TaxTMI 
TaxTMI 
2012 (5) TMI 148
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....ame and style of "Malibu Towne" at Gurgaon (Haryana). It has filed its return of income on 16.11.2006 declaring total income at Rs. 2,42,41,111. The case of the assessee was selected for scrutiny assessment and a notice under sec. 143(2) of the Act dated 11.10.2007 was issued and served upon the assessee. In response to the notice of hearing, Shri Anil Kumar, CA and Shri BK Maheshwari, authorized representative of the assessee company appeared before the Assessing Officer and submitted the details from time to time. On an analysis of the record, learned Assessing Officer has observed that against the name of certain purchasers, assessee has shown zero balance towards receiveable. In the opinion of the Assessing Officer, once nothing was to be recovered then assessee ought to have accounted for these receipts in the sale, therefore, he issued a show-cause notice to the assessee on 21.11.2006 inviting its explanation as to why advances received from some customers, where there is a zero balance left have not been accounted for sales. He also directed the assessee to submit its method of revenue recognition. In response to the query of the Assessing Officer, assessee has submitted det....
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....) external development charges (d) maintenance deposit (e) property registration charges and stamp duty. In respect of the statement furnished to you disclosing NIL balance, the customer was still liable to pay demand raised by the company in respect of (a) maintenance deposits (b) contingency deposit (c) property registration charges and stamp duty. Thus, in such circumstances the assessee continues to remain the legal owner of the property and no sale has been recorded in accordance with the method of accounting regularly follow and approved by the revenue department. It is relevant to state that NIL balances in respect of various customers were appearing even in earlier years. and your predecessor have after due examination approved the same. Thus reliance is placed on the concept of consistency as held by the various courts as under:- (i) Thirani Chemicals Ltd. v. DCIT [2006] 153 Taxman 45 (Delhi) If the facts are unchanged the result for the subsequent assessment year must also remain unchanged. (ii) CIT v. Neo Polypack Ltd., 245 ITR 492 (Del.), Held, that the doctrine of res judicata does not apply to income-tax p....
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....t a contractor but it is engaged in the business of developer and sale of real estates. The sale of immoveable property and agreement for the same is an independent agreement between the purchase and the seller as an independent party. The assessee contended that its rights vis-à-vis the rights of the purchasers are to be seen in the light of agreement. It also contended that Assessing Officer did not provide due opportunity of hearing and did not confront the assessee with the relevant material, hence it be given permission for leading additional evidence. It ought to submit the details exhibiting that these sales were made in future years and duly recognized by the assessee. Learned Commissioner called for a remand report from the Assessing Officer on the admission of additional evidence as well as his comments on the merits of such evidence. Assessing Officer has given his remand report dated 17.6.2009. He contended that conditions enumerated in Clauses A to D in sub-rule (1) of Rule 46A are not available in this case, therefore, the additional evidence should not be admitted. Without prejudice to such an objection on merit, he commented that the issue has been discussed ....
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....eds are registered in favour of the purchasers even though the sales have been made and the price has been received. Learned DR submitted that registration of sales deed can be delayed for several reasons. He also relied upon the order of the ITAT, Bangalore in the case of Prestige Estate Project Ltd. v. DCIT reported in 129 ITD 342 and ITO v. Savoy Real Estates Developers Pvt. Ltd. [2010] TIOL-300- ITAT, Mumbai. Learned DR took us through the license granted by the Haryana Government for development of the colony. He pointed out that internal development was required to be completed within given time as per licensing condition and, therefore, claim of project being incomplete and postponement of revenue recognition is not tenable. 8. On the other hand, learned counsel for the assessee submitted that Assessing Officer has observed that assessee was required to mandatorily follow AS-7. He pointed out that section 145 of the Income-tax Act, 1961 provides that income chargeable under the head "profits and gains of business" is to be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee subject to provisions of sub-section (2) ....
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....s and gone through the record carefully. Section 145 of the Income-tax Act, 1961 contemplates that income chargeable under the head "profits and gains of business or profession" or "income from other sources", subject to the provisions of subsection (2), be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. Sub-section (2) of section 145 contemplates that the Central Government may notify in the official gazettee from time to time accounting standard to be followed by any class of assessee or in respect of any class of income. Sub-section (3) of section 145 states that where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of assessee, or where the method of accounting provided in sub-section (1) or accounting standard as notified under sub-section (2) have not been regularly followed by the assessee, the Assessing Officer may make an assessment in the manner provided in section 144 of the Act. At this stage, we deem it appropriate to note clauses numbers 21 and 22 of the agreement for the sake of reference, copy of the agreement between the assessee in Kohli Housing has been pla....
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....t merely on receipt of advance the contract has fully been satisfied by the vendee qua the vendor. The rights of the parties are to be seen in the light of the agreement executed by them. In the clauses 21 and 22 specifically provide that unless a conveyance deed is executed and registered, the seller shall continue to be the owner of the plot. Apart from this factual aspect, we find that from assessment years 2003-04, 2004-05 and 2005-06, similar accounting principles adopted by the assessee have been accepted by the revenue. In the findings of the Assessing Officer, he nowhere assigned any reason enabling him to change the method of accounting consistently followed by the assessee. Sub-section (3) of section 145 suggest that where Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee or the method of accounting is not inconsequence with the accounting standard notified under sub-section (2) and they are not regularly followed by the assessee. A.O. may determine the true income as per his best judgment. In the assessment order, nowhere Assessing Officer has expressed his difficulty either about the method or about the completeness....
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.... an elaborate discussion has been made in the assessment order by my Learned Predecessor on the issues for which the assessee has attempted to submit these additional evidences. A detailed discussion has been made referring to Accounting Standard of ICAI in the assessment order. Therefore, on merit, full reliance is placed on the assessment order passed by Learned Predecessor". 14. A bare perusal of this remand report, we find that there is no violation of Rule 46A and the judgments relied upon by the Learned DR to this effect are not applicable on the facts of this case. As far as the other judgments relied upon by him are concerned, they are quire distinguishable on facts. He made reference to the decision of the ITAT, Bangalore in the case of Pratima Builders. In this case, assessee had not maintained correct and complete accounts. The cost of construction had not been maintained properly and the only evidence which was submitted before the Assessing Officer was a certificate of the Engineer. The certificate also showed expenditure incurred in round sums which was improbable and contrary to the normal states of affairs. In such circumstances, Assessing Officer has rejected th....
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.... rights to the sister concern. It is a developer, there is no reason as to why it will assign such rights to the sister concern. Assessing Officer rejected all the contentions of the assessee. He observed that total sale value of all the plots and the flats is to be considered as revenue of the assessee. His finding reads as under: "As a part of this agreement, 44 allotment rights for plots and 11 allotment rights for condominiums were transferred to M/s. Kohli One Housing & Development Pvt. Ltd. by M/s. Malibu Estate Pvt. Ltd. by M/s. Malibu Estate Pvt. Ltd. However, out of this 24 plots have been sold earlier, and 20 plots and 11 condominiums have been shown in closing stock by M/s. Kohli One Housing & Development Pvt. Ltd. It is now contended, the sale consideration of these that it appearing in closing stock of M/s. Kohli One Housing & Dev. Pvt. Ltd. has to be treated as Sale-in-hands of M/s. Malibu Estate Pvt. Ltd. as allotment rights have been transferred during the year and on the basis of mercantile system of accounting. Therefore, value of 20 plots and 11 condominiums at Rs. 8,99,39,469 is taken as sale in the hands of M/s. Malibu Estate Pvt. Ltd. ....
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....miserably failed to appreciate this aspect, and observed that it is a bogus and sham transaction. He has not assigned any reason for such conclusion. Learned DR also pointed out that it is a colourable device. According to him, it should be appreciated in the light of human probability and he referred three decisions, namely, Sumiti Dayal v. CIT 214 ITR 801, Killick Nixon Ltd. v. Dy. CIT [2012] 20 taxmann.com 703 (Bom.), XYZ India [2012] 20 taxmann.com 89. 20. We have duly considered these decisions but they are quite distinguishable on facts. Assessing Officer has not brought any facts on the record which suggests any collusion, any attempt to evade tax, he simply observed that booking of plot/flat by the sister concern is not acceptable. To our mind, that cannot be a basis to doubt the transaction. We could understand the case of Assessing Officer, if he had find out that booking rights were not given on arm's length to the sister concern. The learned Assessing Officer has not referred any material in the assessment order. In view of the above discussion, we do not find any merit in these two grounds of appeal. They are rejected. 21. In the Cross-objection, it is pleade....