Assessee an individual was a builder/developer whose assessment was completed by AO under section 143(3) of the Act. Later, assessment was sought to be revised by PCIT on the ground that AO failed to conduct appropriate enquiries and had not examined valuation of closing stock of properties with respect to the cost incurred by the Assessee thereon. The CIT issued show-cause notice for which Assessee replied that he had submitted closing stock valuation and also pointed out that it uses percentage completion method in respect of its real estate projects which has been consistently followed year after year and pleaded that there cannot be any prejudice that could be caused to the interests of the revenue.

However, PCIT held that AO did not conduct necessary enquiry with respect to closing stock and cost incurred thereon and accordingly made revision under section 263 of the Act.

On Assessees appeal, Tribunal held that from scrutiny assessment order framed in Assessee’s own case in earlier year, similar valuation method was adopted which was accepted by AO and no addition was made, which is exactly what the AO has done i.e. merely adopted the same valuation method accepted by his predecessor. AO had rightly applied the valuation method adopted by the Assessee. Hence, Tribunal quashed the revision proceedings ruling in favour of the Assessee.