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TMI Blog2012 (9) TMI 508X X X X Extracts X X X X X X X X Extracts X X X X ..... s them into residential lay-outs after providing all amenities like sewerage treatment plant, providing facility for laying underground electricity and drainage, land scape/gardens etc., and getting approval from BMRDA/Panchayat for such lay-outs. The Assessee commenced its operations in December, 2002. It entered into a MOU dated 1.12.2002 with Sri Siva Priya Township Promoters (P) Ltd., whereby the latter transferred 19 acres and 34 guntas of land to the Assessee at a price of Rs.89,33,387/-. There was a search and seizure action u/s.132 of the Income Tax Act, 1961 ("the Act") carried out in the case of the Assessee by the Revenue on 11.1.2008. Consequent to the search action, assessments for AYs 2003-04 to 2007-08 were made u/s.153A of the Act. 4. In the course of post search investigation, the Assessee by a letter dated 28.2.2008 surrendered a sum of Rs.60,87,229/- on account of undervaluation of stock. 5. For AY 2003-04, in the original return of income filed u/s.139(1) of the Act by the Assessee did not reflect the value of stock of land of Rs.89,33,387/- purchased from Sri Siva Priya Township Promoters (P) Ltd. The value of closing stock declared by the Assessee for that y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 to this order. As per the said Annexure-2, it can be seen that there was an undervaluation of closing stock of Rs.35,43,836/-. The profit as per profit and loss account as on 31.3.2004 was Rs.1,24,518/- without giving effect to the opening and closing stock as per Annexure-1 and Annexure-2 of this order. The Assessee filed a revised profit and loss account as on 31.3.2004 after duly considering the opening and closing stock as per Annexures-1 & 2 to this order. The profit as per profit and loss account as per this profit and loss account was Rs.24,25,713. This was the income declared by the Assessee in the return of income filed for AY 2004-05. It can be seen from Annexure-2 to this order that the difference in closing stock as on 31.3.2004 between the original profit and loss account and the revised profit and loss account was a sum of Rs.35,43,836/- and this has been offered to tax in the return of income. 9. The AO on the basis of the statement filed in the course of post search investigation was of the view that the value of closing stock as on 31.3.2004 was Rs.1,98,61,189 whereas the Assessee had declared closing stock of only Rs.92,21,475/-. In his show cause notice dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than the suppression of stock worked out by the Assessing Officer, hence the Assessing Officer was not justified in making addition of Rs.73,77,098/- to the total income of the appellant, the same is accordingly deleted." 11. Aggrieved by the order of the CIT(A), the revenue has preferred appeal being ITA No. 1449/Bang/2010. We have heard the submissions of the learned DR who reiterated the stand of the AO in the order of assessment. The learned counsel for the Assessee relied on the order of the CIT(A). 12. We have considered the rival submissions. The sum and substance of the case of the AO as reflected in the grounds of appeal before the Tribunal is that while adding a sum of Rs.35,43,836/- to the value of closing stock as on 31.3.2004, the Assessee has also added to the value of opening stock as on 31.3.2003 the sum of Rs.77,48,186. This according to the Revenue should not be permitted. We fail to see any justification for the grievance projected by the Revenue in this appeal. The starting point of the dispute regarding valuation of closing stock was the failure on the part of the Assessee to show the value of land purchased from Sri Siva Priya Township Promoters (P) Ltd. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd loss account as on 31.3.2004 after duly considering the opening and closing stock as per Annexure-3, 4 and 5 to this order. The profit as per profit and loss account as per these profit and loss account was Rs.1,98,45,858 as on 31.3.2005 and Rs.16,57,827 as on 31.3.2007 respectively. These amounts were the income declared by the Assessee in the return of income filed for AY 2005-06 and 2007-08 respectively. It can be seen from Annexures-3, 4 & 5 to this order that the difference in closing stock as on 31.3.2005 and 31.3.2007 between the original profit and loss account and the revised profit and loss account was a sum of Rs.1,64,45,345 and Rs.45,48,159 respectively and these sums have been offered to tax in the return of income for AY 2005-06 and 2007-08 respectively. 15. The AO on the basis of the statement filed in the course of post search investigation was of the view that the value of closing stock as on 31.3.2005 and 31.3.2007 was Rs.2,57,81,764 and Rs.2,21,35,963 respectively whereas the Assessee had declared closing stock of only Rs.77,64,952 and Rs.64,25,983 respectively. In his show cause notice dated 17.8.2009, the AO informed the Assessee that the discrepancy in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel for the Assessee submitted that the seized material were made available only in July, 2009 after repeated requests and therefore the returns u/s.153A were filed only on receipt of the seized material. Our attention was drawn to the decision of the Hon'ble Karnataka High Court in the case of T.P.Indrakumar Vs. ITO ITA No.596 of 2004 dated 9.7.2009 wherein the Hon'ble High Court has taken the view that interest u/s.234-A and B cannot be charged. We have perused the aforesaid judgment of the Hon'ble Karnataka High Court and we find that the Hon'ble Court waived interest taking into account the peculiar facts and circumstances of the case. As rightly contended on behalf of the Revenue by the learned DR, levy of interest is mandatory as laid down by the Hon'ble Supreme Court in the case of M.S.Ghaswala 251 ITR 1 (SC) and it is only the authorities under the Act in exercise of their administrative capacity have the powers to waive levy of interest. Regarding the complaint of the Assessee that seized materials were not available and therefore returns could not be filed, the Assessee has not brought any material on record to show that the absence of seized material or the fact that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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