TMI Blog2018 (3) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of any specific amount of direct expenses verified. Merely for saying it could not be taken a lacuna in the books of account of the assessee and take the same as a reason for rejecting the books of account that were maintained by assessee in regular course of its business. The finding of "on-money transactions" in the appellant's case by the authorities below is found without any basis and found perverse on facts. It, therefore, could not be a reason for rejecting the books of account maintained by the assessee in regular course of business. The same, therefore, could not be taken a valid basis for change of method regularly employed by the appellant. The Income-tax Authority, therefore, has no option or jurisdiction to meddle in the matter either by directing the assessee to maintain its account in a particular manner or adopting a different method for valuing work-in-progress. It also cannot recompute income by adopting any method other than that regularly employed by the appellant in a case like this nor make the same as basis to reject its accounts. - Decided in favour of assessee. - D.B. Income Tax Appeal No. 3, 4 / 2018 - - - Dated:- 20-2-2018 - K. S. Jhaveri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts on the sole ground that the assessee has not followed Accounting Standard-7 and AS-9 for recognition of revenue, though the AO had examined actual allotment agreement and had then reached the conclusion that revenue could be reliably recognized on the basis of Percentage Completion Method? iii) Whether on the facts and circumstances of the case the tribunal has erred in confirming deletion the disallowance made under Section 40(a)(ai) 40A(3) on the ground that assessee has followed project completion method and expenses have not been claimed ignoring the fact that said expenses were included in work- in-progress, to be claimed as revenue expenses subsequently? 4. The facts of the case are that the appellant had filed return of income on 29.9.2011 declaring nil income. Subsequently, the same was selected for scrutiny and notice u/s 143(2) was issued on 1.8.2012. The appellant is a real state developer and has launched a residential scheme at Ajmer Road, Jaipur. The AO observed that the appellant had not prepared any P L account for the year under consideration. The company has prepared a statement of work in progress and capitalized all sort of direct and indire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there was material before the Income-tax Officer to lead him to the conclusion that a proper statement of income, profits and gains could not be deduced from the material placed before him. All he said was that the profits appeared to be somewhat low and there was no stock register'. The want of a stock register was, in that particular case, not a very serious defect because the account books had been found and accepted as correct and disclosed a true state of affairs. It cannot therefore be said that that case laid down as a proposition of law that the want of a stock register by which a proper check could be made was not such a serious defect as to make the proviso to s. 13 inapplicable. 4.4 He has also relied on the decision in the case of Commissioner Of Income Tax, vs. M/S Bilahari Investment (P) Ltd. 2008 (4) SCC 232 wherein it is held as under: 11. The limited controversy is whether the completed contract method of accounting adopted by the assessees as method of accounting for chit discount is required to be substituted by percentage of completion method. 12. In this connection, it is the case of the assessees that, profits (loss) accrued to the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that there is under estimation of profits, he must give facts and figures in that regard and demonstrate to the Court that the impugned method of accounting adopted by the assessee results in under estimation of profits and is therefore rejected. Otherwise, the presumption would be that the entire exercise is Revenue neutral. 5. Counsel for the appellant has contended that the observations which have been made by the Tribunal in para 12 13 are contrary to law, which reads as under: We have heard parties with reference to material on record. The rival submissions as well as case laws brought to our notice have duly been considered. The assessee is engaged in the business of construction as a builder/real estate developer. The appellant has maintained complete books of account which are duly audited by a qualified Chartered Accountant. The assessee maintains its accounts on mercantile basis by regularly employing Project Completion Method. The closing stock has been valued consistently at lower of cost or net realizable value. The auditors have reported no change in method adopted by the assessee. The revenue has accepted this method in regular assessments made from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke an assessment in the manner provided in section 144. 12.2. The first basis taken by the Assessing Authority in reaching a finding that the assessee's accounts do not depict correct and complete picture of its accounts is that the assessee has not maintained a detailed qualitative and quantitative stock register and failed to get the valuation of its closing stock verified with the detailed day-wise qualitative cum quantitative stock register. The appellant's case before the authorities below has, however, been that the assessee had kept both quantitative and qualitative details of material purchased by it as is evident from various ledger accounts related to construction material that were forming part of the seized material available with the assessing authority. All the expenses relating to the project including material purchased were charged to project/work-in-progress and directly taken to the balance sheet. In other words, the materials purchased for the project are issued to site immediately after its purchase and transferred to project in progress for determining profit at the time of completion of the project. No expenditure is charged to Profit Loss acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the case of Pandit Brothers vs. CIT, MANU/PH/0015/1955MANU/PH/0015/1955 : 26 ITR 159, the Hon'ble Punjab Haryana High Court has held that the mere fact that there is no stock register, it only cautions him against the falsity of the return made by the assessee. He cannot say that merely there is no stock register, the accounts book must be false. The Hon'ble Supreme Court took note of this judgment in the case of S.N. Namasivayam Chettiar vs. CIT, 38 ITR 570 (SC) and held that it is for the Income- tax authorities to consider the material which is placed before him and if after taking into account in any case the absence of stock register coupled with other material, are of the opinion that correct profits and gains could not be deduced then they would be justified in applying the proviso to section 13 of the IT Act, 1922. On the peculiar facts in the present case in appeal before us, merely because of non- maintenance of a detailed qualitative and quantitative register alone, the same could not be a valid reason to reach a finding that books of account do not present true and complete picture of accounts and financial transactions. The finding by the assessing authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint business in the year 2006 and thereafter carried business with no interest or involvement of the other brother. This fact, the appellant also disclosed by way of a foot note on the computation of income filed along with return of income. The statements given by Shri Ajit Singh and Shri Ravinder Singh during the course of search admittedly were with regard to receipt of extra money with respect to the flats sold by them. These sales were not of the projects done jointly with the appellant, its constituents or family members. The on-money so received by them has been disclosed and applied to explain the transactions of their independent business unrelated to the appellant and its constituents. The statements so taken, therefore, did not constitute a material or evidence for rejecting the books of account maintained by the assessee in saying that the monies received as earnest money or advances towards sale of its flats are not fully accounted. The reason so taken by the Assessing Officer for rejecting the accounts is thus vitiated and unfounded. ---- ---- ---- 12.8. The Hon'ble Kerala High Court in the case of St. Teresa's Oil Mills vs. State of Ker ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercentage Completion method are recognized methods for assessment of correct income of the assessee under the IT Act, 1961. The choice of method of accounting, however, lies with the assessee. It is not open to the Assessing Officer to change his own opinion or change the method of accounting because he finds another method of accounting better than the one adopted regularly by the assessee and by rejecting his accounts substitute the same with another method of accounting without any just and reasonable cause. In the present case the exercise so undertaken being imaginary and rested on irrelevant considerations could not constitute a just or reasonable cause empowering the authority to change the method of accounting regularly adopted by the appellant. The revenue has also not been able to successfully demonstrate that the method of accounting provided under sub- section (1) or Accounting Standard notified under sub section (2) of section 145 of the Act have not been regularly followed by the assessee. Even for the first year, the method of accounting is deemed to have been employed if the same is shown to have been regularly employed in subsequent years. The decision by Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gains must be computed in accordance with the method of accounting regularly employed by the assessee. The choice of the method of accounting lies with the assessee; but the assessee must show that he has followed the method regularly for his own purposes. The section and the proviso read together clearly make such a method of accounting regularly employed by the assessee a compulsory basis of computation unless, in the opinion of the Income-tax Officer, the income, profits and gains cannot properly be deduced therefrom. If the true income, profits and gains cannot be ascertained on the basis of the assessee's method, or where no method of accounting has been regularly employed, the income must be computed upon such basis and in such manner as the Income-tax Officer may determine. 12.12. Again the Apex Court in the case of Investment Ltd. vs. CIT MANU/SC/0265/1970MANU/SC/0265/1970 : 77 ITR 533 (SC) at page 537 and 538 has taken a view that the tax payer is free to employ any method of accounting but the same should be consistently and regularly followed by him. This is so evident from the following passage:- In the balance-sheet, it is true, the securities and shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eference to the relevant material and in accordance with the correct principles. The court also observed (page 52): Where the market value has fallen before the date of valuation and, on that date, the market value of the article is less than its actual cost, the assessee is entitled to value the articles at market value and thus anticipate the loss which he will probably incur at the time of the sale of the goods. Valuation of the stock-in-trade at cost or market value, whichever is the lower, is a matter entirely within the discretion of the assessee. But which-ever method he adopts, it should disclose a true picture of his profits and gains. If, on the other hand, he adopts a system which does not disclose the true state of affairs for the determination of tax, even if it is ideally suited for other purposes of his business, such as the creation of a reserve, declaration of dividends, planning and the like, it is the duty of the Assessing Officer to adopt any such computation as he deems appropriate for the proper determination of the true income of the assessee. This is not only a right but a duty that is placed on the officer, in terms of the first proviso to section 145, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , came to the conclusion that the system of accounting employed by the assessee is consistent and regular and the ITO, therefore, is not entitled to interfere with the system of accounting followed by the assessee, unless it is possible for him to make out and bring the case within the terms of s. 145 of the I.T. Act. On this basic issue itself, the Department's contention that the dividend should be assessed in the hands of the assessee as and when it is received, in substitution of the method of accounting followed by the assessee, should fail. Even otherwise, we are not persuaded to accept the view that the system of accounting followed by the assessee is in any way defective. 12.15. The Apex Court had also an occasion to consider the Percentage of completion method and Completed Project Method in the case of CIT vs. Bilahari Investment Pvt. Ltd., 299 ITR 1 (SC). In this judgment it has taken a view that recognition/identification of income under the 1961 Act is attainable by several methods of accounting. It may be noted that the same result could be attained by any one of the accounting methods. The Completion Contract method is one of such methods. Under the Complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed annually under the Income-tax Act. Accounting Standard AS-7 issued by the Institute of Chartered Accountants of India also recognize the position that in the case of construction contracts, the assessee can follow either the project completion method or the percentage completion method. In view of the judgments of the Supreme Court (supra), the findings of CIT (A), upheld by the Tribunal does not give rise to any substantial question of law. Further, the Tribunal has also found that there was no justification on the part of the assessing officer to adopt the percentage completionmethod for one year on selective basis. This will distort the true profits and gains of business. 12.17. The judgment rendered by Apex Court in the case of Kachwala Gems vs. JCIT, MANU/SC/8797/2006MANU/SC/8797/2006 : 288 ITR 10 (SC) the Hon'ble Apex Court has observed that several cogent reasons have been given on facts by Income-tax authorities for rejecting the books of account and that is the reason no different view could be taken on this issue. This case as well as other case laws brought on record by revenue are distinguishable on the peculiar facts of this case in hand and the same do n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s found that the production of mustard oil is a continuous process and the seeds are put into the milling for continuous oil production. The Tribunal has further found that 8096 of its mustard oil is by way of trading sale and neither discrepancies were noticed by the AO in either purchase or sale nor any sale or purchase, found unrecorded. The Tribunal also found that the books of account had been maintained in the same manner as in the past and the assessee cannot be expected to stop the plant as and when the new lot of mustard seed is subjected to crushing as manufacturing of mustard oil is a continuous process. The Tribunal has also found as a finding of fact that except quality, quantity wise stock details has been maintained but no other defect was noticed by the AO in the quantitative details and after noticing the above fact, has come to the conclusion that the books of account ought not to have been rejected. In our view, such a finding of fact which has been reached by the Tribunal is after appreciating the material and evidence on record and such a finding has been arrived at by the Tribunal after analyzing the material and in our view, no substantial question of law can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The stock register is not tallying with the other books of account only because some of the items were not deleted from the stock register. Taking into account the decision of this Court, not maintaining the day-today stock register is not a ground to reject the books of account. In Commissioner of Income-tax-IV v. Symphony Comfort Systems Ltd. (supra), it is observed as under:-- Question No. 1 pertains to the addition made by the Assessing Officer on the basis of low gross profit. The Commissioner (Appeals) as well as the Tribunal, however, deleted such addition after examining the material on record. In particular, the Tribunal while upholding the order of the Commissioner (Appeals) in this respect, made following observations: 4. On consideration of the rival submissions, we do not find any justification to interfere with the order of the learned CIT(A) in deleting the addition. The AO merely gone by the fact that there was a fall in the gross profit rate as compared to the preceding assessment year which itself is no ground to reject the books of accounts of the assessee. No specific defect in the maintenance of the books of accounts by the assessee has been pointe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition. This ground of appeal of the revenue is accordingly dismissed. The entire issue is based on appreciation of evidence. No question of law arises. When the Commissioner (Appeals) as well as the Tribunal concurrently held that on the basis of the evidence, addition as made by the Assessing Officer was not justified, we are not inclined to interfere. 9. In Commissioner of Income-tax-XII v. Smt. Poonam Rani (supra), it is observed as under:-- 10. During the course of arguments before us, it was submitted by the learned counsel for the appellant that the assessee was not maintaining the Daily Stock Register. We, however, find no such finding in the assessment order. On the other hand, we note that the Assessee had submitted before the Commissioner of Income Tax (Appea ls) that Form 3CD containing all the quantitative details in respect of raw materials as well as the finished goods, duly audited by the Certified Accountant had been placed on record, but, the Assessing Officer ignored those actual figures enclosed with the return. In any case, no statutory provision under the Income Taxregime requiring the assessee to maintain the Daily Stock Register has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Section 145(3) of the IT Act which relates to rejection of the books of accounts and contended that the CIT(A) as well as the Tribunal has rightly come to the conclusion after considering the material placed before them. After making the aforesaid submissions he has contended that the appeal may be dismissed. 5. Having heard the learned Counsel for the parties and having gone through the order passed by the authorities below, as well as, considering the fact that the assessee has followed the method which is consistent considering the decision in case of Shivalik Buildwell (P.) Ltd. (supra) and Umang Hiralal Thakkar (supra) and therefore this Court is of the opinion that the view taken by the tribunal and CIT(A) is not correct. Since the issue involved in this appeal is identical to the decision cited by the learned Counsel for the assessee while adopting such reasons, we allow this appeal and accordingly answer the issue raised in this appeal in favour of the assessee and against the department. CIT-IV vs. Shivalik Buildwell (P.) Ltd. [2013] 40 Taxman.com 219 (Guj.): 3. On the revenue s appeal, the Tribunal confirmed the view of CIT (Appeals), however, on slight ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income Tax [2012] 2010 Taxman 69 (Delhi): The next aspect relates to rejection of books of accounts because the assessee was following completed contract method. We do not think completed contract method is contrary and cannot be adopted and applied when an assessee follows mercantile system of accounting. This issue was examined by the Madras High Court in Commissioner of Income Tax versus SAS Hotels and Enterprises Limited, MANU/TN/3098/2010 : (2011)334 ITR 194 (Mad.) and it has been held that the said method confirms and can be adopted by an assessee. In fact, we find that there is a contradiction in the orders of both the CIT(Appeals) and the tribunal on the said aspect. With regard to NBCC contract, both of them have held that the receivables and expenses should be excluded as the contract was incomplete. But, at the same time they have held that completed contract method cannot be adopted for the purpose of accounts/computing taxable income as the assessee is following mercantile system of accounting. We may notice here that while examining the question of rejection of books of accounts, the CIT(Appeals) in his finding, which have been quoted above, was ambiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larly in the context of chit discount. Every assessee is entitled to arrange its affairs and follow the method of accounting, which the Department has earlier accepted. It is only in those cases where the Department records a finding that the method adopted by the assessee results in distortion of profits, the Department can insist on substitution of the existing method. Further, in the present cases, we find from the various statements produced before us, that the entire exercise, arising out of change of method from completed contract method to deferred revenue expenditure, is revenue neutral. Therefore, we do not wish to interfere with the impugned judgment of the High Court. CIT vs. Manish Build Well (P) Ltd. [2011] 63 DTR 369(Delhi): 6. Questions Nos. 2 and 3 are connected. They assail the decision of the Tribunal rendered in paragraph 20 of its order. An addition of ₹ 28,21,000/was made by the assessing officer on the footing that the assessee was adopting the project completion method or the completed contract method, which was not proper and the profits of the business should be computed on the basis of the percentage completion method under which the profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out by the assessing officer in the method of accounting followed by the appellant nor any finding has been given that true and fair profits cannot be deduced following the said method of accounting. No evidence was found during the course of search to show that the books of account are not properly maintained by the appellant. The main thrust of the assessing officer in making the addition is that the assessee is deferring the payment of taxes. But this allegation of the assessing officer cannot be accepted as the assessee is consistently following a method of accounting which is well recognized in development business and has been accepted by the assessing officer also in the other group cases. Thus the addition is here by deleted. 7. The aforesaid finding of the CIT (A) was approved by the Tribunal with the observation that the department has accepted the assessee's method of accounting namely, the project completion method and therefore there was no justification for adopting the percentage completion method for one year on selective basis. 8. It is well settled that the project completion method is one of the recognized methods of accounting. In Commissioner Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt it cannot be said that the project completion method followed by the assessee would result in deferment of the payment of the taxes which are to be assessed annually under the Income Tax Act. Accounting Standards 7 (AS7) issued by the Institute of Chartered Accountants of India also recognize the position that in the case of construction contracts, the assessee can follow either the project completion method or the percentage completion method. In view of the judgments of the Supreme Court (Supra), the finding of the CIT (A), upheld by the Tribunal, does not give rise to any substantial question of law. Further, the Tribunal has also found that there was no justification on the part of the assessing officer to adopt the percentage completion method for one year (the year under appeal) on selective basis. This will distort the computation of the true profits and gains of the business. For these reasons, we are of the view that no substantial question of law arises. We, therefore, decline to admit question Nos. 2 and 3. CIT vs. SAS Hotels Enterprises Ltd. [2011] 334 ITR 194 (Madras): 7. In this context, when we apply Section 145(3) of the Income Tax Act, it specifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra) and hold that an assessee has as the option/liberty to adopt any recognized method of account for his business and the income shall be computed in accordance with such regularly maintained accounting system. CIT vs. V.S. Dempo CO. Pvt. Ltd. [1996] 131 CTR 203 (Mum): 4. We have carefully considered the rival submissions. We find that the controversy in this case is basically a finding of fact which has to be decided by the authorities concerned on the facts and circumstances of each case. In the instant case, the Tribunal has come to a conclusion that the method of accounting followed by the assessee was correct and resort to s. 145(1) was not called for. We do not find any infirmity in the said finding. We, therefore, refuse to interfere with the same. ST. Teresa s Oil Mills vs. State of Kerala [1970] 76 ITR 0365 (Ker): 4. The learned counsel for the petitioner brought to our notice the decision of the Ahdhra Pradesh High Court in N. Raja Pullaiah v. Deputy Commercial Tax Officer, [1969] MANU/AP/0166/1969 : 73 I.T.R. 224 and contended that the consumption of electricity by itself cannot form a reliable test for determining the yield of oil, that the yield ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e done on the materials available in each case. The Privy Council had occasion to consider the exact import of the expression to the best of his judgment occurring in Section 23(4) of the Indian Income Tax Act, 1922 (see Commissioner of Income Tax v. Laxminarain Badridas [1937] 5 I.T.R. 170, 180 (P.C.)). The Privy Council made the following observation in that judgment: He (the assessing authority) must not act dishonestly or vindictively or capriciously because he must exercise judgment in the matter. He must make what he honestly believes to be a fair estimate of the proper figure of assessment, and for this purpose he must, their Lordships think, be able to take into consideration local knowledge and repute in regard to the assessee's circumstances, and his own knowledge of previous returns by and assessments of the assessee, and all other matters which he thinks will assist him in arriving at a fair and proper estimate; and though there must necessarily be guess-work in the matter, it must be honest guess-work. 5. In the case on hand, the only circumstance relied on by the authorities below for the rejection of the accounts is that there was wide disparity in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant submitted that even though in the balance sheet maintained by the assessee, market price of the shares and securities is not mentioned, yet for determining the real income of the assessee Bank, the said price is required to be taken into account. And, for that purpose since years, the assessee Bank was submitting income tax returns after taking into account the market price of such shares and securities which has been accepted by the Department without any objection. He also submitted that not making of proper entries in the balance sheet could hardly be a ground for not assessing the real income. 