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2017 (12) TMI 413 - HC - Income TaxValuation of closing stock - methods of accounting - Held that:- Tribunal has again not committed any error in rejecting the foundation of valuation made by the assessing officer. In so far as it has noted that the total sale turnover of the residential units made by the assessee was irrelevant inasmuch as the sales of different units had been made in different years and the same could not be clubbed together to apply the gross profit rate thereto to infer the deemed cost of closing stock. Here, we find that besides the foundation being non-existent (as the Tribunal has found), even the method adopted by the assessing officer is doubtful if not plainly erroneous. In any case, valuation of closing stock being an issue of fact that has a cascading effect in different years, we find that the Tribunal has accepted the valuation of closing stock upon due appraisal of evidence inasmuch as it has found that the cost claimed by the assessee was duly verified from vouchers and the assessee's same method of accounting had found acceptance during assessment proceedings for the Assessment Years 2005-06, 2006-07 and 2007-08 in proceedings under Section 143(3) of the Act. Therefore, the same does not suffer from any infirmity. The finding recorded by the Tribunal is a pure finding of fact recorded on the basis of material and evidence on record. It does not suffer from any infirmity. Question nos. 1 and 6 are answered in the affirmative i.e. in favour of the assessee and against the revenue. Addition made under Section 68 - Held that:- Once registered sale deeds had been executed by the assessee and the cash credit entries found standing in the books of account of the assessee during the previous year relevant to the Assessment Year 2005-06 had been adjusted against the same, there remained no further doubt as to the identity of the persons who deposited the money with the assessee in the previous year relevant to Assessment Year 2005-06. The fact that such person did not receive the letter or did not appear in person during the inquiry made by the assessing officer at the original assessment stage gets overshadowed and looses its relevance in absence of any evidence to doubt the genuineness or correctness of registered sale deeds executed by the assessee. Even in respect of amount of ₹ 8,00,000/- the second remand report as extracted by the CIT (Appeals) clearly mentioned that Aashiq Ali Siddiqui had got the sale deed executed in his favour wherein an amount of ₹ 8,00,000/- had been adjusted. Thus, the finding of the Tribunal on this issue is also a concluded finding of fact recorded on the basis of material and evidence on record and warrants no interference. Questions of law are answered in favour of the assessee and against the revenue.
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