Case Law Details
KGK Homes Vs PCIT (ITAT Jaipur)
ITAT Jaipur held that the difference in the closing stock is emanating from the difference in the working for the preceding years and that such difference cannot be attributed for the year under consideration. Accordingly, order not erroneous and jurisdiction of section 263 not invocable.
Facts- PCIT under section 263 took up two issues i.e. difference in value of closing stock as shown by the assessee firm vis-à-vis working vide order u/s. 263 for the year under consideration amounting to Rs. 16,59,040/- and disclosure made in the income tax return form of closing stock of Rs. 56,82,707/- converted into investment during the year under consideration.
Conclusion- Held that the difference in the closing stock of Rs. 16,59,040/- is emanating from the difference in the working for the preceding years and that such difference cannot be attributed for the year under consideration. Moreover, assessee firm has been consistently following the same methodology for appropriating the expenses which has also been accepted by the Income Tax Department in the past. Considering such factual position, we note that the NFAC accepted the difference and did not make any addition in this regard. NFAC had taken a conscious decision of accepting the working of the assessee firm and the order passed by NFAC cannot be said to be without due application of mind as has been set out by ld. PCIT. Considering the factual and the legal position involved, we do not find that the order of the NFAC, as regards issue number one, is erroneous.
Held that we do not find any error in the order of the NFAC. Also, since the conversion from stock in trade into investment, was not taxable, during the year under consideration, there is no prejudice which has been caused to the Income Tax Department. Since, the conversion has taken place during the year under consideration, ld. PCIT was not correct in treating this conversion to be falling in the subsequent year. Accordingly, for both the issues we hereby set aside the order of the ld. PCIT, passed under Section 263 and sustain the order dated 15.03.2021, passed by NFAC.
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