TaxTMI 
TaxTMI 
2013 (10) TMI 752
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.... Income Tax Rules, 1962. 3. On the facts and in the circumstances of the case, the Ld CIT(A) has erred in holding that the estimation of profit amounting to Rs.3,89,49,700/- in place total taxable income declared by the assessee of Rs.1,81,84,890/- including profit on percentage completion method is not accepted. 4. The order of Ld CIT(A) is perverse in law and on facts. 5. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of hearing of the appeal." CO No.248/Del/2012 "1. That the Ld AO has erred in law as well as on facts in raising Ground No.2 on admitting additional evidence: a) Because the evidence relied upon by the CIT(A) was amount of the seized material already in possession of the AO and not fresh evidence b) Because AO has erred in appraising part evidence for making disallowance, ignoring the other seized material already in possession without raising any query on the doubts in his minds. c) Because Rule 46A is applicable only admission of additional evidence not produced before the AO....
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.... 5 of revenue's appeal (ITA No.1695/Del/2012), ground no.3 of cross objection and ground no.3 of assessee's appeal (ITA No.2093/Del/2012) are general in nature and do not require any adjudication, hence the same are dismissed. 4. First of all, we consider ground no.1 of assessee's appeal where the assessee has raised the issue that the assessment has been framed outside the search material and after the change of opinion. 5. We have heard both the sides on the issue. We have already upheld the assessment on the basis of similar facts and circumstances in assessee's own case in ITA No.2092/Del/2012 for Assessment Year 2007-08 vide order dated 04.01.2013. The relevant para of the said order is reproduced as under:- "5. We have heard both the sides on the issue. We have upheld the assessment on the basis of similar facts and circumstances in assessee's own case in ITA No.2091/Del/2012 for Assessment Year 2006-07 vide order dated 31.12.2012. The relevant para of the said order is reproduced as under:- "6. We have considered rival submissions on the issue and has gone through the material on record and relevant pages of the p....
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....the order of assessment and, evidence on record. The dispute, as raised by the appellant, pertains to the additions of Rs.4,62,09,068/- made by the AO on account of commission paid out of books u/s 69C of the Income Tax Act. As per the AO, amount paid for commission during the year is less than the amount of bills of commission seized by the department at the time of search and therefore an addition of difference amount was made by the AO. In contention to that AR has submitted detailed explanation party wise and also submitted the reconciliation for the difference amount. After considering the submission and arguments of the AR of the appellant, I find that the AO has not taken due care in making additions based on seized record. As a result if same paper or a copy is appearing at different places in the seized annexure, the additions also multiplied. Further, an attempt has not been made from the broker's account in the books of appellant company to link the payment which were through banking channel. The addition chart appearing in the assessment order clearly reveals duplicity of addition viz. the name of the party and same amount appearing at different place. ....
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....nally settled for 10,15,997/- as evident from the seized records itself and the payment of this amount has been shown in the books. However from the bill of Rs.3,23,251 of the same party, the payment in the books is shown at Rs.3,00,000 thus the difference of Rs.23,251/- is liable to be confirmed." Since the matter has been dealt with in the A.Y 2007-2008 and the same entries are appearing in this assessment year, no cognizance of the same can be taken. The additions made per s.no.4 annexure no. A-2/1 dated 29.05.2007 amounting to Rs3,00,000/-, is the payment made by the company to the broker vide cheques no. 678772 dated 17.08.2005 of I.O.B. The same is already entered in the books of account of the appellant company. Appellant has submitted the bank statement for the verification of the transaction. AR of the appellant also refer the s.no.3 annexure A-1144 dated 20.10.2006 of Rs.3,23,251/- which pertains of the previous assessment year i.e. A.Y 2007-08, whereby, based on this account addition of Rs.23,251/- has been made. Search material annexure no. A-2/35 dated 25.05.2007 of Rs.9,42,470/-, the same was the commission bill raised b....
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....2006 in the assessment order passed for the AY 2007-08. The appellant company has mentioned that against the total bookings of 99 plots the commission payable to this broker works out at Rs.27,55,688/-because of some cancellation, some buy backs and some non-cancelled plots. Against this brokerage, the company has paid Rs.15,00,000/- which is reflected in the statement of accounts and bills of this party as appearing in the books of the appellant company in the F.Y 2006-07 relevant to the A.Y 2007-08. Against the final settled amount of Rs.27,55,688/- an amount of Rs.22,65,146/- has already been shown booked in the books of accounts. Subsequently through a communication as per annexure A-2/7 the broker was informed by the appellant company that out of the balance amount of Rs.4,90,452/-, an amount of Rs.2,92,500/- is not due as commission because the payments against the plots booked is outstanding and not received. Hence, as per the analysis of the seized material the* amount which is unexplained is Rs.(4,90,452 - Rs,2,92,500 = Rs.1,98,042/-) and this is confirmed. Annexure no. A-2/37 for the amount of Rs.11,22,634/- is also the part of the final settled amount of ....
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....- is illegal and uncalled for. After going through the seized document, ledger account and payment details as pointed out by the AR of the appellant I find it satisfactory and therefore, this addition is deleted. g) In the case of the broker M/s Suraj Bhan Estates Pvt. Ltd. the following additions were made:- S.NO. Annexure no./Page Date Particulars Amount as per Party A-1 (In Rs.) 8. A-2/10 24.07.2007 Suraj Bhan Estates Pvt. Ltd. 5,51,819/- 17. A-2/41 21.05.2007 Suraj Bhan Estates Pvt. Ltd. 1,69,000/- According to seized annexure no.A-2/10 dated 24.07.2007 there is a confirmation for receipt of amount of Rs.5,51,819/-, which included Rs.1,69,000/- added separately by the AO. The breakup of Rs.5,51,819/- is Rs.2,41,700 + Rs.1,69,000 + Rs.1,41,119 received by the broker and the same was accounted for in the books of account of the appellant company in the F.Y 2005-06 for amount of Rs.5,23,730/- after deducting TS @ 5.61%. When this is grossed up, the amount is approximately the same. In view of this total addition of Rs.7,20,819/- is deleted. h) With....
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....llant could not give any explanation, hence, in view of presumption u/s 132 (4A) of the I.T Act the contents thereon is treated as correct as having paid by the appellant company to the broker. Therefore, the addition of both the above amounts are confirmed. k) Regarding commission paid to broker M/s Umang Estates the following additions have been made:- S.NO. Annexure no./Page Date Particulars Amount as per Party A-1 (In Rs.) 23. A-2/51 10.08.2007 Umang Estates 35,83,834/- 28. A-2/76 03.11.2007 Umang Estates 4,23,484/- 30. A-2/78 03.11.2007 Umang Estates 28,77,539/- The AR has submitted that from the perusal of seized material annexure no A-2/51 of Rs.35,83,834/-, annexure no.A-2/76 of Rs.4,23,484/- and annexure no.A-2/78 of Rs.28,77,539/-, it will be observed that the same were the bills issued by the broker In demand of the money and none of them is bearing the dates thereon. However, the appellant has accounted for the account of the broker for the F.Y 2005-06, 2006-07 and 2007 -08 and total payment was made as under :- S.NO. F.Y. Amount 1. 2005-06 19,97,363/-....
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....ed 10.08.2007 under the head "UMANG ESTATES" above. As such the addition made on account of this paper is nothing but the duplicity of the seized material A-2/51, hence, deleted. 3. Annexure A-2/76 dated 03.11.2007 at s.no.29 for an amount of Rs.27,53,381/- and Annexure A-2/79 dated 03.11.2007 at s.no.31 for an amount of Rs.58,286/- . The appellant has stated that the annexure mentioned above whereby no name of any broker was mentioned in the bill, was stray noting which can never form the part of the assessment as the same is not justified. As such the addition made on this ground is illegal and uncalled for and the same is liable to be deleted. I do not agree with the contention of the appellant because there is a valid presumption u/s 132(4A) about truthfulness of the documents found and seized during the course of search. The onus is on the appellant to explain that what it relates to. If it is asserted to be a stray and dumb documents, the appellant has to prove that this does not lead to any transaction, which has not been discharged. Hence the amount of additions of Rs.27,53,381/- and Rs.58,286/- are thus confirmed. Thus out of....
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....le of plot of land is made by registered documents by handing over the plot and no ownership is transferred prior to the final payment received in respect of the sale of the plot of land. While in construction activities the payments are made on the construction basis. Therefore, the percentage completion method is not applicable to the facts of assessee's case. 10. We have heard both the sides on the issue. The assessee has recognized the sales of the plot when the possession of the plot is transferred to the customer and full consideration for the plot had been received. The assessee was following the project completion method which has been accepted by the department in the earlier years. The CIT (A) has granted the relief to the assessee by holding as under :- "7.1.1 The AO has noticed from the note mentioned with the balance sheet, that the assessee has recognized the sales, when possession of plot has been transferred to the customers and full consideration of that Plot has been received. As the assessee was not following the percentage completion method, therefore, the assessee was asked to show cause as to why the profit for the assessment year should not....
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.... (ii) Further adjusted to include the amount of any tax, duty, cess or fee (by whatever name called} actually paid or incurred by the assessee to bring the goods to the place of its location and condition as on the date of valuation. Explanation.- For the purpose of this section, any tax, duty, cess or fee (by whatever name called) under any law for the time being in force, shall include all such payments notwithstanding any right arising as a consequence to such payment; (b) Interest received by an assessee on compensation or enhanced compensation, as the case may be, shall be deemed of be the income of the year in which it is received. As per Income Tax Act provisions, only two accounting standards are mandatory in nature which are elaborated below and other standards are recommendatory. Official Gazette: As per Notification No. SO 69(E), dated 25-1- 1996 for Notified Accounting Standards, Notified standards is as under: a. Accounting standard I relating to discloser of accounting Policies. ....
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....ssessee has the choice on method, but such method should be shown as regularly followed. Department cannot compel to chose a particular method and in support of that has placed the following case laws to defend his contention. a) CIT v. McMillan & CO. [1958] 33 ITR 182 (SC). b) Investments Ltd v. CIT [1970] 77 ITR 533 (SC) c) MKB Asia (P) Ltd. v. CIT [2008] 167 Taxman 256 (Gau.). d) CIT VS. Hyundai Heavy Industries Co. Ltd. (2007) 210 CTR (SC) 178 . (2007) 291 ITR 482 (SC) e) CIT Vs. Bilahari Investment (P) Ltd. (2008) 215 CTR (SC) 201 : (2008) 3 DTR (SC) 329 : (2008) 299 ITR 1 (SC) f) Juggilal Kamlapat Bankers v. CIT [1975] 101 ITR 40 (All.) g) CIT v. Smt. Vimla O. Son wane [1994] 75 Taxman 335 (Bom.) h) Awadhesh Builders vs. ITO (2010) 37 SOT 122 i) Vastukar vs ITO (ITAT Cuttak) j) Fort Projects (P) Ltd. V. Deputy Commissioner of Income Tax (2011) 63 DTR (Kol)(Trib) 145 7.2.1 The AO has discussed the legal position of the accounting principles to be followed In the case of the Real Estate Developers. As per....
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.... facts of the assessee. In the case cited by the Ld AO, it has been held:- Business-Adventure in the nature of trade-Agreement for purchase of vast areas of land - Division of area into 23 Plots-Sale of 22 plots to others and 23rd retained by the assessee-Whether transactions in the nature of trade- Profits from transaction how ascertained- Value of plot retained by assessee, whether to be taken into account. In the case of the assessee, no such situation for purchase of vast area of land, division of the area into 23 plots and one plot retained by the assessee himself, and whether the value of plot retained by the assessee is to be taken into account was present Rather there has been a substantial question of law as has been raised by the AO that whether, the method of accounting followed by the assessee form the past so many years and accepted by the department as the correct method of deducing profits IS liable to be converted into project completion method to percentage completion method. The facts of the case and the substantial question raised by the AO are nowhere covered, as such, the same is no....
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....med, i.e., by applying the percentage of completion method in the manner explained in Accounting Standard (AS) 7, Construction Contracts. Therefore, in the case of Real Estate Developers also, the income is to be offered on a year to year basis. 7.4.2 The AR has submitted that the guidance notes issued by the ICAI in 2006 has been withdrawn and is not applicable. As per accounting standard prescribed what has been held as mandatory is reproduced below :- In accounting for constructions contracts in financial statements, either the percentage of completion method or the completed contract method may be used. When a contractor uses a particular method of accounting for a contract then the same method should be adopted for all other contracts which meet similar criteria. Therefore, the observation made by the AO are nothing but a distorted inference made by him. Therefore, the same are not liable to be considered and the consequent additions made, based thereon is liable to be deleted. The AR has provide the recent Judgment of Hon'ble Delhi High Court CIT Vs. Manish Build Well (P) Ltd. (Del.) (HC) (2011) 63 DTR 369 which has endorsed the....