The ITO, Ward-9(1), Ahmedabad V. Shri Rasikbhai Ambalal Patel,HUF, Ahmedabad

ITA 1308/AHD/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6096 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 04-09-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 07-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: DIPAK SHAH
• Keywords: Income from undisclosed sources

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD .., , BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.1308/AHD/2013 ( / ASSESSMENT YEAR : 2009-10) THE ITO WARD-9(1) AHMEDABAD / VS. SHRI RASIKBHAI AMBALAL PATEL HUF MAJAR BUNGALOWS, NR.STAR BAZAR JODHPUR GAM ROAD, SATELLITE AHMEDABAD-380 015 $ ./ ./ PAN/GIR NO. : AAEHR 7338 L ( $' / APPELLANT ) .. ( ($' / RESPONDENT ) $') / APPELLANT BY : SHRI V.K. SINGH, SR.DR ($'*) / RESPONDENT BY : SHRI DIPAK SHAH, AR +,*- / DATE OF HEARING 29/11/2017 ./0*- / DATE OF PRONOUNCEMENT 16 / 02 /2018 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTAN CE OF THE REVENUE AGAINST THE APPELLATE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-XV, AHMEDABAD [CIT(A) IN SHORT] DATED 06/02/2013 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF T HE INCOME TAX ITA NO. 1308/AHD/2013 ITO VS. SHRI RASIKBHAI AMBALAL PATEL HUF ASST.YEAR 2009- 10 - 2 - ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') D ATED 19/12/2011 RELEVANT TO ASSESSMENT YEAR (AY) 2009-10. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE REA D AS UNDER:- 1A). THE LD.COMMISSIONER OF INCOME-TAX (APPEALS)-X V, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.59,13,308/- OUT OF TOTAL ADDITION OF RS.71,38,557/- MADE ON ACC OUNT OF INCOME FROM UNDISCLOSED SOURCES. 1B). THE LD.COMMISSIONER OF INCOME-TAX (APPEALS) -XV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS TO IGNORE THE ACCOUNT ING STANDARD-9 WHEREBY THE RISK & REWARD OF OWNERSHIP HAS BEEN TRA NSFERRED ON THE DATE OF SALE DEED / REGISTERED DOCUMENT AND POSSESS ION WAS ALREADY GIVEN ON THE DATE OF SALE DEED. 2). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD.COMMISSIONER OF INCOME-TAX (APPEALS)-XV, AHMEDAB AD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. BRIEFLY STATED, THE ASSESSEE, A HUF, FILED ITS R ETURN OF INCOME FOR AY 2009-2010 DECLARING TOTAL INCOME OF RS.4,42,672/ -. THE RETURN OF THE ASSESSEE WAS SUBJECTED TO SCRUTINY ASSESSMENT. IN THE COURSE OF THE SCRUTINY ASSESSMENT, THE ASSESSING OFFICER (AO) ON EXAMINATION OF A.I.R. INFORMATION, FOUND THAT THE ASSESSEE HAS SOL D A COMMERCIAL IMMOVABLE PROPERTY AT AN AGGREGATE SALE CONSIDERAT ION OF RS.1,75,00,000/- VIDE SALE AGREEMENT DATED 11/09/20 08 TO THE PURCHASER SHREE SIDDHI VINAYAK CORPORATION (SSVC). THE AO OB SERVED THAT THE AFORESAID SALE CONSIDERATION WAS NOT INCLUDED IN TH E REVENUE OF THE ITA NO. 1308/AHD/2013 ITO VS. SHRI RASIKBHAI AMBALAL PATEL HUF ASST.YEAR 2009- 10 - 3 - ASSESSEE AS PER ITS P&L ACCOUNT. IN RESPONSE, THE ASSESSEE TOOK A STAND BEFORE AO THAT IT IS NOT ENGAGED IN ANY BUSINESS O F CONSTRUCTION OF BUILDING EITHER RESIDENTIAL OR COMMERCIAL. THE ASS ESSEE FURTHER SUBMITTED THAT IT HAS NOT OBTAINED ANY REGISTRATION FOR SUCH CONSTRUCTION ACTIVITIES WITH ANY AUTHORITY AND THE BUILDING WAS CONSTRUCTED FOR OWN PURPOSES. HOWEVER, THE SALE AGREEMENT WAS EXECUTED TO ENABLE PURCHASING PARTY TO OBTAIN LOAN FROM BANK AGAINST ITS PROPERTY. THE AS SESSEE FURTHER SUBMITTED BEFORE THE AO THAT THE PROFIT HAS BEEN OF FERED ON THE BASIS OF WORK IN PROGRESS (WIP) FOR THE YEAR UNDER CONSIDE RATION AND EARLIER YEARS ALSO. THE ASSESSEE HAS ADOPTED PERCENTAGE CO MPLETION METHOD FOR REPORTING PROFITS FROM AFORESAID CONSTRUCTION. THE AO FOUND SEVERAL INFIRMITIES IN THE SUBMISSIONS OF THE ASSESSEE. TH E AO OBSERVED THAT THE MAJOR PART OF SALE CONSIDERATION WAS RECEIVED DURIN G THE YEAR UNDER CONSIDERATION. IT WAS NOTED THAT THE ASSESSEE HAS SHOWN AN AMOUNT OF RS.1,23,78,000/- RECEIVED FROM SSVC AS LIABILITIES INSTEAD OF RECOGNIZING THE TRANSACTIONS AS SALES. THE AO ALSO NOTED THAT THE CONSTRUCTION OF THE COMPLEX WAS ALREADY COMPLETED DURING THE YEAR AND T HE ENTIRE AMOUNT OF RS.1.75 CRORES OUGHT TO HAVE BEEN RECOGNIZED AS SAL ES. THE AO ACCORDINGLY CONCLUDED THAT AS THE SALE CONSIDERATIO N HAS BEEN AGREED AT RS.1.75 CORRES DURING THE YEAR AND THE COST OF CONS TRUCTION (WIP) OF RS.1,03,61,443/- HAS BEEN INCURRED, THE DIFFERENTIA L AMOUNT OF RS.71,38,557/- IS TO BE TREATED AS ASSESSEES INCOM E FOR THE YEAR UNDER ITA NO. 1308/AHD/2013 ITO VS. SHRI RASIKBHAI AMBALAL PATEL HUF ASST.YEAR 2009- 10 - 4 - CONSIDERATION WHICH REMAINS UNDISCLOSED. THE AO AC CORDINGLY ADDED THE AFORESAID AMOUNT TO THE TOTAL INCOME OF THE ASS ESSEE. 4. AGGRIEVED, THE ASSESSEE PREFERRED THE APPEAL BEF ORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE TOOK AN ALTOGETHER DIFFERENT STAND IN TOTAL VARIANCE TO THE STAND TAKEN BEFORE THE AO. THE ASS ESSEE SUBMITTED BEFORE THE CIT(A) THAT IT IS ENGAGED IN CONSTRUCTION ACTIV ITY AND SHOWN PROFIT OF RS.5,00,672/- OF W.I.P. OF RS.1,03,61,443/-. IT WA S CONTENDED BEFORE THE CIT(A) THAT THE CONSTRUCTION WORK OF THE PROJECT HA S BEEN CONTINUED FOR NEXT TWO YEARS TILL AY 2011-12. IT WAS SUBMITTED B Y THE ASSESSEE THAT IT HAS SHOWN RECEIVED OF RS.37,22,000/- IN FINANCIAL Y EAR (FY) 2009-10 (AY 2010-11) AND RS.14,00,000/- IN FY 2010-11 (AY 2 011-12) CONCERNING THE SALE OF THE AFORESAID COMMERCIAL BUI LDING. THE ASSESSEE CONTENDED THAT IT HAS ONLY RECEIVED AN AMOUNT OF RS .1,23,78,000/- DURING THE YEAR UNDER CONSIDERATION. HE FURTHER SUBMITTED THAT BEFORE THE CIT(A) THAT ALTHOUGH THE SALE DEED WAS EXECUTED IN FAVOUR OF THE PURCHASER SSVC DURING THE YEAR THE WORK OF BUILDING /PROJECT WAS NOT FULLY COMPLETED. THE ASSESSEE FURTHER SUBMITTED TH AT IT HAS INCURRED ADDITIONAL EXPENDITURE IN SUBSEQUENT ASSESSMENT YEA RS. THE ASSESSEE, IN ESSENCE, CLAIMED BEFORE THE CIT(A) THAT THERE WERE CERTAIN DISPUTES IN THE COMPLETION OF THE CONSTRUCTION OF THE PROPERTY AND THE RECEIPTS OBTAINED FROM THE PURCHASER WERE ONLY CONDITIONAL A ND THEREFORE DID NOT ACQUIRE THE CHARACTER OF INCOME TILL THE MATTER REA CHED THE FINALITY. THE ITA NO. 1308/AHD/2013 ITO VS. SHRI RASIKBHAI AMBALAL PATEL HUF ASST.YEAR 2009- 10 - 5 - ASSESSEE ALSO RELIED UPON THE ACCOUNTING STANDARD-9 ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA AND SUBM ITTED THAT IN VIEW OF THE SIGNIFICANT UNCERTAINTY OWING TO THE DISPUTE AN D DUE TO CONDITIONAL COMMITMENT FROM THE BUYER TO MAKE BALANCE PAYMENT A FTER THE COMPLETION OF THE PROJECT, THE INCOME THEREFROM COU LD NOT BE RECOGNIZED IN THE AY 2009-10. THE CIT(A) CALLED FOR THE REMAN D REPORT FROM THE AO. IN THE REMAND REPORT, THE AO INTER-ALIA SUPPORTED ITS JUSTIFICATION FOR HOLDING RS.71.38 LAKHS AS AN UNDISCLOSED BUSINE SS INCOME. IT WAS CONTENDED BY THE AO THAT THE ASSESSEE HAS EXECUTED SALE DEED WITH THE PURCHASER AND ALSO HAS GIVEN POSSESSION OF THE PROP ERTY COUPLED WITH THE FACT THAT MAJOR SALE CONSIDERATION HAS BEEN RECEIVE D DURING THE YEAR UNDER CONSIDERATION. THE AO ACCORDINGLY CONTENDED THAT T HE ASSESSEE HAS COMPLETED THE PERFORMANCE OF CONTRACT AS PER TRANSF ER OF PROPERTY ACT AND THEREFORE INCOME ACCRUED TO THE ASSESSEE DURING THE YEAR. IN REPLY TO THE REMAND REPORT, THE ASSESSEE REITERATED THAT THE PROJECT WAS NOT COMPLETED AND CERTAIN FINISHING WORK OF THE BUILDIN G OF THE PROJECT AS PER THE UNDERSTANDING WITH THE PURCHASER WERE COMPLETED IN THE SUBSEQUENT ASSESSMENT YEARS WHICH IS VOUCHED BY ADDITIONAL EXP ENDITURE IN THE NEXT TWO YEARS. IT WAS ALSO CONTENDED THAT THE ASSESSE E HAS KEPT POSSESSION OF CERTAIN PORTION OF THE BUILDING WITH IT. IT WAS FU RTHER CONTENDED BY THE ASSESSEE THAT IT RECEIVED PART OF SALE CONSIDERATIO N TO THE EXTENT OF RS.51.22 LAKHS FROM THE SALE OF THE BUSINESS PREMIS ES WHICH WERE DULY RECOGNIZED IN SUBSEQUENT ASSESSMENT YEARS AND THERE FORE DOUBLE TAXATION ITA NO. 1308/AHD/2013 ITO VS. SHRI RASIKBHAI AMBALAL PATEL HUF ASST.YEAR 2009- 10 - 6 - OF THE SAME RECEIPT IS NOT PERMISSIBLE IN LAW. IT WAS HARPED THAT SALE DEED WAS EXECUTED TO FACILITATE THE SANCTION OF LOAN AND THE SALE PER SE WAS NOT COMPLETED. THE CIT(A) AFTER OBJECTIVE CONSIDERATIO N OF THE FACTUAL ASPECTS IN DETAIL AND AFTER TAKING INTO ACCOUNT THE REVENUE AND EXPENDITURE RECOGNIZED IN THE SUBSEQUENT ASSESSMENT YEARS ELIMINATED THE EFFECT OF DOUBLE TAXATION AND CONSEQUENTLY WORK ED OUT THE ADDITION SUSTAINABLE TO THE EXTENT OF RS.12,25,249/- FOR THE AY 2009-10 AND RS.11.140 LAKHS RELEVANT TO AY 2011-12. THUS, THE CIT(A) GRANTED THE PARTIAL RELIEF TO THE ASSESSEE AND SUSTAINED THE AD DITION IN PART AS NOTED ABOVE. 5. AGGRIEVED BY THE PARTIAL RELIEF GRANTED BY THE C IT(A), THE REVENUE PREFERRED APPEAL BEFORE THE TRIBUNAL. 6. THE LD.DR RELIED UPON THE ORDER OF THE AO AND SO UGHT REVERSAL OF THE RELIEF GRANTED BY THE CIT(A). 7. THE LD.AR FOR THE ASSESSEE, ON THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE THE CIT(A) AS NOTED ABOVE A ND CONTENDED THAT THE CIT(A) HAS RIGHTLY GRANTED THE RELIEF IN THE FA CTS OF THE CASE. THE LD.AR FOR THE ASSESSEE ALSO SUBMITTED THAT THE ENTI RE SALE CONSIDERATION HAS BEEN OFFERED IN DIFFERENT ASSESSMENT YEARS AS P ER THE RECEIPTS AND THUS HAVING REGARD TO THE AS-9 ISSUED BY ICAI, IN VIEW O F THE RISK ASSOCIATED ITA NO. 1308/AHD/2013 ITO VS. SHRI RASIKBHAI AMBALAL PATEL HUF ASST.YEAR 2009- 10 - 7 - TO THE ASSESSEE FOR COMPLETION OF WORK AS PER THE R EQUIREMENT OF THE PURCHASER, THE CIT(A) HAS RIGHTLY CONCLUDED THAT TH E ASSESSEE HAS PROPERLY REPORTED THE PROFITS ARISING FROM THE SALE OF BUILDING AS PER PERCENTAGE OF COMPLETION METHOD AND THUS NO INTERFE RENCE IS THEREFORE CALLED FOR IN THE ORDER OF THE CIT(A). 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE CIT(A) HAS ANALYSED THE FACTS THREADBARE AND OBJECTIVELY CONSIDERED THE REVENUE RECOGNITION BY THE ASSESSEE SPANNING OVER VARIOUS ASSESSMENT YE ARS AND HAS GIVEN APPROPRIATE ALLOWANCES FOR EXPENDITURE INCURRED IN THE CONSTRUCTION ACTIVITY IN THE VARIOUS ASSESSMENT YEARS. THE NET PROFIT REPORTED BY THE ASSESSEE IN VARIOUS ASSESSMENT YEARS WERE ALSO TAKE N INTO ACCOUNT AND THE EFFECT OF DOUBLE TAXATION WAS DULY ELIMINATED. FOR READY REFERENCE, THE RELEVANT OPERATIVE PARAS OF THE ORDER OF THE CIT(A) ARE REPRODUCED HEREUNDER:- 5. I HAVE PERUSED THE FACTS OF THE CASE AS ENUM ERATED BY A.O. AND AS SUBMITTED BY APPELLANT. I HAVE PERUSED THE CASE LAW S RELIED ON BY A.O. AS WELL AS APPELLANT. AFTER CAREFUL CONSIDERATION OF FACTS, SUBMISSION AND CONTENTION OF BOTH A.O. AS WELL AS OF APPELLANT, GROUND WISE ADJU DICATION IS AS FOLLOWS: 5.1. BEFORE GOING FOR GROUND WISE ADJUDICATION, CER TAIN FACTS REQUIRED TO BE CONSIDERED AS FOLLOWS: (A) IN RESPECT OF ADDITION OF RS.71,38,557 FOR SAL E OF PROPERTY 'GAJRAJ COMPLEX': ITA NO. 1308/AHD/2013 ITO VS. SHRI RASIKBHAI AMBALAL PATEL HUF ASST.YEAR 2009- 10 - 8 - (A) THE APPELLANT CONSTRUCTED A COMMERCIAL PRO PERTY AT T.P. SCHEME NO.3, P.P. NO.25, MAUJE-VEJALPUR, AHMEDABAD IN THE NAME O F 'GAJRAJ COMPLEX'. THOUGH BEFORE A.O. IT WAS CONTENDED THAT THE SAID C ONSTRUCTION WAS NOT FOR BUSINESS PURPOSE BUT FOR SELF CONSUMPTION BUT AS PE R ADMITTED POSITION, THE APPELLANT DISCLOSED PROFIT AS WELL AS INCOME FROM T HIS PROJECT ON THE BASIS OF PERCENTAGE COMPLETION METHOD IN PREVIOUS YEAR RELEV ANT TO A.Y. 200708 AND A.Y. 2008-09. (B) THE A.O. GOT THE INFORMATION THROUGH ANNUAL INF ORMATION RETURN (AIR) THAT APPELLANT SOLD THIS COMMERCIAL COMPLEX TO M/S.SHREE SIDDHI VINAYAK CORPORATION ON 11.09.2008 FOR A CONSIDERATION OF RS .1,75,00,000 BUT APPELLANT IN THE P&L ACCOUNT HAS NOT SHOWN SUCH SALE CONSIDER ATION. THIS TRANSACTION AND INFORMATION WAS EVIDENCED BY A REGD. SALE DEED. THE APPELLANT CONTENDED THAT HE BEING IN NEED OF MONEY SOLD SUCH UNCOMPLETE D COMPLEX AND AS REQUIRED BY BANKS TO EXTEND THE LOAN TO M/S.SHREE SIDDHI VIN AYAK CORPORATION, AS PER MUTUAL AGREEMENT SAID REGISTRATION OF SALE IS MADE. THIS IS TO FACILITATE M/S.SHREE SIDDHI VINAYAK CORPORATION (SSVC) TO OBTA IN THE LOAN. IT WAS CONTENDED THAT A MAJOR PART OF PAYMENT RECEIVED IN SUBSEQUENT YEARS AND THERE WAS SUBSEQUENT WORK AND PROJECT WAS NOT COMPLETED D URING PREVIOUS YEAR. THE APPROPRIATE PROFIT ON THE BASIS OF PERCENTAGE COMPL ETION METHOD WAS SHOWN IN PREVIOUS YEAR AS WELL AS IN SUBSEQUENT YEAR. THE A. O. REJECTED APPELLANT'S ARGUMENT AND HELD THAT SINCE REGISTRATION HAD ALREA DY MADE THEREFORE AS PER TRANSFER OF PROPERTY ACT, OWNERSHIP IS TRANSFERRED TO SSVC AND SALE IS AFFECTED. HE THEREFORE CONSIDERED THE TOTAL SALE CONSIDERATIO N OF RS. 1,75,00,000 AND WORK IN PROGRESS SHOWN BY APPELLANT IN PREVIOUS YEA R OF RS.1,03,61,443 AND TAKEN THE DIFFERENCE OF RS.71,38,557 (1,75,00,000 - 1,03,61,443) AS ASSESSEE'S INCOME (PROFIT) FOR THE YEAR. (C) THE APPELLANT SUBMITTED COPIES OF RETURN OF INC OME FILED FOR A.Y. 2008-09 TO A.Y. 2011-012 AND SUBMITTED THE DETAILS OF DIRECT E XPENSES DURING SUCH RESPECTIVE PREVIOUS YEAR WITH AMOUNT RECEIVED. ON V ERIFICATION OF SUCH DETAIL, TOTAL RECEIPT AND TOTAL EXPENDITURE RELATED TO PROJ ECT FOR VARIOUS YEARS COMES AS FOLLOWS: A.Y. WORK IN PROGRESS SHOWN IN P&L A/C. SALE CONSIDERATION SHOWN PROFIT OF PROJECT RET.OF INCOME FILED / STATUS ITA NO. 1308/AHD/2013 ITO VS. SHRI RASIKBHAI AMBALAL PATEL HUF ASST.YEAR 2009- 10 - 9 - 07-08 25,05,498 0 2,06,274 YES 08-09 64,49,742 0 3,29,749 YES 09-10 1,03,61,443 1,23,78,000 5,14,672 YES 10-11 87,61,308 37,22,000 3,90,133 YES 11-12 87,61,308 14,00,000 3,78,125 YES TOTAL 1,75,00,000 18,18,953 IT IS THEREFORE THE APPELLANT OVER A PERIOD OF 5 YE ARS HAS SHOWN TOTAL PROFIT (INCOME) FROM THIS PROJECT AT RS. 18,18,953. HOWEVER, THE A.O. REJECTING AND NOT APPRECIATING TH E APPELLANT'S CONSIDERATION ONLY CONSIDERED THE PREVIOUS YEAR RELEVANT TO A.Y. 2009-10 AND REPLACED THE AMOUNT RECEIVED OF RS. 1,23,78,000 AS SHOWN BY APPE LLANT WITH THE TOTAL CONSIDERATION AS PER SALE DEED OF RS. 1,75,00,000 A ND ADDED THE DIFFERENCE AS PROFIT I.E. INCOME OF APPELLANT FROM THE PROJECT. (D) FURTHER VERIFICATION OF SUCH DETAIL AND ANALYSI S REFLECT THAT AS AGAINST THE TOTAL RECEIPT OF RS.1,75,00,000 THE COST OF THE PRO JECT OVER THE YEARS WAS RS. 1,33,55,662 AS FOLLOWS: A.Y. DIRECT EXPENDITURE IN RS. INDIRECT EXPENSES IN RS. 07-08 22,93,634 5,590 08-09 35,26,370 88,125 ITA NO. 1308/AHD/2013 ITO VS. SHRI RASIKBHAI AMBALAL PATEL HUF ASST.YEAR 2009- 10 - 10 - 09-10 32,29,361 2,41,976 10-11 13,70,560 3,61,172 11-12 5,48,322 4,73,552 LAND COST 12,17,000 TOTAL 1,21,85,247 11,70,415 TOTAL COST IS RS.1,33,55,662 (1,21,85,247 + 11,70,4 15) THEREFORE THE PROFIT FROM PROJECT IS RS.41,44,338 (1,75,00,000-1,33,55,662) WHILE THE PROFIT DECLARED BY THE APPELLANT TILL A.Y. 2011-12 RS.18,18,953 BALANCE: RS.23.25,385 (E) THE APPELLANT ON BEING ASKED FOR VERIFICATION S UBMITTED A CONFIRMATION FROM M/S.SSVC SUBMITTING THAT THE REGISTRATION OF S ALE DEED WAS TO FACILITATE THEM TO OBTAIN THE LOAN. NECESSARY COPIES OF LOAN S ANCTION, DISPUTE IN RESPECT OF COMPLETION OF PROJECT AND PAYMENT MADE BY THEM T O APPELLANT THROUGH BANK ACCOUNT ON DIFFERENT DATES WERE ALSO SUBMITTED. IT IS VERIFIED THAT STATE BANK OF INDIA, MID CORPORATE BRANCH VIDE LETTER DATED 13.11 .2008 INFORMED M/S.SSVC THAT ITS EARLIER TERM LOAN OF RS.150 LAC SANCTIONED BY STATE BANK OF SAURASHTRA IS TAKEN OVER BY IT ON ACCOUNT OF ACQUISITION OF S AID BANK (SBS) BY SBI. A COPY OF LETTER DATED 4.8.2008 FROM STATE BANK OF SAURASH TRA (SBS) TO M/S.SSVC (LETTER NO.MCB/BC/347) WAS FILED TO EVIDENCED THAT A TERM LOAN OF RS.150 LAC WAS SANCTIONED TO THEM. IN THE TERMS AND CONDITIONS OF THIS LETTER AT ANN.I UNDER THE HEAD 'SECURITY' AND UNDER SUB-HEAD (I) PR IMARY, THE DETAILS OF BUILDING AT SURVEY NO.24/1 AND 25, P.P. NO.25, TPS NO.3, 14/B SNEH SAGAR CO.OP.HSG. SOCIETY LTD. VEJALPUR IS MENTIONED WITH TOTAL VALUE OF RS.227.74 LAC AS COST IS ITA NO. 1308/AHD/2013 ITO VS. SHRI RASIKBHAI AMBALAL PATEL HUF ASST.YEAR 2009- 10 - 11 - MENTIONED. (F) THE APPELLANT FIELD A COPY OF REGD. DEED TO SUB STANTIATE THE COST OF LAND AT RS.12,17,000. THIS DEED IS REGISTERED WITH NO.AHD-4 PLD/4827/1-17/2006 WHERE THE LAND AT SURVEY NO.24/1 & 25 OF T.P. SCHEM E NO.3 FOR FINAL PLOT NO.25 WITH SNEH SAGAR CO.OP.HSG. SOCIETY LTD. TENEM ENT NO.13/B AND 14/B WAS PURCHASED BY APPELLANT FOR RS11 LACS FROM SHRI MERUBHAI R. BHARWAD AND SHRI MATRABHAI REVABHAI BHARWAD. (G) THE APPELLANT SUBMITTED COPY OF SALE DEED OF TH E IMPUGNED PROPERTY TO MS.SSVC FOR RS.1,75,00,000 REGD. WITH NO.AHD-4-PCD /11804/2-19/2008. THE DETAILS OF PAYMENT I.E. RECEIPT OF APPELLANT AS PER DEED IS AS FOLLOWS: SR.NO. AMOUNT IN RS. CHEQUE NO. DT. BANK 1 5,00,000 88210 30.5.2008 STATE BANK OF SAURASHTRA MID CORPORATE BRANCH 2 1,23,78,000 097327 11.9.2008 -DO- 3 10,00,000 882104 11.9.2008 -DO- 4 10,00,000 882105 11.9.2008 -DO- 5 10,00,000 882106 11.9.2008 -DO- 6 10,00,000 882107 11.9.2008 -DO- 7 6,22,000 882108 11.9.2008 -DO- TOTAL 1,75,00,000 ITA NO. 1308/AHD/2013 ITO VS. SHRI RASIKBHAI AMBALAL PATEL HUF ASST.YEAR 2009- 10 - 12 - IT IS MENTIONED IN THE SALE DEED THAT THE RECEIPT F OR SUCH PAYMENT WAS GIVEN BY APPELLANT WITH COMPLETE POSSESSION OF BUILDING (LAN D + CONSTRUCTION) AND RIGHTS RECEIVED THROUGH ISMENT, COMMON FACILITIES, COMMON PLOT PARKING AND OTHER SUCH RIGHTS WAS HANDED OVER TO M/S.SSVC. (H) THE APPELLANT SUBMITTED THAT THIS DEAL OF SALE UNDERGONE A DISPUTE IN RESPECT OF PAYMENT AND PEACEFUL HANDOVER. A COPY OF LEGAL NOTICE DATED 20.9.2008 FROM THE APPELLANT TO M/S.SSVC THROUGH SH RI MANISH K.PARMAR, ADVOCATE WAS FILED TO SHOW THAT APPELLANT WAS NOT I N RECEIPT OF RS.46,22,000 I.E. SR.NO.3 TO 7 CHEQUES AS MENTIONED AT (G) ABOVE . IN REPLY TO HIS NOTICE M/S.SSVC VIDE LETTER DATED 24.9.2008 THROUGH SHRI D ILIP D YADAV, ADVOCATE (COPY SUBMITTED) REPLIED TO APPELLANT THAT THERE WA S SOME PENDING FINISHING WORK AND AS THE SAME WILL BE COMPLETED THE BALANCE PAYMENT WILL BE MADE. THE APPELLANT SUBMITTED CONTRA ACCOUNT FROM M/S.SSV C THAT IN RESPECT OF SUCH SALE THE PAYMENT WAS RECEIVED AS FOLLOWS: S.NO. AMOUNT DATE BANK 1 5,00,000 21.8.2008 STATE BANK OF SAURASHTRA-CHEQUE NO.882101 2 1,23,78,000 11.9.2008 SBS-LOAN TRANSFER 3 6,22,000 30.5.2009 SBS-CH.NO.882108 4 10,00,000 5.1.2010 SBS-CH.NO.882105 5 10,00,000 2.2.2010 SBS-CH.NO.992107 6 10,00,000 25.3.2011 AHMEDABAD DISTT.COOP.BANK LTD. CH.NO.277401 7 4,00,000 31.3.2011 ADC-CH.NO.277402 8 4,00,000 2.9.2011 ADC-CH.NO.277405 ITA NO. 1308/AHD/2013 ITO VS. SHRI RASIKBHAI AMBALAL PATEL HUF ASST.YEAR 2009- 10 - 13 - 9 2,00,000 13.2.2012 ADC-CH.NO.277412 THE APPELLANT FILED COPY OF BANK ACCOUNT NO.6602833 9837 OF M/S.SSVC AT STATE BANK OF INDIA, LAW GARDEN BRANCH AND COPY OF ACCOUNT NO. 1258 AT ADC, MANAS COMPLEX TO EVIDENCE THAT SUCH PAYMENT RE CEIVED FROM M/S.SSVC AS CREDITED ON SUCH DATE IN M/S.SVC ACCOUNT. (I) THE APPELLANT GET THE BUILDING USE PERMISSION F ROM THE ADDA ON 08.04.02209 VIDE NO.04251 ON THE BASIS OF APPROVAL OF DEVELOPMENT PERMISSION DATED 28.02.2006 VIDE NO.PRM/54/12/64/32 51. (J) THE APPELLANT FILED COPY OF ACCOUNTING STANDARD (AS) 9, WITH SPECIFIC DISCUSSION UNDER THE HEAD 'REVENUE RECOGNITION' TO JUSTIFY THE METHOD OF ACCOUNTING FOLLOWED BY APPELLANT AS 'PROPORTIONATE COMPLETION METHOD.' IN THIS REGARD, COPY OF GUIDANCE NOTE ON RECOGNITION OF REV ENUE BY REAL ESTATE DEVELOPERS ISSUED BY THE COUNCIL OF THE INSTITUTE O F CHARTERED ACCOUNTANTS OF INDIA WAS ALSO FILED WHERE AT PARA 11 IT IS MENTION ED THAT - 'FOR DETERMINING WHETHER IT IS NOT UNREASONABLE TO EXPECT ULTIMATE COLLECTION, A SELLER SHOULD CONSIDER THE EVIDENCE OF THE BUYER' S COMMITMENT TO MAKE THE COMPLETE PAYMENT. WHERE THE ABILITY TO ASSESS THE U LTIMATE COLLECTION WITH REASONABLE CERTAINTY IS LACKING AT THE TIME ALL SIG NIFICANT RISKS AND REWARDS OF OWNERSHIP ARE TRANSFERRED TO THE BUYER, REVENUE REC OGNITION IS POSTPONED TO THE EXTENT OF UNCERTAINTY INVOLVED. FOR EXAMPLE, WH EN THE AGGREGATE OF THE PAYMENT RECEIVED, INCLUDING THE BUYER'S INITIAL DOW N PAYMENT, OR CONTINUING PAYMENT BY THE BUYER, PROVIDE INSUFFICIENT EVIDENCE OF THE BUYER'S COMMITMENT TO MAKE THE COMPLETE PAYMENT, REVENUE IS RECOGNIZED ONLY TO THE EXTENT OF REALIZATION OF THE CONSIDERATION PROVIDED OTHER CON DITIONS FOR RECOGNITION OF REVENUE ARE SATISFIED.' (K) FROM THE ABOVE DISCUSSION FOLLOWING CONCLUSION CAN BE DRAWN: (A) THE APPELLANT CONSTRUCTED A COMMERCIAL BUILDING NOT FOR HIS OWN USE BUT FOR SALE AND SHOWN THE PROFIT AS WELL AS INCOME FOL LOWING ACCOUNTING STANDARD AS-9 ON THE BASIS OF 'PROPORTIONATE COMPLETION 1 METHOD. ON THE BASIS OF WORK ITA NO. 1308/AHD/2013 ITO VS. SHRI RASIKBHAI AMBALAL PATEL HUF ASST.YEAR 2009- 10 - 14 - IN PROGRESS, PROFIT AND INCOME WERE SHOWN IN IT PRE VIOUS YEAR RELEVANT TO ASSTT.YEAR 2007-08 & 2008-09 THOUGH THERE WAS NEITH ER BOOKING NOR ANY SALE. (B) DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 2009- 10, THROUGH A REGISTERED DEED, A SALE WAS AFFECTED OF THE SAID COMPLEX FOR A CONSIDERATION OF RS. 1,75,00,000 BUT THE APPELLANT CONSIDERED ONLY RS. 1 ,23,78,000 AS AMOUNT RECEIVED AND SHOWN PROFIT ON THE BASIS OF WORK IN P ROGRESS ACCORDINGLY. THE APPELLANT IN SUBSEQUENT YEAR SHOWN FURTHER RECEIPT OUT OF SUCH RS. 1,75,00,000 AND INCURRED EXPENDITURE AND SHOWN INCOME FOR A.Y. 2010-11 & A.Y. 2011-12. THE EVIDENCES OF PAYMENT REFLECT THAT THOUGH AS PER SALE DEED THERE WAS NO ENCUMBRANCES TO PROPERTY AND ALL THE PAYMENTS THROU GH CHEQUES OF VARIOUS AMOUNTS TOTALING TO RS. 1,75,00,000 1/VAS RECEIVED BY APPELLANT, THERE WAS DISPUTE AND ONLY RS.1,28,78,000 WAS REALIZED DURING A.Y. 2009-10, WHILE RS.26,22,000 WERE REALIZED IN A.Y. 2010-11, RS.14,0 0,000 WERE REALIZED IN A.Y. 2011-12 AND FINALLY RS.6,00,000 IN A.Y. 2012-13. IT IS WORTH NOTING HERE THAT THOUGH APPELLANT REALIZED RS.1,28,78,000 IN PREVIOU S YEAR, IT HAS SHOWN ONLY RS.1,23,78,000 I.E. RS.5,00,000 THOUGH REALIZED BUT NOT TAKEN INTO ACCOUNT BY APPELLANT. (C) THE APPELLANT STARTED THE CONSTRUCTION OF COMME RCIAL COMPLEX VIDE DEVELOPMENT PERMISSION DATED 8.2.2006. THE BUILDING USE PERMISSION WAS RECEIVED VIDE AUDA CERTIFICATE DATED 08.4.2009. IT IS THEREFORE, THE BUILDING AS COMMERCIAL COMPLEX WITH THE APPROVED PLAN WAS COMPL ETED IN ALL RESPECT BEFORE 8.4.2009. THIS IS BECAUSE AS PER SETTLED LEG AL PROCEDURE THE AUDA ON RECEIPT OF APPLICATION VISIT & INSPECT THE BUILDING AND THEN GRANT BUILDING USE PERMISSION. THE NOTICES ISSUED FOR COMPLETION OF FU RNISHING WORK SEEMS TO BE IN RESPECT OF SOME FINISHING CHANGE AS REQUESTED BY M/S.SSVC BEING THE SAID COMPLEX WAS TO BE USED AS HOTEL AS EVIDENT FROM THE RECORDS OF 'TERM LOAN' SANCTIONED BY SBI TO M/S.SSVC. THIS CHANGE MAY BE N EGOTIATED WITH OVERALL PRICE OF RS.1,75,00,000 AND THEREFORE CONSIDERING T HE NEED BETWEEN M/S.SSVC AND APPELLANT, UPON MUTUAL UNDERSTANDING SUCH SALE DEED WITH COMPLETE DETAILS OF PAYMENT WAS MADE ON COMPLETION OF PROJEC T BUT A PART PAYMENT WAS WITHHELD BY M/S.SSVC TO GET SUCH WORK. (D) THE A.O. COMPLETELY OVERLOOKED THE FACT THAT AP PELLANT HAD ALREADY SHOWN SOME PROFIT FROM THIS PROJECT FOLLOWING 'PROPORTION ATE COMPLETION METHOD.' THE A.O. WORKED OUT THE DIFFERENCE BETWEEN RS.1,75,00,0 00 AND WORK IN PROGRESS ITA NO. 1308/AHD/2013 ITO VS. SHRI RASIKBHAI AMBALAL PATEL HUF ASST.YEAR 2009- 10 - 15 - OF RS.1,03,61,443 FOR MAKING ADDITION OF RS.71,38,5 57 WHICH INTER-ALIA HAS PROFIT SHOWN BY APPELLANT OF RS.5,36,023 (2,06,274 + 3,29,749) SHOWN ALREADY BY APPELLANT IN A.Y. 2007-08 AND A.Y. 2008-09 RESUL TING IN DOUBLE TAXATION OF SAME AMOUNT. FURTHER THE A.O. OVERLOOKED THE COST I NCURRED IN THE FORM OF DIRECT EXPENDITURE OF RS.19,18,882 (13,70,560 + 5,4 8,322) AND INDIRECT EXPENDITURE OF RS.8,34,724 (3,61,172 + 4,73,552) BY THE APPELLANT IN SUBSEQUENT YEAR ON SUCH PROJECT TO REALISE THE RECE IPT OF RS.1,75,00,000. EVEN IF THE METHOD OF COMPUTING PROFIT AS PROJECT COMPLE TION METHOD AS TAKEN BY A.O. IS CONSIDERED, THE PROFIT SO DERIVED BY A.O. O F RS.71,38,557 IS IN EXCESS BY SUCH EXPENSES THOUGH RELATED TO PROJECT I.E. EXPEND ITURE OF RS.27,53,606 THOUGH INCURRED IN SUBSEQUENT YEARS BUT REQUIRED TO BE CONSIDERED IN WORKING OF PROFIT SINCE RELATED TO SAME PROJECT WHICH WAS S OLD FOR SALE CONSIDERATION OF RS.1,75,00,000 AS TAKEN BY A.O. (E) CONSIDERING THE TOTAL RECEIPT OF RS.1,75,00,000 AND TOTAL COST OF RS.1,33,55,662, THE RESULTANT PROFIT FROM THE PROJE CT COMES TO RS.41,44,338. OUT OF THIS, THE APPELLANT IN FIVE YEARS I.E. FROM A.Y. 2007-08 TO A.Y. 2011-12 HAS SHOWN LESS PROFIT BY RS.23,25,385. (B) (A) (B) 5.2. NOW COMING TO ADJUDICATION OF VARIOUS GROUNDS, THE SAME IS AS FOLLOWS: (A) GROUND NO.1 IS AGAINST THE TOTAL INCOME ASSESSE D AT RS.90,90,890 AGAINST THE RETURNED INCOME OF RS.4,42,672. THIS WILL BE CO NSIDERED WHILE ADJUDICATING GROUNDS AGAINST INDEPENDENT ADDITIONS. (B) 1. GROUND NO.2 IS AGAINST THE ADDITION OF RS.71 ,38,557 AS INCOME FROM UNDISCLOSED SOURCE. IN FACT AS DISCUSSED IN DETAIL ABOVE, THE A.O. COMPUTED THE DIFFERENCE BETWEEN TOTAL SALE CONSIDERATION OF RS. 1,75,00,000 FOR THE SALE OF 'GAJRAJ COMPLEX' AND WORK IN PROGRESS AS APPEARING IN THE BOOKS FOR THE ADDITION. I AM PARTLY INCLINED WITH THE APPELLANT'S CONTENTIONS THAT A.O. TOTALLY OVERLOOKED THE FACTS THAT APPELLANT FOLLOWING THE ' PROPORTIONATE COMPLETION ITA NO. 1308/AHD/2013 ITO VS. SHRI RASIKBHAI AMBALAL PATEL HUF ASST.YEAR 2009- 10 - 16 - METHOD' FOR ACCOUNTING ITS PROFIT AND HAD ALREADY S HOWN SOME PROFIT IN EARLIER YEARS WHICH A.O. HAS NOT CONSIDERED. CONSIDERING THE FACT THAT REGISTERED SALE DEED DESCRIBE THE DETAILS OF VARIOUS CHEQUES F OR THE CONSIDERATION OF RS. 1,75,00,000 AND THE BUILDING USE PERMISSION (BU) DA TED 08.04.2009, I AM INCLINED WITH THE CONTENTION OF THE A.O. THAT THE P ROJECT GOT COMPLETED AS ON 31.3.200. HOWEVER, AS EVIDENCED FROM VARIOUS LEGAL NOTICES AND PART OF THE SALE CONSIDERATION RECEIVED IN SUBSEQUENT YEAR, IT IS BEYOND DOUBT THAT THE BUILDING SO SOLD WAS TO BE UTILIZED AS HOTEL, THE P URCHASER ASKED FROM APPELLANT FOR EXTRA WORK OR CHANGE OF SOME FINISHIN G AT THE TIME OF NEGOTIATING TOTAL SALE CONSIDERATION OF RS.1,75,00,000 AND THER EFORE NOT ONLY THE REGISTERED SALE DEED WERE MADE TO FACILITATE M/S.SS VC TO GET LOAN FROM BANK BUT DESPITE THE PROJECT WAS COMPLETED WITH BU PERMI SSION, SUCH MODIFICATION WERE PENDING AND THE SAME WERE COMPLETED BY APPELLA NT IN SUBSEQUENT YEAR. IT IS THEREFORE, APPELLANT IS NOT CORRECT TO CONTEND T HAT PROJECT WAS NOT COMPLETED TILL PREVIOUS YEAR RELEVANT TO A.Y. 2011-12 WHEN HE RECEIVED THE COMPLETE PAYMENT. IN FACT PROJECT WAS COMPLETED DURING PREVI OUS YEAR AND FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING BY APPELLANT THE PR OFIT ON ACCOUNT OF SALE OF PROJECT HAS TO BE CONSIDERED EXCEPT THE PROFIT OF E XTRA WORK/FINISHING WORK WHICH WAS A PART OF TOTAL CONSIDERATION OF RS.1,75, 00,000 AND COMPLETED BY APPELLANT IN SUBSEQUENT YEAR. THE APPELLANT'S CONTE NTIONS ABOUT FOLLOWING ACCOUNTING STANDARD AS-9 IS PARTLY CORRECT ON THE F ACT THAT ONE IN REAL ESTATE DEVELOPMENT IS FREE TO FOLLOW 'PROPORTIONATE COMPLE TION METHOD.' FURTHER IN REFERENCE TO RECOGNITION OF REVENUE, THE ASSESSEE I S GUARDED AGAINST ANY ENCUMBRANCES AND PAYMENT AS MENTIONED BY APPELLANT. BUT, IN THE CASE OF APPELLANT THE FACTS ARE TOTALLY DIFFERENT. AT THE T IME OF REGISTRATION OF PROPERTY THERE WAS NO DOUBT ABOUT ANY SUSPICION FOI* REALIZA TION OF MONEY SINCE DETAILS OF CHEQUES AS GIVEN BY PURCHASER IS THERE AND APPEL LANT NOT CONTENDED THAT ANY OF SUCH CHEQUE DEPOSITED GOT BOUNCED AND APPELLANT TAKEN ACTION AGAINST THAT. THE REGD.DEED ALREADY MENTIONED THAT SUCH CHEQUES W ERE TAKEN IN POSSESSION BY APPELLANT AND RECEIPT FOR THE SAME WITH CLEAR PE ACEFUL POSSESSION OF BUILDING WAS GIVEN BY APPELLANT TO M/S.SSVC. IT IS ONLY ON ACCOUNT OF SOME FINISHING WORK, THERE WAS MUTUAL DISPUTE RELATED TO THAT PART WHICH LED TO WITHHOLDING THE BALANCE AMOUNT. SUCH MUTUAL UNDERST ANDING AND DISPUTE IS REFLECTED BY THE FACT THAT IN SUBSEQUENT YEAR THE A PPELLANT RECEIVED AMOUNT NOT WITH THE SAME CHEQUES AS MENTIONED IN SALE DEED BUT FROM DIFFERENT CHEQUES OF M/S.SSVC. ON THE CONTRARY, THE APPELLANT AS AGAINST THE RECEIPT OF ITA NO. 1308/AHD/2013 ITO VS. SHRI RASIKBHAI AMBALAL PATEL HUF ASST.YEAR 2009- 10 - 17 - RS.1,28,78,000 (RS.5,00,000 + R.1,3,78,000) RECEIVE D DURING PREVIOUS YEAR HAS SHOWN ONLY RS.1,23,78,000. 2. THE OTHER IMPORTANT FACT TO THIS GROUND THEREFOR E SHIFTS TO COMPUTATION OF PROFIT BY A.O. AT RS.71,38,557 FOR WHICH AS ALREADY DISCUSSED, I AM INCLINED WITH THE APPELLANT THAT THE SAME IS NOT FULLY CORRE CT. ON THE BASIS OF THE FACTS THAT (I) APPELLANT ALREADY DISCLOSED THE PART PROFI T IN EARLIER YEARS AND (II) COMPLETE TRANSACTION SPREAD OVER IN FIVE YEARS (III ) THE TOTAL CONSIDERATION AS WELL AS TOTAL COST, THE REAL PROFIT THEREBY INCOME FROM THE PROJECT COMES TO RS.41,44,338 (IV) THE APPELLANT IN FIVE YEARS SHOWN TOTAL PROFIT OF RS.18,18,953 (V) THE APPELLANT'S BOOKS OF ACCOUNTS ARE AUDITED A ND A.O. HAS NOT REJECTED SUCH BOOKS OF ACCOUNTS AS WELL AS ACCOUNTING SYSTEM BEFORE MAKING SUCH ADDITION AND (VI) THE A.O.'S APPROACH WILL RESULT I NTO CASCADING EFFECT FOR EARLIER AND SUBSEQUENT YEAR FOR THE INCOME RETURNED BY APPELLANT, I AM OF THE VIEW THAT SUCH ADDITION IS NOT BASED ON PROPER FACT S AND METHOD. A HELD BY ME THAT REGD. SALE DEED FOR THE 'GAJRAJ COMPLEX' WAS A COMPOSITE DEED OF THE PROJECT AS WELL AS CHANGES/FINISHING IN SOME PARTIC ULAR MANNER FOR WHICH TOTAL CONSIDERATION OF RS.1,75,00,000 WAS PAID. IT IS IN THIS REGARD, FIRSTLY I REJECT THE BOOKS OF ACCOUNTS OF APPELLANT U/S.145 OF THE ACT S INCE THE SAME IS NOT REFLECTING THE CORRECT PROFIT. AFTER THIS, I ADOP T THE FOLLOWING METHOD TO COMPUTE SUCH PROFIT FOR THE PREVIOUS YEAR. (A) TOTAL COST IN THE FORM OF DIRECT EXPENDITUR E AND INDIRECT EXPENSES INCURRED BY APPELLANT UPTO 31.3.2009 AS FOLLOWS: A.Y. DIRECT EXP. IN RS. INDIRECT EXP. IN RS. TOTAL 07-08 22,93,634 5,590 22,99,224 08-09 35,26,370 88,175 36,14,495 09-10 32,29,361 2,41,976 34,71,337 LAND COST 12,17,000 - 12,17,000 1,06,02,056 ITA NO. 1308/AHD/2013 ITO VS. SHRI RASIKBHAI AMBALAL PATEL HUF ASST.YEAR 2009- 10 - 18 - (B) THE TOTAL SALE CONSIDERATION RECEIVED BY APPELL ANT TILL 31.3.2009 IS RS.1,28,78,000 I.E. RS.5,00,000 VIDE CHEQUE NO.8821 01 OF STATE BANK OF SAURASHTRA DATED 21.8.2008 AND LOAN TRANSFER OF RS. 1,23,78,000 DATED 11.9.2008. (C) THE PROFIT FROM THE PROJECT = (B) (A) = 1,28,78,000 1,06,02,056 = 22,75,944 (D) TOTAL PROFIT ALREADY DECLARED BY APPELLANT A.Y. 2007-08 RS.2,06,274 A.Y.2008-09 RS.3,29,749 RS.5,36,023 (E) THE BALANCE PROFIT TO BE CONSIDERED IN THE PR EVIOUS YEAR RELEVANT TO A.Y. 2009-10 IS (D) - (C) I.E. 17,39,921 (22,75,944 - 5, 36,023). (F) THE BALANCE CONSIDERATION RECEIVED BY APPELLANT TILL 31.3.2012 OUT OF RS. 1,75,00,000 ARE AS FOLLOWS: (I) DURING PREVIOUS YEAR 2009-10 CHEQUE NO.882108 OF SBS.DTD.30.5.2009 6,22,000 CHEQUE NO.882105 OF SBSDTD.5.1.2010 10 ,00,000 CHEQUE NO.992107 OF SBS DTD. 2.2.2010 10 ,00,000 26,22,000 (II) DURING PREVIOUS YEAR 2010-11 CHEQUE NO.277401 OF ADC DTD.25.3.2011 10, 00,000 CHEQUE NO.277402 OF ADC DTD. 31.3.2011 4,00,000 14,00,000 (III) DURING PREVIOUS YEAR 2011-012 CHEQUE NO.277405 OF ADC DTD.2.9.2011 4, 00,000 CHEQUE NO.277412 OF ADC DTD.13.2.2012 2,0 0,000 ITA NO. 1308/AHD/2013 ITO VS. SHRI RASIKBHAI AMBALAL PATEL HUF ASST.YEAR 2009- 10 - 19 - (G) AS AGAINST SUCH RECEIPT, THE APPELLANT INCURRED FOLLOWING EXPENSES: PREVIOUS YEAR DIRECT EXPENSES IN RS. INDIRECT EXPENSES IN RS. TOTAL 2009-10 13,70,560 3,61,172 17,31,732 2010-11 5,48,322 4,73,552 10,21,874 ! TOTAL 27,53,606 (H) THE PROFIT OUT OF SUCH RENOVATION / EXTRA WORK CONSIDERING THAT THERE WAS DISPUTE BETWEEN APPELLANT AND M/S.SSVC IN RESPECT O F PAYMENT AND THEREFORE M/S.SSVC RELEASED THE FUND ONLY AFTER VERIFICATION AND TO THE EXTENT OF PERCENTAGE OF SUCH WORK COMPLETED IN THAT YEAR FOR WHICH APPELLANT HAS SHOWN PROFIT FOLLOWING PROPORTIONATE METHOD OF COMPLETION OF CONTRACT IN A.Y. 10-11 & A.Y. 11-12. BUT IT IS BEYOND DOUBT THAT SUCH RE NOVATION / EXTRA WORK WAS TOTALLY COMPLETED BY 31.3.2011 AND ON MERCANTIL E SYSTEM OF ACCOUNTING, THE APPELLANT SHOULD HAVE BOOKED THE PROFIT FOR SUCH WO RK IN THE PREVIOUS YEAR RELEVANT TO A.Y. 11-12. THE WORKING OF SUCH PROFIT THEREFORE IS AS FOLLOWS: (I) TOTAL RECEIPT IN F.Y. 2009-10. 10 -11 AND SUBSEQUENTLY IS OF RS.46,22,000 (26,22,000 + 14,00,000 + 6,00,000). (II) TOTAL EXPENDITURE FOR SUCH WORK IS OF RS.2 7,53,606. (III) THE PROFIT FROM SUCH WORK IS RS. 18,68,394 (46,22,000- 27,53,606) (IV) THE APPELLANT ALREADY ACCOUNTED PROFIT IN A .Y. 10-11 & A.Y. 11-12 FOR AN AMOUNT OF RS.7,68,258 (3,90,133 + 3,78,125). (V) THE DEFICIENCY OF PROFIT TO BE CONSIDE RED IN A.Y. 2011-12 IS RS.11,00,140 (18,68,394-7,68,254). ITA NO. 1308/AHD/2013 ITO VS. SHRI RASIKBHAI AMBALAL PATEL HUF ASST.YEAR 2009- 10 - 20 - 3. IT IS THEREFORE, AT THE PLACE OF BLANKET ADDITIO N MADE BY THE A.O. OF RS.71,38,557, THE ADDITION FOR FOLLOWING TWO YEARS OVER AND ABOVE THE RETURNED INCOME AS SHOWN BY APPELLANT IS REQUIRED TO BE MADE . (I) PREVIOUS YEAR 08-09 RELEVANT TO A.Y. 09-10 RS.17,39,921 LESS: RS. 5.14.672 (ALREADY SHOWN IN RET.OF INCOME) RS.12,25.249 ( II PREVIOUS YEAR 10-11 RS.11.00.140(CREDIT OF RS.37812 5 ALREADY CONSIDERED) RELEVANT TO A.Y. 11-12 TOTAL RS.23.25.389 4 IT IS THEREFORE THE A.O. IS DIRECTED TO DELETE T HE BALANCE ADDITION OF RS.59,13,308 (71,38,557 - 12,25,249) AS FAR AS IMPU GNED ASSTT.YEAR IS CONCERNED. HE IS FURTHER DIRECTED TO ADD / INCREASE THE INCOME OF PREVIOUS YEAR RELEVANT TO A.Y. 2011-12 BY RS.11,00,140. IT IS THE REFORE THE APPELLANT GETS PART RELIEF. 9. A PERUSAL OF THE ORDER OF THE CIT(A) CLEARLY SHO WS THAT THE CIT(A) HAS TAKEN INTO ACCOUNT ALL ASPECTS RELEVANT FOR DET ERMINATION OF ACCRUAL OF INCOME IN VARIOUS ASSESSMENT YEARS. THE REVENUE H AS NOT BEEN ABLE TO POINT OUT ANY SUBSTANTIVE ERROR IN THE PROCESS OF R EASONING OF THE CIT(A). THE CIT(A) HAS TAKEN INTO ACCOUNT THE FACT OF SUBST ANTIAL RECEIPTS DURING THE YEAR AS WELL AS THE CONSIDERATION RECEIVED AND REPORTED IN SUBSEQUENT ASSESSMENT YEARS. SUFFICE TO SAY THAT THE CIT(A) HAS CORRECTLY ANALYZED THE FACTS INVOLVED AND HAS COME TO A JUSTIFIABLE CO NCLUSION. WE FIND THAT ALL MATERIAL ASPECTS HAVE BEEN EXAMINED. THE CIT(A ) HAS ALSO TAKEN INTO ACCOUNT THE FACT THAT THE LOCAL AUTHORITY HAS GRANT ED BUILDING USE ITA NO. 1308/AHD/2013 ITO VS. SHRI RASIKBHAI AMBALAL PATEL HUF ASST.YEAR 2009- 10 - 21 - PERMISSION IMMEDIATELY AFTER THE END OF THE FY 2009 -10 (AY 2009-10) ON 08/04/2009. THE EFFECT OF THE AS-9 WAS ALSO APP RECIATED BY THE CIT(A) AS REPRODUCED ABOVE. WE FIND NO INFIRMITY I N THE CONCLUSION DRAWN BY THE CIT(A). THEREFORE, WE DECLINE TO INTE RFERE. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISM ISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 16 / 02/2018 SD/- SD/- (..) ( ) ( S.S. GODARA ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 16/ 02/2018 4..+,.+../ T.C. NAIR, SR. PS !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. $' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 567- 8- / CONCERNED CIT 4. 8- ( ) / THE CIT(A)-XV, AHMEDABAD 5. 9:-+67 , 670 , 5 / DR, ITAT, AHMEDABAD 6. <, / GUARD FILE. / BY ORDER, (9-- //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD