADDITION MAY BE DELETED. HE HAS ALSO FILED CHART OF G.P. AND N.P. RATE FOR EARLIER AND SUBSEQUENT ASSESSMENT YEARS. 13. ON THE OTHER HAND, THE LD. DR STRONGLY RELIED U PON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT ASSESSEES AUD IT REPORT MENTIONED THE METHOD OF VALUATION OF CLOSING STOCK AT COST PRICE, BUT AT PAGE 13, IT WAS MENTIONED THAT NO ITA NO. 05/AGRA/2011 & ITA NO. 460/AGRA/2010 17 STOCK REGISTER HAS BEEN MAINTAINED. THE LD. DR, THE REFORE, SUBMITTED THAT THE AUTHORITIES BELOW WERE JUSTIFIED IN MAKING THE ADDI TION. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL ON RECORD. THE AO GAVE SEVERAL REASONS FOR REJECTION OF BOOKS OF A CCOUNT. HOWEVER, THE ASSESSEE EXPLAINED EACH AND EVERY DISCREPANCY AT THE APPELLA TE STAGE BEFORE THE LD. CIT(A) AS WELL AS BEFORE US, AS NOTED ABOVE. THE COST OF C ONSTRUCTION HAS NOT BEEN DISPUTED BY THE AUTHORITIES BELOW BECAUSE THE CONSTRUCTION M ATERIAL PURCHASED BY THE ASSESSEE HAS NOT BEEN DISPUTED. THE VOUCHERS MAINTA INED BY THE ASSESSEE HAVE BEEN SIGNED BY THE RECIPIENTS AND HAVE BEEN TAKEN INTO B OOKS OF ACCOUNT. THEREFORE, SUCH A REASON WAS NOT ADVERSE IN NATURE AGAINST THE ASSESSEE. THE AO NOTED THAT THERE IS DIFFERENCE IN THE SALE PRICE OF SIMILAR FL ATS, BUT THE ASSESSEE EXPLAINED IN THE SUBMISSIONS THAT SUCH SALE INSTANCES DO NOT PERTAIN TO THE ASSESSMENT YEAR UNDER APPEAL AND EVEN AFTER MEETING NECESSARY EXPENSES AN D REGISTRATION EXPENSES ON SALE DEEDS ETC. IN DIFFERENT ASSESSMENT YEARS, THE BALAN CE AMOUNT HAS BEEN REFUNDED. NO ADVERSE COMMENTS HAVE BEEN GIVEN ON THE SUBMISSIONS OF THE ASSESSEE. THEREFORE, SUCH A REASON IS NOT VALID TO REJECT THE BOOKS OF A CCOUNT OF THE ASSESSEE. THE AO ACCEPTED IN THE REMAND REPORT THAT COST OF CONSTRUC TION OF AZIM ESTATE-2 HAS NOT BEEN VALUED AT RS.5/- PER SQ.FT. AS IS NOTED BY THE AO BECAUSE THE SAME COMES TO RS.503.90 PER SQ.FT. THE AO NOTED AT PAGE 16 & 17 O F THE ASSESSMENT ORDER, THE ITA NO. 05/AGRA/2011 & ITA NO. 460/AGRA/2010 18 SALE INSTANCES AND THE ASSESSEE EXPLAINED AT PAGE 3 5 TO 39 OF THE PAPER BOOK THAT SUCH SALE AMOUNT OF RS.1,94,42,000/- PERTAINS TO DI FFERENT ASSESSMENT YEARS. THE ASSESSEE HAS GIVEN COMPLETE DETAILS IN THE PAPER BO OK AT THE ABOVE PAGES, WHICH INCLUDES NAMES OF THE CUSTOMERS, FLAT NUMBERS, AMOU NTS OF SALE, DATES OF REGISTRATION AND RELEVANT FINANCIAL YEAR. THESE DET AILS WOULD SHOW THAT SALE DEEDS HAVE NOT BEEN EXECUTED IN THE ASSESSMENT YEAR UNDER