Case Law Details
Babusha Haribhau Gade Vs ITO (ITAT Pune)
Another issue for consideration is whether the appellant has converted the land into stock-in-trade as claimed. It is a fact that this issue was not raised before the AO. Therefore, the AO had no opportunity to verify the assessee’s said claim. This Bench made a specific query to the Authorized Representative(AR) of the assessee to demonstrate assessee’s claim of conversion of land into stock-in-trade by showing the entries in the relevant books of accounts. The AR admitted that no books of accounts have been maintained as the assessee is not aware of accounting. The AR was requested by the Bench to show closing stock in A.Y.2012-13 & 2013-14 in the profit and loss account submitted by the assessee in the paper book. The AR admitted that no closing stock has been shown in the profit and loss account for A.Y. 2012-13 & 2013-14, as assessee is not aware about the accounting. Thus, it is an admitted fact that assessee could not demonstrate conversion of land into stock-in-trade by showing entries in the books of accounts. As per accounting, whenever land is converted into stock-in-trade, it shall appear as closing stock at the end of the year in which it was converted into stock-in-trade. In the case of the assessee it should have appeared as closing stock for the A.Y. 2012-13 and 2013-14. However, we have verified from the profit and loss account filed by the assessee in the paper book that it does not appear as closing stock for the A.Y. 2013-14. The assessee has not filed profit and loss account for the A.Y.2012-13. It is also an admitted fact that no Audit Report has been filed means no Audit has been carried out. It is observed that for A.Y. 2014-15, the assessee has shown sales of Rs.1,96,32,700/-, but, though the sale is more than One Crore, no Audit Report is filed by the assessee. No Balance Sheet has been filed by the assessee for the A.Y. 2012-13. Thus, the assessee has not filed any evidence to substantiate his claim that the impugned land was converted as stock-in-trade before entering into Joint Venture Agreement. Therefore, assessee’s claim that land was converted as stock-in-trade before entering into Joint Venture Agreement is hereby rejected. Therefore, section 45(2) is not applicable in the case of the assessee. Therefore, this ground raised by the assessee is dismissed.
FULL TEXT OF THE ORDER OF ITAT PUNE
This is an appeal filed by the Assessee directed against the order of ld.Commissioner of Income Tax(Appeals)-10, Pune dated 20.02.2017 for the Assessment Year 2012-13.
2. The Assessee raised following grounds of appeal:
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