12. For the reasons, the Central Government had issued Notification dated 12th May, 1982 permitting the assessee bank not to disclose in brackets the market value of the investment under the sub-heads in inner column against any of the sub-heads (ii), (iii), (iv) and (v) of Item 4 of the assets side of the prescribed form. It is also undisputed that: (a) the appellant is a Nationalised Bank and therefore is governed by the Banking Regulation Act, 1949. (b) The appellant follows mercantile systems of accounting both for Book keeping purpose as well as for tax purposes. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he goods in question. (extracted in paragraph 281 of the Report of the Committee on the Taxation of Trading Profits presented to British Parliament in April, 1951). While anticipated loss is thus taken into account, anticipated profit in the shape of appreciated value of the closing stock is not brought into account, as no prudent trader would care to show increased profit before its actual realisation. This is the theory underlying the rule that the closing stock is to be valued at cost or market price whichever is the lower, and it is now generally accepted as an established rule of commercial practice and accountancy. As profits for income tax purposes are to be computed in conformity with the ordinary principles of commercial accounting, unless, of course, such principles have been superseded or modified by legislative enactments, unrealised profits in the shape of appreciated value of goods remaining unsold at the end of an accounting year and carried over to the following year's in a business that is continuing are not brought into the charge as a matter of practice, though as already stated, loss due to a fall in price below cost is allowed even if such loss has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be decided with reference to the relevant material and in accordance with the correct principles. The Court also observed: Where the market value has fallen before the date of valuation and, on that date, the market value of the article is less than its actual cost, the assessee is entitled to value the articles at market value and thus anticipate the loss which he will probably incur at the time of the sale of the goods. Valuation of the stock-in-trade at cost or market value, whichever is the lower, is a matter entirely within the discretion of the assessee. But whichever method he adopts, it should disclose a true picture of his profits and gains. If, on the other hand he adopts a system which does not disclose the true state of affairs for the determination of tax, even if it is ideally suited for other purposes of his business, such as the creation of a reserve, declaration of dividends, planning and the like, it is the duty of the Assessing Officer to adopt any such computation as he deems appropriate for the proper determination of the true income of the assessee. This is not only a right but a duty that is placed on the officer, in terms of the first proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of his trade, his own method of keeping accounts, and for that purpose, to value stock-in-trade either at cost or market price; (3) A method of accounting adopted by the tax payer consistently and regularly cannot be discarded by the departmental authorities on the view that he should have adopted a different method of keeping accounts or of valuation; (4) The concept of real income is certainly applicable in judging whether there has income or not, but in every case, it must be applied with care and within their recognised limits; (5) Whether the income has really accrued or arisen to the assessee must be judged in the light of the reality of the situation; and (6) Under Section 145 of the Act, in a case where accounts are correct and complete but the method employed is such that in the opinion of the Income Tax Officer, the income cannot be properly deduced therefrom, the computation shall be made in such manner and on such basis as the Income-Tax Officer may determine. 26. In our view, as stated above consistently for 30 years, the assessee was valuing the stock-in-trade at cost for the purpose of statutory balance sheet, and for the income tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed himself in respect of sale transaction of one particular flat and he could not have on that basis calculated the addition for all flats. Accordingly, in respect of previous Assessment Year 2004-05, it was held by the Tribunal that the addition for On-money, made in the said year was not proper inasmuch as such addition could have been made only in respect of the flat in respect of which the evidence of On-money was found at the time of search. The said decision dated 31.03.2011 of ITAT, Ahmedabad was relied on, on behalf of the assessee. 5.1 Even as for the year 2004-05 also, the addition on account of on-money was held to be on the basis of guess work and extrapolation, again in the next year 2005-06 being year under consideration the addition of ₹ 1,52,53,128/- was made repeating the same story. When in respect of previous Assessment Year 2004-05 also the Tribunal had dismissed the HC-NIC Department's appeal on the ground that the addition in that year also was based on extrapolation, it emerged beyond pale of doubt that for the addition made for the year 2005-06 there was no evidence whatsoever and the same was presumptive in nature. 6. In above view, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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