TMI Blog2012 (9) TMI 508X X X X Extracts X X X X X X X X Extracts X X X X ..... basis. He will allow the deduction subject to satisfaction. Therefore case remand back to AO. - ITA Nos.1499 to 1451/Bang/10 & CO Nos.54 to 56/Bang/11 - - - Dated:- 29-6-2012 - SHRI N. BARATHVAJA SANKAR, AND SHRI N.V. VASUDEVAN , JJ. Revenue by : Shri Etwa Munda, CIT-III(DR) Assessee by : Shri S. Ram Jogi Reddy, C.A. O R D E R Per Bench ITA Nos.1449/Bang/10 to 1451/Bang/10 are appeals by the Revenue against three orders all dated 13.10.2010 of CIT(A)-IV, Bangalore, relating to A.Y.04-05, 05-06 07-08. The Assessee has filed cross objections against the very same orders of the CIT(A). 2. In its appeals, the revenue has challenged the orders of CIT(A) whereby the CIT(A) deleted the addition made by the AO on account of undervaluation of closing stock. The facts and circumstances under which the above addition was made by the AO and deleted by the CIT(A) are identical in all the three years. 3. ITA No.1449/Bang/10 (A.Y.2004-05): The Assessee is a company. It is in the business of developing residential layouts. It buys lands and converts them into residential lay-outs after providing all amenities like sewerage treatment plant, providing facility fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,33,387/- purchased from Sri Siva Priya Township Promoters (P) Ltd., Rs.11,85,201/- was only an advance and not a payment for purchases and therefore the same were not added to the closing stock. Thus a sum of Rs.77,48,186/- was added to the value of closing stock for AY 2003-04 by the Assessee and offered to tax in assessment u/s.153A of the Act. The addition made by the AO was deleted. We were informed at the bar at the time of hearing that the order of CIT(A) has been accepted by the Revenue for AY 2003-04 and no appeal filed before the Tribunal. 8. In AY 2004-05, the Assessee declared closing stock of 92,21,475/- in the return filed u/s.139(1) of the Act. In the profit and loss account filed along with the return filed u/s.153A of the Act, the Assessee declared closing stock of Rs.1,27,65,311/-. This closing stock was arrived at by the Assessee after duly taking opening stock as on 1.4.2003 of Rs.1,12,18,102/- which was the closing stock as on 31.3.2003 declared for AY 03-04. The working of the closing stock variance as worked out by the Assessee is given as Annexure-2 to this order. As per the said Annexure-2, it can be seen that there was an undervaluation of closing stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock works out at Rs.73,77,098/- should not be added to the total income of the appellant. The appellant in response to above notice submitted that the stock variance and land payments/advances reversal were offered in the respective assessment year. The perusal of the Assessment Order also reveals that the Assessing Officer worked out the difference of Rs.73,77,098/- in closing stock taking into consideration the closing stock shown in the return of income filed under section 139(1) of the Income Tax Act, ignoring the fact that in the computation of the income filed along with the return of income under Section 153A of the Income Tax Act, the appellant offered an amount of Rs.1,64,45,345/- on account of the variation of closing stock which means that the closing stock in the return filed under Section 153A has been taken at Rs.77,64,952/- + Rs.1,64,45,345/- = Rs.2,42,10,297 which means that the appellant has disclosed the suppression of the closing stock for the assessment year at Rs.1,64,45,345/- in the return of income filed under Section 153A of Income Tax Act which is more than the suppression of stock worked out by the Assessing Officer, hence the Assessing Officer was not j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lared closing stock of Rs.77,64,952 Rs.1,57,09,980 respectively in the return filed u/s.139(1) of the Act. In the profit and loss account filed along with the return filed u/s.153A of the Act, the Assessee declared closing stock of Rs.2,42,10,297/- and 2,02,58,139/- respectively. This closing stock was arrived at by the Assessee after duly taking opening stock as on 1.4.2004 and 1.4.2006 of Rs.1,27,65,311 and Rs.1,93,95,699/- respectively, which was the closing stock as on 31.3.2004 and 31.3.2006 respectively declared for AYs 2004-05 and 2005-06 respectively. The working of the closing stock variance as worked out by the Assessee is given as Annexure-3, 4 5 this order. As per the said Annexures, it can be seen that there was a undervaluation of closing stock of Rs.1,64,45,345 for AY 2005-06 and Rs. 45,48,159 for AY 2007-08 respectively. The profit as per profit and loss account as on 31.3.2005 31.3.2007 was Rs.6,18,405 and 4,30,404 respectively without giving effect to the opening and closing stock as per Annexures-3, 4 and 5 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 Annexure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red appeal being ITA Nos. 1450 1451/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). 18. We have considered the rival submission. The basis on which the AO made the impugned addition and the basis on which the CIT(A) deleted the addition are identical to the one discussed in ITA No.1449/Bang/2010. The reasons given for confirming the order of CIT(A) will equally apply to these appeals also. For the reasons given while deciding ITA No.1449/Bang/2010, we are of the view that the CIT(A) was justified in deleting the addition made by the AO. We find no grounds to interfere with the orders of the CIT(A). Consequently the appeal being ITA No.1450 1451/Bang/10 are dismissed. 19. C.O.No.54/Bang/2010 to 56/Bang/10 (AY 04-05, 05-06 and 07-08): The common issue that arises for consideration in these Cross objections filed by the Assessee is with regard to charging of interest u/s.234-A and 234-B of the Act. 20. On the above issue, the learned counsel for the Assessee submitted that the seized material were made available only in Jul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame. In the present assessment year, the AO did not allow the same on the ground that it is a contingent liability and cannot be allowed. The CIT(A) held that in proceedings u/s.153A it is only escaped income that has to be brought to tax and the Assessee cannot make a claim for any deduction which he ought to have made in the original return of income. 23. We are of the view that proceedings u/s.153A of the Act are not akin to proceedings u/s.147 of the Act and therefore the argument that only income which escapes assessment can be brought to tax in assessment u/s.153A of the Act and the Assessee cannot claim any new deduction, cannot be accepted. The total income has to be computed in accordance with law and the revenue cannot be heard to say that a legitimate deduction while determining income cannot be allowed. We however find that the question whether the liability is certain and that it is quantified on a reasonable basis has not been gone into by the AO or CIT(A). In the circumstances, we deem it fit and proper to remand the issue to the AO for fresh consideration. The AO will ascertain if the incurring of the liability is certain and that it has been estimated on a reason ..... X X X X Extracts X X X X X X X X Extracts X X X X
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