SANDHU BUILDERS, MUMBAI V. ADDL CIT RG 19(3), MUMBAI

ITA 4964/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71818 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 09-10-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 02-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GIRIJA DALAL
• Assessee Lawyers: PRADIP KAPASI
• Keywords: Rejection of books of accounts; Sale consideration of property below Jantri Value; Unexplained expenditure; Capital asset; Business income; Depreciation; Loose papers; Deemed to accrue or arise in india; Fair market value; Competent authority; Sham transactions
• Section: 68; 69; 43CA; 50C; 133A

Judgement Text

` IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI . . , ! ' #'' '$ , % ! & BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . : 5049 / / 2012 A.Y. 2009-2010 ITA NO. : 5049/MUM/2012 (ASSESSMENT YEAR: 2009-2010) ASST. COMMISSIONER OF INCOME TAX -19(3), ROOM NO. 305, 3 RD FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI -400 012 VS M/S SANDHU BUILDERS, 41 SANDHU HOUSE, PALI HILL, BANDRA (WEST), MUMBAI -400 050 (APPELLANT) (RESPONDENT) . : 4964 / / 2012 A.Y. 2009-2010 ITA NO. : 4964/MUM/2012 (ASSESSMENT YEAR: 2009-2010) M/S SANDHU BUILDERS, MUMBAI -400 050 .: PAN: AAXFS 4480 K VS ADDL. CIT/INCOME TAX OFFICER-19(3)(4), MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE-APPELLANT BY : SHRI PRADIP KAPASI RESPONDENT-REVENUE BY : SHRI GIRIJA DALAL /DATE OF HEARING : 09-10-2013 !' / DATE OF PRONOUNCEMENT : 06-12-2013 * O R D E R #'' '$ , : PER VIVEK VARMA, JM: THE CROSS APPEALS FILED BY THE DEPARTMENT AND THE ASSE SSEE AGAINST THE ORDER OF CIT(A) 30, MUMBAI, DATED 31.05.2012. 2. THE BRIEF FACTS, PERTAINING TO THE IMPUGNED APPEALS ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM, ENGAGED IN THE BUSINESS OF BUILDERS AND M/S SANDHU BUILDERS ITA 5049/MUM/2012 ITA 4964/MUM/2012 2 DEVELOPERS. AT THE RELEVANT POINT OF TIME, THE ASSESSEE WA S DEVELOPING THE PROJECT FOR CONSTRUCTION AT PALI HILL, BANDRA (WEST). F OR THE DEVELOPMENT OF THIS PROJECT, THE ASSESSEE RECEIVED THE APPROVAL/SANCTION FROM THE APPROPRIATE AUTHORITY, VIDE LETT ER DATED 24.02.2006 3. EVEN SINCE PROJECT WAS UNDERTAKEN, WHICH HAS BEEN C ONTINUING OVER A PERIOD OF TIME, THE ASSESSEE FIRM HAD BEEN FOLLOWING P ERCENTAGE COMPLETION METHOD, AS INDICATED IN THE TAX AUDIT REPORT. IT HAS BEEN ACKNOWLEDGED THAT THE ASSESSEE FOLLOWED MERCANTILE SYSTE M OF ACCOUNTING, WHEREIN, INCOME WAS RECOGNIZED ON PERCENTAGE COMPLETION (LINKED TO RECEIPTS) BASIS AND THE EXPENSE WAS RECOGNIZED ON ACCRUAL BASIS. THIS SYSTEM OF MAINTAINING OF ACCOUNTS HAD BEEN FOLLOWED BY THE ASSESSEE, SINCE THE TIME, IT UNDERTOOK TO DEVELOP THE PRO JECT AT PALI HILL. THE DEPARTMENT HAS ACCEPTED THE SYSTEM FOLLOWED BY T HE ASSESSEE FIRM IN THE PRECEDING YEARS, I.E. ASSESSMENT YEARS 2007-08 SAND 2008- 09. 4. ON 26.09.2008, THE ASSESSEE WAS SUBJECTED WITH SURVE Y ACTION UNDER SECTION 133A BY THE DEPARTMENT, WHEREIN THE SURV EY PARTY EXAMINED THE BOOKS OF ACCOUNTS, LOOSE PAPERS FOUND IN THE OFFICE PREMISES OF THE ASSESSEE FIRM AND ALSO EXAMINED ONE OF THE PARTNERS, PRESENT IN THE OFFICE, AT THE TIME OF SURVEY OPERATIONS. THE QUESTIONS, ASKED IN THE STATEMENT RECORDED, PERTAINED TO CERTAIN PAYMENTS, WHICH WERE FOUND TO HAVE BEEN NOT RECORDED IN THE BOOKS, WH ICH, THE PARTNERS WHO WAS PRESENT THERE, ACCEPTED TO BE THE C ORRECT STATE OF AFFAIRS. 5. WITH THESE TWO ISSUES, I.E. RECORDING AND TREATMENT OF RE VENUES AND EXPENSE, IN THE INSTANT YEAR, ACCORDING TO THE AO WA S NOT ACCEPTABLE, ALONGWITH CERTAIN OTHER EXPENSES, HAVING BEEN NOT RECORDED IN THE BOOKS OF ACCOUNT. THE AO, HIGHLIGHTING THES E DEFECTS, M/S SANDHU BUILDERS ITA 5049/MUM/2012 ITA 4964/MUM/2012 3 REJECTED THE BOOKS, MAINTAINED BY THE ASSESSEE AND PROC EEDED TO FRAME THE ASSESSMENT, WHICH HAS NOW REACHED THE ITAT. 6. SINCE THE DEPARTMENT AND THE ASSESSEE, BOTH ARE IN APPEAL BEFORE THE ITAT, FOR OUR ADJUDICATION, WE TAKE UP DEPART MENTS APPEAL FIRST. ITA NO. 5049/MUM/2012 (DEPARTMENT APPEAL). 7. BEFORE THE ITAT, THE DEPARTMENT HAS TAKEN THE FOLLOWIN G GROUNDS: (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING TO DELETE THE ADDITION OF RS.9,36,82 ,560/- BEING 40% OF RS.23,42,06,400/- IN RESPECT OF DEEMED SALE CONSIDERAT ION AFTER HOLDING THAT THE ASSESSING OFFICER HAD FAILED TO BRING ON RECORD ANY EVIDENCES FOR HIS CONTENTION THAT THE ASSESSEE HAD RECEIVED UNACCOUNTED SALE CONSIDERATION OF RS.23,42,06,400/- IGNORING THE FACTS THAT IN THE ASSES SMENT ORDER, THE ASSESSING OFFICER HAD COME TO A DEFINITE CONCLUSION THAT ASSESSEE HAD SOLD COMPARABLE FLATS WITH SIMILAR AREA I.E. 3479.43 SQ. FT TO DIFFERENT PARTIES FOR HIGHER SALE CONSIDERATION. THE ASSESSEE HAD OFFERED NO EXPLANATION DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR SALE OF IDENTICAL A ND COMPARABLE FLATS AT LOWER PRICE AS THE EXPLANATION OFFERED BY THE ASSESSEE THAT LOWER PRICE WAS DUE TO NEGOTIATION REMAINED UNSUBSTANTIATED. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.9,36,82,560/- FOR THE REASON THAT THE ASSESSING OFFICER HAD FAILED TO BRING ON RECORD ANY EVID ENCE TO PROVE THAT ANY EXTRA CONSIDERATION WAS RECEIVED OVER AND ABOVE AGREEM ENT AMOUNT WITHOUT APPRECIATING THAT THE ASSESSEE HAD UNDERTAKEN BUSINES S/COMMERCIAL TRANSACTION QUA SALE OF SEVERAL FLATS (TOTALING TO 9) IN T HE SAME BUILDING AND THEREFORE LEGITIMATE PRESUMPTION, UNLIKE IN CASE OF SALE BY AN INVESTOR WHO NOT BEING ENGAGED IN REGULAR SALE & PURCHASE MAY NOT HAVE P ROPER APPRECIATION OF PRICE OF ITEMS SOLD, IS THAT IDENTICAL FLATS WERE SOLD FOR SAME PRICE AS THE ASSESSEE HAD FAILED TO SUBSTANTIATE ITS CLAIM THAT LOW ER SALE PRICE WAS DUE TO NEGOTIATION. (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT DURING THE COU RSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE SHOWED ITS INABILITY TO FURNISH ANY DOCUMENTARY EVIDENCE TO SUGGEST THAT THERE WAS ACTUALLY NEGOTIATIO N BETWEEN THE ASSESSEE AND THE BUYER AND THUS THE ASSESSEE FAILED TO SUBSTAN TIATE ITS EXPLANATION FOR SELLING CERTAIN FLATS AT PRICE LOWER THAN THOSE FOR OTHER COMPARABLE FLATS IN THE SAME BUILDING. (4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT SPREAD OVER SEVERAL YEARS, THE MARKET PRICE IS BOUND TO BE DIFFERENT IN DIFFERENT YEARS WITHOUT THERE BEING ANY MATERIAL OR BASIS FOR SUCH CONCLUSION. (5) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE MERE DIFFERENCE IN SALE PRICE OF AGREEMENT IS NOT EVIDENT UNLESS IT IS CORROBORATED BY SOME CONCRETE EVID ENCES OF UNACCOUNTED SALE TRANSACTION IGNORING THE FACTS THAT THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER HAS CLEARLY ESTABLISHED BY EXHAUSTIVELY DISCUSSING T HE FACTS OF THE CASE THAT THE ASSESSEE RECEIVED HIGHER PRICE FROM SHRI. ANIL SHROFF, ONE OF THE BUYERS AS COMPARED TO OTHER BUYERS AND THEREFORE, THIS CONS TITUTES AN ADMISSIBLE PIECE OF EVIDENCE AGAINST THE ASSESSEE FOR WHICH THE DIFFERE NCE OF SALE PRICE WOULD M/S SANDHU BUILDERS ITA 5049/MUM/2012 ITA 4964/MUM/2012 4 DEEM TO BE THE INCOME OF THE ASSESSEE AND THERE IS NO NEED TO PROVE THAT THE MONEY HAS BEEN ACTUALLY RECEIVED BY THE ASSESSEE. (6) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT SURVEY ACTION ON THE ASSESSEE ON 26.09.2008 WHEN THE PROJECT WAS GOING ON BUT NO EVIDENCE OF UNACCOUNTED S ALE CONSIDERATION OVER AND ABOVE THE AGREEMENT VALUE WAS FOUND WITHOUT APPR ECIATING THE FACTS THAT ALL THE AGREEMENTS WERE ENTERED INTO BY THE ASSESSEE SUBSEQUENT TO THE SURVEY ACTION I.E. DURING FINANCIAL YEAR 2009-10 AND 2010-11. (7) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ONUS LIES ON THE ASSESSING OFF ICER TO PROVE THAT THE ASSESSEE HAD RECEIVED UNACCOUNTED SALE CONSIDERATION IGN ORING THE FACTS THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAD ELA BORATELY DISCUSSED WHETHER THE ASSESSEE HAS ACTUALLY RECEIVED THE DIFFER ENCE OF SALE PRICE IN ORDER TO CONSIDER THE DEEMED INCOME. (8) THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET SIDE AND THAT OF THE AO BE RESTORED. 8. THE SOLITARY ISSUE EMERGING FROM THE ABOVE GROUNDS, IS D ELETION BY THE CIT(A), OF THE ADDITION MADE AT RS. 9,36,82,560/-. 9. AS PER THE FACTS MENTIONED IN PRE PARAS, THE ASSESSEE IS A BUILDER & WAS DEVELOPING A PROJECT AT PALI HILL , BANDRA (WEST). 10. WHEN THE AO INITIATED ASSESSMENT PROCEEDINGS, HE FOUND THAT THE ASSESSEE WAS BOOKING ITS REVENUES ON CASH BASIS AN D EXPENSES ON ACCRUAL BASIS. THIS SYSTEM, ACCORDING TO THE AO WAS NOT ACCEPTABLE UNDER THE LAW. HE THEREFORE, ASKED THE ASSESSEE TO JUST IFY THE CORRECTNESS OF ITS BOOKS, BECAUSE ACCORDING TO THIS SYST EM, CORRECT TAXABLE PROFIT COULD NOT BE ASCERTAINED. 11. THE ASSESSEE, ON RECEIPT OF THE SHOWCAUSE, REPLIED AS PER LETTER DATED 27.12.2011 THAT SINCE THE PROJECT WAS STILL UNDER C ONSTRUCTION, THE PROFIT & LOSS ACCOUNT WOULD BE DRAWN, ONCE THE PROJ ECT IS COMPLETED AND AT THAT TIME, THE ASSESSEE SHALL CLAIM THE E XPENSES AND DEPRECIATION THEREON. THUS, THE RETURN WAS FILED ON THE BA SIS OF ESTIMATED PROFIT ON WORK IN PROGRESS. IN THE SUBMISSIONS M ADE IN THE LETTER TO THE AO, IT WAS POINTED OUT THAT INCOME WAS OFFER ED ON THE BASIS OF WORK IN PROGRESS AND THE EXPENSES WERE DEBITED UNDER THE HEAD, WORK IN PROGRESS, AND WAS REFLECTED IN THE ASSET SID E OF THE BALANCE SHEET. THE EXPENSES, AS PER THE RECORDS, IN FACT WERE NOT DEBITED TO PROFIT & LOSS ACCOUNT. IT WAS ELABORATED THAT INCOME WAS M/S SANDHU BUILDERS ITA 5049/MUM/2012 ITA 4964/MUM/2012 5 SHOWN ON CASH BASIS, AND IN EFFECT, NO EXPENSE HAS BEEN C LAIMED AGAINST THE ESTIMATED INCOME OFFERED BY THE ASSESSEE. 12. IT WAS FURTHER ELABORATED THAT THE ASSESSEE HAD D ECLARED INCOME UPTO 5 TH SLAB, WHICH CAME TO RS. 40,95,00,000/-, AND SHOULD HAVE DECLARED THE PROFIT AT RS. 4,91,40,000/-. BUT SINCE PAYMENT S WERE DUE FROM THE BUYERS UPTO 6 TH SLAB, TILL 31.03.2009, WHICH CAME TO RS. 43,91,08,600, IT DECLARED PROFIT AT 12% THEREON AT RS. 5,26,9 3,037/-. THIS AMOUNT, WAS ACTUALLY NOT RECEIVED BY THE ASSESSEE FIRM. THE ASSESSEE, THEREFORE, IN RESPONSE TO THE SHOW CAUSE, ISSUE D BY THE AO, SUBMITTED THAT IT HAD ACTUALLY DECLARED HIGHER INCOME, CON SIDERING THE SYSTEM OF ACCOUNTING BEING FOLLOWED BY IT. 13. AFTER EXAMINING THE DETAILS OF INCOME BOOKED, THE AO TO OK INTO CONSIDERATION THE ARGUMENT OF THE ASSESSEE THAT THE RE CEIPTS OF SALE PROCEEDS WERE TO BE ASCERTAINED UPTO 5 TH SLAB, COMPLETED UPTO 31.03.2009 AS PER PERCENTAGE COMPLETION METHOD. HE, THERE FORE, CALLED FOR THE COPIES OF SALE AGREEMENT WHICH WAS SUBMITTED, WH ICH GAVE THE FOLLOWING DETAILS: SR NO NAME OF THE CUSTOMER FLAT NO. CARPET AREA AGREEMENT VALUE TOTAL AMT RECEIVED AMT RECEIVABLE AMT. ACCRUED AS PER PAYMENT SCHEDULE 1 ANIL SHROFF B 3 3479.79 97225800 50608600 46617200 - 2 ASHWIN KUMAR MEHTA A -4 3479.79 66000000 51000000 15000000 - 3 SHAILESH KUMAR MEHTA B -4 3479.79 66000000 4700 0000 19000000 - 4 RAMESH MAHAJAN 3479.79 ADVANCE 1000000 - - 5 VIMLA LALIT ADANI (DHAMAL BLDG. & DEV P L) A- 5 3479.79 66000000 31700000 34300000 6 PREETI PETHANI (DHAMAL PROP PVT LTD) B 5 3479.79 66000000 31700000 34300000 7 RAKESH/MA- NISH/VIPUL SHAH A 8 3479.79 60000000 2500000 57500000 8 VIJAY KAMDAR A 9 3479.79 78500000 13750000 64750000 9 DHAVAL V B 9 3479.79 70000000 16250000 53750000 M/S SANDHU BUILDERS ITA 5049/MUM/2012 ITA 4964/MUM/2012 6 KAMDAR 10 DIVYA KALWANI A 11 3479.79 71100000 41100000 30000000 11 SRI DHAVAL REAL ESTATES PVT LTD 3479.79 ADVANCE 72500000 - 12 VANQUISH INVESTMENTS & LEASING PVT LTD A 2 3479.79 ADVANCE 10000000 - 13 NATRAJ VINIMAY PVT LTD B 2 3479.79 ADVANCE 70000000 - TOTAL 439108600 14. FROM THE ABOVE DETAILS, THE AO FOUND THAT PROCEEDS FR OM SERIAL NO. 5 TO 10 WERE LESS THEN THE SALE PROCEEDS RECEIVABLE FROM THOSE PARTIES AND HE THEREFORE, ANALYSED THE FOLLOWING: SR NO NAME OF THE CUSTOMER FLAT NO. CARPET AREA AGREEMENT VALUE TOTAL AMT RECEIVED AMT RECEIVABLE 1 VIMLA LALIT ADANI (DHAMAL BLDG. & DEV P L) A- 5 3479.79 4,55,00,000 3,17,00,000 3,18,00,000 2 PREETI PETHANI (DHAMAL PROP PVT LTD) B 5 3479.79 45500000 31700000 31800000 3 RAKESH/MA- NISH/VIPUL SHAH A 8 3479.79 45500000 2500000 43000000 4 VIJAY KAMDAR A 9 3479.79 45500000 13750000 31750000 5 DHAVAL V KAMDAR B 9 3479.79 45500000 16250000 29250000 6 DIVYA KALWANI A 11 3479.79 45500000 41100000 4400000 TOTAL 13,60,00,000 15. ACCORDING TO THIS CHART, PREPARED BY THE AO, IT WAS C ONCLUDED BY HIM, THAT THE ASSESSEE HAD ACTUALLY SUPPRESSED ITS SALE PROCEEDS RECEIVABLE/ACCRUED TO THE TUNE OF RS. 13,60,00,000/- AND ESTIMATED THE GROSS RECEIPTS AT RS. 57,51,08,600/- (RS. 43,91,08,600 + RS. 13,60,00,000). 16. BESIDES THIS, AS PER THE CHART SUBMITTED BY THE ASSE SSEE, IT WAS NOTED BY THE AO THAT THE SALE OF FLAT TO MR. ANIL SHROFF WAS MUCH HIGHER THEN THE REST OF THE BUYERS. ON THE BASIS OF THIS DETAIL, THE AO CONCLUDED THAT THE ASSESSEE WOULD HAVE RECEIVED THE DIFFE RENTIAL AMOUNT AS ON MONEY. HE, THEREFORE, TO EXPLAIN THE DETAILS AS ASCERTAINED BY HIM PREPARED THE CHART SHOWING THE DIFFERE NTIAL COSTS M/S SANDHU BUILDERS ITA 5049/MUM/2012 ITA 4964/MUM/2012 7 ACCREDITED TO THE REST OF THE BUYERS, WHICH CAME TO RS. 23,42,06,4 00/-, WHICH HE DERIVED AS PER THE CHART PREPARED BY HIM, AS UNDER : SR NO NAME OF THE CUSTOMER FLAT NO. CARPET AREA COMPARABLE AGREEMENT VALUE AGREEMENT VALUE DEEMED SALE CONSIDERATION 1 ASHWIN KUMAR MEHTA A -4 3479.79 97225800 66000000 31225800 2 SHAILESH KUMAR MEHTA B 4 3479.79 97225800 66000000 31225800 3 VIMLA LALIT ADANI (DHAMAL BLDG. & DEV P L) A- 5 3479.79 97225800 66000000 31225800 4 PREETI PETHANI (DHAMAL PROP PVT LTD) B 5 3479.79 97225800 66000000 31225800 5 RAKESH/MA- NISH/VIPUL SHAH A 8 3479.79 97225800 66000000 31225800 6 VIJAY KAMDAR A 9 3479.79 97225800 66000000 31225800 7 DHAVAL V KAMDAR B 9 3479.79 97225800 66000000 31225800 8 DIVYA KALWANI A 11 3479.79 97225800 66000000 31225800 TOTAL 23,42,06,400 17. ON THIS BASIS, THE AO BASING HIS ESTIMATE, CONCLUDED TH AT UPTO 31.03.2009, THE PROJECT WOULD HAVE BEEN 40% COMPLETE. HE CONCLUDED THAT THE ASSESSEE WOULD HAVE EARNED AN INCOME UPTO 40 % ON THE ABOVE RS. 23,42,06,400/-, AS NO EXPENSES HAD BEEN CLAIMED . HE, THEREFORE, ADDED BACK 40% ESTIMATED PROFIT ON RS. 23,42,06 ,400/-, AT RS. 9,36,82,560/-. 18. THE AO, THEREFORE, MADE AN ADDITION OF RS. 9,36,82,560/- TO THE INCOME OF THE ASSESSEE. TO ARRIVE AT AND TO JUSTIFY THE ADDITION, THE AO PLACED RELIANCE ON A NUMBER OF DECISIONS PERTAINING TO COO RDINATE BENCHES OF THE ITAT, VARIOUS HONBLE HIGH COURTS AND THE HONBLE SUPREME COURT OF INDIA (THESE DECISIONS ARE NOT BEING REPRODUCE D). 19. AGGRIEVED, THE ASSESSEE APPROACHED THE CIT(A), WHEREIN , BASICALLY, THE ASSESSEE REITERATED THE SUBMISSIONS MADE B EFORE THE AO AND HOW THE REASONING GIVEN BY THE AO WAS INFIRM AND HOW THE M/S SANDHU BUILDERS ITA 5049/MUM/2012 ITA 4964/MUM/2012 8 COMPUTATION OF RS. 9,36,82,500/- WAS FALLACIOUS IN VIEW OF THE DIFFERENCE IN THE SALE PRICE ON IDENTICAL FACTS. IT WAS ALSO S UBMITTED BEFORE THE CIT(A) THAT DETERMINATION OF PRICE DEPENDED UPO N A LOT OF FACTORS, LIKE THE TIME OF NEGOTIATION, QUANTUM OF ADVANCE RE CEIPT OF CONSIDERATION, DATE OF AGREEMENT, LOCATION ETC. IT WAS POIN TED OUT THAT IN THE CASE OF ANIL SHROFF THE DATE OF AGREEMENT WAS 18 .10.2010, WHEREAS, IN OTHER CASES, IT WAS MUCH EARLIER. ANOTHER IMPOR TANT FACTOR FOR A HIGHER RATE NEGOTIATED FROM MR. ANIL SHROFF WAS THE DO WN PAYMENT. ACCORDING TO THE ASSESSEE THERE WAS A DOWN P AYMENT RANGING FROM 48% TO 77% FROM OTHER CUSTOMERS, WHEREAS, FR OM MR. ANIL SHROFF, THERE WAS NONE. 20. IT WAS FURTHER ARGUED THAT THERE WAS A SURVEY OPE RATION UNDER SECTION 133A OF THE INCOME TAX ACT ON THE ASSESSEE AND NO PAYMENT OR EVIDENCE WAS FOUND OR INDICATED THAT THERE WAS ANY INVOL VEMENT OF RECEIPT OF EXTRA CONSIDERATION. IT WAS ALSO SUBMITTED THA T EVEN IN THE ASSESSMENT PROCEEDINGS, THERE WAS NO MATERIAL INDICATING A NY EXTRA CONSIDERATION EXCEPT FOR THE FACT THAT SALE CONSIDERATION OF ANIL SHROFF WAS HIGHER THEN THE OTHER BUYERS OF THE FLATS. 21. THE CIT(A), ON THE BASIS OF THESE ARGUMENTS AND PLACING RELIANCE ON A NUMBER OF DECISIONS OBSERVED, 4.14 IN VIEW OF THE ABOVE DISCUSSION COUPLED WITH THE FACT THAT THE A,0. HAS FAILED TO BRING ON RECORD ANY EVIDENCE FOR HIS CONTENTION THAT T HE APPELLANT HAD RECEIVED UNACCOUNTED SALE CONSIDERATION OF RS. 23,42,06,400/- A ND IN VIEW OF VARIOUS COURTS JUDGMENT DISCUSSED ABOVE INCLUDING JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF K.P. VARGHESE, THE ADDITION SO MADE BY THE A.0. CANNOT BE SUSTAINED. THE A.0. HAS NOT BROUGHT ON RECORD ANY EV IDENCE TO PROVE THAT ANY EXTRA CONSIDERATION WAS RECEIVED OVER AND ABOVE AGREEM ENT AMOUNT. IT IS A KNOWN FACT THAT IN A PROJECT WHICH IS SPREAD OVER SEVE RAL YEARS, THE MARKET PRICE IS BOUND TO BE DIFFERENT IN DIFFERENT YEARS. THE MERE DIFFERENCE IN SALE PRICE OF AGREEMENT IS NO EVIDENCE UNLESS IT IS CORROBORATED B Y SOME CONCRETE EVIDENCE OF UNACCOUNTED SALE TRANSACTIONS. IN FACT, THE A.0. H AD CARRIED OUT SURVEY ACTION ON THE APPELLANT ON 26-09-2008 WHEN THE PROJECT WAS G OING ON BUT NO EVIDENCE OF UNACCOUNTED SALE CONSIDERATION OVER AND ABOVE THE A GREEMENT VALUE WAS FOUND. THE ONUS LIES ON THE A.0. TO PROVE THAT THE AP E1LANT HAD RECEIVED UNACCOUNTED SALE CONSIDERATION FROM THE FLAT OWNERS. TH IS ONUS HAS NOT BEEN DISCHARGED. FURTHER, SUSPICION HOWSOEVER GRAVE CANNOT TAKE PLACE OF PROOF. THEREFORE, THE A.O. IS NOT JUSTIFIED IN MAKING IMPUGNE D ADDITION OF RS. 9,36,82,560/- BEING 40% OF RS. 23,42,06,400/-, THE SAM E IS DIRECTED TO BE DE1ETED. 22. THE CIT(A), THUS DELETED THE ADDITION MADE BY THE AO. M/S SANDHU BUILDERS ITA 5049/MUM/2012 ITA 4964/MUM/2012 9 23. AGAINST THIS ORDER OF THE CIT(A), THE DEPARTMENT IS IN A PPEAL BEFORE THE ITAT. 24. BEFORE US, THE DR PRIMARILY RELIED ON THE ORDER OF THE AO AND HE FURTHER SUBMITTED THAT THE CIT(A) DID NOT GIVE ANY BASIS FO R ACCEPTANCE OF STAGGERED RATES NEGOTIATED BY THE ASSESSEE ON THE FLATS IN THE SAME BUILDING AND HAVING SIMILAR FLOOR AREA. THE DR ALSO SUBMITTED T HAT IN THE SURVEY IT IS DIFFICULT TO FIND CASH ELEMENT, WHICH IS QUITE E VIDENT IN THE INSTANT CASE. HE, THEREFORE, PRAYED THAT THE ORDER OF THE AO SHOULD BE SUSTAINED 25. THE AR ON THE OTHER HAND REITERATED BEFORE US THA T IT WAS A CASE OF WHERE THERE WAS A SURVEY OPERATION AT THE BUSINESS PREMISES OF THE ASSESSEE ON 26.09.2008. IN THE SURVEY, NO PAPER INDICATIN G ANY UNACCOUNTED MONEY/CASH WAS FOUND. IT WAS ALSO SUBMITTED THAT THERE WAS NEITHER ANY ADMISSION OF ANY UNACCOUNTED FUNDS, NOR A NY QUESTION, WHAT SO EVER WAS ASKED BY THE SURVEY PARTY WITH REGARD TO RATE VARIANCE. 26. THE AR ALSO POINTED OUT THAT THE FACT THAT THE ASSE SSEE HAD BEEN FOLLOWING PERCENTAGE COMPLETION METHOD FROM THE PRECEDING Y EARS. THIS HAS BEEN ACCEPTED AS SUCH EARLIER, WHERE IT HAD BEEN SH OWING 12% OF THE REVENUE AS PROFIT. 27. IT WAS ALSO SUBMITTED THAT AT NO POINT OF TIME, ANY O F THE PURCHASER OF FLATS WAS CALLED BY THE AO TO CROSS VERIFY T HE RATES. AS SUCH, THE RATES STANDS CONFIRMED, WHICH WERE IN ACCORDAN CE WITH STAMP DUTY VALUATION. 28. WITH REGARD TO DIFFERENCE OF RATES OF MR. ANIL SHROFF AND OTHER BUYERS, IT WAS SUBMITTED THAT THE RATE HAD BEEN RENEGO TIATED AND ALSO THAT THERE WAS LOCATION ADVANTAGE, WHICH RESULTED IN A HIG HER RATE THEN THE OTHERS. M/S SANDHU BUILDERS ITA 5049/MUM/2012 ITA 4964/MUM/2012 10 29. THE AR FURTHER SUBMITTED THAT THE RECOGNITION OF INCOM E COULD BE AND SHOULD BE WHEN THERE IS THE RECEIPT OF PAYMENT. T HE AR SUBMITTED THAT DUE TO CERTAIN LITIGATIONS, NO RECEIPTS HAS BEEN BOOKED, WHICH COULD BE IDENTIFIED AS INCOME AND BECAUSE OF THE LITIGAT IONS, THE ASSESSEE HAS TILL DATE NOT ISSUED ANY LETTER OF ALLOTMENT. THE AR, THUS SUBMITTED THAT THE ACTION OF THE AO WAS INCORRECT BECAU SE THERE WAS NO REVENUE GENERATION. THE TAXABILITY SHALL GET TRIGGERED W HEN THERE IS RECEIPT AND REVENUE GENERATION, AND NOT ON ACCRUAL, WHIC H, AS PER THE CHARTS REPRODUCED ABOVE, WAS THE BASIS OF ADDITION MADE BY THE AO. ACCORDING TO THE AR, THE VERY BASIS OF ADDITION WAS FALLACIOUS. 30. THE AR PLACED RELIANCE ON THE DECISION OF THE COORDINAT E BENCH OF THE ITAT IN THE CASE OF NEELKAMAL RELATORS & ERECTORS INDIA PVT LTD VS DCIT, ITA NO. 1143/MUM/2013, WHEREIN AFTER REFERRING TO A NUMBER OF DECISIONS OF THE VARIOUS HONBLE HIGH COURTS AND SUPREME COURT OF INDIA, IT WAS OBSERVED, 14. IT IS TRITE THAT THE ONUS TO CLAIM THAT THE APPA RENT IS NOT REAL IS ONE WHO SO CLAIMS. WHERE THE REVENUE REQUIRES THE ASSESSEE TO SHOW AS TO WHY THERE IS A DIFFERENCE IN THE PRICE CHARGED FROM CUSTO MERS AND THE ASSESSEE OFFERS SOME PLAUSIBLE EXPLANATION, ADDITION CAN BE MADE SIMPLY BY HOLDING THAT THIS EXPLANATION IS FANCIFUL. THERE M UST BE SOME THING CONCRETE TO SHOW THAT THE VERSION GIVEN BY THE A SSESSEE IS INCORRECT. THE AO CANNOT SIMPLY MAKE ADDITION ON HYPOT HETICAL BASIS BY PRESUMING A HIGHER SALE PRICE BY SIMPLY REJECTING THE AS SESSEES EXPLANATION WITHOUT COGENT REASONS. IF THIS PROCEDURE IS RESORTED, THEN IT WOULD AMOUNT TO TAXING HYPOTHETICAL INCOME INSTEAD OF REA L INCOME, WHICH IS OBVIOUSLY IMPERMISSIBLE UNLESS AN EXPRESS PROVISION IS ENSHRINED IN THIS REGARD. 15. COMING BACK TO THE FACTS OF THE INSTANT CASE, WE FIND THAT THE ASSESSEE TENDERED EXPLANATION IN SUPPORT OF CHARGING LOWER PRICE IN RESPECT OF SOME OF THE FLATS SOLD BY IT. THE AO NOT ONLY SIMPLY REFU SED TO ACCEPT SUCH EXPLANATION WITHOUT ANY CONVINCING REASON BUT ALS O DID NOT BRING ANY MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE IN F ACT RECEIVED HIGHER PRICE THAN DECLARED. UNDER SUCH CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT THE ACTION OF THE AUTHORITIES BE LOW IN THIS REGARD CANNOT BE JUSTIFIED. AT THE COST OF REPETITION, WE ME NTION THAT THE PROVISIONS OF SECTION 43CA HAVE BEEN INSERTED WITH EFF ECT FROM 2014- 2015 IN RESPECT OF TRANSFER OF LAND OR BUILDING OR BOT H WHICH IS NOT A CAPITAL ASSET. IT IS ONLY DURING THE PREVALENCE OF THIS P ROVISION THAT THE REVENUE HAS BEEN DISCHARGED FROM THE BURDEN OF PROVI NG THAT THE SALE PRICE OF LAND, OR BUILDING OR BOTH IS UNDERSTATED. STRAIGH T WAY, THE DECLARED SALE CONSIDERATION CAN BE SUBSTITUTED WITH THE STAMP DUTY VALUE, IF IT LESS. IN THE PERIOD ANTERIOR TO THE APPLICATIO N OF THIS PROVISION, THE BURDEN IS SQUARELY ON THE REVENUE TO POSITIVELY SHO W THAT THE SALE PRICE CHARGED WAS ACTUALLY MORE THAN THAT DECLARED. W E ARE CONFRONTED WITH A SITUATION IN WHICH THE ASSESSEE GAVE REASONS FO R CHARGING LOWER PRICE IN RESPECT OF SOME OF THE FLATS SOLD, WHICH THE AO FAILED TO CONTROVERT. IN SUCH A SITUATION, THERE CAN BE NO REAS ON TO MAKE OR M/S SANDHU BUILDERS ITA 5049/MUM/2012 ITA 4964/MUM/2012 11 SUSTAIN ANY SUCH ADDITION. WE, THEREFORE, ORDER FOR T HE DELETION OF THIS ADDITION IN ENTIRETY. THIS GROUND IS ALLOWED. 31. HE ALSO REFERRED TO THE DECISION OF THE HONBLE DELHI H IGH COURT IN THE CASE OF CIT VS DISCOVERY ESTATES (P) LTD. ITA NO. 1 089, 1090 & 1097 OF 2011, WHEREIN THEY OBSERVED, 14. ON A CAREFUL CONSIDERATION OF THE MATTER WE ARE IN CLINED TO ACCEPT THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE AND AGREE WITH HIM THAT THE FINDINGS RECORDED BY THE TRIBUNAL ARE NOT PERVERSE. IT IS NOT CORRECT TO SAY THAT THE ASSESSEE DID NOT SATISFACTORILY ANSWER THE QUERIES RAISED BY THE ASSESSING OFFICER ON NOTICING THE ABSENCE OF REGISTERED SALE DOCUMENTS, VARIATIONS IN SALE PRICES OF S HOPS IN THE SAME FLOOR, SALE OF SHOPS TO SISTER CONCERNS, ETC. THE Y HAVE ALL BEEN ANSWERED BY THE ASSESSEES AND WE HAVE ADVERTED TO T HE REPLIES OF THE ASSESSEE WHILE SUMMARIZING ITS SUBMISSIONS MADE BEFORE TH E CIT (APPEALS). NEITHER THE CIT (APPEALS) NOR THE TRIBUNAL FOUN D ANYTHING AMISS IN THOSE REPLIES/SUBMISSIONS. THE POWER OF THE ASS ESSING OFFICER TO RAISE VALID QUERIES ON THE BASIS OF THE FACTS OR UNUS UAL FEATURES NOTICED BY HIM MUST BE CONCEDED. THE FEATURES NOTICED BY HIM IN THE ASSESSEES BUSINESS CERTAINLY CONSTITUTE A STARTING PO INT OF INQUIRY. THEY ARE, HOWEVER, NOT TO BE TAKEN AS EVIDENCE OR MA TERIAL SHOWING ANY SUPPRESSION OR UNDERSTATEMENT OF THE SALE PRICE. I F ON FURTHER PROBE, THE ASSESSING OFFICER WAS ABLE TO UNEARTH ANY EVIDENC E I OR MATERIAL ON THE BASIS OF WHICH ACTUAL SUPPRESSION OF THE SALE PRICE C OULD BE FOUND, THEN THE ADDITIONS MADE ON THAT BASIS WOULD BE VALID. E VEN IF THE EVIDENCE DOES NOT SHOW THE PRECISE AMOUNT OF SUPPRESS ED SALE PRICE, BUT SHOWS CLEARLY AND CATEGORICALLY THAT THERE WAS UND ERSTATEMENT OF SALE CONSIDERATION, THAT WOULD BE SUFFICIENT TO EMPOWER THE ASSESSING OFFICER TO REJECT THE ACCOUNT BOOKS AS BEING INCORREC T AND INCOMPLETE. HE MAY THEREAFTER MAKE AN ESTIMATE OF THE PROFITS OF TH E BUSINESS TO THE BEST OF HIS JUDGMENT, ON THE BASIS OF THE EVIDENCE UN EARTHED BY HIM REVEALING SUPPRESSION OF SALE PRICE. BUT IT IS NOT OPEN T O HIM, MERELY ON THE BASIS OF WHAT HE PERCEIVES TO BE THE MARKET CONDIT IONS, TO MAKE ADDITIONS TO THE SALE PRICE OR THE PROFITS, WITHOUT ANY EVIDENCE OF UNDERSTATEMENT. THESE PRINCIPLES HAVE BEEN KEPT IN MIN D BY THE TRIBUNAL AND, THEREFORE, ITS ORDER CANNOT BE FAULTED OR BRANDED AS PERVERSE. MOREOVER, AS RIGHTLY POINTED OUT ON BEHALF OF THE ASSESSEE, THERE IS NO OTHER PROVISION IN THE ACT PERMITTING THE ASSESSING OFFICER TO ENHANCE THE PROFITS OR THE SALE PRICE EXCEPT SECTION 50 C AND SECTION 92BA. SECTION 50C DOES NOT APPLY TO THE PRESENT CASE AS IT APPLIES ONLY TO A CASE OF CAPITAL GAINS. SECTION 92BA ALSO DOES NOT APPLY AS IT CAME INTO FORCE ONLY FROM THE ASSESSMENT YEAR 2012-13. MOR EOVER, IT APPLIES ONLY TO SUCH DOMESTIC TRANSACTIONS AS MAY BE PRESCRIBED BY THE COMPETENT AUTHORITY. 15. SEVERAL DECADES BACK THE MADRAS HIGH COURT IN THE CASE OF SRI RAMALINGA CHOODAMBIKAI MILLS LTD. V. CIT [19551 28 ITR 952 HELD THAT IN THE ABSENCE OF ANY EVIDENCE TO SHOW EITHER THAT TH E SALES WERE SHAM TRANSACTIONS OR THAT THE MARKET PRICES WERE IN FACT PA ID BY THE PURCHASERS, THE MERE FACT THAT GOODS WERE SOLD AT A CONCESSIONAL RATE WOULD NOT ENTITLE THE INCOME TAX DEPARTMENT TO ASSESS THE DIFFERENCE BETWEEN THE MARKET PRICE AND THE PRICE PAID BY THE PUR CHASER AS PROFIT OF THE ASSESSEE. IN CIT V. A. RAMAN & CO. [1968] 67 ITR LITHE SUPREME COURT HELD THAT THE LAW DOES NOT OBLIGE A TRADER TO MA KE THE MAXIMUM PROFIT THAT HE CAN OUT OF HIS TRADING TRANSACTIONS. INC OME WHICH ACTUALLY ACCRUES IS TAXABLE, BUT INCOME WHICH THE ASSESSEE COULD HAVE, BUT HAS NOT IN FACT EARNED, IS NOT MADE TAXABLE. THESE TWO JUD GMENTS WERE APPROVINGLY NOTICED AND APPLIED BY THE SUPREME COURT IN C IT V. CALCUTTA DISCOUNT CO. LTD. [1973] 91 ITR 8. THESE JUD GMENTS APPLY TO THE PRESENT CASE IN FAVOUR OF THE ASSESSEE. M/S SANDHU BUILDERS ITA 5049/MUM/2012 ITA 4964/MUM/2012 12 32. THE AR POINTED OUT THAT THEIR HONBLE LORDSHIPS EVE N OBSERVED ON NOTORIOUS ACTIVITIES , WHEREIN, THEY OBSERVED, IN LALCHAND BHAGAT AMBICA RAM V. CIT [1959] 37 ITR 2 88, THE SUPREME COURT DISAPPROVED THE PRACTICE OF MAKING ADDIT IONS IN THE ASSESSMENT ON MERE SUSPICION AND SURMISES OR BY TAKING NOTE OF THE NOTORIOUS PRACTICE PREVAILING IN TRADE CIRCLES. IT WAS O BSERVED AS UNDER: ADVERTING TO THE VARIOUS PROBABILITIES WHICH WEIGHED WITH THE INCOME- TAX OFFICER WE MAY OBSERVE THAT THE NOTORIETY FOR SMU GGLING FOOD GRAINS AND OTHER COMMODITIES TO BENGAL BY COUNTRY BOATS ACQU IRED BY SAHIBGUNJ AND THE NOTORIETY ACHIEVED BY DHULIAN AS A GRE AT RECEIVING CENTRE FOR SUCH COMMODITIES WERE MERELY A BACKGROUND OF SUSPICION AND THE APPELLANT COULD NOT BE TARRED WITH THE SAME B RUSH AS EVERY ARHATDAR AND GRAIN MERCHANT WHO MIGHT HAVE BEEN INDULG ING IN SMUGGLING OPERATIONS, WITHOUT AN IOTA OF EVIDENCE IN THAT BEHALF. 33. THE AR SUBMITTED THAT THE CASE OF THE ASSESSEE IS BETTER PLACED, BECAUSE, WHAT WAS FOUND AND PRODUCED BEFORE THE REVENU E AUTHORITIES WERE REGISTERED SALE DOCUMENTS. NO OTHER DOCUMENT OR ANY PIECE OF EVIDENCE WAS FOUND OR MADE THE BASIS OF ADDITION, AS MADE BY THE AO. 34. EVEN THE HONBLE BOMBAY HIGH COURT IN THE CASE OF C IT VS VISHAL TEKNIKS (CIVIL) PVT LTD, ITA NO. 1896/2012 OBSERVED THAT THE CONCLUSION OF UNDISCLOSED INCOME IN THE ABSENCE OF ANY OTHE R EVIDENCE IS ONLY ON THE BASIS OF CONJECTURES. 35. THE AR FURTHER PLACED RELIANCE ON THE DECISION OF ITO V S PANCHVATI ARCADE, REPORTED IN 23 SOT 17 (HYD.), WHEREIN IT WAS HELD, ON SALE OF 83 SHOPS/MULGIES, THERE WAS NO EVIDENCE TO SHOW THAT THE ASSESSEES HAD RECEIVED ANY AMOUNT OVER AND ABOVE WH AT WAS MENTIONED IN THE SALE DEEDS AND, AT ANY RATE, OVER AND ABOVE THE MARK ET PRICE FIXED BY THE REGISTRATION AUTHORITIES FOR THE PURPOSE OF STAMP DUTY. THE ASSESSEE MIGHT HAVE INTENTIONALLY SOLD THE SHOPS/MULGIES AT A LESSER PRICE BECA USE SAID SHOPS MULGIES WERE SOLD TO THE KITH AND KIN OF THE PARTNERS. SUCH TAX PLANNING COULD NOT BE QUESTIONED, EXCEPT IN A CASE WHERE THERE WAS A DIRECT EVIDENCE TO SHOW THAT THE SALE PRICE RECORDED IN THE SALE DEED IS NOT TH E CORRECT PRICE AT WHICH THE PROPERTY WAS SOLD AND SOME ON-MONEY HAD PASSED. ADMIT TEDLY, IN THE INSTANT CASE, THE ASSESSING OFFICER COULD NOT LAY HIS HANDS ON DIRECT EVIDENCE TO PROVE THAT ON-MONEY HAD PASSED. UNDER THESE CIRCUMSTANCES, THERE WAS NO INFIRMITY IN THE ORDERS PASSED BY THE COMMISSIONER (APPEALS) AH AC CORDINGLY, THE (APPEALS) FILED BY THE REVENUE WAS TO BE DISMISSED. 36. THE AR ALSO REFERRED TO THE CASE OF CIT VS GEORGE H ENDERSON & CO. LTD., REPORTED IN 66 ITR 622 (SC), WHEREIN, THE HONBLE SUPREME COURT OF INDIA EXPLAINED THE MEANING OF THE EXPRESSION FULL VALUE OF THE CONSIDERATION , AND OBSERVED, M/S SANDHU BUILDERS ITA 5049/MUM/2012 ITA 4964/MUM/2012 13 THE EXPRESSION 'FULL VALUE OF THE CONSIDERATION' CANNOT BE CONSTRUED AS THE MARKET VALUE BUT AS THE PRICE BARGAINED FOR BY THE PAR TIES TO THE SALE. THE DICTIONARY MEANING OF THE WORD 'FULL' IS 'WHOLE OR ENTIRE , OR COMPLETE '. THE WORD 'FULL' HAS BEEN USED IN THIS SECTION IN CONTRAST TO 'A PART OF THE PRICE '. CONSEQUENTLY, THE WORDS 'FULL PRICE' MEAN 'THE WHOLE PR ICE'. CLAUSE (2) OF SECTION 12B ITSELF CLEARLY SUGGESTS THAT IF NO DEDUCTIO NS ARE MADE AS MENTIONED IN SUBCLAUSE (II) THEREOF, THEN THAT AMOUNT REPRESENTS THE FULL VALUE OF THE CONSIDERATION OR THE FULL PRICE. IN OTHER WORDS, WHEN DEDUCTIONS ARE MADE AS SPECIFIED IN SUB-CLAUSES (I) AND (II), THEN THAT AMOUNT D OES NOT REPRESENT THE FULL VALUE. THE EXPRESSION 'FULL VALUE' MEANS THE WHOLE PRICE WITHOUT ANY DEDUCTION WHATSOEVER AND IT CANNOT REFER TO THE ADEQUACY OR IN ADEQUACY OF THE PRICE BARGAINED FOR. NOR HAS IT ANY NECESSARY REFERENCE TO THE MARKET VALUE OF THE CAPITAL ASSET WHICH IS THE SUBJECT-MATTER OF THE TRAN SFER. 37. THE AR SUBMITTED THAT THE ASSESSEE GAVE FULL DETAILS OF THE SALE CONSIDERATION TO THE AO, WHICH HE REFUSED TO CONSIDER AN D ACCEPT, WITHOUT ANY EVIDENCE TO THE CONTRARY. HE ONCE AGAIN EMP HASIZED, THAT NOT ONE EVIDENCE, WAS USED OR FOUND OR PRODUCED BY THE AO TO SUGGEST THAT THE ASSESSEE HAD, IN FACT, RECEIVED CONSIDERATION OVE R AND ABOVE THE DOCUMENTED PRICE. 38. THE AR ALSO REFERRED TO THE CASE OF K P VARGHESE VS ITO REPORTED IN 131 ITR 597 (SC), WHEREIN IT WAS OBSERVED, ACCORDINGLY, IF THE REVENUE SEEKS TO BRING A CASE WIT HIN SECTION 52(2), IT MUST SHOW NOT ONLY THAT THE FAIR MARKET VALUE OF THE CAPITA L ASSET AS ON THE DATE OF THE TRANSFER EXCEEDS THE FULL VALUE OF THE CONSIDERATI ON DECLARED BY THE ASSESSEE BY NOT LESS THAN 15 PER CENT OF THE VALUE SO DECLARED, BUT ALSO THAT THE CONSIDERATION HAS BEEN UNDERSTATED AND THE ASSESSEE H AS ACTUALLY RECEIVED MORE THAN WHAT IS DECLARED BY HIM. THERE ARE TWO DIST INCT CONDITIONS WHICH HAVE TO BE SATISFIED BEFORE SUB-SECTION (2) CAN BE INVOK ED BY THE REVENUE AND THE BURDEN OF SHOWING THAT THESE TWO CONDITIONS ARE SA TISFIED RESTS ON THE REVENUE. THIS BURDEN MAY BE DISCHARGED BY THE REVENU E BY ESTABLISHING FACTS AND CIRCUMSTANCES FROM WHICH A REASONABLE INFERENCE CAN BE DRAWN THAT THE ASSESSEE HAS NOT CORRECTLY DECLARED OR DISCLOSED THE C ONSIDERATION RECEIVED BY HIM AND THERE IS UNDERSTATEMENT OF CONCEALMENT OF THE CONSIDERATION IN RESPECT OF THE TRANSFER 39. THE AR, SUBMITTED THAT THE ENTIRE CASE OF THE AO IS B ASED ON, NO EVIDENCE AGAINST THE ASSESSEE. HE POINTED OUT THAT, IF AT ALL, THE ADDITION COULD HAVE BEEN MADE, THE AO COULD HAVE ONLY PR OCEEDED ON THE DEEMING PROVISIONS CONTAINED UNDER SECTION 68 TO 69 D AND THAT TOO, WOULD HAVE BEEN ATTRACTED ON FINANCIAL YEAR AND ASSE SSMENT YEAR WISE, I.E. WHEN THE SALE CONSIDERATIONS/ADVANCES RECEIVED BY THE ASSESSEE FIRM, FOUND THEIR WAY TO THE BOOKS OF ACCOUNTS OF THE ASSESSEE. IN THE ABSENCE OF THESE, THE AR SUBMITTED THA T THE AO ERRED IN MAKING THE ADDITION OF RS. 9,36,82,560/-. M/S SANDHU BUILDERS ITA 5049/MUM/2012 ITA 4964/MUM/2012 14 40. WE HAVE HEARD THE DETAILED ARGUMENTS OF THE CONTEST ING PARTIES AND HAVE PERUSED THE ORDERS OF BOTH THE REVENUE AUTH ORITIES. THE CASE BEFORE US HAS THE FOLLOWING ASPECTS: A) THE PROJECT HAS BEEN IN OPERATION FROM THE PRECEDIN G YEARS, AS EVIDENT FROM THE ASSESSMENT ORDERS PASSED UNDER SECTION 143(3); B) THAT THE ACCOUNTS HAVE BEEN PREPARED ON PERCENTAGE COMPLETION METHOD, WHERE ALL THE EXPENSES HAVE BEEN DEBITED TO WIP; C) THERE WAS A SURVEY OPERATION UNDER SECTION 133A OF THE INCOME TAX ACT, ON THE OFFICE PREMISES OF THE ASSESSEE; D) NO EVIDENCE WAS FOUND IN THE SEARCH, SUGGESTING ANY ON MONEY RECEIVED BY THE ASSESSEE OVER AND ABOVE THE S ALE CONSIDERATION; E) THE DOCUMENTS IN THE FORM OF SALE DEEDS SUBMITTED BY THE ASSESSEE SHOWED THAT THERE WAS A DIFFERENCE OF PRICE OF SALE OF FLATS RECEIVED FROM BUYERS WITH THAT OF THE SALE CONSIDERATION RECEIVED FROM MR. ANIL SHROFF; F) THERE IS NO CORROBORATIVE EVIDENCE WHICH THE AO USE D TO FRAME ASSESSMENT SUGGESTING AN ADDITION OF RS. 9,36,82,560/-, BEING 40% OF ON MONEY RECEIVED AT RS. 23,42,06,400/-; AND G) DECISIONS RELIED UPON BY THE AR. 41. IT MAY BE MENTIONED THAT THE AO APPLIED ALL THE POSSIB LE ANGLES TO JUSTIFY THE ADDITION, WHICH HE HAD SOUGHT TO MAKE & WHICH, ULTIMATELY, HE DID MAKE, RELYING ON VARIOUS DECISIONS RENDE RED BY VARIOUS FORA. THE ADDITION, AS IMPUGNED HERE IN THE INSTANT APPEAL, HAS BEEN ACCEPTED TO BE NOT BASED ON ANY EVIDENCE. 42. THE ASSESSEE HAS BEEN RELYING ON THE PERCENTAGE C OMPLETION METHOD FOR MAINTAINING ITS BOOKS AND SINCE THE PROJECT H AS BEEN COMING FROM PRECEDING YEARS, WHERE NEITHER THERE IS ANY R EFERENCE NOR ANY ACTION TAKEN BY THE AO TO DISTURB THE METHOD OF ACCOUNTING, WH ICH WAS BEING REGULARLY FOLLOWED BY THE ASSESSEE, SINCE THE C OMMENCEMENT OF PROJECT. IN THE SUBMISSIONS MADE BEFORE THE AO, THE AS SESSEE POINTED OUT THAT AS PER THE REQUIREMENTS OF ACCOUNTING STANDARDS, THE M/S SANDHU BUILDERS ITA 5049/MUM/2012 ITA 4964/MUM/2012 15 ASSESSEE IS ONLY TAKING INTO CONSIDERATION THE REVENUES BEING BOOKED BY IT. IN FACT, THE ASSESSEE HAS SUBMITTED BEFORE THE AO THAT NO EXPENDITURE HAS BEEN CLAIMED AND THE INCOME IS OFFERE D ON ESTIMATE BASIS (PAGE 3 OF THE ASSESSMENT ORDER). IN P&L ACCOUNT FOR AY 2009- 10, ONLY INCOME ON THE BASIS OF GROSS RECEIPTS IS CON SIDERED AND NO EXPENSE HAVE BEEN CLAIMED. THIS PROVES THE POINT OF THE ASSESSEE THAT THE ASSESSEE HAD ONLY SHOWN/DECLARED ESTIMATED 12% INC OME ON THE TOTAL RECEIPTS UPTO 6 TH SLAB, THOUGH THE ASSESSEE HAD ACTUALLY RECEIVED SALE CONSIDERATIONS UPTO 5 TH SLAB ONLY. THIS NEGATES THE PRESUMPTION OF THE AO, THAT THE PROJECT HAD BEEN COMPLETED UPTO 7 TH SLAB, AND THEREFORE, THE AO WAS TAKING THE DEEMED SALE CONSIDERATION THEOR Y. 43. COMING TO THE ASPECT OF UNDER VALUING OF SALE CONSIDERA TION BY THE ASSESSEE WITH REGARD TO 12 BUYERS AGAINST ONE BUY ER, MR. ANIL SHROFF, THE CIT(A), RELYING PRIMARILY ON FACTS, NOTES, THAT NOT ONE PIECE OF EVIDENCE HAS BEEN USED BY THE AO TO SHOW THAT THER E WAS ACTUALLY, UNDER VALUATION OF SALE CONSIDERATION FROM 12 BUYERS. THIS FACT NOT ONLY GETS CORROBORATED ON THE FACE OF IT THAT NO EVIDEN CE IS AGAINST THE ASSESSEE, BUT THE AO COULD NOT MAKE OUT ANY CASE WHEN THE SALE AGREEMENTS WERE PRODUCED BEFORE HIM. 44. THIS CONCLUSION DRAWN BY THE AO, WOULD HAVE TILTED TH E BALANCE OF PRESUMPTION IN THE AOS FAVOUR, BUT SINCE THERE WAS A SURVEY OPERATION UNDER SECTION 133A OF THE INCOME TAX ACT, WHE RE THE DEPARTMENT ACTUALLY ENTERED THE PREMISES OF THE ASSESS EE AND GATHERED THE EVIDENCE AND TOOK STATEMENT OF THE ATTENDING PARTN ER ON OATH, THE CASE HAS SHIFTED FROM PRESUMPTIONS TO FACTS. THE FACT THAT THE SURVEY PARTY WAS PRIVY TO DOCUMENTS, BOOKS AND EVIDENCE AND A LSO RECORDED THE STATEMENT OF THE PARTNER, IT IS SEEN THAT NOT ONE Q UESTION PERTAINED TO EITHER DIFFERENTIAL OF RATES OR THE SYSTEM OF ACCOUNTING. W E HAVE GONE THROUGH THE STATEMENT RECORDED ON OATH, WHICH RUNS IN 11 PAGES AND APPENDED IN THE APB, ALONG WITH THE UN DISTURBED ASSESSM ENT ORDERS FOR ASSESSMENT YEARS 2007-08 AND 2008-09, ACCEPTING TH E METHOD OF M/S SANDHU BUILDERS ITA 5049/MUM/2012 ITA 4964/MUM/2012 16 ACCOUNTING, REGULARLY FOLLOWED BY THE ASSESSEE. IN THESE CIRCUMSTAN CES, THE CASE HAS SLIPPED OUT OF THE PRECINCT OF PRESUMPTIONS CONJECTURES AND SURMISES, AND FALLS IN THE FIELD OF FACTS. 45. WE CANNOT IGNORE THE FACT THAT THE AO HAS BASED TH E IMPUGNED ADDITION, PLACING RELIANCE ON DECISIONS GATHERED FROM VARIOUS COURTS AND PRESUMING THE DEEMED SALE CONSIDERATION, WHICH BY ITS ELF IS FAR FROM THE FACTS, GATHERED FROM THE ORDERS OF THE REVENUE AUTHORITIES AND EVIDENCES PLACED IN THE APB. 46. ON THE OTHER HAND, THE AR HAS PLACED RELIANCE ON A N UMBER OF DECISIONS, TAKEN INTO CONSIDERATION BY US IN PRE PARAS, AR E AGAINST THE DEPARTMENT, WHERE THE DEPARTMENT HAS TRIED TO MAKE AD DITION WITHOUT ANY FIRM FOUNDATION BASED ON FACTS, BUT CREATING AN EDIFICE W HICH DOES NOT HAVE ANY SOLIDITY. 47. TAKING THE ENTIRE FACTS, CIRCUMSTANCES AND CASE LAWS C ITED BEFORE US, WE FIND NO JUSTIFICATION TO DISTURB THE CONCLUSION OF THE CIT(A). 48. IN THE RESULT, WE SUSTAIN THE ORDER OF THE CIT(A) DELET ING THE ADDITION OF RS. 9,36,82,560/- MADE BY THE AO. 49. GROUNDS RAISED IN APPEAL FILED BY THE DEPARTMENT ARE R EJECTED AND THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. ITA NO. 4964/MUM/2012 : (APPEAL FILED BY THE ASSESSE E) : 50. THE ISSUES INVOLVED IN THE APPEAL OF THE ASSESSEE ARE INTERLINKED AND THE SAME ARE RAISED BY WAY OF THE FOLLOWING GROUNDS:- 1.01 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT (A) ERRED IN CONFIRMING REJECTION OF BOOKS OF ACCOUNTS. 1.02 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT (A) ERRED IN CONFIRMING THE ESTIMATED INCOME AT RS. 6,90,13,032/- BEING 12% OF 57,51,08,600/- INSTEAD OF RS. 5,26,93,032/- OFFERED FO R TAXATION BY THE APPELLANT BEING 12% OF 43,91,08,600/-. M/S SANDHU BUILDERS ITA 5049/MUM/2012 ITA 4964/MUM/2012 17 1.03 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT (A) ERRED IN CONFIRMING ACTION OF A. 0. IN TAXING RS. 18,34,524/- WITHOUT CONSIDERING THE FACT THAT TOTAL DISCLOSURE OF RS. 4,00,00,000/- MADE BY THE APPELLANT U/S. 133A OF THE I. T. ACT, 1961 INCLUDES RS. 18,34,524/-. 1.04 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT (A) ERRED IN CONFIRMING REDUCTION OF RS. 3,83,94,512/- FROM WORK IN PROGRESS. 51. DURING THE YEAR UNDER CONSIDERATION, HOUSING PROJECT NAMELY SANDHU PALACE WAS BEING DEVELOPED AND CONSTRUCTED BY T HE ASSESSEE. AS PER THE PERCENTAGE COMPLETION METHOD CLAIMED TO BE C ONSISTENTLY FOLLOWED BY THE ASSESSEE, INCOME OF RS. 5.26 CRORES WAS OFFER ED BY THE ASSESSEE IN RESPECT OF THE SAID PROJECT BEING 12% OF THE TOTAL RECEIPT OF RS. 43.91 CRORES RECEIVED FROM VARIOUS CUSTOMERS OF THE P ROJECT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOT ICED BY THE A.O. THAT CONSTRUCTION UPTO 6 TH SLAB OF SANDHU PALACE PROJECT WAS COMPLETED BY THE ASSESSEE TILL 31-3-2009. HE ALSO WORKED OUT FROM THE AGREEMENTS ENTERED INTO BY THE ASSESSEE WITH VARIOUS FLA T HOLDERS OF SANDHU PALACE PROJECT, THE TOTAL AMOUNT RECEIVABLE BY TH E ASSESSEE AGAINST SANDHU PALACE PROJECT AND FOUND THAT A SUM OF RS. 13.60 CRORES WAS RECEIVABLE BY THE ASSESSEE FROM THE FLAT HOLD ERS OF SANDHU PALACE PROJECT IN ADDITION TO THE AMOUNT ACTUALLY RECEIVE D FROM THEM TILL 31-3-2009. HE, THEREFORE, ADDED THE AMOUNT OF RS. 13.60 CRORES RECEIVABLE FROM THE FLAT HOLDERS TO THE AMOUNT OF RS. 43.91 CRORES ALREADY RECEIVED BY THE ASSESSEE FROM THEM AND TAKING T HE SAME AS GROSS RECEIPTS/WIP OF THE SAID PROJECT FOR THE YEAR UND ER CONSIDERATION, HE ESTIMATED THE INCOME OF THE ASSESSEE FROM SANDHU PALA CE PROJECT AT RS. 6.90 CRORES BEING 12% OF RS. 57.51 CRORES AS AGAINST T HE INCOME OF RS. 5.23 CRORES DECLARED BY THE ASSESSEE. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ESTIMATION OF INCOME OF THE ASSESSEE MADE BY THE A.O. FROM THE PROJECT OF SANDHU PALACE. 52. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IN OUR OPINION, NE ITHER THE BASIS TAKEN BY THE ASSESSEE NOR EVEN THE ONE ADOPTED BY THE M/S SANDHU BUILDERS ITA 5049/MUM/2012 ITA 4964/MUM/2012 18 AUTHORITIES BELOW IS CORRECT TO ESTIMATE/DETERMINE THE INC OME OF THE ASSESSEE FROM THE PROJECT OF SANDHU PALACE AS PER THE PERCENTAGE COMPLETION METHOD FOLLOWED BY THE ASSESSEE. FOR DETERMININ G THE INCOME OF THE ASSESSEE FROM THE SAID PROJECT, NEITHER THE AMOUNT RECEIVED FROM THE FLAT OWNERS AS TAKEN BY THE ASSESSEE NOR THE AMOUNT RECEIVABLE FROM THE FLAT HOLDERS OF THE ASSESSEE AS ADOPTE D BY THE AUTHORITIES BELOW IS RELEVANT. WHAT IS RELEVANT IS THE PERC ENTAGE OF TOTAL WORK COMPLETED IN RESPECT OF THE PROJECT AND THA T IS TO BE WORKED WITH REFERENCE TO THE ACTUAL CONSTRUCTION EXPENSES INCUR RED BY THE ASSESSEE DURING THE RELEVANT YEAR OUT OF THE TOTAL ESTIM ATED CONSTRUCTION COST OF THE PROJECT. SUCH PERCENTAGE AS W ORKED OUT ON THE BASIS OF ACTUAL CONSTRUCTION COST INCURRED BY THE ASSESS EE IS REQUIRED TO APPLIED TO THE TOTAL ESTIMATED SALES VALUE OF THE PROJE CT TO WORK OUT THE WIP OR GROSS REVENUE FROM THE PROJECT FOR THE RELE VANT YEAR AND AFTER REDUCING THERE FROM THE PROPORTIONATE LAND AS WELL A S INCIDENTAL COST AND CONSTRUCTION AND OTHER EXPENSES ACTUALLY INCU RRED BY THE ASSESSEE, THE NET PROFIT OF THE PROJECT IS REQUIRED TO BE DETERMINED. THE FOLLOWING ILLUSTRATION GIVEN BY US WOULD EXPLAIN THE EXACT METH OD BY WHICH THE PROFIT OF THE ASSESSEE FROM THE PROJECT UNDER EXECUTION IS REQUIRED TO BE DETERMINED AS PER THE PERCENTAGE COMPLE TION METHOD FOLLOWED BY THE ASSESSEE. - THE TOTAL ESTIMATED SALES VALUE OF THE PROJECT - SAY RS . 100 CRORES, - ESTIMATED CONSTRUCTION COST SAY RS. 50 CROR ES, - LAND & OTHER INCIDENTAL EXPENSES REQUIRED FOR LAND DEVELOPMENT SAY RS. 20 CRORES, - OTHER EXPENSES - SAY RS. 18 CRORES, - ESTIMATED PROFIT SAY RS. 12 CRORES IF THE PROJECT IS EXECUTED AND COMPLETED BY THE ASSESS EE IN THREE YEARS WITH 40%, 40% AND 20% COMPLETION IN FIRST, SECOND AND THIRD YEAR, THE PROFIT OF THE RELEVANT THREE YEARS IS TO BE ESTIMATED AS UNDER:- PARTICULARS IST YEAR (RS. IN CRORES) 2 ND YEAR (RS IN CRORES) 3 RD YEAR (RS IN M/S SANDHU BUILDERS ITA 5049/MUM/2012 ITA 4964/MUM/2012 19 CRORES WIP/GROSS REVENUE 40 40 20 LESS: PROPORTIONATE LAND COST 08 08 04 LESS: CONSTRUCTION EXPENSES 20 20 10 OTHER EXPENSES 7.2 7.2 3.6 PROFIT 4.8 4.8 2.4 53. THE ABOVE WORKING IS TO BE BASED ON THE ACTUAL CON STRUCTION COST INCURRED BY THE ASSESSEE IN THE RELEVANT YEAR INASMUCH AS IF 40% OF THE TOTAL CONSTRUCTION COST IS INCURRED IN THE FIRST YEAR, THE PROJECT CAN BE SAID TO HAVE COMPLETED TO THE EXTENT OF 40% AND THE GROSS REVENUE/WIP OF THE PROJECT IS TO BE TAKEN AT RS. 40 CRO RES BEING 40% OF THE TOTAL SALES VALUE OF THE PROJECT. FROM THE SAID WIP/ GROSS VALUE OF THE PROJECT AS COMPLETED IN THAT YEAR, PROPORTIONATE LAN D COST TO THE EXTENT OF 40% IS TO BE REDUCED AS WELL AS THE OTHER EXP ENSES TO THE EXTENT ACTUALLY INCURRED BY THE ASSESSEE IN THAT YEAR TO WORK OUT THE PROFIT OF THE PROJECT FOR THE RELEVANT YEAR. IF THERE IS ANY CHANGE IN THE PROJECTED SALES VALUE OF THE PROJECT OR THE TOTAL CONST RUCTION COST, THE EFFECT OF THE SAME IS TO BE GIVEN IN THE LAST YEAR IN WHICH THE PROJECT IS COMPLETED AND ACCORDINGLY ANY DIFFERENCE IN THE PROJECTED PROFIT AND THE ACTUAL PROFIT WOULD GET ADJUSTED IN THAT YEAR. WE, ACC ORDINGLY, SET ASIDE THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE A.O. FOR DETERMINING/ ESTIMATING THE PROFIT OF THE ASSESSEE FROM THE PROJECT OF SANDHU PALACE FOR THE YEAR UNDER CONSIDERATION TAKING CORRESPONDING FIGURES BASED ON THE ACTUAL CONSTRUCTION COST INCURRED BY THE ASSESSEE IN THAT YEA R AND FOLLOWING THE METHOD AS GIVEN BY US AND EXPLAINED WITH THE EXAMPLE. THE ACTION OF THE AUTHORITIES BELOW IN REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE IS ACCORDINGLY UPHELD DISMISSING GROUND NO. 1.0 1 OF THE ASSESSEES APPEAL. GROUND NO. 1.02 OF THE ASSESSEES APP EAL RELATING TO THE DETERMINATION/ESTIMATION OF INCOME FROM SANDHU PALACE P ROJECT IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 54. AS REGARDS GROUND NO. 1.03 OF THE ASSESSEES APPEAL RELATING TO ADDITION OF RS. 18,34,524/- MADE BY THE A.O. AND CONFIRMED BY THE LD. M/S SANDHU BUILDERS ITA 5049/MUM/2012 ITA 4964/MUM/2012 20 CIT(A) ON ACCOUNT OF UNEXPLAINED EXPENDITURE, IT IS OBSERVED THAT THE EXPENDITURE TO THE EXTENT OF RS. 18,34,524/- WAS FOUND TO BE INCURRED BY THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNT AND THE SAME THEREFORE WAS TREATED AS UNEXPLAINED BY THE A.O. AS WELL AS THE LD. C IT(A). THE STAND TAKEN BY THE ASSESSEE ON THIS ISSUE IS THAT THE INCOME DECLARED BY IT FROM THE SANDHU PALACE PROJECT FOR THE YEAR UNDER CONSIDERATION INCLUDES THE AMOUNT OF UNEXPLAINED EXPENDITURE. SINCE THE ISSUE RELATING TO THE ESTIMATION/DETERMINATION OF THE INCOME OF TH E ASSESSEE FROM SANDHU PALACE PROJECT IS SET ASIDE BY US TO BE DEC IDED AFRESH AS PER THE SPECIFIC DIRECTIONS GIVEN, WE ARE OF THE VIEW THAT T HE ADDITION ON ACCOUNT OF ANY EXPENDITURE INCURRED BY THE ASSESSEE OU TSIDE THE BOOKS OF ACCOUNT IS LIABLE TO BE MADE SEPARATELY AFTER ESTIMATING THE INCOME OF THE ASSESSEE FROM ITS BUSINESS TAKING INTO CONSIDERATION THE EXPENDITURE ACTUALLY INCURRED BY THE ASSESSEE AS PER T HE BOOKS OF ACCOUNT AS DIRECTED BY US. GROUND NO. 1.03 OF THE ASSESS EES APPEAL IS ACCORDINGLY DISMISSED. 55. AS REGARDS GROUND NO. 1.04 REGARDING THE DETERMINATIO N OF WORK- IN-PROGRESS OF THE SANDHU PALACE PROJECT, THIS ISSUE, IN OU R OPINION, IS CONSEQUENTIAL TO THE MAIN ISSUE RELATING TO THE DETERMINATION/ESTIMATION OF THE INCOME OF THE ASSESSEE FROM SANDHU PALACE PROJECT WHICH ALSO INVOLVES THE DETERMINATION OF WIP AS PER THE METHOD SUGGESTED BY US. ACCORDINGLY, THE WIP DETERMINED AS PER OUR DIRECTION FOR THE YEAR UNDER CONSIDERATION WILL BE TREATED AS CLOSING WIP AND THE SAME SHALL BE CARRIED FORWARD TO THE SUBSEQ UENT YEAR AS OPENING WIP. THIS ISSUE THUS IS REQUIRED TO BE RECONSIDERE D BY THE A.O. AFRESH IN THE SET ASIDE PROCEEDING AND ACCORDINGLY GR OUND NO. 1.04 OF THE ASSESSEES APPEAL IS TREATED AS ALLOWED FOR ST ATISTICAL PURPOSE. SUM-UP: M/S SANDHU BUILDERS ITA 5049/MUM/2012 ITA 4964/MUM/2012 21 APPEAL FILED BY THE REVENUE IS DISMISSED AND APPEAL OF THE A SSESSEE IS TREATED AS PARTLY ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH DECEMBER, 2013. SD/ SD/- ( . . ) ( #'' '$ ) ! ! (P.M. JAGTAP) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 6 TH DECEMBER, 2013 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) & &' ( ) - 30 MUMBAI / THE CIT (A)-30, MUMBAI. 4) & &' CITY-19, MUMBAI / THE CIT CITY-19, MUMBAI, 5) )*+ , , & , , -. / THE D.R. E BENCH, MUMBAI. 6) +/ 0 COPY TO GUARD FILE. &12 / BY ORDER / / TRUE COPY / / [ 3 / 4 5 & , , -. DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *784 . . * CHAVAN, SR. PS