ASST CIT CEN CIR 2, THANE vs. TRIVENI DEVELOPERS, NAVI MUMBAI

Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सद�,राजे� के अनुसार -Per Rajendra,AM: Challenging the order,dated 21.01.2013,of the CIT(A)-I,Thane the Assessing officers(AO.s) have filed the appeals for the above mentioned two Assessment Years(AY.s).Assessee-firm, is a builder and developer and it filed its return of income on 28.04.2010,declaring income of Rs. 17.97 lakhs.The AO completed the assessment u/s.143(3)r.w.s.153A of the Act,on 3.11. 2010,determining its income at Rs.1.53 Crores. ITA/4250/Mum/2013,AY 2008-09: 2.Effective ground of appeal is about deleting the addition,made by the AO,amounting to Rs. 1.30 Crores.Before proceeding further we would like to narrate the brief facts of the case.A search and seizure action u/s 132(1) of the Act was carried out in the case of Gajra Group on 19-2-2009. During the course of search proceeding, a sum of Rs. 15 crores was voluntarily admitted and offered for the Group. Out of the said declaration of Rs. 15 crores, sum of Rs. 1.30 Crores pertained to the assessee for A.Y. 2008-09 on account of income from the project.However, at the time of the filing of the return of income, the assessee did not offer this income in the return of income filed in response to notice u/s 153A. Accordingly, the assessee was required to show cause as to why the income of Rs. 63 lakhs should not be added to the income of the project on the basis of "percentage completion method" as voluntarily admitted and offered by the assessee during the course of search proceeding, in

4250/M/13 &4251/M/13-Triveni the statement recorded u/s 132(4). In response, the assessee submitted that its housing project commenced from 29-9-2007 and during the year under consideration it was an ongoing project,that income shown in the return of income was only indirect income and no element of business income from the project was shown in the return of income,that it was following "Project Completion Method" for the revenue recognition and not the "Percentage Completion Method",that it was following Accounting Standard - 9 for the revenue recognition as prescribed in the case of builder.However, the A.O. rejected the assessee's contention n the ground that during the course of search proceeding, the assessee itself has offered the income on estimated basis for the year under consideration.He made an addition of Rs. 1.30 Crores to the income of the assessee.Aggrieved by the order of the AO,the assessee filed an appeal before the First Appellate Authority(FAA),who allowed its appeal.

3.During the course of hearing before us,the AR and the DR agreed that the identical issue was deliberated upon and decided by the Tribunal while adjudicating the appeals,filed by the group concerns.We find that vide its orders dated 15.05.2015(ITA.s/1267-68 and 2174-75 AY.s.2008-09 and 2009-10)in the case of Bhoomi Construction Projects,the Tribunal had dealt the issue as under:

“9. We have heard the rival submissions and also perused the relevant findings given in the impugned order. The sole reason for making the addition by the A.O. is that, at the time of search the assessee had offered to disclose the income on the basis of percentage completion method which has been retracted later on. However, there is no finding that the assessee has been following percentage completion method regularly since beginning or in any other project. There is no such evidence or documents which have been found during the course of search indicating that the assessee had been following percentage completion method regularly. If the assessee has been following one of the recognized methods as prescribed by AS-9, then it cannot be held that the Revenue can impose a different method upon the assessee unless there is a finding of fact that such a method is not reflecting the true profits of the assessee. Now it has also been brought on record by the ld. Counsel that in the subsequent year i.e. in the year of completion of the project in A.Y. 2012-13, the Revenue itself has accepted the project completion method for recognition of revenue and accordingly, has assessed the income of the project on the same method. Thus, a contrary view cannot be taken for this year. Moreover, the finding recorded by the ld CIT(A) after detail discussion as incorporated above is not only factually correct but also legally sustainable and therefore such a finding and conclusion of the ld. CIT(A) is affirmed and the grounds raised by the Revenue is dismissed.”

4250/M/13 &4251/M/13-Triveni