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2019 (6) TMI 463 - AT - Income TaxRejection of books u/s 145(3) - applicability of method of accounting - project completion method OR percentage completion method - HELD THAT:- Where the AO himself has confirmed production of books of account and other details before him, there seems no reason for the AO to hold that no books of account or bills/vouchers or evidences for the impugned year were produced before him. Moreover, when the revenue could not bring before us any contrary material against the view held by the Ld. CIT(A) in the impugned order, the rejection of books of account of the assessee is uncalled for and this question is answered against the revenue. Adoption of project completion method of accounting by the assessee - Assessee’s business came into existence from 11.03.2003 and since then it has been consistently following project completion method of accounting - assessee has never deviated from such method of accounting since the inception of the business and that the revenue had also accepted project completion method and profit shown by the assessee during the assessment proceedings for AY 2014-15 in assessee’s own case It is well settled that the project completion method is one of the recognized method of accounting and as the assessee has consistently been followed such recognized method of accounting thus in the absence of any prohibition or restriction under the act for doing so, it can’t be held that the decision of the CIT(A) was erroneous or illegal in any manner. The judgement in the case of “CIT vs. Realest Builders & Services Ltd.” [2008 (5) TMI 6 - SUPREME COURT] relied by the ld. DR on method of accounting is rather in favor of the assessee and against the revenue in the peculiar facts of the present case. From computation of income and factual matrix of the case, it is evident that the AO has committed error in estimation of profit from sale of shops by wrongly adopting area sold to be 4,500 sq. yards as against 92.90 sq. mts. of actual sales which has been demonstrated by the Ld. AR before us (APB, Pgs. 1 to 4). We also find merit in the argument of the Ld. AR that during the impugned year under consideration only one shop measuring 92.90 sq. mts. was sold for ₹ 7,50,000 as against sale of ₹ 6,77,26,260 wrongly worked out by the AO in his order. No merit and substance in the submissions of the revenue. Addition u/s 68 - assessee could not establish the genuineness of advances from customers as the letters issued for verification were received back unserved - HELD THAT:- The assessee in fact has not taken any advances from customers during the impugned assessment year but these were old balances brought forward from previous assessment years which is supported by the copies of ledger accounts of the advances received from customers. Considering all it is a trite principle of law that addition of ₹ 50,10,000 regarding credit balances brought forward from earlier assessment years cannot be made. No merit in the ground raised by the revenue in respect old credit balances and therefore we upheld the order of the CIT(A) in deleting the addition. - Decided in favour of assessee.
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