APPEAL AND AS SUCH, THESE WERE NOT THE SALE INSTANCES FOR THE ASSESSMENT YEAR UNDER APPEAL. THEREFORE, THERE WAS NO REASON FOR THE AO TO TAKE SUCH FIGURES IN TH E ASSESSMENT ORDER TO WORK OUT THE VALUE OF THE CLOSING STOCK AS PER SELLING PRICE BY DEDUCTING AVERAGE G.P. SINCE THE SALE INSTANCES NOTED BY THE AO ARE NOT RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL, THEREFORE, WHOLE FOUNDATION WOULD GO AND WO ULD NOT SUPPORT THE FINDINGS OF THE AUTHORITIES BELOW. THE LD. COUNSEL FOR THE A SSESSEE FILED COMPARATIVE CHART OF SALE, G.P. AND N.P. RATE IN EARLIER YEAR AND SUBSEQ UENT YEARS RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL, WHICH READ AS UNDER : ASSESSMENT YEAR SALES GROSS PROFIT GROSS PROFIT RATIO NET PROFIT NET PROFIT RATIO 2004-05 54,60,000/- 3,67,508/- 6.73% 2,10,940/- 3.8 6% 2005-06 47,93,000/- 4,39,071/- 9.16% 2,12,442/- 4,4 3% 2006-07 87,91,000/- 8,20,415/- 9.33% 3,60,560/- 4.1 0% 2007-08 78,95,000/- 7,93,881/- 10.05% 3,18,238/- 4. 03% ITA NO. 05/AGRA/2011 & ITA NO. 460/AGRA/2010 19 THE ABOVE CHART WOULD CLEARLY INDICATE THAT WHENEVE R SALE DEEDS HAVE BEEN EXECUTED, THE ASSESSEE TOOK THE SALES IN THE BOOKS OF ACCOUNT AND PAID TAX THEREON. IT WOULD SUPPORT THE CONTENTION OF THE ASSESSEE THA T DIFFERENT PROJECTS WERE NOT COMPLETE IN THE ASSESSMENT YEAR UNDER APPEAL. THE G .P. AND N.P. RATE IS PROGRESSIVE AND WHEN SALES HAVE BEEN EXECUTED IN SU BSEQUENT YEAR, THE ASSESSEE HAS SHOWN MORE G.P. AND N.P. RATE IN SUBSEQUENT YEA R. THEREFORE, THERE IS NO QUESTION OF ANY UNDER VALUATION OF CLOSING STOCK. T HE ASSESSEE MAINTAINED THAT SAME METHOD OF ACCOUNTING HAD BEEN ADOPTED FOR VALU ING THE CLOSING STOCK IN EARLIER AND SUBSEQUENT YEAR. IN EARLIER ASSESSMENT YEAR 2004-05, THE METHOD OF VALUATION OF CLOSING STOCK ADOPTED BY THE ASSESSEE HAS NOT BEEN DISTURBED BY THE AO AND EVEN IN SUBSEQUENT ASSESSMENT YEAR 2006-07 A ND 2007-08, THE AO ACCEPTED THE SAME METHOD OF ACCOUNTING OF VALUATION OF STOCK IN THE SCRUTINY PROCEEDINGS U/S. 143(3) OF THE IT ACT. COPIES OF TH E ASSESSMENT ORDERS ARE FILED IN THE PAPER BOOK. SINCE THE SAME METHOD OF ACCOUNTING OF VALUATION OF CLOSING STOCK HAS BEEN MAINTAINED CONSISTENTLY, THEREFORE, THERE WAS NO REASON FOR THE AO TO DISTURB THE SAME. MORE SO, NO RELIABLE AND COGENT R EASONS HAVE BEEN GIVEN IN THE ASSESSMENT ORDER. WHATEVER REASONS WERE GIVEN BY TH E AO FOR REJECTING THE BOOK RESULTS OF THE ASSESSEE, ARE NOT FOUND REASONABLE B