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TMI Blog2012 (8) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case and in law, the Hon'ble CIT(A) erred in deleting the addition of Rs.33,57,337/- made on account of disallowance of expenses pertains to A.Y. 2005-06. 2.1. Facts in brief as emerged from the corresponding assessment order passed u/s.143(3) of the I.T. Act, 1961 dated 31.12.2008 were that the assessee in individual capacity is in the business of construction of a project, namely, Shivani Park at Navsari and subjected to a survey u/s.133A dated 10.1.2006. As on the date of survey, the survey party had drawn a trading account; reproduced below:- "Trading Account As on 10-01-2006 Particulars Dr (Rs) Particulars Cr (Rs) Land purchase 85,00,000 Sales 3,12,53,601 Land development expenses 2,03,26,885 Closing s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asked to explain as to why the above expenses pertained to A.Y. 2005-06 should not be disallowed vide assessment proceedings dated 23-12-2008. However, no explanation offered in this regard. In view of above facts the expenses pertained to A.Y. 2005-06 as shown as per above table Rs.3357337/- claimed during the previous year relevant to assessment year is disallowed and added to the total income. I am, therefore, satisfied that the assessee has furnished inaccurate particulars of income and, therefore, penalty proceedings u/s.271(1)(c) are separately initiated." Being aggrieved, the matter was carried before the first appellate authority. 3. After hearing the submissions and on appreciation of the facts of the case, the Learned CIT(Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d during the survey, the application of undisclosed amount was made as under:- (i) Closing stock : 90,00,000/- (ii) Cash in hand : 4,87,000/- (iii) Sundry Debtors : 7,48,000/- Total ..... -------------- 1,02,35,000/- The closing stock shown in the books of account related to the Shivani Park Projects. The nature of expenditure is not in dispute. Any expenditure pertains to development of the projects is part of stock in trade i.e. work-in-progress till the project was completed. The appellant has correctly debited development expenses as stock-in-trade in the Asstt.Year 2005-06 and carried forward to Asstt.Year 2006-07 as opening stock-in-trade and worked out profit of the project. Considering the facts and the circumstances of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogress and added development expenses incurred during A.Y. 2006-07 Rs.40,80,613 so the total development works out at Rs.2,03,26,885/-. The A.O. added following Rs.33,57,337 development expenditure incurred during A.Y. 2005-06 and carried forward as closing stock of work in progress in A.Y. 2005-06." 5.1. He has further argued that there was inconsistency in the approach of the Assessing Officer because an another expenditure under the head "labour expenses" was allowed by the Assessing Officer, though that expenditure has already been incurred in the past. However, Assessing Officer has not disturbed the expenditure incurred in the past, but decided only to disallow an adhoc amount of 10% that too on the ground that some of the expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, we hereby confirm the deletion of addition. This ground of the Revenue is dismissed. 7. Ground No.2 reads as under:- [2] On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in deleting the addition of Rs.3,41,300/- made on account of disallowance out of labour expenses. 7.1. Having heard the submissions of both the sides and in the light of the discussion made hereinabove, we hereby hold that there was no logical basis for an adhoc disallowance out of "labour expenses claimed". The Learned CIT(Appeals) has given relief as follows:- "6.3. I have considered the contention of the Appellant as well as observation of the AO in the assessment order. There is no plausible reason to disbelieve the contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Since the expenditure of Rs.34,13,000/- is not excessive, no part of the same can be disallowed. The ad-hoc disallowance of Rs.3,41,300/- made by the AO is therefore Deleted. The Appellant's ground No.2 is Allowed." 8. We have already expressed our opinion while deciding ground No.1[supra] that there was inconsistency in the approach of the Assessing Officer that on one hand he has held that the expenditure did not pertain to the year under consideration and on the other hand, in respect of labour expenses he has only disallowed a percentage of those very expenditure. We hereby confirm the reasons given by the Learned CIT(Appeals) while deleting the addition, hence this ground of the Revenue is hereby dismissed. [B] Revenue's appeal, IT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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