Suppression of Sales Addition Rejected Where Construction Accounts Showed No Out-of-Books Receipts

An addition for alleged suppression of sales was rejected where the assessment rested on a comparison of opening and closing work-in-progress and an assumption of out-of-books sales. The appellate authority examined the project-wise receipts and construction costs, found that the assessee was engaged in construction activity rather than sale of properties, and held that the Assessing Officer had misunderstood the accounts. The Tribunal found no infirmity in that factual and accounting-based finding, and noted that the same order had already been affirmed in the assessee's appeal; the deletion of the major part of the addition was therefore upheld.

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Issues: Whether the addition made on account of alleged suppression of sales was sustainable.

Analysis: The assessment was based on a comparison of opening and closing work-in-progress and proceeded on the assumption that the assessee had booked out-of-books sales. The appellate authority examined the project-wise receipts and construction costs, noted that the assessee was engaged in construction activity rather than sale of properties, and found that the Assessing Officer had misunderstood the accounts. The Tribunal found no infirmity in that reasoned appellate finding and also noted that the same order had already been affirmed in the assessee's appeal.

Conclusion: The deletion of the major part of the addition was upheld and the Revenue's challenge failed.

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