DCIT CIRCLE-4, Pune V. M/S MANJARI MEADOWS, Pune

ITA 204/PUN/2011

• Counselvise Citation: 20424514 RSA 2011
• Duration Of Justice: 2 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-07-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 11-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P D KUDWA
• Assessee Lawyers: S K SINGH
• Section: 143(3); 145; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 1446/PN/2010 (ASSESSMENT YEAR: 2006-07) DY. COMMISSIONER OF INCOME TAX CIRCLE 4, PUNE. . APPELLANT VS. M/S MANJARI MEADOWS RAIGAD BUNGALOW, PUNE SHOLAPUR ROAD, MANJARI FARM, PUNE 412 307 PAN : AAAAM7324A . RESPONDENT ITA NO. 204/PN/2011 (ASSESSMENT YEAR: 2007-08) DY. COMMISSIONER OF INCOME TAX CIRCLE 4, PUNE. . APPELLANT VS. M/S MANJARI MEADOWS RAIGAD BUNGALOW, PUNE SHOLAPUR ROAD, MANJARI FARM, PUNE 412 307 PAN : AAAAM7324A . RESPONDENT APPELLANT BY : MR. P.D. KUDWA RESPONDENT BY : MR. S.K. SINGH DATE OF HEARING : 12-06-2013 DATE OF PRONOUNCEMENT : 25-06-2013 ORDER PER G. S. PANNU, AM THE CAPTIONED TWO APPEALS BY THE REVENUE ARISE OUT OF TWO SEPARATE ORDERS PASSED BY THE COMMISSIONER OF INCOME TAX (AP PEALS)-II, PUNE DATED 30.09.2010 & 23.11.2010 PERTAINING TO THE ASSESSMEN T YEARS 2006-07 & 2007-08 RESPECTIVELY. THE RESPECTIVE ORDERS OF THE CIT(A) ARISE FROM THE ORDERS PASSED BY THE ASSESSING OFFICER UNDER SECTIO N 144 READ WITH SECTION ITA NO. 1446/PN/2010 ITA NO. 204/PN/2011 M/S MANJARI MEADOWS A.YS. 2006-07 & 2007-08 145(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE A CT) DATED 31.12.2008 FOR THE ASSESSMENT YEAR 2006-07 AND AGAINST THE ORDER U NDER SECTION 143(3) OF THE ACT DATED 29.12.2009 FOR THE ASSESSMENT YEAR 20 07-08. IT WAS A COMMON GROUND BETWEEN THE PARTIES THAT IN BOTH THE APPEAL THE ISSUE RAISED IS IDENTICAL. ACCORDINGLY ITA NO. 1446/PN/2010 RELATIN G TO THE ASSESSMENT YEAR 2006-07 IS TAKEN AS THE LEAD CASE. 2. THE ASSESSEE IS AN ASSOCIATION OF PERSONS (AOP) AND IS ENGAGED IN THE BUSINESS OF LAND DEVELOPERS AND PROMOTERS. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, ASSESSEE FILED A RETURN OF INCOME DE CLARING TOTAL INCOME OF RS.20,47,992/-. THE AOP HAS BEEN FORMED BETWEEN 4 M EMBERS OF GHULE FAMILY WHO WERE OWNERS OF LAND ADMEASURING 9 HECTAR ES AND 73 ARES AT SURVEY NO.78 AND 79 OF VILLAGE MANJARI BUDRUK AND S HRI LALIT KUMAR JAIN, PROPRIETOR M/S KUMAR BUILDERS (REFERRED AS PROJECT MANAGER OR PRM). THE PRM WAS RESPONSIBLE FOR THE DEVELOPMENT OF LAND INT O PLOTS AND FOR PLANNING MANAGEMENT, SUPERVISION AND EXECUTION OF THE SAME I NCLUDING SALE OF PLOTS/SHOPS/CONSTRUCTED HOUSES, ETC. ON THE LAYOUT. IN LIEU OF THE SERVICES, PRM WAS ENTITLED TO 16% OF THE SALE PROCEEDS. THE P ROCEEDS FROM THE PROJECT WERE TO BE KEPT IN SEPARATE BANK ACCOUNT AND THE CR EDITS TO SUCH ACCOUNT WAS TO BE UTILIZED FOR MEETING COST OF THE PROJECT AND THE SURPLUS IN THIS COLLECTION AMOUNT AFTER MEETING COST OF DEVELOPMENT WAS TO BE SHARED BETWEEN THE OWNERS AND PRM. THE PROJECT ALSO CONSISTED OF A CLU B HOUSE, GYMNASIUM, SWIMMING POOL, TENNIS COURTS AND OTHER COMMON FACIL ITIES AND THE PLOT HOLDERS WERE ALSO GIVEN EXCLUSIVE RIGHTS INDIVIDUAL LY AND/OR COLLECTIVELY TO THE CLUB OR OTHER AMENITIES AND THE MEMBERSHIP WAS OPEN TO THE OUTSIDERS ALSO. THE ASSESSEE DECLARED ITS INCOME FROM THE SAID PROJ ECT DURING THE YEAR OF RS.17,01,080/-. THE ASSESSING OFFICER EXAMINED THE INCOME DECLARED BY THE ASSESSEE FROM THE SAID PROJECT. ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THAT REVENUES WERE RECOGNISED BY THE ASSESS EE ONLY AFTER THE ENTIRE AMOUNT PAYABLE BY THE BUYERS IN INSTALMENTS WAS REC EIVED AND THEREAFTER ITA NO. 1446/PN/2010 ITA NO. 204/PN/2011 M/S MANJARI MEADOWS A.YS. 2006-07 & 2007-08 SALE-DEED WAS EXECUTED AND POSSESSION HANDED OVER. THE ASSESSEE CLARIFIED THAT ITS BUSINESS OF DEVELOPMENT AND SALE OF PLOTS WAS NOT IN THE NATURE OF CIVIL CONSTRUCTION CONTRACTS. THE ASSESSING OFFICER NOTIC ED THAT OUT OF INSTALMENTS RECEIVED FROM 89 CUSTOMERS, SALE OF ONLY ONE FLAT W AS RECOGNISED DURING THE YEAR AND THE BALANCE WAS SHOWN AS ADVANCES RECEIVED AND THE INCOME THEREOF WAS SHOWN ONLY IN THE SUBSEQUENT YEARS. AS PER THE ASSESSING OFFICER AS AGAINST AN AMOUNT OF RS.12,39,68,679/- RECEIVED AS INSTALMENT FROM THE BUYERS IN THIS YEAR, AN AMOUNT OF RS.30,60,800/- WA S ONLY ACCOUNTED FOR SALES. THE ASSESSING OFFICER SEGREGATED 46 BUYERS OUT OF T OTAL 89, ON THE BASIS THAT WHERE UPTO 70% OR MORE OF THE AGREED CONSIDERATION FOR THE PLOTS HAVE BEEN RECEIVED UP TO THE END OF THE YEAR WHICH AMOUNTED T O RS.920.74 LAKHS. THE AFORESAID AMOUNT WAS CONSIDERED BY THE ASSESSING OF FICER TO BE SALES AND AS ACCORDING TO HIM THE SALE-REVENUE WAS TO BE RECOGNI ZED TO THE EXTENT OF RS.920.74 LAKHS IN THIS YEAR ITSELF. OUT OF 31 CASE S IN THE LIST OF 46 PLOTS, THE ASSESSING OFFICER NOTICED THAT NO SEPARATE POSSESSI ON WAS TO BE GIVEN TO SUCH CUSTOMERS AS THEY HAVE ENTERED INTO AN AGREEMENT WI TH M/S KUMAR BUILDERS, PROPRIETOR, SHRI LALIT KUMAR JAIN FOR CONSTRUCTION OF HOUSES. ACCORDING TO THE ASSESSING OFFICER, POSSESSION OF PLOTS TO SUCH BUYE RS WAS NOT REQUIRED TO BE GIVEN SEPARATELY. THE ASSESSING OFFICER OBSERVED TH AT IN ALL SUCH CASES SALES- REVENUE COULD NOT DEFERRED ON THE PRETEXT THAT THE CUSTOMERS WERE GIVEN POSSESSION OF THE PLOTS SUBSEQUENT, EVEN WHERE MORE THAN 70% OF THE TOTAL CONSIDERATION WAS ACTUALLY RECEIVED. FOR THE AFORES AID REASON, HE REJECTED THE BOOKS OF ACCOUNT BY INVOKING SECTION 145(3) OF THE ACT AND ADOPTED THE INSTALMENTS RECEIVED TO THE EXTENT OF RS.920.74 LAK HS AS SALES AND AFTER ALLOWING DEDUCTION FOR COST OF LAND, DEVELOPMENT CO STS, PRM FEES, ADMINISTRATIVE EXPENSES, ON PROPORTIONATE BASIS A N ET INCOME OF RS.3,53,01,171/- WAS ASSESSED FOR THE YEAR UNDER CO NSIDERATION IN RELATION TO THE PROJECT. ITA NO. 1446/PN/2010 ITA NO. 204/PN/2011 M/S MANJARI MEADOWS A.YS. 2006-07 & 2007-08 3. THE AFORESAID WAS CHALLENGED IN APPEAL BEFORE TH E CIT(A). THE ASSESSEE HAD MADE DETAILED SUBMISSIONS BEFORE THE C IT(A), AND THE CIT(A) CALLED FOR REMAND REPORTS FROM THE ASSESSING OFFICE R ALSO. PRIMARILY, ASSESSEE EXPLAINED BEFORE THE CIT(A) THAT IT WAS FOLLOWING A CONSISTENT POLICY OF ACCOUNTING FOR SALES ONLY ON HANDING OVER THE POSSE SSION OF THE PLOTS TO THE BUYERS. IT WAS EMPHASIZED THAT THE AMOUNTS RECEIVED IN RELATION TO THE 46 FLATS WERE ONLY ADVANCES AND CANNOT BE TREATED AS SALES, BY ARBITRARILY FIXING A BENCHMARK OF 70% AND ABOVE. THE ASSESSEE CLARIFIED THAT SALES HAVE ACTUALLY BEEN DECLARED FOR THESE PARTICULARS PLOTS IN THE SU BSEQUENT YEARS AND THE CORRESPONDING INCOME HAS ALSO BEEN DECLARED IN THE RETURNS OF INCOME FILED. BEFORE THE CIT(A), ASSESSEE ALSO POINTED OUT THAT C ERTAIN MISTAKES IN CALCULATION OF TOTAL CONSIDERATION AND PERCENTAGE O F ADVANCES RECEIVED FROM THE DIFFERENT PLOT BUYERS AND THE CIT(A) HAS ACCEPT ED THE SAME BY NOTICING THAT IN THE REMAND REPORT THE ASSESSING OFFICER HAS NOT CONTESTED SUCH A POSITION. 4. THE ASSESSEE ALSO ASSAILED THE OBSERVATION OF TH E ASSESSING OFFICER THAT POSSESSION IN 31 CASES WAS NOT REQUIRED TO BE HANDED OVER TO THE PLOTS OWNERS SEPARATELY SINCE PRM WAS INVOLVED IN CONSTRU CTION OF HOUSES ON THESE PLOTS. THE ASSESSEE CLARIFIED THAT THE SAME WAS ACT UALLY INCORRECT SINCE PRM DID NOT UNDERTAKE ANY SUCH ACTIVITY EXCEPT IN ONE C ASE WHEREIN THE FULL PAYMENT WAS RECEIVED. IN RESPECT OF THE REMAINING P LOTS, THE DEVELOPMENT WORK WAS COMPLETED ONLY IN THE NEXT YEAR AND THEREF ORE THE SAME WERE ACCOUNTED FOR THE SALES IN THE SUBSEQUENT YEARS. TH E CIT(A) HAS NOTICED THAT INCURRENCE OF DEVELOPMENT EXPENSES COMMENCED DURING THE YEAR UNDER CONSIDERATION AND PICKED-UP IN THE SUBSEQUENT ASSES SMENT YEARS AND THEREFORE ACCORDING TO HIM SUBSTANTIAL WORK FOR THE PROJECT WAS PENDING AT THE END OF THE CURRENT YEAR. AS PER THE CIT(A), THE PRO FITS ON SALE OF PLOTS WOULD ACCRUE ONLY WHEN POSSESSION WAS HANDED OVER AND ENT IRE SALE CONSIDERATION WAS RECEIVED AND IN COMING TO SUCH CONCLUSION HE RE LIED ON THE DECISION OF THE ITA NO. 1446/PN/2010 ITA NO. 204/PN/2011 M/S MANJARI MEADOWS A.YS. 2006-07 & 2007-08 DELHI BENCH OF THE TRIBUNAL IN THE CASE OF GROWTH T ECHNO PROJECTS LTD. VS. CIT (2009) 29 SOT 59 (DEL.). AFTER MAKING ELABORATE DEC ISION ON EACH OF THE POINTS RAISED BY THE ASSESSING OFFICER, HE HAS FOUN D IT FIT TO UPHOLD THE PLEA OF THE ASSESSEE AND SET-ASIDE THE ACTION OF THE ASSESS ING OFFICER AND IN CONCLUSION HE HAS STATED AS UNDER :- IN ACCORDANCE WITH THE DISCUSSIONS MADE ABOVE AT P ARA 4 TO 4.6, AND CONSIDERING THE EXPLANATION OFFERED BY THE APPELLAN T ON THE VARIOUS ISSUES RAISED BY THE ASSESSING OFFICER AS WELL AS IN THE R EMAND REPORT, IT IS OBVIOUS THAT THE ENTIRE EXERCISE INDULGED INTO BY THE ASSES SING OFFICER TO PREPONE THE SALES AND THE INCOME OFFERED FROM THE SALE OF PLOTS FROM THE NEXT YEARS TO THIS YEAR IS NOT ON A SOUND FOOTING. THE APPELLANT HAS A LSO POINTED OUT VARIOUS JUDGEMENTS RELATED TO METHOD OF ACCOUNTING INCLUDIN G THOSE OF THE HONBLE APEX COURT IN ITS WRITTEN SUBMISSION DATED 13.11.20 09 (REFER PARA 3.4) IF THE METHOD OF ACCOUNTING FOLLOWED BY THE APPELLANT IS C ONSISTENT FROM YEAR TO YEAR, AND ON THE BASIS OF THE ACCEPTED PRINCIPLES O F ACCOUNTING, THE COURTS HAVE HELD THAT IT SHOULD NOT BE DISCARDED OR DISTUR BED UNLESS THE ASSESSING OFFICER COMES TO THE CONCLUSION FOR THE REASONS THA T THE SYSTEM DOES NOT REFLECT TRUE AND CORRECT PROFITS. BUT HERE THE ASSE SSING OFFICER HAS ONLY COME TO THE CONCLUSION THAT THE PROFITS WHICH WERE SHOWN IN THE SUBSEQUENT YEARS ON ACCOUNT OF THE SALES BEING BOOKED AFTER RECEIPT OF THE ENTIRE CONSIDERATION IN INSTALMENTS AND HANDING OVER POSSESSION, WAS TO BE PREPONED TO THIS YEAR IN CASE 70% OF SUCH ADVANCES WERE ALREADY RECEIVED BY THE END OF THE ASSESSMENT YEAR. THIS IS AN ADHOC BASIS OF TAXING T HE INCOME. THE APPELLANT HAS ALSO POINTED OUT THAT FOR ARRIVING AT THE 70% R ATIO, SOME OF THE FIGURES WERE IGNORED AND ACTUALLY THE NUMBERS OF SUCH CASES AND THE AMOUNT INVOLVED WAS MUCH LESS. HOWEVER, THIS IS NOT THE ISSUE HERE. THE MAIN POINT IS THAT WHEN THE INCOME HAS ALREADY BEEN SHOWN IN THE NEXT ASSES SMENT YEARS STARTING FROM A.Y. 2007-08, THERE DOES NOT APPEAL TO BE ANY BASIS FOR PREPONING THE SAME TO THIS YEAR BASED ON THE FACTS AND CIRCUMSTAN CES DISCUSSED ABOVE. IT HAS BEEN PROPERLY EXPLAINED BY THE APPELLANT THAT T HERE WERE CONSIDERABLE AMOUNT OF PENDING WORK RELATING TO DEVELOPMENT OF T HE PLOTS; AND MORE EXPENDITURE ON THIS DEVELOPMENT WAS INCURRED IN THE NEXT ASSESSMENT YEAR I.E. A.Y. 2007-08. THE ASSESSING OFFICERS OBSERVAT ION REGARDING NO NEED OF HANDING OVER POSSESSION TO THE BUYERS OF THE PLOT S INCE THESE PLOTS WERE BEING STRAIGHT AWAY UTILIZED FOR CONSTRUCTION OF THE HOUS ES BY THE PRM IS ALSO NOT ESTABLISHED ON RECORD IN VIEW OF THE EXPLANATION GI VEN BY THE APPELLANT. (REFER PARA 4.2). CONSIDERING THE SAME, THE ADDITION MADE BY THE ASSESSING OFFICER ON THE BASIS OF PLOT ADVANCES RECEIVED UPTO THIS YE AR FROM 46 BUYERS IS DIRECTED TO BE DELETED. GROUNDS OF APPEAL NOS. 1, 2 & 3 ARE THEREFORE, ALLOWED. 5. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER BY REJECTING THE BOOKS OF ACCOUNT UNDER SECTION 145(3) OF THE AC T WAS DELETED. AGAINST THE AFORESAID, REVENUE IS IN APPEAL BEFORE US. ITA NO. 1446/PN/2010 ITA NO. 204/PN/2011 M/S MANJARI MEADOWS A.YS. 2006-07 & 2007-08 6. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATI VE HAS PRIMARILY RELIED UPON THE STAND OF THE ASSESSING OFFICER IN SUPPORT OF THE CASE OF THE REVENUE. THE REASONING TAKEN BY THE ASSESSING OFFICER IN ORD ER TO REJECT THE BOOKS OF ACCOUNT UNDER SECTION 145(3) OF THE ACT AND CONSEQU ENT ADDITION HAS ALREADY BEEN NOTICED BY US IN PARA 2 ABOVE AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 7. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE PRIMARILY HAS REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AU THORITIES. IT HAS BEEN FURTHER SUBMITTED BY THE LEARNED REPRESENTATIVE FOR THE ASSESSEE THAT ASSESSEE HAS BEEN FOLLOWING CONSISTENTLY THE ACCOUN TING METHOD TO RECOGNIZE REVENUE ONLY WHEN THE FULL CONSIDERATION HAS BEEN R ECEIVED AND POSSESSION OF THE PLOT WAS HANDED OVER TO THE CUSTOMERS. THE LEAR NED COUNSEL HAS POINTED OUT THAT INCOME SOUGHT TO BE TAXED BY THE ASSESSING OFFICER HAS BEEN IN-FACT DECLARED IN THE SUBSEQUENT YEARS IN TERMS OF THE ME THOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE AND IN THIS REGARD ASSESSM ENT ORDERS PASSED BY THE ASSESSING OFFICER IN THE ASSESSEES OWN CASE FOR AS SESSMENT YEARS 2008-09 AND 2009-10 UNDER SECTION 143(3) OF THE ACT DATED 2 7.12.2010 AND 22.12.2011 RESPECTIVELY HAVE BEEN PLACED ON RECORD. THE LEARNED COUNSEL POINTED OUT THAT IN THE COURSE OF ASSESSMENT PROCEE DINGS FOR ASSESSMENT YEAR 2008-09, ASSESSEE HAD BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER THAT IF THE VIEW TAKEN BY THE ASSESSING OFFICER FOR EARLIER ASSESSMENT YEARS 2006-07 AND 2007-08 WAS TO BE CONSIDERED, THE INCOME DECLAR ED IN THE RETURN OF INCOME FOR ASSESSMENT YEAR 2008-09 WAS LIABLE TO BE REDUCED TO THE EXTENT THAT SAME INCOME HAS BEEN ASSESSED IN THE ASSESSMEN T YEARS 2006-07 AND 2007-08. IN SUM AND SUBSTANCE IT IS SOUGHT TO BE MA DE THAT THE CIT(A) MADE NO MISTAKE IN DIRECTING THE ASSESSING OFFICER TO DE LETE THE IMPUGNED ADDITION. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. NOTABLY, THE CRUX OF THE ISSUE IS WITH REGARD TO THE ACTION OF THE AS SESSING OFFICER IN INVOKING ITA NO. 1446/PN/2010 ITA NO. 204/PN/2011 M/S MANJARI MEADOWS A.YS. 2006-07 & 2007-08 SECTION 145(3) OF THE ACT TO REJECT THE BOOKS OF AC COUNT MAINTAINED BY THE ASSESSEE. SECTION 145(1) OF THE ACT PROVIDES THAT I NCOME CHARGEABLE UNDER HEAD PROFITS AND GAINS OF BUSINESS AND PROFESSION SHALL SUBJECT TO THE PROVISIONS OF SUB-SECTION (2) BE COMPUTED IN ACCORD ANCE WITH EITHER CASH OR MERCANTILE SYSTEM OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE. SUB- SECTION (3) OF SECTION 145 EMPOWERS THE ASSESSING O FFICER, IF HE IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPETENCE OF AC COUNTS OF THE ASSESSEE OR WHERE THE METHOD OF ACCOUNTING PROVIDED IN SUB-SECT ION (1) OR ACCOUNTING STANDARDS AS NOTIFIED UNDER SUB-SECTION (2) HAVE NO T BEEN REGULARLY FOLLOWED BY THE ASSESSEE, TO REJECT THE BOOK RESULTS AND TO COMPLETE THE ASSESSMENT IN THE MANNER PROVIDED IN SECTION 144 OF THE ACT. IN T HE PRESENT CASE, SECTION 145(3) HAS BEEN INVOKED BY THE ASSESSING OFFICER TO REJECT THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE FOR REASON THAT ACCORDING TO HIM THE SALES-REVENUE IN RELATION TO THE PLOTS AGAINST WHIC H 70% AND MORE OF THE STIPULATED CONSIDERATION HAS BEEN RECEIVED IS LIABL E TO BE RECOGNIZED IN THE CURRENT YEAR ITSELF. WHEREAS AS PER THE ASSESSEE T HE SALES-REVENUE HAS BEEN RECOGNIZED IN RELATION TO SUCH PLOTS ONLY IN THE YE AR WHEN THE PLOTS WERE HANDED OVER TO THE CUSTOMERS AGAINST RECEIPT OF FUL L PAYMENT. QUITE CLEARLY, THE POINT OF DIFFERENCE BETWEEN THE ASSESSEE AND TH E ASSESSING OFFICER IS WITH REGARD TO THE TIMING OF THE TAXABILITY OF THE REVEN UE EARNED FROM THE SALE OF PLOTS. IT IS QUITE OBVIOUS THAT IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE METHOD ADOPTED BY THE ASSESSEE RESULTS IN ANY UNDER -ESTIMATION OF PROFIT. WHAT IS SOUGHT TO BE MADE OUT BY THE ASSESSING OFFI CER IS MERE PREPONEMENT OF TAXABILITY OF INCOME COMPUTED AS PER HIS DEVISED METHODOLOGY. THE ISSUE IS WHETHER SUCH AN APPROACH IS WITHIN THE SCOPE OF SEC TION 145(3) OF THE ACT AND IS OTHERWISE JUSTIFIED IN THE FACTS AND CIRCUMSTANC ES OF THE PRESENT CASE. IN OUR CONSIDERED OPINION, IN A CASE WHERE THE ASSESSING O FFICER SEEKS TO INVOKE SECTION 145(3) OF THE ACT TO ASSESS A PARTICULAR IN COME, IT IS INCUMBENT UPON HIM TO ASCERTAIN THE METHOD OF ACCOUNTING REGULARLY FOLLOWED BY THE ASSESSEE AND WHETHER THE PROFITS ARE BEING UNDER-ESTIMATED A S PER THE METHOD ADOPTED ITA NO. 1446/PN/2010 ITA NO. 204/PN/2011 M/S MANJARI MEADOWS A.YS. 2006-07 & 2007-08 BY THE ASSESSEE. IN THE PRESENT CASE, THERE IS NO S UCH CASE MADE OUT BY THE ASSESSING OFFICER. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. REALEST BUILDERS & SERVICES LTD. 307 ITR 202 (SC) OBSERVED THAT UNLESS THE ASSESSING OFFICER GIVES A FINDING BASED ON FACTS AND FIGURES THAT THERE IS AN UNDER- ESTIMATION, THE PRESUMPTION WOULD BE THAT THE ENTIR E EXERCISE IS REVENUE NEUTRAL. IN THE CASE BEFORE THE HONBLE SUPREME COU RT THE ISSUE WAS AS TO WHETHER INCOME ACCRUED TO THE ASSESSEE ON REGISTRAT ION OF SALE-DEED IN FAVOUR OF THE PLOT BUYER OR WHETHER IT ACCRUED AT THE TIME OF EXECUTION OF THE AGREEMENT. AS PER THE REVENUE, INCOME ACCRUED ON TH E DATE OF EXECUTION OF AGREEMENT WHEN ASSESSEE RECEIVED FULL CONSIDERATION OF THE PLOT AND NOT WHEN THE SALE-DEED STOOD EXECUTED. QUITE CLEARLY, THE IS SUE BEFORE THE HONBLE SUPREME COURT ALSO RELATED TO THE TIMING OF THE TAX ABILITY OF INCOME ONLY. WITHOUT EMPHASIZING ON THE RIVAL ISSUES INVOLVED BE FORE THE HONBLE SUPREME COURT, THE REASONING LAID DOWN THERE IS TO BE UNDER STOOD TO MEAN THAT IN ORDER TO REJECT THE METHOD OF ACCOUNTING ADOPTED BY THE A SSESSEE IN SITUATIONS LIKE THE PRESENT, THE ASSESSING OFFICER MUST SHOW THAT T HERE IS AN UNDER-ESTIMATION OF PROFITS, OTHERWISE THE PRESUMPTION WOULD BE THAT THE ENTIRE EXERCISE IS REVENUE NEUTRAL. IN THE PRESENT CASE TOO, AS THE CI T(A) HAS CLEARLY BROUGHT OUT IN PARA 4.6 OF HIS ORDER, THAT THE RESULT IS MERELY PREPONMENT OF INCOME AND IT IS NOT A CASE WHERE THERE IS UNDER-ESTIMATION OF PR OFITS. ON THIS COUNT ITSELF, IN OUR VIEW, THE ULTIMATE CONCLUSION DRAWN BY THE CIT( A) IS LIABLE TO BE AFFIRMED. WE HOLD SO. 9. EVEN OTHERWISE IN OUR VIEW, THE CIT(A) HAS PASSE D A REASONED ORDER AFTER DEALING WITH EACH AND EVERY OBJECTION RAISED BY THE ASSESSING OFFICER AND WE FIND NO INFIRMITY IN THE SAME. IN FACT, THE METHODOLOGY OF RECOGNIZING REVENUE ARTICULATED BY THE ASSESSING OFFICER, NAMEL Y, IN CASES WHERE 70% OR MORE OF THE CONSIDERATION HAS BEEN RECEIVED, IS QUI TE ADHOC AND NOT BASED ON ANY ESTABLISHED NORMS. THEREFORE EVEN ON THIS ASPEC T, WE ARE IN COMPLETE AGREEMENT WITH THE ORDER OF THE CIT(A) WHICH WE HER EBY AFFIRM. ITA NO. 1446/PN/2010 ITA NO. 204/PN/2011 M/S MANJARI MEADOWS A.YS. 2006-07 & 2007-08 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. 11. ITA NO. 204/PN/2011 IS APPEAL OF THE REVENUE FO R ASSESSMENT YEAR 2007-08 WHEREIN THE ISSUE INVOLVED IS IDENTICAL AND OUR DECISION IN THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2006-07 SHALL AP PLY MUTATIS-MUTANDIS IN THIS APPEAL ALSO. ACCORDINGLY, ITA NO. 204/PN/2011 FOR ASSESSMENT YEAR 2007-08 IS HEREBY DISMISSED. 12. RESULTANTLY, THE CAPTIONED APPEALS OF THE REVEN UE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JUNE, 2013. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 25 TH JUNE, 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, PUNE; 4) THE CIT-II, PUNE; 5) THE DR, B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE.