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TMI Blog2022 (8) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... gain added as closing stock in that case, the value of sales will have reduced by corresponding figure and the same does not have any tax effect - CIT(A) further held that if the addition amount is included in the value of closing stock in that case corresponding deduction is allowable to assessee in subsequent year by increasing of opening balance of stock. On the basis of aforesaid observation, CIT(A) held that explanation of assessee that supplier raised separate bills on account of supplies made on different dates through different challans appears to be quite legible, otherwise, the supplier would have raised only a single bill if the item is supplied on a particular day. We find that the CIT(A) also examined the facts of the case on other angle as well and held that, if the impugned amount is considered as closing stock in that case, the profit of assessee will go up to Rs. 50,88,594/- which is around 20% of sales, which is not feasible considering the fact that work was started only in the month of January, 2010. On observation of ld. CIT(A), we find that the Assessing Officer passed the order in haste and it seems that the addition is made only for the reasons that so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal. 2. Brief facts of the case are that the assessee is the proprietor of Om Construction , engaged in Civil Construction and job work filed his return of income for the Assessment Year (AY) 2010-11 on 25/09/2010 declaring income of Rs. 4,75,270/-. The case was selected for scrutiny and assessment was completed under Section 143(3) of the Income Tax Act, 1961 (in short, the Act) on 23/01/2013 by making certain additions/disallowances on account of expenses, diesel expenses and some other expenses by treating personal in nature and addition on account of household expenses thereby assessing total income of Rs. 6,52,690/-. Subsequently, the case of assessee was reopened by the Assessing officer on 28/07/2015. Notice under Section 148 of the Act was served upon the assessee. The case of assessee was reopened by the Assessing officer by taking a view that on perusal of profit and loss account, it was noted that the assessee has shown closing stock at Rs. 2,56,332/- and the purchase expenses on gong sale (OGS) of Rs.71,07,262/- which included in the purchase of gitty amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom Charbhuja Crushing Plant, Udaipur which was supplied through various challans on different days in the month of March, 2010. The bills were raised separately for each challan on last day/single day on 31/3/2010 by supplier. Thus, it was not a case that entire purchases were made only on 31/3/2010. Material was received on various days in the month of March, 2020 and only bill was raised on the last day. The material was actually used and consumed in the construction site at Udaipur, so it was not shown in closing stock. Actually, the material was used before 31/3/2010, the assessee debited the amount in the account of GHV India Private Limited on 31/3/2010 by Rs. 55,72,112/- and accordingly it is included in the figures of sales. Accordingly, the assessee stated that there is no question of showing closing stock on the ground that the material was in transit. If the same is included in the closing stock, then the corresponding amount will have to be reduced from the sales as the same is already included in the sales figure shown in profit and loss account. 4. The assessee on the validity of reopening stated that in his case, the assessment was initially completed under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. CIT(A) further noted that when the assessee explained that the material was supplied through different challans on different dates and supplier raised bill on the last date of month, the Assessing Officer ought to have made relevant enquiry from the supplier. The observation of Assessing Officer that transaction taken place as on 31/3/2010 is confirmed by Charbhuja Crushing Plant is not valid as the supplier has already confirmed in compliance of notice under Section 133(6) of the Act. Further the enquiry was made in the original assessment and no addition was made in the closing stock of the assessee. However, if the Assessing officer is of the opinion that the purchases as per separate bills issued on 31/3/2010 were not consumed but represent the stock in transit, in that case, it was imperative on his part to cite cogent evidence in reassessment to prove that the material was not received earlier but retained in transit. There is no iota of evidence that the material was in transit. The ld. CIT(A) further noted that the stand of assessee that he included the cost of material in sales is correct as it is evident in the ledger account of GHV India Private Limited and the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . On the other hand, the ld. AR of the assessee submits that before the Assessing Officer, the assessee has filed reply on 14/3/2016. The assessee in its reply explained that GHV India Private Limited was awarded a contract for development/construction of Airport at Udaipur. GHV India Private Ltd. sublet/assigned /sub contracted work to the assessee. The assessee purchased certain material locally including gitty from Charbhuja Crushing Plant, Udaipur. The gitty/material was transported locally to the site of Airport and was consumed therein. The assessee also explained that the material was supplied by challan on different dates, however, the invoices were raised on the last day of month. The assessee furnished/deposited all original challans in the office of GHV India Private Limited who in turn submitted those original challans to the Airport Authority for clearance of bills. The ld. AR submits that there is no dispute about the purchase of material as the Assessing Officer has not disputed the quantum and purchase of material. The only objection of Assessing Officer was that the material purchased was in transit. The ld. AR of assessee further invited attention on the audit obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer failed to give any reason to reject the submission of assessee rather recorded that the assessee failed to establish as to why goods in transit were not shown in closing stock or work in progress. The ld. CIT(A) also held that when the assessee explained that the material was supplied through different challans on different days and supplier raised bill on the last date of month, the Assessing Officer ought to have made relevant enquiry from the supplier. The observation of Assessing Officer that transaction taken place as on 31/3/2010 is confirmed by Charbhuja Crushing Plant, Udaipur is not valid as the supplier has already confirmed in compliance of notice under Section 133(6) of the Act. Further the enquiry was made in the original assessment and no addition was made in the closing stock of the assessee. However, the Assessing officer is of the opinion that the purchases as per separate bills issued on 31/3/2010 were not consumed but represent the stock in transit, in that case, it was imperative on his part to cite cogent evidence in reassessment to prove that the material was not received earlier but retained in transit. It was held that there is no iota of evidence that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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