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TMI Blog2017 (12) TMI 413X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment proceedings for the Assessment Years 2005-06, 2006-07 and 2007-08 in proceedings under Section 143(3) of the Act. Therefore, the same does not suffer from any infirmity. The finding recorded by the Tribunal is a pure finding of fact recorded on the basis of material and evidence on record. It does not suffer from any infirmity. Question nos. 1 and 6 are answered in the affirmative i.e. in favour of the assessee and against the revenue. Addition made under Section 68 - Held that:- Once registered sale deeds had been executed by the assessee and the cash credit entries found standing in the books of account of the assessee during the previous year relevant to the Assessment Year 2005-06 had been adjusted against the same, there remained no further doubt as to the identity of the persons who deposited the money with the assessee in the previous year relevant to Assessment Year 2005-06. The fact that such person did not receive the letter or did not appear in person during the inquiry made by the assessing officer at the original assessment stage gets overshadowed and looses its relevance in absence of any evidence to doubt the genuineness or correctness of registered sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (6) Whether on the facts and circumstances of the case, the Hon'ble ITAT was justified in law in deleting the addition made by the AO at ₹ 62.95 Lakh by rejecting the books of account under Section 145 of the I.T.Act, 1961? (7) Whether on the facts and circumstances of the case, the order of the Hon'ble ITAT may be set aside and that CIT (A) and AO be restored? At the very outset, learned counsel for the revenue states that the instant appeal is being pressed on questions of law nos. 1, 2 and 6 only. While questions no. 1 and 6 relate to addition made to the income of the assessee on account of valuation of closing stock, question no.2 relates to addition made under Section 68 of the Income Tax Act, 1961 (hereinafter referred to as the 'Act'). The assessee is an individual engaged in construction and sale of residential flats in the name of M/s Azim Builders. He had filed his return of income for the Assessment Year 2005-06, disclosing income ₹ 2,84,940/-. The said return was taken up under scrutiny. Vide assessment order dated 14.12.2007, the assessee was assessed to tax on total income at ₹ 1,02,90,750/-. In that assessment, an add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal, therefore, did not find any reliable or cogent reason to reject the book results of the assessee and to make the addition to the value of closing stock of residential flats. Upon such discussion and reasoning made by the Tribunal in detail and having thus considered the facts and evidence on record, the Tribunal deleted the addition to the closing stock of ₹ 62,95,813/-. With respect to the additions made under Section 68 of the Act, while the CIT (Appeals) had partly allowed the grounds of appeal raised by the assessee and sustained the additions made under Section 68 of the Act upto ₹ 1,70,000/-, the Tribunal took note of the fact that the CIT (Appeals) had called for two remand reports and reading the same together, the Tribunal found that the entire cash credit found recorded in the assessee's books of account for the previous year relevant to the Assessment Year 2005-06 stood duly explained and reconciled inasmuch as the entire amount of ₹ 37,10,000/- was found to have been adjusted against the sale consideration for different flats sold by the assessee in different assessment years, to the same persons in whose name those cash credit entries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccording to the Tribunal, the valuation of closing stock done following the same method in the previous year relevant to the Assessment Year 2005-06 should also have been accepted. Again, there being no evidence to doubt the correctness of the method followed by the assessee, the Tribunal has again not committed any error in rejecting the foundation of valuation made by the assessing officer. In so far as it has noted that the total sale turnover of the residential units made by the assessee was irrelevant inasmuch as the sales of different units had been made in different years and the same could not be clubbed together to apply the gross profit rate thereto to infer the deemed cost of closing stock. Here, we find that besides the foundation being non-existent (as the Tribunal has found), even the method adopted by the assessing officer is doubtful if not plainly erroneous. In any case, valuation of closing stock being an issue of fact that has a cascading effect in different years, we find that the Tribunal has accepted the valuation of closing stock upon due appraisal of evidence inasmuch as it has found that the cost claimed by the assessee was duly verified from vouchers ..... X X X X Extracts X X X X X X X X Extracts X X X X
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