ECAUSE THE SAME HAVE BEEN EXPLAINED BY THE ASSESSEE TO PROVE THAT THE FINDING S OF THE AO WERE NOT BASED ON CORRECT FACTS. SINCE THE AO ADOPTED THE SALE INSTAN CES OF SUBSEQUENT ASSESSMENT ITA NO. 05/AGRA/2011 & ITA NO. 460/AGRA/2010 20 YEAR AS PER THE DETAILS MENTIONED AT PAGE 35 TO 39 OF THE PAPER BOOK, WHICH REMAINED SUBJECT MATTER OF SCRUTINY ASSESSMENT IN A SSESSMENT YEAR 2006-07 AND 2007-08. THEREFORE, THE SAME FIGURES CANNOT BE TAKE N INTO CONSIDERATION BY THE AO IN ASSESSMENT YEAR UNDER APPEAL FOR DISTURBING THE VALUATION OF THE CLOSING STOCK. ONCE THE AO ACCEPTED THE SAME FIGURES IN SUBSEQUENT ASSESSMENT YEARS IN SCRUTINY ASSESSMENTS, IT CANNOT BE SUBJECT MATTER OF CONTROV ERSY IN ASSESSMENT YEAR UNDER APPEAL. THE ASSESSEE EXPLAINED BEFORE THE AUTHORITI ES BELOW THAT CLOSING STOCK IS CORRECTLY VALUED AT COST WHICH INCLUDES THE OPENING STOCK PLUS COST OF MATERIAL PURCHASED AND OTHER DIRECT EXPENSES DEBITED IN TRAD ING ACCOUNT MINUS SALE CONSIDERATION AFTER DEDUCTING GROSS PROFIT AND SAME METHOD WAS FOUND ACCEPTABLE TO THE AO AS PER REMAND REPORT. SO THERE WERE NO RE ASON FOR THE LD. CIT(A) TO HAVE CONFIRMED THE ADDITION. THE METHOD OF VALUATION OF THE CLOSING STOCK ADOPTED BY THE ASSESSEE IS AS PER THE SETTLED LAW AND AS SUCH WOULD NOT BE SUBJECTED TO DISTURBANCE. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES NOTED ABOVE, AND FURTHER THAT THE ASSESSEE CONSISTENTLY FOLLOWED THE SAME METHOD OF ACCOUNTING OF VALUATION OF CLOSING STOCK, WHICH IS ACCEPTED BY THE AO IN SUBSEQUENT SCRUTINY ASSESSMENTS AND REMAND REPORT, WE DO NOT FIND ANY J USTIFICATION TO SUSTAIN THE ORDERS OF THE AUTHORITIES BELOW. HONBLE RAJASTHAN HIGH COURT IN THE CASE OF GOTAN LIME KHANIJ UDYOG, 256 ITR 243 HELD THAT EVEN IF BO OK RESULTS ARE REJECTED, WOULD NOT NECESSARILY MEAN TO MAKE THE ADDITION. IN THIS CASE, THE ASSESSEE EXPLAINED EACH ITA NO. 05/AGRA/2011 & ITA NO. 460/AGRA/2010 21 AND EVERY OBJECTION OF THE AO. THEREFORE, THERE WAS NO REASON TO SUSTAIN THE ADDITION. WE ACCORDINGLY SET ASIDE THE ORDERS OF TH E AUTHORITIES BELOW AND DELETE THE ENTIRE ADDITION. AS A RESULT, GROUND NO. 1 TO 5 OF THE APPEAL OF THE ASSESSEE ARE ALLOWED. GROUND NO. 6 OF APPEAL OF THE ASSESSEE HAS ALREADY BEEN DECIDED WHILE DECIDING THE DEPARTMENTAL APPEAL. IN THE RESULT, TH E APPEAL OF THE ASSESSEE IS ALLOWED. 15. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMI SSED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY