Uncorroborated seized notings cannot sustain on-money additions; consistently followed project completion method accepted absent profit distortion.

Additions for alleged on-money receipts and bogus tenancy rights in redevelopment projects were deleted because the seized loose papers were inconsistent with the agreements, the allotted areas and the occupants' replies, while the remand report and MHADA-certified tenant position did not support the allegation; without independent corroborative evidence, rough notings and presumptions were insufficient. The assessee's consistently followed project completion method was accepted because no material showed distortion of profits or any basis to displace the method. Delay in filing the cross objections was condoned on a bona fide explanation, though the cross objections were ultimately not pressed or treated as infructuous.

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Issues: (i) Whether additions made on the basis of seized loose papers and statements, alleging receipt of on-money and creation of bogus tenancy rights in redevelopment projects, were sustainable; (ii) whether the assessee's consistently followed project completion method could be disturbed on the facts of the case; (iii) whether the delay in filing the cross objections deserved condonation.

Issue (i): Whether additions made on the basis of seized loose papers and statements, alleging receipt of on-money and creation of bogus tenancy rights in redevelopment projects, were sustainable.

Analysis: The seized notings were found to be inconsistent with the actual agreements, the area allotted to the occupants, and the replies given in response to notices. The Assessing Officer's remand report itself confirmed that the area mentioned in the seized material did not tally with the actual area allotted. The occupants stated that they had received flats in lieu of surrender of tenancy or possession and had paid no money. The MHADA-certified tenant position also did not support the allegation of bogus tenancies. In the absence of independent corroborative material, the additions based on presumptions, extrapolation, and rough notings could not be sustained.

Conclusion: The additions on account of alleged on-money and bogus tenancy sales were held unsustainable and were deleted, in favour of the assessee.

Issue (ii): Whether the assessee's consistently followed project completion method could be disturbed on the facts of the case.

Analysis: The assessee had consistently followed the project completion method, and the Tribunal found no material to show distortion of profits or any basis to reject the method for the years in question. The method was supported by the contemporaneous factual record and the Revenue did not establish any contrary evidence warranting substitution of the accounting treatment.

Conclusion: The project completion method was accepted, in favour of the assessee.

Issue (iii): Whether the delay in filing the cross objections deserved condonation.

Analysis: The explanation for delay was accepted as bona fide and sufficient, and the delay was condoned in the interests of substantial justice.

Conclusion: The delay was condoned, but the cross objections were dismissed as not pressed or infructuous.

Final Conclusion: The Revenue's appeals failed on merits, the assessee's connected objections did not survive for adjudication, and the relief granted by the first appellate authority remained undisturbed.

Ratio Decidendi: Additions for alleged unaccounted receipts cannot rest on rough seized notings or presumptions where the contemporaneous agreements, remand report, and third-party responses negate the allegation and no independent corroborative evidence is produced; a consistently followed project completion method cannot be rejected absent proof of profit distortion.

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