TMI Blog2021 (4) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... low claims that alleged timidly due to assessee, even when such a claim is not made. In the present case, the Ld. AO ought to have guided assessee for adopting one of the recognised method of accounting to arrive at the correct income vis- -vis the method of accounting adopted by assessee in the previous assessment year or the immediately succeeding assessment year. We rely on the decision of Hon'ble Supreme Court in case of CIT vs British Paints India Ltd. [ 1990 (12) TMI 2 - SUPREME COURT] observed that assessee was valuing the work in progress and finished products at raw material cost by excluding other overriding expenditure. Hon'ble Supreme Court, held the method adopted by assessee therein was not acceptable, as it was not recognised method. We note that the method adopted by the Ld. AO to determined taxable income in the hands of assessee is not correct. It was incumbent on the Ld. AO to correct the mistake in the method adopted by assessee to compute taxable income for year under consideration. Merely because assessee had followed an unrecognised method to compute taxable income in the immediately preceding and succeeding assessment year, cannot be an estopp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Income Tax (Appeals) ought to have furnished the reasons recorded u/s. 148(2) of the Act. 4. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in holding that the appellant had earned a profit of ₹ 35,05,415/- in the business of development on the only ground that the appellant has agreed for the addition during the assessment proceedings and it is consistently followed for preceding and subsequent years. 5. That the appellant is entitled to challenge the addition with respect to profit on development even if the authorized representative of the appellant has agreed for such addition as there is no estoppel against the law. 6. That the learned Commissioner of Income Tax (Appeals) ought to have appreciated neither the principles of valuation of WIP adopted by the appellant nor the method of determination of profit by the assessing officer is correct in law. 7. That the learned Commissioner of Income Tax (Appeals) ought to have held method of determining the profit by the learned assessing officer is erroneous as it is neither as per percentage of completion method nor project completion method. 8. That the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und challenging the validity of assessment proceedings before the Ld. CIT(A) which was dismissed. 6. Aggrieved by the order passed by the Ld. CIT(A), assessee is in appeal before us now. 7. At the outset, the Ld. Counsel before us did not press Ground No. 2-3, challenging the validity of reassessment proceedings. Accordingly these grounds are dismissed as not pressed. 8. The Ld. Counsel restricted his arguments issues raised on merits in Ground 4-8 and the Additional Ground raised vide application dated 14/02/2021. 9. The Ld. Counsel submitted that, the additional ground so raised was not raised before the Ld. CIT(A), however it emanates from the order of assessment, and no new records needs to be verified in order to adjudicate. 10. He placed reliance on the decision of Hon'ble Supreme Court in case of CIT vs National Thermal Power Corporation Ltd., reported in 229 ITR 383 and Jute Corporation of India vs CIT reported in 187 ITR 688. It is also submitted that, these are consequential grounds and needs to be considered for computing actual tax payable for the year under consideration. 11. We have perused submissions advanced by both sides in light of reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Additional Ground raised by assessee. Accordingly, ground 2-3 raised by assessee stands dismissed as not pressed. Ground 4-8: 14. The Ld. Counsel submitted that admittedly, assessee declared income at 15% on the WIP. He submitted that assessee adopted a method of determination of income which is unknown to law or to the approved accounting standards. However the contention of Ld. Counsel is that, the Ld. AO instead of adopting correct method to determine income in the hands of assessee, estimated the income as percentage of WIP, which is also erroneous and in law unapproved. He objected to the observation of authorities below that, assessee agreed to the addition, which is not based on approved accounting standards. 15. The Ld. Counsel submitted that, assessee has only 2 options; either follow project completion method or percentage completion method, which is the generally accepted accounting principles and A-S 7 issued by Institute of chartered accountants of India. He submitted that, the Ld. AO estimated the income and computed addition on an ad-hoc basis, which is not recognised either by the accounting standards or under the Income tax Act. 16. On the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed taxable income in the hands of assessee is not correct. It was incumbent on the Ld. AO to correct the mistake in the method adopted by assessee to compute taxable income for year under consideration. Merely because assessee had followed an unrecognised method to compute taxable income in the immediately preceding and succeeding assessment year, cannot be an estoppel under the statute to correct the mistake that has crept in. The Ld. AO was duty-bound to correct the method of computation of income by adhering to either of recognised accounting standards. We refer to and rely upon to the decision of Hon'ble Bombay High Court in case of in case of Nirmala L. Mehta vs. A. Balasubramaniam, CIT Ors., reported in (2004) 269 ITR 1 held that, merely because the assessee has offered the income, that would not take away the right to contend that amount was not chargeable to tax. Hon'ble Court, referring the Article 265 of the Constitution of India, that reads as under: Article 265 of the constitution of India reads as under:- No tax shall be levied or collected except by authority of law. 22. We therefore remand this issue back to Ld. AO to consider it afresh. The Ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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