2019 (11) TMI 1037

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....nt passed by the learned Assessing Officer, Ward-2 (2), Bhubaneswar without valid reason and without considering the facts of the case is illegal, unjustified and liable to be quashed. 2. That the estimation of net profit @15% on closing stock treating it as sale is unjustified, arbitrary and not tenable in law. 3. That as per the audited statement of accounts of the appellant, the net taxable profit ratio to sales was 1.04%. On the basis of this the taxable profit on stock, if treated as sale shall be Rs. 1,95,610 4. That again once this is taxed this year, the assessee shall claim refund in subsequent year, when the said stock has actually been sold in the AY 2016-17 and AY 2017-18. 5. That above all th....

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....dering the submissions of the assessee and findings of AO has applied Percentage Completion Method (PCM) and estimated @15% profit on the entire value of closing stock(WIP) as declared by the assessee in his profit and loss account and balance sheet. Accordingly, the CIT(A) substituted by profit of Rs. 28,21,305/- on the valuation of closing stock. 5. Further feeling aggrieved by the order of CIT(A), the assessee is in appeal before the Income Tax Appellate Tribunal. 6. Ld. AR before us filed paper book which is placed on record containing written submission of material fact, balance sheet as on 31.03.2015 and copy of tax audit report for A.Y.2015-2016 and submitted that both the authorities below are not justified and the entire valu....

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....ch it has been earned/accrued by the assessee. The assessee has followed mercantile system of accounting and in respect of the construction contract. The Percentage Completion Method (PCM) has been recognized for calculating of the profits. As per our considered opinion, the assessee should have been obtained the valuation report from any technical persons/architects for valuing of the closing stock(WIP) and accordingly he should have been disclosed in his profit and loss account. It is undisputed that the assessee has taken advance from customers i.e. the final sale value has not been recognized. We also notice from the order of AO that the assessee did not cooperate during the course of assessment proceedings for substantiating the valuat....