Biplab Construction & Finance Private Limited, Kolkata V. ITO, Ward - 11(4), Kolkata, Kolkata

ITA 77/KOL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92050 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-08-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 13-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANIL KR
• Assessee Lawyers: KHIRAJIT GOSWAMI
• Keywords: Corroborative evidences
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI, P . K BANSAL , ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH , J UDICIAL MEMBER ITA NO. 77 / KOL / 2012 ASSESSMENT YEAR : 2004 - 05 BIPLAB CONSTRUCTI O N & FINANCE PVT. LTD., 38, BANGUR AVENUE, BLOCK - A, KOLKATA - 700 055 [ PAN NO.AABCB 0409L ] V/S . I.T.O. WARD - 11(4) AYAKAR BHAVAN, 6 TH FLOOR, P - 7, CHOWRINGHEE SQUARE, KOL - 700 069 / APPELLANT .. / RESPONDENT / BY APPELLANT SHRI KHIRAJIT GOSWAMI, FCA / BY RESPONDENT ANIL KR. PANDE, SR - DR / DATE OF HEARING 30 - 06 - 2005 / DATE OF PRONOUNCEMENT 07 - 07 - 2015 / O R D E R PER P .K. BANSAL , ACCOUNTANT MEMBER: - THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - XIX, KOLKATA DATED 25.11.2011 FOR AY 2004 - 05. THE ONLY EFFECTIVE GROUND TAKEN BY THE ASSESSEE, WHICH READS AS UNDER: - 1) FOR THAT THE ORDERS OF THE OFFICE S BELOW ARE ARBITRARY, MISCONCEIVED, BAD ON MERITS OF FACTS AND IN LAW. 2) FOR THAT THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY RAISING THE VALUE OF CLOSING STOCK BY RS.23,26,574/ - ON THE PLEA OF UNDER VALUATION. IN FACT, THE APPELLANT SUBMITTED THE VALUER S REPORT AND ALL OTHERS SUPPORTING EVIDENCES IN REGARD TO THE VALUA TION OF CLOSING STOCK ITA NO. 77/KOL/2012 A.Y. 2004 - 05 BIPLAB CONSN. & FINANCE P.LTD. V. ITO WD - 11(4) KOL. PAGE 2 DURING THE COURSE OF HEARINGS WHICH SHOULD HAVE BEEN DULY CONSIDERED IN COMPLETION THE ASSESSMENT. 2. BRIEF FACTS RELATING TO THIS GROUND ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF RESIDENTIAL AND COMMERCIAL PRE MISES. THE CIT - VI, KOLKATA ON EXAMINATION OF THE RECORD FOUND THAT DURING THE YEAR UNDER CONSTRUCTION, THE ASSESSEE HAD SHOWN SALE OF FLATS AT 94,08,750/ - WHICH WAS CREDITED TO THE PROFIT AND LOSS ACCOUNT . THE INCREASING STOCK (WORK - IN - PROGRESS) WAS SHOWN AT NIL . AS THE OPENING STOCK WAS AT 2,25,12,041/ - AND THE CLOSING STOCK WAS ALSO SHOWN AT 2,25,12,041/ - SHOW CAUSE NOTICE U/S 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) ISSUED AND ULTIMATELY AFTER HEARING THE ASSESSEE CIT S ET ASIDE THE ASSESSMENT ORDER WITH THE DIRECTION TO THE ASSESSING OFFICER TO EXAMINE THE UNDER - VALUATION OF THE CLOSING STOCK AMOUNTING TO 23,26,574/ - AS IT WAS NOTED THAT WHILE VALUING THE CLOSING STOCK, THE ASSESSEE HAS REDUCED THE SALE VALUE THE FLATS INSTEAD OF COST OF CONSTRUCTION. THE AO ACCORDINGLY ISSUED SHOW CAUSE NOTICE. IN REPLY THERETO, THE ASSESSEE SUBMITTED THE WORK - IN - PROGRESS OF THE CLOSING STOCK AS UNDER: - WORKING SITE AREA (SQ.FT) AMOUNT (RS) 10, JESSORE RD, KOL - 28 37490 1,40,96,537 MADHYAMGRAM, SODEPUR RD, 24 PGS.(N) 22707 84,15,504 OPENING STOCK (WORKING - IN - PROGRESS) 60197 2,25,12,041 ADDITI O N DUR I NG THE YEAR 24615 94,08,750 TOTAL (WORKING - IN - PROGRESS) 84812 3,19,20,791 LESS: SOLD DURING THE YEAR (SALE VALUE) 18817 94,08,750 CLOSING STOCK (WORKING - IN - PROGRESS) 65995 2,25,12,041 THE AO ON PERUSAL OF THE DETAILS NOTED THAT THAT THE ASSESSEE WAS CALCULATING THE CLOSING STOCK, THE STOCK - IN - PROGRESS DEDUCTED THE SALE VALUE OF THE FLATS (18,817 SQ.F T OF FLAT WAS SOLD DURING THE RELEVANT YEAR FOR 94,08,750/ - ) INSTEAD OF CONSIDERING THE COST OF CONSTRUCTION OF THE FLATS SOLD. HE, THEREFORE, MADE ITA NO. 77/KOL/2012 A.Y. 2004 - 05 BIPLAB CONSN. & FINANCE P.LTD. V. ITO WD - 11(4) KOL. PAGE 3 THE ADDITION OF 23,26,574/ - . WHEN THE MATTER WENT BEFORE CIT(A), WHO CONFIRMED THE ADDITION BY OBSERVING AS UNDER: - (8) I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND PERUSED THE ASSESSMENT ORDER. I HAVE ALSO GONE THROUGH THE ORDER U/S. 263 OF THE ACT. IN THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT S AR WAS ASKED TO EXPLAIN AS TO HOW THE CALCU LATION MADE BY THE AO FOR CLOSING WORK - IN - PROGRESS IS NOT CORRECT KEEPING IN VIEW THE ENTRIES MADE BY THE APPELLANT IN I T S BOOKS OF ACCOUNT AND THE ACCOUNTING PRINCIPLES. HOWEVER, THE APPELLANT S AR COULD NOT EXPLAIN THE FAULT IN THE CALCULATION MADE BY TH E AO. ON PERUSAL OF ORDER U/S 263, IT IS OBSERVED THAT A SPECIFIC QUERY WAS RAISED BY THE CIT,KOL - IV, KOL WITH REGARD TO UNDER VALUATI O N O F CLOSING STOCK ARRIVED ON RS.23,26,574/ - . THE APPELLANT COMPANY WAS ALLOW E D AN OPPORTUNITY TO EXPLAIN THE SAME. HOWEV ER, IT IS OBSERVED THAT IN THE PROCEEDINGS U/S 263, THE APPELLANT ONLY SUBMITTED THAT IT WAS FOLLOWING A DIFFERENT ACCOUNTING METHOD FOR VALUATION OF CLOSING STOCK AND SAME WAS BEING FOLLOWE D YEAR AFTER YEAR. IT IS FURTHER OBSERVED THAT THE AR OF THE APPEL LANT WAS REQUESTED TO RECONCILE THE DIFFERENCE HIGHLIGHTED IN THE SHOW - CAUSE NOTI C E U/S 263 WITH REFERENCE TO THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. BUT, THE AR OF THE ASSESSEE FAILED TO RECONCILE AND WAS NOT IN A POSITION TO OFFER A REASONABLE E XPLANATION