- (1.) THE present appeal under s. 260A of the IT Act, 1961 (hereinafter referred to as "the Act"), has been admitted vide "(i) Whether on the facts and in the circumstances of the case and material available on the records, the Tribunal is legally justified in holding that the AO was not justified in disturbing the system of accounting regularly adopted by the assessee without appreciating the fact that the assessee's true and correct income could not be ascertained on the basis of it. (ii) Whether on the facts and in the circumstances of the case and material available on the records, the Tribunal is legally justified in not appreciating the fact that the full value of closing stock of work -in -progress should be considered for the computation of assessee's correct income."
(2.) BRIEFLY stated facts giving rise for filing of the present appeal are as follows :
(3.) THE appeal relates to the asst. yr. 1987 -88. The respondent -assessee is a registered firm. The previous year relevant assessee carried on the business on commercial scale as real estate developer, promoters, builders, property developers for developing the property on commercial scale and thereafter to sell the land and property on package deal basis. The assessee was required to construct 88 flats and community hall under the agreement. The assessee had adopted a consistent practice of not disclosing the work -in -progress while working its profit and loss. The profits as disclosed during the previous assessment year, i.e., 1986 -87 and the subsequent asst. yr. 1988 -89 on this basis had been accepted by the Department. However, during the assessment years in question the AO made an addition of Rs. 5,47,000 being the value of the work -in -progress. The matter was taken up in appeal before the CIT(A) who even though held that the value of the work -in -progress ought to be disclosed and taken into account while working out the profits, yet in the special circumstances of the present case as the trade results have been accepted both in the previous year and the subsequent year, it will disturb the entire method adopted by the assessee and would lead to reopening and adjustment in the opening and closing stock of the previous and subsequent year. The CIT(A), therefore, accepted the claim of the assessee in the following words : "But it is found that the income for the asst. yrs. 1986 -87 and 1988 -89 have been computed by the AO on the basis of profit and loss account, prepared without including either opening of closing work -in -progress. The fact remains that sale value of closing work -in -progress in question had already been included in the next year's income returned by the assessee and it stands duly assessed by the Revenue. In such a situation, the question is not of a scientific method to be applied this year. In fact, the question is whether or not the method of CIT should be applied for the past assessment years and subsequent assessment years for which assessments have been completed according to law." The Revenue challenged the decision of the CIT(A) before the Tribunal without success.;