Gayatri Creatives Vs ACIT (ITAT Ahmedabad)
ITAT Ahmedabad held that initiation of reopening of assessment based on mere change of opinion and not taking into account the work-in-progress method of accounting followed by the assessee is unjustifiable and liable to be quashed.
Facts- The assessee filed his return for Rs.42,98,920/-. The assessment u/s. 143(3) of the Income Tax Act, 1961 was completed on 28.03.2013 thereby assessing the total income at Rs.43,26,030/-. AO noticed that the Balance Sheet of the assessee as on 31.03.2010 showed work-in-progress at Rs.7,85,89,164/- and in the Profit & Loss Account for the Financial Year 2009-10, the work-in-progress was shown at Rs.6,49,00,000/-. However, during the course of assessment, details furnished by the assessee revealed that the closing work-in-progress was Rs.7,85,89,164/- and the opening work-in-progress was Rs.1,14,47,948/-. Thus, the correct figure of work-in-progress for the year should have been Rs.6,71,41,216/- instead of Rs.6,49,00,000/-as shown in the Profit & Loss Account.
AO reopened the assessee’s case u/s. 147 of the Act and notice u/s. 148 of the Act was issued to the assessee. The assessee objected to the reopening of assessment under Section 148 of the Act. However, AO made addition of Rs.22,41,216/- in respect of understated work-in-progress. CIT(A) also dismissed the appeal of the assessee. Being aggrieved, the present appeal is filed.