FOR THE DISCREPANCY POINTED OUT TO HI M . IT IS ALSO OBSERVED THAT THE APPELLANT COMPANY DID NOT FILE ANY APPEAL AGAINST THE ORDER PASSED BY THE CIT, KOL - IV, KOL U/S 263 OF THE ACT WHEREIN IT WA S POINTED OUT TO THE APPELLANT THAT THERE WA S SUNDER VALUATION OF CLOSING STOCK AMOUNTING TO RS.23,26,574/ - . ON CAREFUL CONSIDERATION OF THE FACTS AND IN LAW, I AM OF THE OPINION THAT THE CALCULATI O N MADE BY THE AO FOR VALUATI O N OF CLOSING STOCK ( WORK - IN - PROGRESS ) IS ABSOLUTELY CORRECT AND HE HAD CORRECTLY O BSERVED THAT THE APPELLANT COMPANY SHOULD HAVE CONSID E RED COST OF CONSTRUCTION OF THE FLATS SOLD DURING THE YEAR INSTEAD OF CONSIDERING THE SALE PROCEEDS OF THE FLATS WHILE ARRIVING ON THE FIGURE OF CLOSING WORK - IN - PROGR E SS AS ON 31.03.2004. AS MENTI O NED A BOVE THE APPELLANT COULD NOT POINT OUT AND EXPLAIN ANY ERROR IN THE WORKING OF AO, HENCE IT IS TO BE HELD T H AT THE AO WAS JUSTIFIED IN MAKING THE ADDITION OF RS.23,26,574/ - ON ACCOUNT OF UNDER VALUATION OF CLOSING STOCK. THE ADDITION MADE BY HIM IS CONFIR MED. THE GROUND NO.2 IS DISMISSED. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED THAT WHILE VALUING THE CLOSING STOCK, THE ASSESSEE EVEN THOUGH MADE THE ADDITION IN RESPECT OF 24,615 SQ.FT AT 94,08,750/ - BUT D EDUCTING THE SALE VALUE OF THE FLATS SOLD MEASURING 18,817 SQ.FT I.E., 94,08,750/ - IN RESPECT OF DEDUCTING THE COST ITA NO. 77/KOL/2012 A.Y. 2004 - 05 BIPLAB CONSN. & FINANCE P.LTD. V. ITO WD - 11(4) KOL. PAGE 4 OF THE FLATS. THUS, THE VALUE OF THE WORK - IN - PROGRESS HAS BEEN UNDER - VALUE EVEN THOUGH THE ARE A OF THE COST HAS BEEN INCREASED FROM 60,197 SQ.FT TO 65,995 SQ.FT. BUT THE ASSESSEE KEPT THE VALUE AT THE SAME , WHICH WAS INSTEAD OF 60,197 SQ.FT I.E., 2,25,12,041/ - . IN VIEW OF THIS FACT, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER OF CIT IN CONFIRMING THE ADDITION OF 23,26,574/ - . W E ACCORDINGLY CONFIRM THE ORDER OF CIT AND DISMISS THE APPEAL FILED BY ASSESSEE. 4. IN THE RESULT, APPEAL FILED BY ASSESSEE IS STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07 / 0 7 /201 5 SD/ - SD/ - ( MAHAVIR SINGH ) ( P .K. BANSAL ) ( JUDICIAL MEMBER ) ( ACCOUNTANT MEMBER) KOLKATA , *DKP - 07 / 0 7 / 201 5 / COPY OF ORDER FORWARDED TO: - 1 . / APPELLANT - BIPLAB CONSTRUCTION & FINANCE PVT. LTD. 38, BANGUR AVENUE, BLOCK - A, KOLKATA - 700 055 2 . / RESPONDENT - ITO WARD - 11(4), AYAKAR BHAVAN, 6 TH FLOOR, P - 7, CHOWRINGHEE SQUARE, KOLKATA 700 069 3 . / CONCERNED CIT KOLKATA 4 . - / CIT (A) KOLKATA 5 . , , / DR, ITAT, KOLKATA 6 . / GUARD FILE. BY ORDER/ , /TRUE COPY/ / ,