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2015 (5) TMI 892 - ITAT HYDERABAD

2015 (5) TMI 892 - ITAT HYDERABAD - TMI - Reopening of assessememt - valuation of closing stock of property - Held that:- The assessee during the year under consideration purchased one property situated at Panjagutta, Hyderabad for ₹ 13.13 cores and sold a portion of the said property, i.e. ground floor for consideration of ₹ 11 crores. The cost of the portion of the said property sold during the year under consideration was taken by the assessee as ₹ 7.6 crores, on the basis o .....

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was directly linked with these transactions, we find it difficult to accept the contention of the Learned Departmental Representative that the same was not examined by the Assessing Officer during the course of original proceedings Moreover, the Assessing Officer himself in the letters written to the audit team as well as to the concerned Addl.CIT had stated in very clear terms that the issue relating to the valuation of closing stock was duly examined during the course of original assessment p .....

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infirmity in the impugned order of the learned CIT(A) holding the assessment made by the Assessing Officer under S.143(3) read with S.147 as invalid and upholding the same, we dismiss the appeal filed by the Revenue. - Decided in favour of assesse. - ITA No.146/Hyd/14, Cross Objection No.25/Hyd/2014 - Dated:- 10-4-2015 - Shri P.M.Jagtap And Shri Saktijit Dey JJ. For the Appellant : Shri A.V.Raghuram For the Respondent : Shri Ramakrishna Bandi, DR ORDER Per P.M.Jagtap, Accountant Member : This ap .....

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originally completed under S.143(3) vide order dated 27.7.2009, the total income as declared by the assessee in the return was accepted by the Assessing Officer. Subsequently, the assessment was reopened by the Assessing Officer by issuing a notice under S.148 on 22.3.2012, after recording the following reasons- "On verification of the records, it was seen that the assessee had purchased the immovable property consisting of semi-finished commercial complex named as 'OZONE'. This pro .....

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details available on record, the cost of construction per square feet works out to ₹ 2257.55 (Total 58,179 Sq. Ft with undivided land of 1858.92 Sq. Yards purchased for ₹ 13,13,42,530). The cost of area sold works out to ₹ 2,63,32,063 (11664 x ₹ 2257.55) and therefore, the value of closing stock should be Rs.l0,50,09,938/- as against which the assessee shown only ₹ 5,53,42,530/- which resulted in escapement of income. 3. In response to the notice issued by the Asses .....

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the assessee and proceeded to complete the re-assessment under S.143(3) read with S.147 vide his order dated 31.3.2013 making therein, an addition of ₹ 4,96,74,352 to the total income of the assessee on account of alleged under valuation of closing stock. 4. Against the order passed by the Assessing Officer under S.143(3) read with S.147, an appeal was preferred by the assessee before the learned CIT(A), challenging the validity of the said assessment as well as disputing the addition mad .....

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floor of any commercial property was substantially higher than the upper floors, a valuation report was obtained determining the value of the ground floor at ₹ 7.6 crores. It was submitted that after apportioning such value of the ground floor, the value of the remaining portion of the property being the closing stock, was adopted at ₹ 5.53 crores, by the assessee and the same was accepted by the Assessing Officer during the course of original assessment proceedings, after taking int .....

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notice of the learned CIT(A) by the assessee that the Assessing Officer in this regard had sent a report dated 29.1.2011 to the Additional CIT Range 6, Hyderabad, clearly stating that the audit objection was not acceptable, as the issue in question was duly examined during the course of original assessment proceedings. It was therefore, contended on behalf of the assessee before the learned CIT(A) that the issue having been duly examined by the Assessing Officer during the course of original as .....

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e same was based on a mere change of opinion. Accordingly, the assessment made by the Assessing Officer under S.143(3) read with S.147 was cancelled by the learned CIT(A). Keeping in view the decision rendered by her on the preliminary issue holding the assessment made by the Assessing Officer under S.143(3) read with S.147 as invalid, the learned CIT(A) did not consider it necessary to decide the other issue raised by the assessee in its appeal on merits relating to the addition made by the Ass .....

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unt of under-valuation of closing stock on merits. 7. The Learned Departmental Representative while supporting the appeal of the Revenue submitted that the issue relating to the valuation of closing stock was not examined by the Assessing Officer during the course of original assessment proceedings as is evident from the order passed by him under S.143(3) . He invited our attention to the copy of the said order placed on record and submitted that there is nothing in the said order to show that t .....

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to point out that copy of the relevant agreement for sale of portion of the property was specifically called for by the Assessing Officer, and the same was also duly furnished by the assessee. He submitted that even all other details and documents required by the Assessing Officer were furnished by the Assessing Officer from time to time, including the valuation report giving the basis of valuation of closing stock adopted by the assessee. He contended that the assessee had entered into only one .....

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issue relating to the valuation of closing stock was duly examined during the course of original assessment proceedings. He contended that this issue thus was duly examined by the Assessing Officer during the course of original assessment proceedings under S.143(3) and the reopening of the assessment on the same issue based on a mere change of opinion is not permissible in law, as held inter alia by the Hon'ble Supreme Court in the case of CIT V/s. Kelvinator India Ltd. (320 ITR 561). 9. In .....

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e considered the rival submissions and perused the relevant material on record. It is observed that the assessee during the year under consideration purchased one property situated at Panjagutta, Hyderabad for ₹ 13.13 cores and sold a portion of the said property, i.e. ground floor for consideration of ₹ 11 crores. The cost of the portion of the said property sold during the year under consideration was taken by the assessee as ₹ 7.6 crores, on the basis of a valuation report a .....

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