SAIDARSHAN BUILDERS,KOLHAPUR vs. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 2, KOLHAPUR

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ITA 509/PUN/2019Status: DisposedITAT Pune30 April 2019AY 2010-115 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had already offered the enhanced value of the WIP for taxation by including it in the closing stock. Therefore, a separate addition for the increase was erroneous.

What were the facts?

The assessee, a developer, had an increase in the value of work-in-progress (WIP) in their closing stock. The Assessing Officer treated this increase as unexplained expenditure and added it to the assessee's income.

What were the issues?

Whether the increase in the value of closing stock of work-in-progress, which was already offered for taxation, can be treated as unexplained expenditure.

Which sections of the Income-tax Act were involved?

Section 133A,Section 69C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI R.S. SYAL

For Appellant: Shri P.S. Kulkarni
For Respondent: Shri Rajesh Gawali

आदेश / ORDER

PER R.S.SYAL, VP : This appeal by the assessee arises out of the order passed 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.

2 ITA No.509/PUN/2019 Shri Saidarshan Builders

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 assessee is

engaged in the business as Developer. A survey was

conducted u/s.133A of the Income-tax Act, 1961 (hereinafter

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 details

of opening stock which included an item of work-in-progress (WIP) of Rajarampuri 13th 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 chargeable

to tax u/s. 69C of the Act as unexplained expenditure. The ld.

CIT(A) confirmed the addition, against which the assessee has

come up in appeal before the Tribunal.

3 ITA No.509/PUN/2019 Shri Saidarshan Builders

5.

I have heard both the sides and gone through the relevant

material on record. The ld. CIT(A) has drawn the assessee’s

Trading profit and loss account on page 3 of the impugned

order, in which the figure of opening stock is Rs.72,09,071/-

and the amount of closing stock is Rs.1,05,85,200/-. There are

certain Purchases and Direct expenses as well and the amount

of gross profit has been declared at Rs.12,05,408/-. The 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 can

be any question of addition towards the increase in the value

of closing WIP because the assessee by showing the enhanced

value has already shown the corresponding profit and offered

it for taxation. The case of the assessee is that he revalued the

WIP at the end of the year and adopted the enhanced value 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

4 ITA No.509/PUN/2019 Shri Saidarshan Builders

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 30th April, 2019.

Sd/- (R.S.SYAL) उपा�य�/ VICE PRESIDENT उपा�य� उपा�य� उपा�य�

पुणे Pune; �दनांक Dated : 30th April, 2019 सतीश आदेश क� क� क� �ित क� �ित �ितिलिप �ित िलिप अ�ेिषत अ�ेिषत अ�ेिषत / Copy of the Order is forwarded to : अ�ेिषत आदेश आदेश आदेश िलिप िलिप 1. अपीलाथ� / The Appellant; 2. ��यथ� / The Respondent; आयकर आयु�(अपील) / 3. The CIT (Appeals)-2, Kolhapur 4. The Pr. CIT-2, Kolhapur िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “SMC” / DR ‘SMC’, 5. ITAT, Pune; गाड� फाईल / Guard file. 6. // True copy // आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार

// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

ITA No.509/PUN/2019 Shri Saidarshan Builders

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 JM the second member 4. Draft discussed/approved by JM Second Member. 5. Approved Draft comes to the Sr.PS Sr.PS/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. *

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