ANTRIKSH DEVELOPERS & PROMOTERS PRIVATE LIMITED,DELHI vs. ACIT, CC-1, GURGAON

In the instant case, a search action was carried out on 05.02.2014 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 Unaccounted Unaccounted received Receipts 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

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 reward are transferred to the buyer. The AO has changed the method of revenue recognition from PCM to ‘POCM’ [“Percentage of completion method”] and held that 20% of the booking amount received from the customers as income of the assessee for all the assessment years before us. Besides this, based on the seized documents, AO

The 2nd issue raised by the assessee is with respect to the approval granted u/s 153D dated 29.03.2016 which is mechanical approval granted for various AYs without mentioning year-wise breakup of income proposed to the assessed nor any reference was made of the seized material. As per ld.AR, the approval was granted prior to 01.04.2021, therefore, amendment made vide Finance Act, 2026 by inserting new Section 292BC with retrospective effect from 01.04.2021 is not applicable. For this reliance is placed on the following judgements:- - The Hon'ble Delhi High Court in the case of Shiv Kumar Nayyar in 2024 (6) TMI 29, dated 15.05.2024, has held that the approval u/s 153D of the Act has to be granted for each Assessment year independently. - ITAT Delhi (LB) in the case of Shri Dheeraj Chaudhary Versus Assistant Commissioner of Income Tax, CC-8, Delhi, 2025 (9) TMI 1372, dated 12.09.2025, wherein this issue was referred to the consideration of Hon'ble Third Member.

3rd issue raised by the assessee is that additions have been made by change of method of revenue recognition from PCM to POCM. As per ld. AR, when no incriminating material was found and seized, therefore, the issue regarding the revenue recognition being part of the regular books of accounts cannot be considered in the assessment completed u/s 153A of the Act in particular for Assessment Years 2011-12 & 2012-13 as they were unabated years as no proceedings were pending as on the date of search i.e. 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, reported in 2024 (2) TMI 637 (ITAT Delhi), order dated 09.02.2024. 29. The said case also involved the identical allegation of the AO that income should be recognised by applying Percentage Completion Method instead of Project Completion Method. 30. The Hon'ble Tribunal held that the assessee, being a real estate developer cannot be forced to adopt Percentage Completion Method in absence of any defect in the accounts. The Tribunal further held that there was no justification to discard the method of accounting regularly followed by the assessee. 31. Accordingly, the Hon'ble Tribunal upheld the order of the CIT(A) deleting the addition made by applying Percentage Completion Method and dismissed the appeal of the Revenue. 32. Since the present case involves identical facts and the same allegation, the issue stands fully covered by the aforesaid decision of the coordinate bench, and therefore the addition made by the id. AO deserves to be deleted. 2. Project Completion Method is a recognised method of accounting 33. The assessee has consistently followed the Project Completion Method (PCM) for recognising revenue from its real estate project since inception, under which revenue is recognised only upon completion of the project. During the assessment proceedings, the assessee had specifically submitted that it is recognising revenue under the completed project method and therefore no revenue was required to be recognised during the year as the project had not been completed. 34. It is respectfully submitted that Project Completion Method is a recognised and accepted method of accounting, particularly in the case of real estate developers. The Hon'ble Supreme Court in the case of CIT vs. Bilahari Investment (P) Ltd., (2008) 299 ITR 1 (SC) held that recognition of income under the mercantile system can be achieved through different methods of accounting and the method consistently followed by the assessee cannot be disturbed unless it results in distortion of profits. 35. Similarly, the Hon'ble Supreme Court in CIT vs. Hyundai Heavy Industries Co. Ltd., (2007) 291 ITR 482 (SC) recognised the project completion method as a valid method for recognising income in long-term contracts. 36. In the present case, the assessee had consistently followed PCM and therefore the Id. AO was not justified in disregarding the same and estimating income arbitrarily.

Next issue raised by the assessee is with respect to the addition made towards unaccounted receipts and unaccounted payments based on the entries found noted in the documents found/seized from the possession of Shri Rakesh Kumar Yadav during the course of search. As per Ld. AR, these documents contained rough noting and scribbling without having direct nexus with the assessee company. Ld. AR submits that these documents are dumb documents

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.

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

Regarding additions made that on the basis of incriminating material found and seized from the possession of Shri Rakesh Kumar Yadav, ld. CIT DR submits that Shri Rakesh Kumar Yadav is one of the Director of assessee company and therefore, documents found from his possession should have been treated as documents pertained to the assessee and for using these documents against the assessee, there is no requirement to invoke the provision of section 153C of the Act. As per ld. CIT DR, the assessee’s contention that proceedings must have initiated u/s 153C of the Act is not correct. Ld. CIT DR submits that the AO has rightly used the documents found from the possession of Director of the assessee company and therefore, he prayed for the confirmation of the additions made based on such material. Regarding assessee’s claim of set off against the income surrendered/offered for the tax, ld. CIT DR submits that income was offered in AY 2014-15, credit of which cannot be allowed in any of other assessment year against the addition made based on the same set of documents and therefore, he requested for the confirmation of the additions made in all the years.

It is observed that the loose papers and documents were found from the possession of the Director of assessee company in whose case, search u/s 132 of the Act was simultaneously carried out. It cannot be 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.

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 were the issues and seized material relevant to seven years for which a consolidated approval was being granted. At the same time our discussion above, has established that even the satisfaction note was not recorded in accordance with mandate of law. The additions were not on basis of any incriminating material found is search. Thus the exercise of approval function seems to be without any application of mind and makes apparent that it is not a case of insufficiency or deficiency of reasoning in grant of approval, but absence of reasoning and not application of mind to the records but summarily approving the drafts. The Hon'ble Delhi High Court in the case of Shiv Kumar Nayyar in 2024(6) TMI 29, dated 15.05.2024, has held that the approval u/s 153D of the Act has to be granted for each Assessment year independently. Then in the case of Shri Deeraj Chaudhary Versus Assistant Commissioner of Income Tax, CC-8, Delhi, 2025(9) TMI1372, dated 12.09.2025, wherein this issue was referred to the consideration of Hon'ble Third Member, too it is held that approval if granted in a manner showing non-application of mind, same will vitiate the assessments.”

The facts being identical and the approval u/s 153D of the Act was granted before of 01.04.2021 thus, by respectfully following the order of Co- ordinate Bench in the case of M/s Antriksh Engineers & Builders Pvt. Ltd. vs DCIT/ACIT (supra), we hold that approval granted in all the 04 (four) Assessment Years was without application of mind and mechanical approval and thus the assessment order passed are hereby quashed.

Now coming to the assessee’s plea with respect to the application of POCM as against PCM regularly followed and estimation of income by applying 20% on gross advances received. It is observed that for AYs 2011-12 & 2012-13, the proceedings were completed as on the date of search and these are unabated years where no proceedings were pending and therefore, the addition, if any, is required to be made, the same should have been based on the incriminating material and documents found and seized as a result of search and

Coming to the issue of addition for unaccounted receipts and payments based on the material found and seized from the possession of the director of the assessee company, it is observed that AO has made the addition of INR 5,69,42,283/- for the assessment years before us in present appeals, as tabulated herein above on account of unaccounted receipts of INR 3,96,26,064/- and for unaccounted payments of INR 1,73,16,219/-. It is observed that AO has considered both the receipts and payments as income of the assessee ignoring the fact that the payments have been made out of the receipts and, therefore, either the receipt or the payment could be taken as the as in come for making the additions, if any. It is further observed that based on entries found noted in these papers, assessee has offered sum of INR 3.93 crores as additional income in AY 2014-15 which has been accepted by the AO.

Considering the overall facts and circumstances of the case, in our considered opinion, no further addition is required to be made separately when the income has already been offered by the assessee based on these papers which has been accepted and any further addition made, would be double addition of an income. Accordingly, we direct the AO to delete the additions so made in all the assessment years before us in present set of appeals. Accordingly, all Grounds raised by the assessee in all captioned appeals are allowed.

In the final result, all captioned appeals filed by the assessee in ITA Nos. 9040 to 9041 & 9044 to 9045/Del/2025 for Assessment Years 2011-12 to 2014- 15 respectively, are allowed.