TMI Blog2014 (4) TMI 1254X X X X Extracts X X X X X X X X Extracts X X X X ..... A), Central, Jaipur has erred in deleting the trading addition of ₹ 84,40,241/- holding that the action of the AO in adopting percentage completion method and rejection of books of account cannot be sustained. 2. On the facts and in the circumstances of the case the Ld. CIT(A), Central, Jaipur without providing an opportunity to the AO, has erred in relying on the argument of the assessee that not a single sale agreement has been executed etc. which is contrary to the categorical finding on the basis of the seized material that the purchasers and the flat units purchased by them were clearly identifiable and the sale consideration was quantified, against which advances were received and agreements were made despite the fact that the assessee did not even provide basic details of books to the AO. 3. The appellant craves the right to amend, alter or add to any of the grounds of appeal given above. 2 From the above grounds, it is clear that the only grievance of the department relates to the deletion of trading addition made by the Assessing Officer by adopting percentage completion method and rejecting the books of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertainty exists regarding the amount of the consideration that will be derived from sale of goods. According to the Assessing Officer, in assessee s case the following conditions are satisfied for application of percentage completion method:- i) Regarding the booking of flats Shri Ankit Jain stated that the booking amount is received either in cash or through cheques and accordingly receipts are issued. For booking a flat, an amount of ₹ 2 lacs is taken but the amount may vary from person to person. However, as regards the details of flat booked as on date of search the name and addresses of persons who have booked the flat though the assessee was requested time and again but only part information was provided. ii) As per books of account of M/s Ankit Chirag Developers Pvt. Ltd. the advances on account of booking of flats should be at ₹ 30084999/- as on 08/03/2010. However, the details in respect of number of flats that have been booked, names and addresses of the persons in whose name they have been booked were not provided by the assessee in spite of repeated opportunities. As per records of M/s Chirag Developers Pvt. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of 1484 sq. ft. and the cost has been taken at ₹ 1400/- per sq. ft. and after adding other charges like society charges etc. the cost of the flat comes to ₹ 2138776/-. The Assessing Officer also referred the statement of Shri Ankit Jain, who handled the sales and marketing of the flats and was confronted regarding the size of flats, selling price of flat, booking amount and payment plan etc in his statement recorded under section 131 of the Act on 21/04/2010, the said statement also forms part of the assessment order. On the basis of statement of Shri Ankit Jain, the Assessing Officer came to the conclusion that the flats had been sold to buyers at the rates and as per plan mentioned on the three pages mentioned above but in the books of accounts the assessee had shown sale of such flats at ₹ 12,46,000/- and ₹ 14,00,000/- respectively. The Assessing Officer had taken the cost of construction/expenditure as declared by the assessee in the books of accounts and shown as work in progress at ₹ 10,86,89,817 /-. The said figure was given by the assessee to the DVO for valuation of the project. 4. The Assessing Officer also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 84,40,241/- was added to the income of the assessee. 6. Being aggrieved, the assessee carried the matter to the ld. CIT(A) and submitted that invoking of the provisions of section 145(3) of the Act was based on the misconception of law as well as facts because the correctness of book result should not be challenged without pointing out any specific mistake/defect or deficiency in the books of accounts or without recording finding that the profits and gains could not be properly deduced from such books of accounts. It was stated that the assessee maintained all the books of accounts consisting of cash book, ledger, opening stock, closing stock, stock register, purchase and sales, bank book and expenses vouchers etc. It was further stated that the accounts were duly audited as per law by the qualified person and the Auditor did not point out any defect in the books of accounts which were duly examined and that the Assessing Officer applied very high net profit rate of 20% on closing work in progress on the basis of other case which has not been confronted to the assessee. It was stated that application of net profit rate on work in progress/stock was absolutely wron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s rightly adopted. It was further stated that the approach of the Assessing Officer was fully contradictory in his own action because he has applied Project Completion Method in the year under consideration only and worked out the profit on estimate basis whereas he had accepted the profit and stock shown by the assessee on the basis of Project Completion Method in the preceding and succeeding years. It was also stated that the Assessing Officer had not commented about the position of profit in succeeding year and the effect of this addition against the profits as per accounts in the succeeding year. It was accordingly submitted that the addition made in the year under consideration deserves to be deleted. 8. The learned CIT(A), after considering the submissions of the assessee deleted the addition by observing at page Nos. 25 to 27 of the impugned order as under:- I have carefully considered all relevant facts as discussed above. First of all, the issue whether accounting standard AS-7 and AS-9 applied by the AO are justified or not is to be examined. There is no dispute that the assessee is in the business of construction of flats and selling the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of builders w.e.f. year 2003. As regards AS-9 the same reads as under: Para-10 of AS-9 Revenue from sales or service transactions should be recognized when the requirements as to performance set out in paragraphs 11 and 12 are satisfied, provided, that at the time of performance it is not unreasonable to expect ultimate collection. If at the time of rising of any claim it is unreasonable to expect ultimate collection, revenue recognition should be postponed. Para-11 of AS-9 In a transaction involving the sale of goods, performance should be regarded as being achieved when the following conditions have been fulfilled: i) the seller of goods has transferred to the buyer the property in the goods for a price or all significant risks and rewards of ownership have been transferred to the buyer and the seller retains no effective control of the goods transferred to a degree usually associated with ownership; and ii) no significant uncertainty exist regarding the amount of the consideration that will be derived from the sale of the good. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the books of account. It is the contention of the appellant that defects pointed out by the AO were in respect of the books found during course of search and that survey and that subsequent to survey whatever deficiencies were pointed out were removed and resultant income was shown in return. The books produced before the AO are audited books and in these books no defect have been pointed out by the AO. Accordingly as per appellant rejection of books of accounts was not justified. On careful consideration of relevant fact it may be noted that prima facie no valid defects are pointed out by the AO in the audited books of accounts. Though certain reference of seized records indicating on money is made by the AO but such interpretation of the AO is not supported by any independent finding in as much as the appellant has neither admitted such on money nor such on money is evidenced by any independent third party or corroborative evidences including by the buyer parties. There is nothing on record which may indicate that any item of income was suppressed or any item of expenditure was suppressed or inflated. Therefore prima facie rejection of books of accounts by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deleted. Now the department is in appeal. 9. Learned D.R. strongly supported the order of the Assessing Officer and reiterated the observations made in the assessment order. 10. In his rival submissions, learned counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the Ld. CIT(A) righty deleted the addition made by the Assessing Officer by following the decisions of the ITAT, Jaipur Bench, Jaipur in the case of M/s. Unique Builders Developers Vs. DCIT, Jaipur in I.T.A.Nos. 73 to 77/JP/2012 order dated 14/03/2013 and the decision dated 21/11/2012 of the ITAT, Jodhpur Bench, Jodhpur in the case of M/s. Surya Estate Vs. DCIT, Udaipur in I.T.A.No. 112 to 116/JU/2012. 11. We have considered the submissions of both the parties and carefully gone through the material available on record. In the present case, it is an admitted fact that the Ld. CIT(A) deleted the impugned addition by following the aforesaid referred to decisions of the ITAT, Jaipur Jodhpur Benches. During the course of hearing, learned D.R. could not rebut the findings given by the Ld. CIT(A) a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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