Tribunal upholds deletion of addition for flat repurchase, finding no impact on income.

The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decision to delete the addition of Rs. 13,00,000/- made on account of the repurchase of the flat. The Tribunal found that the entry was a correction that did not impact the profit or income of the assessee, and the Pr.CIT's revision order did not provide a conclusive finding, allowing the assessee to challenge the assessment order.

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Issues Involved:
1. Justification of CIT(A) in allowing the appeal of the assessee and deleting the addition of Rs. 13,00,000/- made on account of repurchase of flat debited in P&L A/c.
2. Applicability of the revenue audit objection falling under exception clause 10(c) of Circular 03 of 2018.

Issue-Wise Detailed Analysis:

Issue 1: Justification of CIT(A) in Allowing the Appeal of the Assessee and Deleting the Addition of Rs. 13,00,000/-
The primary issue revolves around the allowability of a deduction of Rs. 13,00,000/- claimed by the assessee as a sales return due to the repurchase of a flat initially sold to Ms. Divya Goyal. The revenue contended that this transaction was incorrectly accounted for in the financial year 2010-11 instead of 2009-10. The Assessing Officer (A.O.) disallowed this claim based on the revision order under Section 263 of the Income Tax Act, 1961, which found the original assessment erroneous and prejudicial to the revenue's interest due to the lack of proper enquiry.

The CIT(A) allowed the appeal, stating that the entry was a correction for the subsequent financial year and did not affect the profit or income of the assessee. It was argued that the repurchase and the corresponding sales return increased the stock without impacting the profit. The Tribunal upheld CIT(A)'s decision, noting that the transaction was correctly recorded as a sales return and part of the closing stock, thus having no substantial revenue effect for the year under consideration.

Issue 2: Applicability of Revenue Audit Objection Falling Under Exception Clause 10(c) of Circular 03 of 2018
The revenue argued that the audit objection was accepted, thus falling under exception clause 10(c) of Circular 03 of 2018. The Tribunal noted that the Principal Commissioner of Income Tax (Pr.CIT) did not provide a conclusive finding but remanded the matter to the A.O. for fresh assessment after proper enquiry. The Tribunal distinguished this case from the precedent set by the Hon'ble Bombay High Court in Herdillia Chemicals Ltd. Vs CIT, where the CIT had given a definite finding.

The Tribunal concluded that since the Pr.CIT had not conclusively determined the issue in the revision order, the assessee was entitled to challenge the A.O.'s assessment order resulting from the revision order. The Tribunal found no error in the CIT(A)'s decision to delete the addition, as the assessee's entry was a correction that did not affect the profit or income.

Conclusion:
The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decision to delete the addition of Rs. 13,00,000/- made on account of the repurchase of the flat. The Tribunal found that the entry was a correction that did not impact the profit or income of the assessee, and the Pr.CIT's revision order did not provide a conclusive finding, allowing the assessee to challenge the assessment order. The appeal was dismissed, and the order was pronounced in the open court on 25th June 2020.

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