TMI Blog2018 (3) TMI 1457X X X X Extracts X X X X X X X X Extracts X X X X ..... ication and correct appreciation of facts. It is true that principles of res judicata do not apply to income tax proceedings, but principles of consistency apply. So, if an AO wants to deviate from the path followed in the earlier year, he has to give reasons for it. We do not find any such reasons in the assessment order - the matter should be restored back to the file of the FAA for fresh adjudication Addition on account of variation in sale prices - Held that:- FAA, after considering the available material, held that even after considering the date of booking, there was inexplicable variations in the rate per square feet shown by the appellant. He referred to some of the sale transactions where variation in the rates was found. He observed that in several cases the rate per sq. ft. as per agreement was lower than stamp duty value, that large variations in rates indicated that sales realization was under reported, that the assessee was showing losses year after year. Finally, he upheld the additions, made by the AO, ‘in principle’. But, he directed the AO to consider only the additional area area and rate of ₹ 5040 sq. ft. stated in the agreement in two cases while co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal(GOA-2)is about upholding an estimated addition of ₹ 2. 36 crores. During the assessment proceedings, the AO found that the assessee had shown current liability of ₹ 3. 18 crores in the balance sheet. He directed it to file further details in that regard. After considering the same, he observed that there was gross advance received against contract of ₹ 7. 94 crores, that after netting off the advance paid(Rs. 4. 75 crores), the net amount was shown at ₹ 3. 18 crores, that the assessee had not filed the addresses of the parties from whom he had received advances. He further called for the details and held that the assessee had only one project at Kandivili West, that the project consisted of residential and commercial projects, that the closing WIP was shown at ₹ 7. 31 crores, that WIP included residential and commercial projects that the project was completed, that the assessee had booked sales of 66. 75% of the commercial portion and 96. 92% of residential portion in the earlier years(till end of AY. 2012-13), that the closing WIP valued at ₹ 7. 31 crores represent - ed value of balance of commercial and residential component of the projec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed for all preceding and succeeding years consistently and regularly, that same method was accepted in earlier years, while passing order u/s. 143(3)of the Act for AY. s 2008- 09, 2009-10, 2010-11 2011-12, that the amounts received from the buyers of Shops/Office/ Flats/Additional Area was credited to the respective purchaser s account, that sales were recognised from year to year based on percentage completion of construction method and had been debited to Receivable of Commercial Premises, that the net figure of above two accounts i. e. Purchasers Account and Receivable of Commercial Premises were shown as Current Liabilities in Schedule 7 of the Audited Balance Sheet, that the purchaser-account would be debited for purchase price, service tax and VAT on possession, that the assessee had recognised revenue of ₹ 1, 35, 34, 865/-during the year and total revenue of ₹ 13, 95, 62, 016/-till 31. 03. 2012. Referring to the Schedule 7, he gave the details of current liabilities of the assessee and stated that the debit balance on purchases account of ₹ 1, 22, 12, 654/- represented the income recognized as per the accounting method but not received from the purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsider the calculation or ignored it. There is no evidence that that the net advance was not ₹ 6, 70, 50, 365/-, as claimed by the assessee in the Schedule 7. In other words, the figure adopted by the AO/FAA at ₹ 3, 18, 50, 717/- under the head net advance was factually incorrect. If the net advance was of ₹ 6. 70 crores then same was lower than the closing WIP of ₹ 7. 31 crores. The sole basis of making the addition was that advances were more than closing WIP. Considering these facts we are of the opinion that matter needs further verification and correct appreciation of facts. 6.1. We have also taken note of the fact that in the earlier years the AO had accepted the method of accounting followed by the assessee, while completing the assessment u/s. 143(3)of the Act. He has not given any reason as to why he was not satisfied with the method for the year under consideration. It is true that principles of res judicata do not apply to income tax proceedings, but principles of consistency apply. So, if an AO wants to deviate from the path followed in the earlier year, he has to give reasons for it. We do not find any such reasons in the assessment order. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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