Appeal allowed, income not added as per receipt basis. Tribunal rules in favor of Assessee.

The Tribunal allowed the appeal filed by the Assessee, canceling the addition of Rs. 14,00,000 as income from other sources. The Tribunal disagreed with the Ld. CIT(A) and held that the amount should be taxed on a receipt basis, not under the percentage of completion method. Consequently, the Tribunal did not address the jurisdictional challenge to the assessment order under section 143(3) r.w.s. 153A, as the primary issue was resolved in favor of the Assessee.

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Issues:
1. Addition of income from other sources
2. Jurisdiction of assessment order under section 143(3) r.w.s. 153A

Issue 1: Addition of income from other sources
The case involved a search and seizure operation under section 132 of the Income Tax Act, 1961, in the Gardenia Group of cases. The appellant was covered in the search, and the assessment was made at an income of Rs. 14,00,000 after considering undisclosed receipts admitted by the appellant. The Ld. CIT(A) dismissed the appeal of the Assessee against the assessment order. The appellant contended that the addition of Rs. 14,00,000 as income from other sources was erroneous. The Ld. CIT(A) invoked section 69A to tax the amount as income from other sources for the assessment year 2007-08. However, the Tribunal disagreed with this approach.

Issue 1 Analysis:
The Ld. CIT(A) confirmed the addition of Rs. 14,00,000 as income from other sources under section 69A. The appellant argued that the amount should be considered for assessment under the head "business & profession" as per the percentage of completion method followed by the company. The Tribunal noted that the appellant did not account for the received amount in the books, and since it was not recorded, it did not form part of the revenue receipt. The Tribunal held that income from regular business transactions is taxed under the business head, while income from undisclosed business transactions is treated differently and taxed under the head 'income from other sources.' The Tribunal concluded that the amount should be taxed on a receipt basis and not on the percentage of completion method. Therefore, the Tribunal disagreed with the Ld. CIT(A) and canceled the addition of Rs. 14,00,000 made by the AO, allowing the appeal filed by the Assessee.

Issue 2: Jurisdiction of assessment order under section 143(3) r.w.s. 153A
The appellant challenged the assessment order passed by the AO under section 143(3) r.w.s. 153A as illegal and without jurisdiction. The Ld. CIT(A) upheld the assessment order. However, since the Tribunal decided in favor of the Assessee on the first issue, it did not adjudicate on the jurisdiction of the assessment order under section 143(3) r.w.s. 153A.

Final Decision:
The Tribunal allowed the appeal filed by the Assessee by canceling the addition of Rs. 14,00,000 made by the AO and confirmed by the Ld. CIT(A) as income from other sources. Since the addition was deleted, the Tribunal did not adjudicate on the other issues raised by the Assessee.

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