TaxTMI 
TaxTMI 
2026 (1) TMI 1250
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....come of INR 5,92,243/-. The case was selected for complete scrutiny under CASS for the reason "income from Real Estate Business". A notice u/s 143(2) was issued on 22.09.2019 followed by notices us/ 142(1) alongwith questionnaires from time to time. In response, assessee company filed replies y alongwith documents/evidences and after considering the same, the AO assessed the income of the assessee company at INR 2,36,30,393/- vide assessment order dated 19.04.2021 passed u/s 143(3) r.w.s. 144B of the Act. 3. Against the said order, assessee filed an appeal before Ld. CIT(A) who vide impugned order dated 20.12.2024, partly allowed the appeal of the assessee. 4. Aggrieved by the order of Ld. CIT(A), assessee is in appeal before the Tribunal by taking following grounds of appeal:- 1. "The Ld. CIT(A) has erred in law and against the facts & circumstances of the case for confirming the addition of Rs. 21349415/-made in the assessment order dated 19/04/2021. 2. That the Ld. CIT (A) has erred in law against the facts and circumstances of the case for confirming the addition of Rs. 21349415/- by alleging that- In the instant case, it is seen that the appellant has g....
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....inst flat booking however has shown sales of only INR 9,27,58,567/- and the amount of INR 20,98,79,793/- as shown under the head "finished goods". 6. Before us, Ld.AR for the assessee submits that assessee has recognized its revenue on 'Project Completion Method' wherein the sale is booked when sale deed is executed and physical possession is handed over to the prospective buyer. He further submits that the amount shown under the head "finished goods" have been booked under sale in subsequent years when sales has taken place and the assessee has filed a chart before us, showing year-wise sales declared in subsequent years out of such finished goods. Ld.AR submits that due taxes are paid as and when sales have been booked and further filed copy of the balance sheet for immediately succeeding year where sales of INR 16,18,95,725/- is declared. He thus submits that action of the AO in taxing the entire stock in the year under appeal by treating the same as sales is not correct in terms of the accepted accounting principles followed by the assessee on regular basis and therefore, he prayed for the deletion of the addition so made by the AO. 7. On the other hand, Ld. Sr. DR for th....
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....,97,25,000/- 4,35,42,000 10. Since the assessee has already offered the sales in subsequent AYs and paid due taxes thereon on the profits which is evident from the copy of financial statement for subsequent AYs and the chart reproduced herein above. It is further observed that the assessee has declared net profit of INR 3,97,794/- on the sales of INR 6,18,95,725/- in AY 2019-20 and likewise in other AYs has declared profits which has not been doubted by the Revenue. Further this action of the AO tantamount to double taxation of income where the assessee has paid taxes in subsequent assessment years on the sales declared out of such stock and further in the year under appeal when profit is estimated by treating the said stock as sales. 11. The Hon'ble Jurisdictional Delhi High Court in the case of Paras Buildtech India Pvt.Ltd. vs CIT in ITA Nos. 602 & 603/2015 vide order dated 18.11.2015 has followed the judgement of Hon'ble Apex Court in the case of CIT vs Bilahari Investment P.Ltd. [2008] 299 ITR 1 (SC) and further following the judgment of Hon'ble Supreme Court in the case of CIT vs Excel Industrie Ltd. 2013 ITR 295 (SC) wherein it is held that when income of offered to....
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....ll then for the construction project are treated as advances and shown as liability." 18. Section 145 (1) of the Act states that the income chargeable under the heads 'Profits and gains of business or profession' shall be computed in accordance with either cash or mercantile system of accounting "regularly employed by the Assessee". It is only with effect from 1st April 2015 that a change has been brought about in Section 145 (2) which permits the central government to notify in the Official Gazette from time to time the income computation and disclosure standards to be followed by any class of Assesses or in respect of any class of income. That change is prospective and in any event does not apply to the case on hand. 19. The settled legal position as far as Section 145 of the Act is concerned is that it is not open to an AO to reject the accounts of an Assessee unless he comes to a determination that notified accounting standards have not been regularly followed by the Assessee. As pointed out by the CIT (A) in the order dated 2nd July, 2010, the AS of the ICAI did not have any statutory recognition under the Act although it was binding under the Companies Act, ....
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....s shown as income. The explanation added by way of Notes to the Accounts was not taken note of by the ITAT when it came to the conclusion that the percentage completion method should apply to the Assessee. 22. The other aspect that appears to have escaped the attention of the ITAT is that the Assessee offered to tax in the subsequent FY the amounts received and therefore there was no actual loss to the revenue. In similar circumstances, the Supreme Court in CIT v. Excel IndustriesLimited2013ITR 295 (SC) observed that the dispute if any raised at the instance of the Revenue would be at best academic. The stand of the Assessee in the present case also finds support in the decision of the Gujarat High Court in CIT-IV v. Shivalik Buildwell (P) Ltd. (2013) 40 taxmmann.com 219 (Gujarat).It was held that the Assessee in that case, who was a developer, was entitled to book the amount received as booking advance as income on transfer of the property. Till then the advance booking amounts could not be treated as his trading receipt. The High Court recognized that the Assessee in that case was entitled to apply the project completion method in terms of the applicable AS. 23.....