9911796707
TMI Blog2025 (1) TMI 1050X X X X Extracts X X X X X X X X Extracts X X X X ..... AY 2015-16 was filed by the assessee on 24.09.2015 declaring total income of Rs. 4,68,360/-. The case was selected for limited scrutiny under CASS. In the course of assessment proceeding, the AO found that the assessee had opening work in progress (WIP) of Rs. 6,47,47,376/- and during the year the assessee had sold stock (flats & shops) of Rs. 4,20,11,458/-. However, in the P & L account, the assessee had shown sale proceed of Rs. 55,70,000/- only. Thus, the difference in the sales as per the WIP stock account and as per P & L account was found by the AO for which an explanation was sought. The assessee had explained that it was following the percentage completion method and the profit from the sales were already disclosed in the earlier ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny remand report from the AO. He contended that the AO was not allowed an opportunity to verify the facts and figures as submitted before the Ld. CIT(A) in the course of appellate proceedings, which was reproduced in his order. 6. Per Contra Shri Pritesh L Shah, the Ld. AR of the assessee explained that the assessee was consistently following the percentage completion method of accounting since AY 2012-13, which was accepted by the Department in the past. The assessee had disclosed income on the basis of percentage completion method considering the advances received in the past years. Thus, the revenue was shown as income by the assessee even if there was no sale, following the accounting principle of the percentage completion method. Unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and only the balance amount should have been considered as undisclosed sales. The AO did not allow the set-off for sales as disclosed by the assessee in the P & L account, which was not correct. On merits, there is no dispute to the fact that the assessee was consistently following the percentage completion method of accounting. This method of accounting as followed by the assessee, was accepted by the Department in the earlier years. This fact was explained by the assessee before the AO to account for the difference in sales as appearing in the WIP stock account and in the P & L account. However, the AO had not given any reason to reject the explanation of the assessee. The Ld. CIT(A) has rightly held that the AO did not point out any def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e method of accounting regularly followed by the assessee and in working out the income on the basis of actual sales made during the year. When a fundamental aspect permeating through the different assessment years is found as a fact and the parties have allowed that position to be sustained; it would not be open and appropriate to allow that position to be changed in a subsequent year. The Revenue cannot be allowed to flip-flop the method of accounting regularly followed by the assessee without pointing out any defect in the accounts of the assessee. As rightly pointed by the assessee, the profit out of the sales were already substantially accounted for by the assessee in the earlier years on the basis of percentage completion method and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion as made by the AO. The addition made by the AO was not only incorrect but was based on wrong presumption which had led to double addition. As explained by the assessee the work-in-progress credited to P&L account comprised of cost-plus profit on percentage completion method and the closing balance of WIP was accordingly disclosed in the accounts. Thus, the profit was already disclosed in closing WIP every year and this fact has not been controverted by the Revenue. Therefore, the Ld. CIT(A) has correctly deleted the addition made by the AO in the current year.
12. In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the Open Court on 31st December, 2024 at Ahmedabad. X X X X Extracts X X X X X X X X Extracts X X X X
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