ITO, NEW DELHI vs. M/S. SMART INVESTMENT, NEW DELHI

The assessee is a partnership firm engaged in the real estate business. It filed its return of income on 24.9.2010 declaring total income of Rs.13,470/-. The AO completed assessment u/s 143(3) on 22.3.2013, inter alia, making two additions of Rs.8,54,369/- towards disallowance on account of purchase of wood and Rs.30 lacs recorded as sales returns. Aggrieved, the assessee carried the matter in appeal. The first appellate authority granted relief. Aggrieved, the Revenue is in appeal on both these issues.

After hearing the rival contentions, I find that at para 8 and 9 of the ld.CIT(A)’s order, the clear finding of fact is given. He records that Shri Ravinder Kumar, the purchaser of the second floor had, in his statement, stated that wood work was carried out on the second floor flat after the sale of the property during the relevant year. As regards ground floor, wood work was also carried out and were shown as sales returns in the Profit & Loss Account. The closing stock particulars of the ground floor flat were shown by the assessee firm at Rs.32,90,150/- while the sales returns declared in the Profit & Loss Account was only Rs.30 lacs. The difference of Rs.2,90,150/- was the value of wood work. At para 9, the ld.CIT(A) recorded factual finding of the cost incurred towards purchase of wood and the amount paid to the carpenters and granted part relief to the assessee. This factual finding could not be controverted by the ld. DR. Thus, we uphold the same and dismiss these grounds of the Revenue.

On the second addition of Rs.30 lacs, the first appellate authority recorded that, the assessee had declared this as income being sales returns and, hence, making an addition would amount to double addition. I fully agree with this finding. Thus, we uphold the same and dismiss this ground of the Revenue also.

In the result, the appeal of the Revenue is dismissed.