Saidarshan Builders, Kolhapur V. Deputy Commissioner of Income-tax, Circle - 2, Kolhapur

ITA 509/PUN/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7516 (ITAT-PUNE)
• Duration Of Justice: 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 01-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ARISES OUT OF PASSED
• Keywords: Unexplained expenditure; Condonation of delay
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT . / ITA NO.509/PUN/2019 / ASSESSMENT YEAR : 2010-11 SHRI SAIDARSHAN BUILDERS, 773 E, SHAHUPURI, 5 TH LANE, KOLHAPUR 416001 PAN : ABKFS2478K VS. DCIT, CIRCLE-2, KOLHAPUR (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSE D BY THE CIT(A)-2, KOLHAPUR ON 20-12-2018 IN RELATION TO THE ASSESSMENT YEAR 2010-11. 2. THIS APPEAL IS TIME-BARRED BY 42 DAYS. THE ASSESSEE HAS PLACED ON RECORD A LETTER DATED 28-03-2019 EXPLAINING THE REASONS WHICH LED TO THE LATE FILING OF APPEAL. I AM SATISFIED WITH SUCH REASONS. THE DELAY IS CONDONED AND THE APPEAL IS ADMITTED FOR HEARING ON MERITS. APPELLANT BY SHRI P.S. KULKARNI RESPONDENT BY SHRI RAJESH GAWALI DATE OF HEARING 30-04-2019 DATE OF PRONOUNCEMENT 30-04-2019 ITA NO.509/PUN/2019 SHRI SAIDARSHAN BUILDERS 2 3. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF ADDITION OF RS.3,32,827/- ON ACCOUNT OF INCREASE IN THE VALUE OF CLOSING STOCK. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESS EE IS ENGAGED IN THE BUSINESS AS DEVELOPER. A SURVEY WAS CONDUCTED U/S.133A OF THE INCOME-TAX ACT, 1961 (HEREINAF TER ALSO CALLED `THE ACT) ON 24-02-2010 IN WHICH THE ASSESSEE DECLARED CERTAIN ADDITIONAL INCOME WHICH WAS PROMPTLY OFFERED FOR TAXATION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) OBSERVED THE DETA ILS OF OPENING STOCK WHICH INCLUDED AN ITEM OF WORK-IN-PROGRESS (WIP) OF RAJARAMPURI 13 TH LANE SITE AT RS.22,35,746/-. THE AO NOTICED THAT THE CLOSING VALUATION OF THIS WIP WAS TAKEN AT RS.25,68,573/-. AS THE ASSESSEE DID NOT UNDERTAKE ANY CONSTRUCTION ACTIVITY DURING THE YEAR IN RESPECT OF THIS PROPERTY, THE AO HELD THAT THE ADDITIONAL WIP AMOUNTING TO RS.3,32,827/- (RS.25,68,573 RS.22,35,746) WAS CHA RGEABLE TO TAX U/S. 69C OF THE ACT AS UNEXPLAINED EXPENDITURE. TH E LD. CIT(A) CONFIRMED THE ADDITION, AGAINST WHICH THE ASSESSEE HA S COME UP IN APPEAL BEFORE THE TRIBUNAL. ITA NO.509/PUN/2019 SHRI SAIDARSHAN BUILDERS 3 5. I HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE R ELEVANT MATERIAL ON RECORD. THE LD. CIT(A) HAS DRAWN THE ASSESS EES TRADING PROFIT AND LOSS ACCOUNT ON PAGE 3 OF THE IMPUGNED ORDER, IN WHICH THE FIGURE OF OPENING STOCK IS RS.72,09,07 1/- AND THE AMOUNT OF CLOSING STOCK IS RS.1,05,85,200/-. THE RE ARE CERTAIN PURCHASES AND DIRECT EXPENSES AS WELL AND THE AMOUN T OF GROSS PROFIT HAS BEEN DECLARED AT RS.12,05,408/-. T HE FIGURE OF OPENING WIP AT RS.22,35,746/- IS APPARENTLY INCLUDED IN THE OVERALL FIGURE OF THE OPENING STOCK OF RS.72,09,071/- AND THE FIGURE OF CLOSING WIP AT RS.25,68,573/- IS INCLUDED IN THE OVERALL FIGURE OF THE CLOSING STOCK OF RS.1,05,85,200/-. ONCE THE POSITION IS SUCH, I FAIL TO COMPREHEND AS TO HOW THERE CA N BE ANY QUESTION OF ADDITION TOWARDS THE INCREASE IN THE VALUE OF CLOSING WIP BECAUSE THE ASSESSEE BY SHOWING THE ENHANC ED VALUE HAS ALREADY SHOWN THE CORRESPONDING PROFIT AND OFFE RED IT FOR TAXATION. THE CASE OF THE ASSESSEE IS THAT HE REVALU ED THE WIP AT THE END OF THE YEAR AND ADOPTED THE ENHANCED VALU E OF RS.25.68 LAKH AND INCLUDED IT IN THE VALUE OF TOTAL CLOSING STOCK AND OFFERED INCOME FOR TAXATION ACCORDINGLY AT THE ENHANCED VALUE. IN MY CONSIDERED OPINION, THE AUTHORITIES BELOW HAVE ERRED IN MAKING A SEPARATE ADDITION WHEN THE AMOUNT OF ITA NO.509/PUN/2019 SHRI SAIDARSHAN BUILDERS 4 ENHANCEMENT IN THE VALUE OF CLOSING STOCK OF THE WIP WAS ALREADY OFFERED FOR TAXATION. I, THEREFORE, OVERTURN THE IMPUGNED ORDER AND ORDER TO DELETE THE ADDITION. 6. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL, 2019. SD/- (R.S.SYAL) / VICE PRESIDENT PUNE; DATED : 30 TH APRIL, 2019 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-2, KOLHAPUR 4. THE PR. CIT-2, KOLHAPUR 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NO.509/PUN/2019 SHRI SAIDARSHAN BUILDERS 5 DATE 1. DRAFT DICTATED ON 30-04-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 30-04-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *