The DCIT, Central Circle-1(3), Ahmedabad V. Shri Sunil Prahladbhai Sewani, Ahmedabad

ITSSA 179/AHD/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8705 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 10-07-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 12-06-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P SHARMA
• Assessee Lawyers: S N SOPARKAR
• Keywords: Business expenditure; Additional evidence; Validity of assessment; Revenue expenditure; Set aside
• Section: 143(3); 153A

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SMT. MADHUMITA ROY, JUDICIAL MEMBER () . / I.T.(SS)A. NOS. 179 & 180/AHD/2015 WITH CROSS OBJECTION NOS. 134 & 135/AHD/2015 ( ASSESSMENT YEARS : 2011-12 & 2012-13) DCIT CENTRAL CIRCLE 1(3), ROOM NO. 304, 3 RD FLOOR, AAYKAR BHAVAN, ASHRAM ROAD, AHMEDABAD - 380009 / VS. SHRI SUNIL PRAHLADBHAI SEWANI 45, ASHWAMEGH BUNGALOW- 3, NR. SOMESHWAR DERASAR, SATELLITE RING ROAD, AHMEDABAD - 380015 ./ ./ PAN/GIR NO. : AFSPS5475C ( APPELLANT / RESPONDENT ) .. ( RESPONDENT / CROSS OBJECTOR ) / REVENUE BY : SHRI O. P. SHARMA, CIT D.R. / ASSESSEE BY : SHRI S. N. SOPARKAR, SR. ADV. DATE OF HEARING 18/06/2019 !'#$ / DATE OF PRONOUNCEMENT 10/07/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEALS HAVE BEEN FILED BY THE REVENU E CONCERNING AYS 2011-12 & 2012-13 AGAINST THE RESPEC TIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)- I, AHMEDABAD (CIT(A) IN SHORT), BOTH DATED 18.03.2015 ARISING FROM THE RESPECTIVE IT(SS)A NOS. 179 & 180/AHD/15 WITH CO NOS. 134 & 135/AHD/2015 [DCIT VS. SHRI SUNIL P. SEWANI] A.YS. 2011-12 & 2012-13 - 2 - ASSESSMENT ORDERS BOTH DATED 24.03.2013 PASSED BY T HE AO UNDER S.143(3) R.W.S. 153A(1)(B) OF THE INCOME TAX ACT, 1961 (THE ACT) . 2. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION IN T HE RESPECTIVE APPEALS OF THE REVENUE. BOTH THE REVENUES APPEALS AND THE CROSS OBJECTIONS OF THE ASSESSEE THEREON HAVE BEEN HEARD TOGETHER OWING TO SIMILARITY OF THE ISSUES INVOLVED. 3. WE SHALL FIRST TAKE UP REVENUES APPEAL IN IT(SS )A NO. 179/AHD/2015 CONCERNING AY 2011-12. 4. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS UNDER: 1) THE LD. CIT(A) HAS ERRED ON LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.1,70,39,124/- BEING INCREASE IN THE NET PROFIT BY REJECTING BOOKS OF ACCOUNT U/S.145(3) OF THE ACT . 5. BRIEFLY STATED, THE ASSESSEE IS ENGAGED IN THE B USINESS OF CONSTRUCTION OF REAL ESTATE AND FOLLOWS PERCENTAGE COMPLETION ACCOUNTING METHOD (PCAM) FOR WORKING OUT THE PROFIT S. A SEARCH UNDER S.132 OF THE ACT WAS CARRIED OUT IN THE CASE OF SEWANI GROUP ON 20 TH DECEMBER, 2011. THE ASSESSEE, AN INDIVIDUAL, IS O NE OF THE ENTITIES OF THE SEWANI GROUP. FOLLOWING THE AFORES AID SEARCH, PROCEEDINGS UNDER S.153A OF THE ACT WERE INITIATED IN THE CASE OF THE ASSESSEE FOR THE SPECIFIED PERIOD COVERED UNDER FIRST PROVISO TO SECTION 153A OF THE ACT I.E. IN RESPECT OF AYS. 200 6-07 TO 2012-13. WITH REGARD TO THE AY 2012-13 (ALSO SUBJECT MATTER OF APPEAL), THE RETURN OF INCOME WAS FILED AFTER THE DATE OF SEARCH ON 30 TH SEPTEMBER, 2012. HOWEVER, IN RESPECT OF PRECEDING SIX ASSESSMENT YEARS, THE ORIGINAL RETURN OF INCOME WERE ALREADY F ILED BY THE ASSESSEE WITHIN TIME PERMITTED UNDER S.139(1) OF TH E ACT. IN RESPONSE TO THE NOTICES ISSUED UNDER S.153A OF THE ACT, THE RETURN OF IT(SS)A NOS. 179 & 180/AHD/15 WITH CO NOS. 134 & 135/AHD/2015 [DCIT VS. SHRI SUNIL P. SEWANI] A.YS. 2011-12 & 2012-13 - 3 - INCOME FOR AY 2011-12 IN QUESTION WAS AGAIN FILED D ECLARING THE SAME INCOME IN PARITY WITH ORIGINAL RETURN OF INCOM E. THE ASSESSMENT PROCEEDINGS RELATING TO AY 2011-12 FALLI NG WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO UNDER S. 153A OF THE ACT AND PENDING ON THE DATE OF INITIATION OF SEARCH UND ER S.132 OF THE ACT STOOD ABATED AND THE ASSESSMENT WAS FRAMED UNDE R S.153A(1)(B) OF THE ACT. 5.1 IN THE COURSE OF THE ASSESSMENT PROCEEDINGS UND ER S.153A OF THE ACT, THE AO INTER ALIA RAISED QUERIES REGARDING CORRECTNESS OF PROFITS DECLARED AS PER THE BOOKS OF ACCOUNTS, THE REPLIES THEREOF WERE NOT FOUND SATISFACTORY BY HIM. IT WAS OBSERVE D BY THE AO THAT BOOKS OF ACCOUNTS WERE INCONSISTENT VIS--VIS THE CLOSING STOCK VALUATION SHOWN BY THE ASSESSEE. IT WAS ALLEGED TH AT THE ASSESSEE HAS ARBITRARILY CLAIMED EXPENSES WITHOUT JUSTIFICAT ION AND ALSO DID NOT CAPITALIZE THE INTEREST EXPENSES ADEQUATELY IN PROPORTION TO THE PROJECT SIZE. THE AO ACCORDINGLY RE-CASTED THE PRO JECT-WISE CONSTRUCTION ACCOUNT OF THE ASSESSEE REPRESENTING THE STOCK, WIP, DIRECT EXPENSES RELATING TO VARIOUS PROJECTS UNDERT AKEN AND THE CLOSING STOCK OF VARIOUS PROJECTS WERE INCREASED AS A RESULT OF CERTAIN ADJUSTMENTS. AS A RESULT OF READJUSTMENTS, YEAR-WISE NET PROFIT/LOSS OF THE ASSESSEE WAS RE-COMPUTED AS UNDE R: ASSESSMENT YEAR ACTUAL NET PROFIT AS PER THE ABOVE WORKING NET PROFIT AS SHOWN BY THE ASSESSEE INCREASE/(DECREASE) 2006-07 10976809 10801810 174999 2007-08 6926458 5397778 1528679 2008-09 19512196 6453486 13058709 2009-10 18839781 6396206 12443575 2010-11 (17641935) 2089570 (19731505) 2011-12 57164892 40125767 17039124 2012-13 119343704 101345504 17998200 TOTAL 42511780 IT(SS)A NOS. 179 & 180/AHD/15 WITH CO NOS. 134 & 135/AHD/2015 [DCIT VS. SHRI SUNIL P. SEWANI] A.YS. 2011-12 & 2012-13 - 4 - WE ARE HOWEVER PRESENTLY CONCERNED WITH PROCEEDINGS IN RELATION TO AY 2011-12 AND 2012-13 IN QUESTION. 5.2 IT WAS ALLEGED BY THE AO THAT THE BOOKS OF ACCO UNTS OF THE ASSESSEE DID NOT GIVE TRUE AND FAIR PICTURE OF THE AFFAIRS OF THE BUSINESS UNDER S.145(3) OF THE ACT. THE AO GATHERE D INFORMATION FROM THE ASSESSEE IN CONNECTION WITH VARIOUS PROJEC TS IN PROGRESS AND METHOD OF THE ACCOUNTING VIS--VIS CLOSING STOC K VALUATION AND CONSEQUENTLY RE-COMPUTED TAXABLE PROFITS FOR VARIOU S ASSESSMENT YEARS FALLING WITHIN THE SPECIFIED PERIOD IN SEARCH ASSESSMENT ON THE BASIS OF RE-COMPUTATION OF COST OF GOODS SOLD A ND CLOSING WORK- IN-PROGRESS ON YEAR TO YEAR BASIS. 5.3 THE BOOKS OF ACCOUNTS WERE REJECTED BY INVOKING SECTION 145(3) OF THE ACT AND THE COST OF SALES AND CLOS ING STOCK WAS RE- WORKED WHEREBY THE ADDITIONS WERE MADE IN RESPECT O F UNDERSTATEMENT OF PROFITS TO THE EXTENT OF RS.1,70, 39,124/- TO THE TOTAL INCOME OF THE ASSESSEE FOR AY 2011-12 IN QUES TION. SIMILAR ADDITIONS WERE MADE IN RESPECT OF OTHER ASSESSMENT YEARS AS TABULATED ABOVE. 6. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER CONSIDERATION OF THE DETAILED SUBM ISSIONS MADE ON BEHALF OF THE ASSESSEE AND THE COMMENTS OF THE AO T HEREON IN THE REMAND REPORT, FOUND THE ACTION OF THE AO TO BE UNS USTAINABLE. THE RELEVANT OPERATIVE PARA OF THE ORDER OF THE CIT(A) IS REPRODUCED HEREUNDER FOR READY REFERENCE: 7. THE APPELLANT CONTENDED THAT THE A.O. RECAST CO NSTRUCTION ACCOUNT ON CAST BASIS AND WHEN THERE WAS PLUS DIFFE RENCE, THE SAME WAS ADDED TO THE CLOSING WORK IN PROGRESS AS DISCLO SED IN THE AUDITED IT(SS)A NOS. 179 & 180/AHD/15 WITH CO NOS. 134 & 135/AHD/2015 [DCIT VS. SHRI SUNIL P. SEWANI] A.YS. 2011-12 & 2012-13 - 5 - ACCOUNTS OF THE APPELLANT, HOWEVER, EVEN WHEN THE D IFFERENCE WAS IN MINUS IN WORK IN PROGRESS, THE SAME WAS ALSO ADDED TO CLOSING WORK IN PROGRESS DISCLOSED IN THE AUDITED ACCOUNT OF THE APPELLANT. SUCH ERRONEOUS METHOD OF THE A.O. RESULTED INTO ADDITION OF DIFFERENCE IN EITHER CASE IN THE COST OF THE CONSTRUCTION ACCOUNT . HE ASSUMED THAT IN A SITUATION WHEN THERE IS A PROFIT IN THE CONSTR UCTION ACCOUNT RECAST ON COST BASIS, IT IMPLIED THAT THE COST OF T HE SALES WERE OVERSTATED AND THE CLOSING STOCK WAS UNDERSTATED TO THAT EXTEND. SIMILARLY, IT WAS FURTHER ASSUMED THAT WHEN THERE W AS LOSS ON THE RECAST OF ACCOUNT, THE CLOSING STOCK WAS UNDERVALUE D TO THAT EXTEND. SUCH EXERCISE OF THE A.O- WAS BASED ON ASSUMPTIONS WITHOUT ANY CORROBORATIVE EVIDENCE AND CONTRARY TO THE ACCEPTED ACCOUNTING PRINCIPLES. 7.1 THE AO, IN THE REMAND REPORT, GAVE HIS COMMENT THAT 'IN THIS YEAR THE RETURN OF INCOME IS ACCEPTED CONSIDERING T HE OUTCOME OF APPEAL' 7.2 THE SUBMISSION OF THE APPELLANT WAS THAT THE A. O. CONSIDERED ACTUAL COST OF THE PROJECT ON THE BASIS OF THE AUDI TED ANNUAL ACCOUNTS FOR THE PERIOD FROM 01-04-2005 TO 31-03-2012 WHEREA S THE APPELLANT COMPUTED WORK IN PROGRESS ON YEAR TO YEAR BASIS AFT ER CONSIDERING ACTUAL EXPENDITURE INCURRED IN THE RELEVANT A.Y. AN D ACCORDINGLY ESTIMATED TOTAL COST OF THE PROJECT. THE ASSESSEE C ONSIDERED AVERAGE COST OF LAND AND CONSTRUCTION SIMILAR TO THE WORKIN G OF THE A.O. IN THE RECASTING OF THE ACCOUNTS. THE A.O. MADE ASSESS MENT FOR THE A.Y. 2006-07 TO 2012-13 IN THE F.Y. 2013-14 WHEN HE WAS HAVING COMPLETE DETAILS OF THE ACTUAL EXPENDITURE INCURRED BY THE APPELLANT UPTO 31-03-2012. IT WAS IMPOSSIBLE FOR THE ASSESSEE TO HAVE THE DETAILS OF THE ACTUAL EXPENDITURE WHEN HE WAS MAKIN G VALUATION OF WORK IN PROGRESS FOR A.Y. 2006-07 TO A.Y, 2011-12 O N YEAR TO YEAR BASIS, THEREFORE, THE ENTIRE METHOD OF RE-COMPUTING THE COST OF CLOSING WORK IN PROGRESS STOCK WAS TOTALLY ERRONEOU S AND IMPRACTICAL. 7.3 THE APPELLANT CONTENDED THAT THE A.O. COMMITTED ERRORS IN ADOPTING THE FIGURE OF ACTUAL NET PROFIT AS HE WORK ED OUT NET PROFIT WITHOUT CONSIDERING THE FIGURES OF DEFERRED TAXES A ND INCOME TAX WHEREAS THE APPELLANT DID NOT CLAIM THE PROVISIONS FOR INCOME TAX OR DEFERRED TAX IN THE RETURN OF INCOME. THEREFORE, SU CH FACTUALLY ERRONEOUS ASSUMPTION OF THE AO RESULTED INTO DIFFER ENCE IN THE COMPARATIVE AMOUNT OF THE PROFIT. THE APPELLANT FUR NISHED A TABULAR CHART FOR A.Y. 2008-09 AND 2009-10 TO SUBSTANTIATE HIS CONTENTION. 7.4 THE AO, IN THE REMAND REPORT, GAVE HIS COMMENT THAT THE CONTENTION OF THE ASSESSEE WAS FACTUALLY CORRECT, H OWEVER, AFTER CONSIDERING THE SAME, THE ADDITION WAS MADE. IT(SS)A NOS. 179 & 180/AHD/15 WITH CO NOS. 134 & 135/AHD/2015 [DCIT VS. SHRI SUNIL P. SEWANI] A.YS. 2011-12 & 2012-13 - 6 - 7.5 THE APPELLANT SUBMITTED THAT THE LAND AREA I N RESPECT OF PROJECT SP-1 WAS WRONGLY ADOPTED BY THE AO AS 33 SQ. MTR. W HEREAS THE CORRECT MEASUREMENT OF THE AREA WAS 82.43 SQ. MTR. SIMILAR MISTAKES WERE COMMITTED BY THE A.O. FOR THE PROJECT SP-4 ALS O WHEREIN THE ACTUAL AREA OF THE LAND SOLD WAS 907.65 SQ. MTR. BU T THE A.O. ADOPTED THE FIGURE AT 780.65 SQ. MTR. ONLY. REGARDING THE S ALE OF CONSTRUCTED AREA THE ACTUAL AREA SOLD WAS 54880 SQ. FT. WHEREAS THE AO ADOPTED THE FIGURE OF SOLD AREA AT 51250 SQ. FT. ONLY. THE AVERAGE COST OF THE LAND AND CONSTRUCTION WERE ALSO WRONGLY ADOPTED. TH EREFORE, THE FACTUALLY WRONG FACTS AND FIGURES WERE ADOPTED BY T HE AO FOR WORKING OF COST OF WORK IN PROGRESS WHICH RESULTED INTO DISTORTED AND UNREALISTIC ADDITIONS. THE APPELLANT FURNISHED A TA BULAR CHART OF SP- 4 TO POINT OUT THE AFORESAID FACTS AND ERRORS COMMI TTED BY THE AO 7.6 IN THE REMAND REPORT THE A.O. MADE A VERY CASUA L REMARK THAT THE CONTENTION OF THE ASSESSEE WAS FACTUALLY INCORR ECT WITHOUT CLARIFY THE REASON. 7.7 THE APPELLANT FURNISHED THE WORKING OF THE A.O. , REGARDING THE COST OF GOODS SOLD IN THE PROJECT KNOWN AS SHOPPERS PLAZA-4 IN THE A.Y. 2008-09. HE CONTENDED THAT THERE WERE PATENT M ISTAKES IN THE WORKING OF THE AREA SOLD BECAUSE HE CONSIDERED THE SOLD AREA OF 14222 SQ. FT. ONLY AND THE COST OF THE TOTAL CONSTR UCTED AREA SOLD WAS ADOPTED AT RS.1,53,960/-. THE AVERAGE COST OF CONST RUCTION OF THE SOLD AREA WAS TAKEN @ RS.11 PER SQ. FT. ONLY. IT WA S EMPHASIZED BY THE APPELLANT THAT CONTRARY TO THIS RATE, THE AO AD OPTED THE COST OF CONSTRUCTION OF THE ENTIRE PROJECT @ RS. 918.62 PER SQ. FT, IT WAS AN EXAMPLE OF GLARING MISTAKE OF THE AO. 7.8 IN THE REMAND REPORT, THE AO MADE A COMMENT ON THE CONTENTION OF THE APPELLANT THAT THE CONTENTION OF THE ASSESSEE WAS FACTUALLY CORRECT, HOWEVER, AFTER CONSIDERING THE S AME, THE ADDITION WAS MADE. 7.9 FURTHER CONTENTION OF THE APPELLANT WAS THAT TH E A.O. COMMITTED SERIOUS ERROR IN ADOPTING THE FIGURE OF N ET INTEREST EXPENSES IN THE A.Y. 2009-10 WHILE ALLOCATING INTER EST OF RS.1,13,65,012/- TO DIFFERENT PROJECTS. IT WAS SUBM ITTED TO THE A.O. THAT INTEREST COST OF RS. 62,52,000/- WAS ALREADY A LLOCATED TO SHOPERS PLAZA-4, DESPITE THIS FACT, THE A.O. COMMITTED ERRO R IN DUPLICATION OF ALLOCATION OF THE INTEREST WHICH RESULTED INTO HIGH ER PROFIT. 7.10 IN THE REMAND REPORT, THE AO MADE A COMMENT O N THE CONTENTION OF THE APPELLANT THAT THE CONTENTION OF THE ASSESSEE WAS FACTUALLY CORRECT, HOWEVER, AFTER CONSIDERING THE S AME, THE ADDITION WAS MADE. 8. THE APPELLANT CONTENDED THAT THE A.O. DISALLOWED INTEREST EXPENDITURE ON THE GROUND THAT IT CANNOT BE CONSIDE RED AS REVENUE EXPENDITURE, THOUGH IT WAS A PART OF COST OF CONSTR UCTION, HE FURTHER IT(SS)A NOS. 179 & 180/AHD/15 WITH CO NOS. 134 & 135/AHD/2015 [DCIT VS. SHRI SUNIL P. SEWANI] A.YS. 2011-12 & 2012-13 - 7 - SUBMITTED THAT HE WAS ENGAGED IN THE BUSINESS OF DE VELOPMENT AND CONSTRUCTION OF HOUSING AND COMMERCIAL PROJECTS. WH EN THE UNITS OF THE PROJECTS REMAIN UNSOLD OR ARE UNDER CONSTRUCTIO N AS A PART OF INVENTORY, INTEREST INCURRED DURING CONSTRUCTION OF THE PROJECT IS ALLOWED AS BUSINESS EXPENDITURE U/S 36(1) (III) OF THE ACT. 8.1 THE ASSESSEE CONTENDED THAT THE ASSESSMENTS FOR THE A.Y. 2006- 07, 2008-09 AND 2009-10 WERE MADE U/S 143(3) WHEREI N THE ISSUES INCLUDING METHOD OF ACCOUNTING WERE ALREADY DEALT W ITH. THE DEPARTMENT HAD ACCEPTED THE METHOD OF ACCOUNTING FO LLOWED BY THE ASSESSEE AND ASSESSED THE PROJECT INCOME AS SHOWN B Y THE ASSESSEE. IN VIEW OF THE SAME, IT WAS EVIDENT THAT THE BOOKS OF ACCOUNT WERE CORRECT AND GAVE TRUE AND FAIR VIEW OF THE STATE OF BUSINESS AFFAIRS, THEREFORE, THERE WAS NO QUESTION TO RECAST THE TOTA L P&L ACCOUNT BY REJECTING THE BOOKS OF ACCOUNT. TO THE BEST OF KNOW LEDGE OF THE ASSESSEE, THE METHOD SUGGESTED BY THE A.O. DID NOT HAVE ANY LOCUS STANDI AS IT WAS NOT-PRESCRIBED UNDER ANY ACCOUNTIN G STANDARD NOR WAS IT PRESCRIBED UNDER ANY OF THE PROVISIONS OF TH E INCOME TAX ACT. 8.2 THE METHOD OF ACCOUNTING SUGGESTED BY THE A. O. COULD ONLY BE POSSIBLE AFTER COMPLETION OF THE PROJECT. THEREFORE , IT WAS THE DUTY OF THE A.O. TO SUGGEST THE ASSESSEE SOME MANNER AS TO HOW THE ASSESSEE SHOULD HAVE ADOPTED THE ACTUAL COST OF THE PROJECT IN THE FIRST YEAR WHEN THE VERY PROJECT WAS TO BE COMPLETED IN SUBSEQ UENT YEARS. IF THE SAME METHOD CANNOT BE ADOPTED AS SUGGESTED BY THE A .O., THE ASSESSEE DID NOT KNOW HOW TO DETERMINE THE INCOME T O BE OFFERED FOR TAX IN THE FIRST YEAR. THEREFORE, THE METHOD PROPOS ED BY THE A.O. WAS ERRONEOUS AND COULD NOT BE APPLIED IN THE REAL WORD . 8.3 THE CONTENTS OF THE ASSESSMENT ORDER, SUBMISSIO N OF THE APPELLANT AND REMAND REPORT OF THE A.O. WERE ANALYZ ED. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF DEVELOPING AND CONST RUCTING HOUSING AND COMMERCIAL PROJECTS. HE ADOPTED THE METHOD OF W ORK IN PROGRESS AS PRESCRIBED IN ACCOUNTING STANDARD-7 AND ACCOUNTI NG STANDARD -9 ISSUED BY ICAI. ADMITTEDLY, THIS METHOD WAS REGULAR LY FOLLOWED BY THE ASSESSEE AND THE SAME WAS ACCEPTED BY THE DEPAR TMENT IN THE REGULAR ASSESSMENTS. 8.4 THE A.O. CALLED FOR DETAILS SUCH AS COST OF LAN D, CONSTRUCTION, INTEREST AND OTHER EXPENSES. BOOKS OF ACCOUNT WERE ALSO CALLED FOR DURING THE ASSESSMENT PROCEEDINGS. THESE FACTS ARE EVIDENT FROM THE CONTENTS OF THE SHOW CAUSE NOTICE DATED 26-02-2014. AFTER EXAMINATION OF THE DETAILS SUCH AS CLOSING STOCK, P ROJECT-WISE EXPENSES OF COST OF LAND, CONSTRUCTION AND ALLOCATI ON OF INTEREST AMONGST THE PROJECTS AND OTHER DETAILS OF SALE OF L AND AND CONSTRUCTED AREA, THE A.O. RECAST CONSTRUCTION ACCO UNT. HE ADOPTED THE ACTUAL PROJECT-WISE COST OF THE PROJECTS FROM T HE AUDITED ANNUAL ACCOUNTS OF THE ASSESSEE FOR THE PERIOD FROM 01-04- 2005 TO 31-03- 2012. THIS LINE OF EXERCISE WAS, TO MY UNDERSTANDIN G, BOUND TO RESULT INTO DIFFERENCE IN THE PROFIT WORKED OUT IN THE REC AST ACCOUNT FROM IT(SS)A NOS. 179 & 180/AHD/15 WITH CO NOS. 134 & 135/AHD/2015 [DCIT VS. SHRI SUNIL P. SEWANI] A.YS. 2011-12 & 2012-13 - 8 - THE PROFIT AS SHOWN IN THE ACCOUNTS OF THE ASSESSEE BECAUSE THE ASSESSEE COMPUTED WORK IN PROGRESS ON YEAR TO YEAR BASIS AFTER CONSIDERING ACTUAL EXPENDITURE INCURRED IN THE RELE VANT ASSESSMENT YEAR. HE HAD TO.-ESTIMATE HIS INCOME ON THAT BASIS ONLY. THE DIFFERENCE WAS BECAUSE OF THE VERY FACT THAT THE A. O. WAS HAVING COMPLETE DETAILS OF THE ACTUAL EXPENDITURE INCURRED FOR THE PROJECTS UPTO 31-03-2012. IT WAS IMPOSSIBLE FOR THE ASSESSEE TO HAVE THESE DETAILS OF ACTUAL EXPENDITURE WHEN HE WAS MAKING VA LUATION OF THE WORK IN PROGRESS FOR A.Y. 2006-07 TO 2011-12 ON YEA R TO YEAR BASIS. 9. THE APPELLANT FURNISHED SUBMISSION REGARDING THE METHOD OF ACCOUNTING WHICH WAS REGULARLY FOLLOWED IN THE BUSI NESS AND ALSO THE ERRONEOUS METHOD ADOPTED BY THE AO. AFTER PROPER EX AMINATION OF THE SUBMISSION OF THE APPELLANT, IT WAS OBSERVED TH AT THERE WERE APPARENT INCONSISTENCIES IN THE FINDINGS OF THE AO FOR REJECTION OF BOOKS OF ACCOUNT AND ALSO PATENTLY WRONG AND ERRONE OUS ASSUMPTIONS WERE APPLIED IN THE RECASTING OF CONSTRUCTION ACCOU NT SO MUCH SO THAT THE AO CONVENIENTLY IGNORED THE RESULT OF RECAST CO NSTRUCTION ACCOUNT WHEN THE WORKING RESULTED INTO MINUS FIGURES AND ON THE OTHER HAND, WHEN THE WORKING RESULTED INTO THE FIGURE OF PROFIT , THE SAME WAS CONSIDERED FOR ADDITION. IT SEEMS THAT THE AO ADOPT ED TOTALLY CASUAL APPROACH IN HANDLING THE ISSUE AND ARRIVED AT THE F INDINGS WHICH WERE NOT EVEN REMOTELY HAVING ANY RELEVANCE TO THE FACTS OF THE CASE. 9.1 AS DISCUSSED IN DETAIL IN THE FOREGOING PARAS, THE A.O. ADOPTED A UNIQUE METHOD WHICH COULD POSSIBLY BE APPLICABLE FOR THE PAST BUSINESS ACTIVITY ONLY IN FUTURE. IN OTHER WORDS, T HERE IS A LOT OF FORCE IN THE CONTENTION OF THE ASSESSEE THAT THE A.O. WAS HAVING INFORMATION ABOUT THE ACTUAL EXPENDITURE INCURRED F OR EACH ASSESSMENT YEAR UNDER CONSIDERATION, BECAUSE THE PR OJECTS WERE ALMOST COMPLETED WHEN HE RECAST THE CONSTRUCTION AC COUNT AND MADE THE WORKING OF THE VALUE OF WORK IN PROGRESS. IT IS ALSO A FACT ON THE RECORD THAT THE A.O. ADOPTED PICK AND CHOOSE METHOD DESPITE THE FACT THAT HIS WORKING WAS PATENTLY WRONG AND CONTRARY TO THE FACTS OF THE CASE. THE FINDINGS OF THE A.O. TO JUSTIFY HIS ACTIO N OF REJECTING BOOKS OF ACCOUNT WERE TOTALLY DISTORTED AND FACTUALLY UNS USTAINABLE. 9.2 THEREFORE, AFTER HAVING REGARD TO ALL THE FACTS OF THE CASE, SUBMISSION OF THE APPELLANT AND REMAND REPORT OF TH E A.O. IN MY CONSIDERED OPINION, THE ACTION OF THE A.O. WAS NOT SUSTAINABLE, ACCORDINGLY, THESE GROUNDS OF APPEAL ARE ALLOWED. THE CIT(A) ACCORDINGLY REVERSED THE ACTION OF THE A O AND DELETED THE ADDITION SO MADE TOWARDS UNDERSTATEMENT OF BUSI NESS PROFITS. 7. AGGRIEVED, THE REVENUE PREFERRED APPEAL BEFORE T HE TRIBUNAL. IT(SS)A NOS. 179 & 180/AHD/15 WITH CO NOS. 134 & 135/AHD/2015 [DCIT VS. SHRI SUNIL P. SEWANI] A.YS. 2011-12 & 2012-13 - 9 - 8. THE LEARNED DR FOR THE REVENUE RELIED UPON THE O RDER PASSED BY THE AO AND SUBMITTED THAT THE AO HAS MADE A DETA ILED RE- WORKING OF CONSTRUCTION ACCOUNT AT COST AND ALLOC ATED THE EXPENDITURE AND INTEREST COSTS IN RELATION TO VARIO US PROJECTS TO ARRIVE AT THE TRUE PROFITS DEDUCIBLE FROM THE VARIO US PROJECTS CONCERNING DIFFERENT ASSESSMENT YEARS. IT WAS FOUN D BY THE AO THAT ACCOUNTS SHOWING PROFITS ARISING FROM THE PROJECTS DEVELOPED AND SOLD HAVE NOT BEEN CORRECTLY DRAWN AND THE ASSESSEE HAS OVERSTATED THE COSTS OF SALE AND UNDERSTATED THE CLOSING STOCK WHICH HAS RESULTED IN LOWER DECLARATION OF BUSINESS PROFITS. THE LEARNED DR SUBMITTED THAT THE BOOKS OF ACCOUNTS OF THE ASSESSE E WAS RIGHTLY REJECTED BY INVOKING PROVISIONS OF SECTION 145(3) O F THE ACT IN THE CIRCUMSTANCES AS IT FAILED TO GIVE A TRUE AND FAIR PICTURE OF THE AFFAIRS OF THE CONSTRUCTION BUSINESS OF THE ASSESSE E. IT WAS CONTENDED THAT THE CIT(A) HAS REVERSED THE ACTION O F AO WITHOUT MAKING OBJECTIVE ANALYSIS OF FACTS. 9. THE LEARNED SENIOR COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, SUBMITTED AT THE OUTSET THAT ASSESSMENT YEAR BEGINN ING FROM 2006-07 TO 2012-13 ARE SUBJECT MATTER OF ASSESSMENT SCHEME PERTAINING TO SEARCH ASSESSMENT. IT WAS POINTED OUT THAT THE ASS ESSMENTS CONCERNING AYS 2006-07 TO 2010-11 WERE NOT PENDING AT THE TIME OF SEARCH AND CONSEQUENTLY DID NOT ABATE AND THUS ADDI TIONS MADE UNDER S.153A OF THE ACT FOR THESE ASSESSMENT YEARS HAVE BEEN SET ASIDE AND QUASHED IN THE APPELLATE PROCEEDINGS DUE TO ABSENCE OF ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF T HE SEARCH. THEREFORE, REMAINING AYS. 2011-12 & 2012-13 IN QUES TION ALONE ARE SUBJECT TO FACTUAL ANALYSIS BEFORE THE TRIBUNAL FOR THE FIRST TIME WITHOUT ANY PRECEDENT ON FACTS. IT(SS)A NOS. 179 & 180/AHD/15 WITH CO NOS. 134 & 135/AHD/2015 [DCIT VS. SHRI SUNIL P. SEWANI] A.YS. 2011-12 & 2012-13 - 10 - 9.1 IT WAS SUBMITTED THAT THE AO HAS TOTALLY MISCON STRUED AND MISCONCEIVED THE FACTUAL MATRIX FOR SUBJECT ASSESSM ENT YEARS. IT WAS SUBMITTED THAT THE ACCOUNTS OF THE ASSESSEE ARE AUDITED AND THE AO HAS NOT FOUND ANY UNDERSTATEMENT OF SALES OR OVE R STATEMENT OF EXPENSES PER SE . THE AO HAS MERELY INDULGED IN RE-ADJUSTMENT OF COST OF LAND, COST OF CONSTRUCTION, COST OF SALES A ND CLOSING STOCK IN THE CONSTRUCTION ACCOUNT FROM THE VERY FIGURES AVAI LABLE IN THE BOOKS OF ACCOUNTS. THE INTEREST COSTS HAVE BEEN RE ALLOCATED ARBITRARILY AND WITHOUT ANY SOUND BASIS RESULTING I N DOUBLE CHARGE AT PLACES. THE LEARNED SENIOR COUNSEL STRONGLY HOISTE D THAT THE METHOD ADOPTED BY THE AO WHILE COMPUTING THE ESTIMA TED NET PROFIT IS PATENTLY WRONG AND BEYOND CONTEMPLATION. THE LE ARNED SENIOR COUNSEL INTER ALIA REFERRED TO THE NET PROFIT DETERMINED BY THE AO TO BE IN NEGATIVE I.E. AT LOSS OF RS.1,76,41,935/- FOR AY 2010-11 AS AGAINST THE ACTUAL PROFIT OF RS.20,89,570/- OFFERED BY THE ASSESSEE HIMSELF AND CONSEQUENTLY, DETERMINED LOSS AT RS.1,9 7,31,505/- FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2010-11. HOWEVER, ODDLY ENOUGH, THE AO HAS ULTIMATELY CONVENIENTLY IG NORED THE FAVOURABLE POSITION EMERGING IN SOME YEARS AND THUS NOT ASSESSED THE TOTAL INCOME AT LOSS WHEREVER THERE IS A LOSS O R WHEREVER THERE IS A DECREASE IN THE PROFIT IN THE EARLIER ASSESSMENT YEARS. THE LEARNED SENIOR COUNSEL THUS SUBMITTED THAT SUCH INSTANCES W OULD VINDICATE THE STANCE OF THE ASSESSEE THAT THE APPROACH OF THE AO IS WHOLLY WITHOUT RATIONALE. THE LEARNED SENIOR COUNSEL THER EAFTER REFERRED TO THE REMAND REPORT DATED 13.12.2014 AND POINTED OUT THAT THE AO HIMSELF FOUND THE CONTENTION OF THE ASSESSEE TO BE FACTUAL CORRECT AT SEVERAL PLACES BUT THE EFFECT FOR THE SAME WAS NOT GIVEN IN THE REMAND PROCEEDINGS. THE NET PROFITS WERE ARTIFICIA LLY ARRIVED FROM THE RE-ADJUSTMENTS OF THE COSTS INCURRED BY THE ASS ESSEE. IT(SS)A NOS. 179 & 180/AHD/15 WITH CO NOS. 134 & 135/AHD/2015 [DCIT VS. SHRI SUNIL P. SEWANI] A.YS. 2011-12 & 2012-13 - 11 - 9.2 THE LEARNED SENIOR COUNSEL THEREAFTER ASSAILED THE ACTION OF THE AO TO INVOKE THE PROVISIONS OF SECTION 145(3) OF TH E ACT AND CONTENDED THAT SUCH ACTION OF THE AO IS DEVOID OF A NY LEGITIMACY. THE LEARNED SENIOR COUNSEL RELIED UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF PR.CIT VS. GARDEN SILK MILLS LTD. [2016] 388 ITR 237 (GUJ) FOR THE PROPOSITION THAT WHERE THE AO COULD NOT PINPOINT ANY SPECIFIC DEFECT IN THE WORKI NG RESULT, THE ADDITIONS MADE ON ACCOUNT OF UNDER VALUATION OF WOR K-IN-PROGRESS COULD NOT BE SUFFICIENT TO REJECT THE BOOKS OF ACCO UNT. THE LEARNED SENIOR COUNSEL FURTHER RELIED UPON THE DECISION IN THE CASE OF CIT VS. CEREMIC INDUSTRIES [2017] 396 ITR 50 (RAJ) & CIT VS. JANANAMANDAL LTD. [2013] 214 TAXMANN.COM 49 (ALL.) FOR THE PROPOSITION THAT THE REJECTION OF ACCOUNTS ON ACCOU NT OF INCONSISTENCY IN INPUT AND OUTPUT RATIO ETC. IS NOT PERMISSIBLE WHERE THE DEVIATION HAS BEEN PROPERLY EXPLAINED BY THE AS SESSEE. 9.3 THE LEARNED SENIOR COUNSEL, IN ESSENCE, SUBMITT ED THAT THE ACTION OF THE AO WAS WITHOUT ANY BASIS WHICH HAS BE EN RIGHTLY REVERSED BY THE CIT(A) ON PROPER APPRECIATION OF EV IDENCE PLACED BEFORE IT AND IN SYNC WITH POSITION OF LAW AS INTER PRETED BY THE JUDICIARY. THE LEARNED SENIOR COUNSEL SUBMITTED TH AT THE CONCLUSION DRAWN BY THE CIT(A) DOES NOT WARRANT ANY INTERFEREN CE FROM THE TRIBUNAL. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. THE ADDITION OF RS.1,70,39,124/- TO THE TAXABLE BUSINES S INCOME FROM THE CONSTRUCTION BUSINESS BY RESORTING TO RE-CASTING OF CONSTRUCTION ACCOUNT REPRESENTING CLOSING STOCK, WORK-IN-PROGRES S AND DIRECT EXPENSES BY THE AO IS IN CONTROVERSY. THE QUESTION IS ESSENTIALLY FACTUAL IN NATURE. IT(SS)A NOS. 179 & 180/AHD/15 WITH CO NOS. 134 & 135/AHD/2015 [DCIT VS. SHRI SUNIL P. SEWANI] A.YS. 2011-12 & 2012-13 - 12 - 10.1 IT IS THE CASE OF THE REVENUE THAT THE ACTION OF THE AO IN MAKING ENHANCEMENT TO THE DECLARED NET PROFITS BY R E-CALCULATING THE COST OF SALES AND CLOSING STOCK OF VARIOUS PROJECTS IS FULLY JUSTIFIED IN VIEW OF THE EXHAUSTIVE WORKING MADE BY THE AO AS ANNEXED TO THE ASSESSMENT ORDER. THE ASSESSEE, ON THE OTHER HAND, HAS FOUND FAULT WITH THE ACTION OF THE AO ON MULTIPLE COUNTS BOTH O N FACTS AS WELL AS ON FIRST PRINCIPLES AND CONTENDED THAT THE ACTIO N OF THE AO IS NOT SUSTAINABLE ON FACTS OR IN LAW. IT IS THE CASE OF THE ASSESSEE THAT ALLEGATION OF THE AO TOWARDS INCORRECT REFLECTION O F BUSINESS PROFITS DERIVED FROM CONSTRUCTION BUSINESS BY ASSESSEE IS W ITHOUT ANY FOUNDATION. THE AO HAS MERELY PROCEEDED ON ASSUMPT IONS AND SURMISES IN A MOST ARBITRARY MANNER AND REJECTED TH E BOOKS OF ACCOUNTS AND APPLIED HIS OWN ARBITRARY METHOD FOR W ORKING OUT THE PROFITS OF THE ASSESSEE DURING AYS. 2006-07 TO 2012 -13. IT IS THE CONTENTION OF THE ASSESSEE THAT BOOKS OF ACCOUNTS A RE AUDITED BY THE INDEPENDENT AUDITORS EQUIPPED WITH REQUISITE EXPERT ISE AND WELL VERSED WITH PRINCIPLES OF ACCOUNTANCY AND ACCOUNTIN G STANDARDS AND THEREFORE A NORMAL PRESUMPTION WOULD ARISE THAT THE BOOKS ARE RELIABLE AND GIVES TRUE PICTURE OF HIS BUSINESS AFF AIRS. THUS, THE ONUS WOULD SHIFT HEAVILY ON THE AO FOR DISCARDING T HE BOOKS RESULTS. IT IS FURTHER CASE OF THE ASSESSEE THAT THE ASSESSM ENTS FOR AYS. 2006- 07, 2008-09 & 2009-10 WERE FRAMED UNDER S.143(3) OF THE ACT WHEREIN THE BOOK RESULTS DRAWN FOLLOWING THE PRESCR IBED METHOD OF ACCOUNTING ON SIMILAR LINES WAS DULY ACCEPTED IN TH E SCRUTINY ASSESSMENT. 10.2 A PERUSAL OF THE ORDER OF THE CIT(A) GIVES AN IMPRESSION THAT THE AO HAS COMMITTED SOME FACTUAL ERRORS WHILE DETE RMINING THE ESTIMATED PROFITS YEAR AFTER YEAR. SIMILAR FACTUAL ERRORS ARE STATED TO BE COMMITTED WHILE ALLOCATING THE INTEREST COSTS OV ER VARIOUS IT(SS)A NOS. 179 & 180/AHD/15 WITH CO NOS. 134 & 135/AHD/2015 [DCIT VS. SHRI SUNIL P. SEWANI] A.YS. 2011-12 & 2012-13 - 13 - PROJECTS. THE CORRECT MEASUREMENT OF VARIOUS PROJE CTS WAS STATED TO BE MISTAKEN WHICH LED TO SOME ANOMALY IN WORKING. WE OBSERVE FROM THE FINDINGS RECORDED BY THE CIT(A) THAT THE A O CONSIDERED AND REGROUPED THE ACTUAL COSTS OF THE PROJECT PICKI NG UP THE FIGURES FROM AUDITED ANNUAL ACCOUNTS FOR THE PERIOD COVERIN G AYS. 2006-07 TO 2012-13 WHEREAS THE ASSESSEE COMPUTED WORK-IN-PR OGRESS ON YEAR TO YEAR BASIS ON THE BASIS OF ACTUAL EXPENDITURE IN CURRED. IT IS THE CONTENTION OF THE ASSESSEE THAT THE AO AT THE TIME OF ASSESSMENT IN FY 2013-14 WAS HAVING COMPLETE AND AUTHENTIC DETAIL S OF FACTUAL EXPENDITURE INCURRED BY THE ASSESSEE UP TO 31.03.20 12 WHEREAS IT WAS IMPOSSIBLE FOR THE ASSESSEE TO HAVE THE DETAILS OF ACTUAL EXPENDITURE TO BE INCURRED AT THE TIME OF VALUATION OF WORK-IN- PROGRESS FOR AY 2006-07 TO 2011-12 ON YEAR-TO-YEAR BASIS. THIS HAS ESSENTIALLY RESULTED IN DEVIATION IN THE PROFITS DE DUCTED BY THE ASSESSEE VIS--VIS BY THE AO ON YEAR TO YEAR BASIS. IT WAS POINTED OUT THAT THE CIT(A) AFTER TAKING NOTE OF THE OBSERV ATIONS MADE BY THE AO IN THE REMAND REPORT HAS CONCLUDED THAT THE ACTION OF THE AO IN RE-COMPUTING THE PROJECT-WISE PROFIT IS MARRED WITH ADHOCISM AND PICK & CHOOSE METHOD. THE CIT(A) ACCORDINGLY R EVERSED THE ACTION OF THE AO IN TOTO AND UPHELD THE WORKING RESULTS DECLINED BY THE ASSESSEE. 10.3 AT THIS STAGE, WE ALSO NOTE THAT THE ASSESSEE HAS STRONGLY OBJECTED TO THE REJECTION OF BOOKS OF ACCOUNT WITHO UT ANY COGENT REASONS. IT WAS POINTED OUT THAT WRONG AND ERRONEO US ASSUMPTIONS WERE APPLIED IN RE-CASTING THE CONSTRUCTION ACCOUNT ON COST BASIS WHEREBY THE POSITIVE DIFFERENCE WAS ADDED TO THE CL OSING WORK-IN- PROGRESS AS DISCLOSED IN THE AUDITED ACCOUNTS WHERE AS THE NEGATIVE DIFFERENCE IN THE WORK-IN-PROGRESS WAS ALSO ADDED T O THE CLOSING WORK-IN-PROGRESS. THE ACTION OF THE AO IMPLIES THA T WHERE THE COST IT(SS)A NOS. 179 & 180/AHD/15 WITH CO NOS. 134 & 135/AHD/2015 [DCIT VS. SHRI SUNIL P. SEWANI] A.YS. 2011-12 & 2012-13 - 14 - OF SALES ARE OVERSTATED THE CLOSING STOCK WOULD BE CORRESPONDINGLY UNDERSTATED. BUT, HOWEVER IT WAS SIMULTANEOUSLY AS SUMED THAT IN THE CASE OF LOSS, THE CLOSING STOCK IS ALSO UNDER V ALUED TO THIS EXTENT. SUCH ACTION OF THE AO IS CONTRARY TO RUDIMENTARY PR INCIPLES OF ACCOUNTING. IT IS THE CASE OF THE ASSESSEE THAT AS PER THE ACCEPTED ACCOUNTING PRINCIPLES AS APPLICABLE TO THE CONSTRUC TION BUSINESS, THE COST IS REQUIRED TO BE ESTIMATED AT THE END OF EACH YEAR ON THE BASIS OF TECHNICAL ESTIMATION AND AFTER ESTIMATING THE PR OJECT COST, THE ASSESSEE IS REQUIRED TO DETERMINE THE COST OF SALE TO BE CHARGED PROFIT AND LOSS ACCOUNT AGAINST THE SALE VALUE. TH E SALE VALUE HAS BEEN RECOGNIZED ON A PERCENTAGE COMPLETION BASIS RE GARDLESS OF PENDENCY IN COMPLETION OF WORK OF THE PROJECT. 10.4 HAVING TAKEN NOTE OF THE PRINCIPAL CONTENTIONS LED ON BEHALF OF THE ASSESSEE, WE HOWEVER FIND THAT WHILE ADJUDICATI NG THE ISSUE, THE APPROACH OF THE CIT(A) APPEARS TO BE QUITE GENERIC AND DEVOID OF OBJECTIVITY. WHILE POINTING OUT SOME ERRORS OF LES SER IMPACT HERE AND THERE, THE CIT(A) HAS NOT COMPARED THE PROJECT- WISE WORKING AS PER THE ASSESSEE AND AS PER THE AO TO LOCATE THE AR EA OF DIFFERENCE. THE CIT(A) HAS MERELY SET ASIDE THE WORKING OF THE AO WITHOUT BRINGING ON BOARD, THE COMPARISON WITH THE WORKING SHOWN BY THE ASSESSEE. WE DO NOT FIND REFERENCE TO SUCH WORKING ANYWHERE EITHER IN THE ASSESSMENT ORDER OR IN THE CIT(A)S ORDER. IT IS THUS DIFFICULT TO EXACTLY GAUGE PURPORTED ANOMALY AND DEVIATION IN THE WORKING OF THE AO QUA THAT OF ASSESSEE. THE CIT(A) HAS MERELY FOUND FAU LT WITH THE REMAND REPORT TO BE WITHOUT ANY EXPLANATIO N. THE AO HAS ALREADY PROVIDED WORKING IN THE ASSESSMENT ORDER. IN THE ABSENCE OF ANY ADDITIONAL EVIDENCE, WE DO NOT SEE ANY OSTENSIB LE REASON FOR AO TO REDO THE SAME EXERCISE BASED ON SOME SUBMISSIONS OF THE ASSESSEE. THE ONUS WAS EQUALLY PLACED ON THE ASSES SEE TO POINT OUT IT(SS)A NOS. 179 & 180/AHD/15 WITH CO NOS. 134 & 135/AHD/2015 [DCIT VS. SHRI SUNIL P. SEWANI] A.YS. 2011-12 & 2012-13 - 15 - EXACT AREA OF DIFFERENCE AND EXPLANATION THEREON. THE CIT(A) HAS APPARENTLY ABDICATED HIS RESPONSIBILITIES AND SHIFT ED THE ONUS AGAIN ON THE AO WITHOUT ANY COGENT REASON. IN THE ABSENC E OF OBJECTIVE COMPARISON AVAILABLE FOR THE RESULTANT PROFITS DECL ARED BY THE ASSESSEE AND COMPUTED BY THE AO, WE CONSIDER IT BEF ITTING AND EXPEDIENT TO RESTORE THE MATTER BACK TO THE FILE OF THE CIT(A). THE CIT(A) SHALL CALL FOR THE COMPARATIVE ANALYSIS AND OTHER FACTUAL DETAILS AND LOOK INTO ALL THE ASPECTS AFRESH OBJECT IVELY AND IN ACCORDANCE WITH LAW. NEEDLESS TO SAY, PROPER OPPOR TUNITY SHALL BE PROVIDED TO ASSESSEE IN THIS REGARD. THE ISSUE IS ACCORDINGLY SET ASIDE TO THE FILE OF THE CIT(A) FOR DE NOVO ADJUDICATION. 10.5 WHILE COMING TO AFORESTATED CONCLUSION, WE ALS O TAKE NOTE OF THE OBJECTION RAISED ON BEHALF OF THE ASSESSEE FOR REJECTION OF BOOKS BY INVOKING SECTION 145(3) OF THE ACT. HOWEVER, WE ARE UNABLE TO NOTICE ANY SUCH OBJECTION HAS BEEN RAISED BEFORE LO WER AUTHORITIES. IN THE REVENUES APPEAL, IT WILL BE DIFFICULT TO AP PRECIATE SUCH TECHNICAL ASPECT WITHOUT NOTICE TO OTHER SIDE. THU S, SUCH GROUND REQUIRES TO BE SHUNNED. BE IT AS IT MAY, WE FIND T HAT THE AO HAS GIVEN A VERY DETAILED WORKING FOR DETERMINING TRUE PROFITS AND CONSEQUENT DEFECT IN THE DETERMINATION OF PROFITS. THUS, WE DO NOT FIND ANY SUBSTANCE IN SUCH OBJECTION. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES. IT(SS)A NOS. 179 & 180/AHD/15 WITH CO NOS. 134 & 135/AHD/2015 [DCIT VS. SHRI SUNIL P. SEWANI] A.YS. 2011-12 & 2012-13 - 16 - CO NO. 134/AHD/2015 AY 2011-12 12. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE RE AD AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) ERRED IN NOT APPRECIATING THE CONTENTIONS RAISED BEFORE HIM BY T HE RESPONDENT THAT THE ADDITION OF RS.1,70,39,124 MADE BY THE ASSESSING OF FICER BY REJECTING THE BOOKS OF ACCOUNT, WAS BAD IN LAW FOR THE REASON THA T THE SAID ADDITION IS NOT BASED UPON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF THE SEARCH, NOTWITHSTANDING THE FACT THAT THE LEARNED C .I.T. (APPEALS] HAS DELETED THE ADDITION ON MERITS. 13. AT THE TIME OF HEARING, IT WAS FAIRLY SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE LEGAL OBJECTION TOWARDS VALIDITY OF ASSESSMENT UNDER S.153A OF THE ACT RAISED IN THE CROSS OBJECTION IS NOT SUSTAINABLE FOR THE IMPUGNED ASSESSMENT YEARS AND THEREFORE THE SAM E MAY BE TREATED AS NOT PRESSED. 14. IN THE RESULT, CROSS OBJECTION IN CO NO. 134/AH D/2015 IS THUS DISMISSED AS NOT PRESSED. IT(SS)A NO. 180/AHD/2015 AY 2012-13 15. THE GROUNDS OF APPEAL RAISED BY THE REVENUE REA D AS UNDER: 1) THE LD. CIT(A) HAS ERRED ON LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.1,79,98,200/- BEING INCREASE IN THE NET PROFIT BY REJECTING BOOKS OF ACCOUNT U/S.145(3) OF THE ACT . 16. THE ISSUE TOWARDS ADDITION OF RS.1,79,98,200/- TO THE NET PROFIT FLOWING FROM THE RECAST OF CONSTRUCTION ACCOUNT BY AO BY REJECTING BOOKS OF ACCOUNTS IS IDENTICAL AND IN CONTINUATION TO AY 2011-12. WE THEREFORE, IN PARITY, HOLD THAT SIMILAR TREATMENT B E GIVEN TO THE AY 2012-13 AS WELL. THE ORDER OF THE CIT(A) IS ACCORD INGLY SET ASIDE TO IT(SS)A NOS. 179 & 180/AHD/15 WITH CO NOS. 134 & 135/AHD/2015 [DCIT VS. SHRI SUNIL P. SEWANI] A.YS. 2011-12 & 2012-13 - 17 - THE FILE OF THE AO AND THE CIT(A) IS DIRECTED TO EX AMINE THE ISSUE DE NOVO IN ACCORDANCE WITH LAW ALSO AFTER OBTAINING RELEVAN T FACTS IN THIS REGARD FROM THE ASSESSEE AS MAY BE CONSIDERED EXPED IENT FOR DISPOSAL OF THE APPEAL. 17. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES. CO NO. 135/AHD/2015 AY 2012-13 18. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE RE AD AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) ERRED IN NOT APPRECIATING THE CONTENTIONS RAISED BEFORE HIM BY T HE RESPONDENT THAT THE ADDITION OF RS.1,79,98,200/- MADE BY THE ASSESSING OFFICER BY REJECTING THE BOOKS OF ACCOUNT, WAS BAD IN LAW FOR THE REASON THA T THE SAID ADDITION IS NOT BASED UPON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF THE SEARCH, NOTWITHSTANDING THE FACT THAT THE LEARNED C .I.T. (APPEALS) HAS DELETED THE ADDITION ON MERITS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) ERRED IN NOT APPRECIATING THE CONTENTIONS RAISED BEFORE HIM BY T HE RESPONDENT THAT THE ADDITION OF RS.2,50,000/- MADE BY THE ASSESSING OFF ICER ON THE BASIS OF THE NOTINGS ON THE SEIZED PIECE OF PAPER IN SPITE OF TH E FACT THAT THE ASSESSEE HAD ALREADY MADE SUFFICIENT DISCLOSURE TO COVER SUCH NO TINGS. 19. GROUND NO.1 IS NOT PRESSED. THUS, GROUND NO.1 IS DISMISSED AS NOT PRESSED. 20. GROUND NO.2 WAS ALSO STATED TO BE NOT PRESSED I N THE BAR OWING TO SMALLNESS OF THE ADDITION. GROUND NO.2 IS ACCOR DINGLY DISMISSED AS NOT PRESSED. IT(SS)A NOS. 179 & 180/AHD/15 WITH CO NOS. 134 & 135/AHD/2015 [DCIT VS. SHRI SUNIL P. SEWANI] A.YS. 2011-12 & 2012-13 - 18 - 21. IN THE RESULT, CROSS OBJECTION IN CO NO. 135/AH D/2015 IS THUS DISMISSED AS NOT PRESSED. 22. IN THE COMBINED RESULT, BOTH APPEALS OF THE REV ENUE ARE ALLOWED FOR STATISTICAL PURPOSES AND BOTH CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED AS NOT PRESSED. SD/- SD/- (MADHUMITA ROY) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 10/07/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- '. / REVENUE 2. / ASSESSEE ). *+, - / CONCERNED CIT 4. -- / CIT (A) 0. 123 455+,6 +,$6 78* / DR, ITAT, AHMEDABAD 9. 3:; < / GUARD FILE. BY ORDER / 6 /7 +,$6 78* THIS ORDER PRONOUNCED IN OPEN COURT ON 10/07/2019