TaxTMI 
TaxTMI 
2026 (8) TMI 822
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....02.2014 and consequently, notice u/s 153A was issued on 30.11.2015.fter considering various replies filed by the assessee, following additions have been made in following AYs:- A.Y. 20% of advances received Unaccounted Receipts Unaccounted Payments 2011-12 15,63,71,227 1,05,50,000 69,57,040 2012-13 20,34,56,353 2,80,76,064 1,03,59,179 2013-14 23,04,59,014 5,00,000 - 2014-15 11,74,07,705 5,00,000 - Total 70,76,94,299 3,96,26,064 1,73,16,219 4. The brief facts of the case are that during the course of search carried out at the business premises of the assessee, no documents were found which could be held as incriminating material. However, from the possession of the Director of the assessee company, Shri Rakesh Kumar Yadav, certain loose papers were found and seized. The assessee company is engaged in the business of real estate where the revenue has been recognized by following 'PCM' ["Project Completion Method"] and the income is declared as and when the registration of the Sale Deed has taken place and physical possession of goods were delivered to the respective buyers i.e. when the significant risk and re....
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....199-ITAT Visakhapatnam, Dated: - February 28, 2023 * ITAT Delhi in the case of M/S Indo Autotech Ltd., M/S Admach Auto India Ltd. Versus The Dy. C.I.T. Central Circle -25 Faridabad, 2022 (7) TMI 331-ITAT Delhi, Dated: July 6, 2022 * ITAT Bangalore in the case of M/S. P. Shyamaraju And Co. India Private Limited Versus The Deputy Commissioner Of Income-Tax, Central Circle 2 (2) Bangalore. And The Assistant Commissioner of Income-Tax, Central Circle 2 (3) Bangalore. Versus M/S. P. Shyamaraju And Co. India Private Limited, 2022 (5) TMI 38-ITAT Bangalore, Dated: - April 25, 2022 * ITAT Cuttack in the case of Kothakota Rama Rao Versus Acit, Central Circle-1, Bhubaneswar, 2020 (12) TMI 8-ITAT Cuttack Dated: August 31, 2020 * ITAT Delhi in the case of Mr. Trilok Chand Chaudhary Versus Acit, Central Circle-26, New Delhi, 2019 (9) TMI 95-ITAT Delhi, Dated: - August 20, 2019 * ITAT Kolkata in the case of Shri Krishna Kumar Singhania, Shri Ajay Kumar Singhania, Smt. Kasak Singhania, Shrivijay Kumar Singhania and Smt. Ruchi Singhania Versus DCIT, CC-3 (3), Kolkata, 2018 (1) TMI 131-ITAT Kolkata, Dated 6.12.2017. 5. The 2nd issue raised by the asse....
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.... on 05.02.2014. For this, ld. AR placed reliance on the judgement of Hon'ble Apex Court in the case PCIT v. Abhisar Buildwell P. Ltd. reported in (2023) 454 ITR 212 (SC). It is further submitted that the assessee has regularly followed PCM for recognizing the Revenue from the project undertaken where the Revenue is recognized only when the project reaches completion and all the risks and rewards are substantially transferred to the buyers. As per ld. AR, AO has arbitrarily applied POCM ignoring the fact that under Income Tax Act, no accounting standard is prescribed for computation of income in the case of real estate business. Ld.AR further submits that AO has held 20% of the gross booking as revenue in the year under appeal without any basis and therefore, such observations deserves to be ignored. In this regard, the submissions made by ld. AR of the assessee are as under:- 1. Issue covered by Delhi ITAT in the case of DCIT vs. Reliable Realtech Pvt. Ltd 28. The issue involved in the present appeal is squarely covered in favour of the assessee by the decision of the Hon'ble ITAT, Delhi Bench in DCIT vs. Reliable Realtech Pvt. Ltd., ITA No. 4808/Del/2019, rep....
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.... was not justified in disregarding the same and estimating income arbitrarily. 3. No dissatisfaction recorded by the Id. AO regarding correctness or completeness of accounts 37. The addition made by the Id. AO is also unsustainable as the books of account of the assessee were rejected without recording any dissatisfaction regarding the correctness or completeness of the accounts. 38. It is a settled principle of law that unless the Assessing Officer records a clear finding that the accounts maintained by the assessee are incorrect, incomplete or unreliable, the method of accounting followed by the assessee cannot be rejected. 39. In the present case, the Id. AO has neither pointed out any defect in the books of account nor recorded any finding regarding incorrectness or incompleteness of the accounts. The addition has been made merely by applying an ad-hoc rate of 20% on the advances received, which clearly demonstrates that the estimation is arbitrary and without any legal basis. 40. Therefore, the rejection of the method of accounting and the consequent estimation of income is contrary to law and the addition deserves to be deleted. ....
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....ngly, ld.AR requested that all the appeals of the assessee be decided as per the arguments made herein above and prayed for the deletion of the additions made. 8. On the other hand, ld. CIT DR for the Revenue vehemently supported the orders of the lower authorities and submits that in the case of the assessee, a search was carried out u/s 132 of the Act and as a consequence, proceedings were initiated u/s 153A of the Act and as such there was no error in the order of AO initiating the proceedings u/s 153A in the case of assessee company. With respect to the additions made without referring to incriminating material, ld. CIT DR submits that proceedings for AYs 2013-14 & 2014-15 were pending as on the date of search and thus they are years where the proceedings were abated and therefore, AO has liberty to make the additions on the issues other than the issues based on the seized material. 9. Regarding the arguments of the assessee that the approval granted u/s 153D of the Act was defective approval, ld. CIT DR referred the amendment by Finance Act, 2026 w.r.e.f. 01.04.2021 where section 292BC is inserted and submits that as per the said section all the approvals granted under t....
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....e said that the documents found from the possession of Directors should be separately considered as he is person who is managing the day-to-day affairs of company and therefore, any material / documents found from his possession could be used in the assessment order passed u/s 153A of the Act in the case of assessee. In view of the above discussion, we find no error in the orders of lower authorities in completing the assessment in the hands of the assessee company u/s 153A of the Act. Accordingly, this issue of the assessee is rejected. 13. Coming to the 2nd plea with respect to the approval granted u/s 153D of the Act. Before going further, the approval granted vide order dated 29.03.2016 is reproduced as under:- 14. It is observed that identical approval was given in the case of other group company i.e. M/s Antriksh Engineers & Builders Pvt. Ltd. vs DCIT/ACIT in ITA Nos.9037 to 9039/Del/2025 for AYs 2009-10 to 2015-16 wherein vide order dated 17.07.2026, the Co-ordinate Bench has held the said approval as mechanical and the order passed based on such approval were held as invalid by making following observations:- 9.1. "The approval no where indicates as to what w....
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....ollowed PCM to recognize the revenue which was accepted in preceding years. It is also a matter of fact for applying POCM, the AO should have considered various aspect such as total cost of the project, total estimated revenue, total area to be constructed, booking advance received etc. Thereafter, he has to consider the total area constructed at the end of the relevant AY vis-a-vis advance booking received against the total area booked and then the Revenue could be recognized in terms of the methodology provided in the Guidance notes issued by ICAI. However, in the instant case, the AO has arbitrarily taken 20% as income of the gross booking amount received without considering the fact of how much percentage of work was completed during the year under appeal. Under the POCM, there is no room for adopting such an arbitrary approach to compute the income. When the assessee has consistently followed the method of Accounting which is also one of the accepted method, it cannot be changed without any valid/cogent reason solely for the allegation that no income was offered for tax. Under PCM, Revenue has been recognized as and when substantial and significant risk and rewards have been t....