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2023 (12) TMI 864 - AT - Income TaxInflated cost of land - GAAP v/s Ind AS for financial statement recording - AO based on the financial statement prepared as per GAAP and also considering the cost of land as computed by the assessee based on West Bengal Consultancy Organization Ltd. (WEBCON) s report and based on the accounting system consistently adopted by the assessee i.e. percentage of completion method (PCM) came to a conclusion that the assessee had made over statement of cost of land in the profit and loss account - AO examined the financial statements based on GAAP and did not take note of the financial statements prepared as per Ind AS which were filed by the assessee during the course of assessment proceedings - HELD THAT - As per the guidelines given by the Government of India the assessee was required to prepare the financial statements for FY 2017-18 and onwards as per Ind AS which is a new system of accounting West Bengal Housing Infrastructure Development Corporation Limited based on the concept of fair market value whereas the accounts under GAAP are prepared on Historical Cost Concept. The assessee prepared revised financial statement as per Ind AS and the same was approved by the Board of Directors The financial statements prepared as per GAAP became non-est during the course of assessment proceedings itself. Under these facts and circumstances where the case of the assessee was selected for scrutiny on various issues the ld. AO ought to have carried out the scrutiny proceedings on the basis of revised financial statements as per Ind AS and should have accepted the revised computation of income filed by the assessee and all the other details as necessary should have been called for in order to complete the scrutiny proceedings. Perusal of the impugned order indicates that the ld. CIT(A) had summarily dismissed the assessee s grounds without giving any reasoning before confirming the impugned addition and the order of the ld. CIT(A) is purely a non-speaking one. Since time limit to file revised return lapsed before the preparation of financial statements as per Ind AS and AO has also not scrutinised the assessee s case on the basis of the revised financial statements as per Ind AS furnished during the course of assessment proceedings we are of the considered view that the issues raised in the instant appeals deserve to the restored to the Assessing Officer for de-novo adjudication based on the revised financial West Bengal Housing Infrastructure Development Corporation Limited statement as per the Ind AS and scrutiny shall be done in accordance with law. Appeal of the assessee is allowed for statistical purposes.
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