9911796707
TMI Blog2015 (10) TMI 2824X X X X Extracts X X X X X X X X Extracts X X X X ..... a common issue relating to the assessability of the income offered by the assessee-company in the course of search, the appeals have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. 2. Briefly put, the relevant facts are that the assessee is a Private Limited Company incorporated under the provisions of the Companies Act, 1956 and is, inter-alia, engaged in the business of development of real estate properties. A search action under section 132 of the Income Tax Act, 1961 (in short "the Act") was carried out in the case of the assessee group on 11/4/2007,wherein certain incriminating material/documents were found and seized, and in particular, we are concerned with a record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6-07 115.00 Gross Receipts 2007-08 250.52 Remaining balance out of 10 crores disclosed. Total 922.19 3.1 At the time of search, the amount was disclosed year-wise on the basis of the year of receipt. In other words, undisclosed amounts found recorded in the seized material was declared in the respective years of receipt. However, in the returns of income filed for the assessment years 2002-03 to 2007-08 in response to the notices issued under section 153A of the Act, assessee disclosed the incomes as under:- Assessment Year Amount (Rs. In Lac) Basis 2002-03 0.00 2003-04 1.00 Project completion method 2004-05 0.65 2005-06 175.00 2006-07 0.00 2007-08 743.35 Remaining balance out of 10 crores disclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of the assessee was not accepted by the Assessing Officer, who instead taxed the income surrendered by the assessee on the basis of the year of receipt of such amounts. Accordingly, the assessment finalized by the Assessing Officer for the assessment years 2002-03 to 2007-08 contained assessment of undisclosed receipts as follows:- Assessment Year Amount (Rs. In Lac) Basis 2002-03 84.51 Gross Receipt 2003-04 224.81 Gross Receipt 2004-05 97.35 Gross receipt 2005-06 846.66 Gross Receipt (154.0)+ Sec 69 Unexplained expenditure (690.66) 2006-07 115.00 Gross Receipt 2007-08 8.33 (742.85 on protective) -- Total 1375.66 3.3 Notably, in relation to assessment year 2005-06 the Assessing Officer noticed that the sei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ping of the preceding three year's receipts against the unrecorded expenditure noticed in the seized record. In this manner, the total income was assessed at Rs. 446.67 lacs as against Rs. 846.66 lacs computed by the Assessing Officer on this count. In so far as the protective addition for assessment year 2007-08 is concerned, the CIT(A) has deleted the same. 5. In the above background, before us, Ld. Representative for the assessee vehemently argued that the methodology adopted to assess the income of the assessee in the regular assessment under section 143(3) of the Act for the captioned assessment years be followed in order to assess the income relating to the undisclosed receipts found during the course of search. Ld. Representative em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it based on certain percentage ( 6 or 7%) of the expenses incurred on a project during the year plus balance profit of the project which is completed during year, which is computed by matching the sales/revenues with the costs incurred. Thus, the profit declared by the assessee under the head 'profits and gains of business or profession' is a combination of a percentage of expenses incurred on the on-going projects plus the balance of the profit of projects completed during particular year. The methodology of accounting is not disputed by the Revenue. So however, the dispute relates to assessing of income in relation to such undisclosed receipts of business, which were found in the course of search and were not declared in the regular books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee- company had rightly asserted at the time of filing of returns of income under section 153A of the Act that the income from undisclosed receipts be also computed as per the regular methodology accepted by the Revenue in the past. Therefore, on this aspect we uphold the plea of the assessee. 7.1 As a consequence, we set aside the orders of the CIT(A) for all the captioned assessment years and direct the Assessing Officer to recompute the income as per aforesaid directions and as per law. 8. In so far as the appeal of the Revenue for assessment year 2007- 08 is concerned, there is no merit in the same in as much as the CIT(A) has merely deleted the amount assessed by the Assessing Officer on protective basis, even though such amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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