TMI Blog2023 (6) TMI 803X X X X Extracts X X X X X X X X Extracts X X X X ..... ting Head of Rs. 279 Cr. has been considered. While considering the letter of Ex. Marketing Head for determination of sales to the tune of Rs. 279 Cr. and working out the profits/undisclosed income consequently, while doing so, the revenue has not even recorded the statement of Ex. Marketing Head and confronted the same to the Principle Officer of the company. Appeals of the revenue are dismissed. - ITA No. 5231/Del/2011, ITA No. 5392/Del/2011, ITA No. 5579/Del/2011 - - - Dated:- 14-10-2022 - Dr. B. R. R. Kumar, Accountant Member And Sh. Yogesh Kumar US, Judicial Member For the Assessee : Dr. Rakesh Gupta, Adv. Sh. Deepesh Garg, Adv. For the Revenue : Ms. Shivani Singh, CIT DR ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present appeals have been filed by the Revenue against the orders of ld. CIT(A)-III, New Delhi dated 14.09.2011, 21.09.2011 and 17.10.2011. 2. Since, the issues involved in all these appeals are identical, they were heard together and being adjudicated by a common order. 3. in ITA No. 5231/Del/2011, following grounds have been raised by the Revenue: 1. On the facts and in the circumstances of the case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e No. mentioned prior to Sign of = are represents the figures in lacs and mentioned after the mark of = are represents the amount in thousand. For example if 25=20 is written. It means the figure mentioned prior to the sign of = is represents lacs and after the = sign represent the thousands. It is therefore, 25= is twenty five lac and =20 means 20 thousand. In totally 25=20 is represents the amount of Rs. 25,20,000/-. In this diary, for mentioning the figure the sign of = is used in twice such as 2=41=64, it means 2 crore forty one lac and sixty four thousand (2,41,64,000/-). All the pages are reproduced hereunder in tabular form: Annexure A/2 Opposite side of Page No. 2 Page No. 2 5=00 Rajeev J.N. 2=00 Nitin Cash P.L. 2=00 7=00 Paid SH Jewel P.L. =70 Rohit VK 1=50 Office Meenakshi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Int. 1/5/05 to 30/4 @75 paisa 19=50 25/1/2006 25=00 2=61=14 31-1-2006 15=00 Paid 35=00 1.6.6 B/F B/02=26=14 1.6.06 CR 2 Uchani Upto 30.5.08 11=14 31/10/07 Cash 5 3. In this regard the assessee has been requested to furnish the details of the transactions mentioned in the diary. However the assessee has failed to furnish satisfactory reply in respect of the figures mentioned in such diary. This diary is found from the resid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coded language in lacs of rupee. The year wise quantum of the amount is mentioned hereunder: 5. Opposite side of Page No. 2: On the opposite side of this page April 05 is mentioned. It means these transactions are related to the A.Y. 2006-07 and total amount involved in this page is Rs. 7=00 means Rs. 7,00,000/-. Page No. 2 On this page period of April 05 is mentioned it means these entries are pertains to the F.Y. 2005-06 (A.Y. 2006-07) and total amount involved is 7=75 means Rs.7,75,000/-. 6. Opposite side of Page No. 3 This page is an account of the person 20 No (Coded language). The date mentioned on this page is 01.04.03 means this page is pertains to the F.Y.2003-04 relevant to the A.Y. 2004-05. The total amount involved is 24.06 means Rs. 24,06,000/-. Below the entry A/c T/f/SH is also mentioned and credited in the concern as CR is also mentioned. Means Rs. 24,06,000/- received from the person of 20 No. and credited in the account of firm M/s Shriram Hariram Jewellers. Below this entry (Account) the name of 20 No P.S. is also appears. And again the date mentioned in this account is 01.04.03 means this page is pertains to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned. As per the above working it is evident that the amounts mentioned in the diary on the above mentioned pages are nothing but financial transactions and in the amount of lacs only. 9. Opposite side of Page No. 6 This page is an account of the person D-96 (Coded language). The date mentioned on this page is 30/4/05 means this page is pertains to the F.Y.2005-06 relevant to the A.Y. 2006-07. The total amount involved for the period is 2=41=64. On this page the sign of = used twice, means the first figure before the first sign of = mentioned is in the amount of crore and between the two sign of = represents the value in lacs. It means the amount involved is Rs. 2,41,64,000/-. Below the amount of Int 1/5/05 to 31/4 @ 75 paisa is mentioned and interest amount is presented as 19=50. This interest amount is pertains to the A.Y. 2006-07 and 2007-08 which worked out to Rs. 19,93,530/- and of Rs. 1,81,230/- for the A.Y. 2006-07 and 2007-08 respectively. Below the entry total 2=61.14 (Rs. 2,61,14,000/-) and payment of Rs. 35.00 (Rs. 35,00,000) is mentioned and thereafter balance of 02/26.14 (Rs. 2,26,14,000/-) is mentioned. 10. Thereafter again the transaction da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of accounts. The amount mentioned in the diary on various pages is nothing but financial transactions of the assessee. As mentioned above during the year under consideration the assessee has given loan/made investment of Rs. 1,80,000/- is added to the total income of the assessee. As the director of the assessee company Sh. Rajat Gupta is the main person of the company and the above documents had been seized from his residential premises. However, the entries in the diary / slip pad seized relate to M/s Majestic properties Pvt. Ltd. Hence, the addition is made in the case of the assessee on substantive basis and the addition is made in the case of Sh. Raj at Gupta on this account on protective basis. (Addition : Rs. 1,80,000/-) The appellant vide submission dated 8.9.2011 has made the following detailed reply:- Sir, it is a case of search and during search no unaccounted cash, jewellery etc. were found. Page No. 1 of this annexure mentions list of items meant for some Pooja and the same has been accepted by Ld AO. AO has deciphered the rough notings on other pages by adding 00, 000, some in lac and some in crore at his whims and caprice. Such as on page No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns for suspicion would not tantamount to evidence. Narayan Chand Baidya Vs. CIT 20 ITR 287 (Cal). it should not be based on mere suspicion, conjecture or guess work or on irrelevant or inadmissible material. Dhirajlal Girdharilal Vs. CIT 26 ITR 736 (SC), Lalchand Bhagar Ambica Ram Vs. CIT 37 ITR 288 (SC), Umacharan Shaw Bros Vs. CIT 37 ITR 271 (SC), Omar Salay Mohamed Sait Vs. CIT 37 ITR 151 (SC), Page 170 On no account whatever should the Tribunal base its findings on suspicions, conjectures or surmises nor should it act on no evidence at all or on improper rejection of material and relevant evidence or partly on evidence and partly on suspicions, conjectures or surmises and if it does anything of the sort. Its findings, even though on questions of fact, will be liable to be set aside by this court. These cases have been followed by several High Courts International Forest Co Vs. CIT 101 ITR 721 (J K). There must be something more than bare suspicion to support the assessment Dakeshwari Cotton Mi l ls Ltd Vs. CIT 26 ITR 775, 82 (SC). Further reliance is placed on following cases that no addition could be made merely on the basis of uncorroborated loose papers: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the recorded transactions was found. 6.1 The question whether that hand written loose papers/note book seized from the premises of raided party falls within the meaning of a document/ account books? The word document has been defined in section 32 of the Indian Evidence Act to mean-any matter expressed or described upon any substance by means of letters, figures, or marks or by more than one of those means, intended to be used or which may be used for the purpose of recording that matter. The word document has also been Similarly defined in the General Clauses Act. According to the Hon ble Supreme Court in the case of Ramj Dayawala Sons (P) Ltd. Vs. Invert Imports AIR (1981) SC 2085 mere proof of handwriting of a document would not tantamount to a proof of all the contents or the facts stated in the documents, if the truth of the facts stated in a document is in issue, mere proof of the handwriting and execution of the document would not furnish evidence or the truth of the fact or contents of the document. The truth or otherwise of the fact or contents so stated would have to be proved by admissible evidence i.e. by the evidence or those persons who can vouch safe fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r be done by invoking the provisions of another act, which are not attracted. It is also trite that while two interpretations are possible, the court ordinarily would interpret the provisions in favour of a taxpayer and against the revenue. That Third Member decision of Mumbai Bench of ITAT in the case of S. P. Goyal Vs. DCIT. ITA No. 4117 of 1999 becomes relevant: The matter has been discussed at length by Ld. Third Member, but the ultimate conclusion, which has been reached is that a mere entry on a loose sheet of paper and where the assessee claims that it was only a planning done, but not supported by actual cash when there is no documentary evidence to support the passing of cash and further there is no evidence about the existence of the amount mentioned in the loose sheet of paper as embedded in either cash, jewellery or investment, then the assessee s explanation cannot be rejected and addition made by the AO would, therefore, not be sustainable. Even in the present case the entire addition rests on the hand written loose papers/notebook seized from the searched party and no other material has been adverted to and which would conclusively show that the amounts as men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cr., Trs. which all denote accounting code. That therefore the onus is now shifted on to the assessee to establish the transactions with supporting documentary evidences. That the assessee has totally failed to explain and establish the contents/figures mention in this diary and correlate these entries with the regular books of accounts maintained by the assessee. That it is the duty of the assessee to prove each and every content of the diary and explain each and every item including books of accounts (diaries etc.) found during the course of search and co-relate with the book entries maintained by the assessee That the assessee has nothing to explain the entries because all the entries mentioned in this diary are out of books of accounts. The A.O. concludes that the entries made in this diary are the figures of loan given to the persons whose name is mentioned in the diary in coded language in lacs of rupee. Thereafter in para 4.5 to 4.9 of the order the A.O. goes on to interpret year wise quantum of the amount on each page of the dairy, which has already been referred above in para 4 of this appellate order. The recordings made in code has been deciphered in the following mann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne by the AO to corroborate his basis for deciphering of the figures written on the documents as depicting rupees in Crores/ Lacs /thousands. It is seen from the assessment order that the AO has made the addition to income on the ground that the assessee has failed to correlate these entries with the regular books of accounts maintained by him and has also failed to discharge the onus and duty cast on the assessee to prove each and every content of the diary. In my view, in a case where an assessee is not forthright and transparent in this explanation or fails to give satisfactory explanation regarding the contents of a document seized from his premises/possession (the notings being unintelligible and cryptic in nature) then the burden to substantiate or prove the contents of the document shifts over to the person who is making such assertion that is the assessing Officer in this case. This substantiation or drawing of logical and reasonable inference could either be derived from the contents written on the document itself, which are speaking in nature or in case the same are not speaking/ coherent then to a rational correlation can be made by the assessing Officer in conjunction w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the handwriting and execution of the document is in issue, mere proof of the handwriting and execution of the document would not furnish evidence of the truth of the fact or contents of the document. The truth or otherwise of the fact or contents so stated would have to be proved by admissible evidence i.e., by the evidence of those persons who can vouchsafe for the truth of the facts in issue. 6.5. Further, the Hon ble Supreme Court in the case of Mohd. Yusuf Anr. vs. D. Anr. AIR 1968 Bom. 112 has observed that the evidence of the contents contained in document is hearsay evidence unless the writer thereof is examined before the Court. The Hon ble Court, therefore, held that the attempt to prove the contents of the document by proving the signatures of the handwriting of the author thereof is to set at nought, the well-recognized rule that hearsay evidence cannot be admitted. 6.6. If we consider the said piece of paper seized during search in light of the definition of the word document as given in the Indian Evidence Act and General Clauses Act and truthfulness of the contents thereof in light of the afore cited decisions of the Hon ble Supreme Court we find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot in the handwriting of any of the partners or employees or any connected person. The Tribunal held that the initial onus laying upon the assessee was thus discharged. Further during the search or even after that nothing was asked by the Revenue regarding the seized papers. The Department thus completely failed to establish that the assessee made any unexplained investment during the relevant year and held that on the basis of the entries made in the paper no addition could be made. 6.10. In Dy. CIT Vs. Krorilal Aggarwal. A diary seized during search contained certain jottings. The Tribunal held that the jottings in diary neither represented books of account nor any document and, therefore, presumption u/s 132(4A) was not available and the addition made on the basis of the said jottings was deleted. 6.11. In the case of M.V. Mathew vs. ITO Unaccounted sum found noted in a diary and the assessee claimed that the same represented deposits from certain parties. The parties denied having deposited the amount. The AO treated the amount as advance made by the assessee and addition on that account was made. In the absence of clinching evidence to show that the impugned sum wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laying down- File containing loose sheets of papers are not book and hence entries therein are not admissible under section 34 of the Evidence Act, 1872. It was held that the document was a dumb document and led nowhere. Appeal fi led by revenue was dismissed. In the case of Commissioner of Income-tax, vs. Atam Valves (P.) Limited 184 Taxmann 6, the Punjab Haryana High Court has held as under on the issue of placing reliance on loose slips:- Z` 2. During the pendency of assessment proceedings, a survey was conducted by the Department under section 133A of the Act on 27-9-2005 in the premises of the assessee and certain incriminating documents were found including a 'Slip Pad' containing payment of wages to various persons. The slips were written by Manoj Jain, an employee of the assessee, who was confronted with the slips, apart from questioning of the Director. Manoj Jain as well as Director of the assessee explained the position as to how the slips had been written and the stand of the assessee was that the same did not represent payment of wages during the year in question but were for the earlier year. However, the Assessing Officer did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t been established in the assessment order. Following the ratio of the above decisions, when applied to the facts of the impugned case it is concluded that the jottings made in the diary are by itself incapable of any intelligible interpretation and has not been corroborated or linked with any other material in order to make it capable of reasonable interpretation. Moreover the notings on this diary are not in the nature of books of accounts as each of the entry is independent of other and there is no opening or closing balance on day to day basis which is normally the case while maintaining books of accounts. In view thereof the addition to income for Rs. 1,80,000/- made on account of unaccounted interest income which has been calculated on the assumption that the figure of 20 represents Rs. 20,00,000/- and that the figure of 10=35 represents interest for Rs. 10,35,000/- between 01.04.03 to 31.12.08 is held to be based on surmise, assumption presumption and being uncorroborated through independent evidence is directed to be deleted. Ground of Anneal no. 4 is accordingly allowed. Ground No. 5 (A.O. s finding): - During the course of search at 401, JOP Plaza, Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Towards arrears of salary for the month of Aug. 08 Rs. 90,000 Towards reimbursement (bi l ls submitted) Rs. 60,685 Towards Earned Leave Benefits Rs. 1,12,134 Towards bonus for the year 2007-08 Rs. 90,000 Towards Annual increment (as per market assessment) 40% increment for 12 months @ 36000 pm Rs.4,32,000 30% increment for 5 months @ Rs. 37800 pm Rs. 1,89,000 TOTAL Rs. 9,7 3,819 (B) Sales Incentive *(@ 1% of sale value) Meerut Mall (sale value of Rs. 60,00,00,000/-) Rs. 60,00,000 Jaipur Township (sale value of Rs. 2,01,37,50,000) Rs.2,01,37,500 TOTAL Rs.2,61,37,500 (C) Total payable (A + B) Rs.2,71,11,319 5. That over and above the salary, I was also provided with a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1550 1898750 263 499371250 2 Bed Room 1615 1550 2503250 164 410533000 2+1 Bed Room 1340 1500 2010000 14 28140000 441 938044250 Fresh Sales: Type A 1645 2000 3290000 128 421120000 Type A-(2 Bed Room) 1270 2000 2540000 16 40640000 Type B (2 Bed Room) 1615 2000 3230000 124 400520000 Type C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 110789750 NPAT to Sales - 4468402487 5.2 These pages further strengthens the submission of Sh. Abdul Bari that on the date his resignation, i.e. 01.09.2008, the sale was to the tune of Rs. 261.37 crore, and the same had rose up to Rs. 275.86 crore from Jaipur project alone as on the date of search, i.e. 26.02.2009. Further, the net profit has been shown to have been calculated at Rs. 27,92,10,250. Accordingly, the assessee was asked to explain the material seized by parties SOB-6 and SOB6A from two different premises during the course of search and correlate the same with its regular books of account. In response, the assessee vide its letter submitted as under: Annexure A-2 of SOB 6 contains page no 1 t oi l3, these pages are nothing but the trial balance, Prof it loss Account and balance sheets of group companies which are duly recorded in regular books of accounts and can be verified from the audited balance sheets. all these companies have been filling their ITRs regularly within their respective jurisdiction. However, it seems that these facts mentioned in point no 7 of your notice requires explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has mentioned the details of his claims against the company after his resignation. He has mentioned his claim as sale incentives @ 1% on all estimated sales value (present future) of Meerut Mall Jaipur Township. Sir, being the marketing head MR. Abdul Bari was a part of core team as he himself mentioned in point no 2 of this letter on page no 42. Therefore, he was aware and well conversant with the estimation and determination of estimated cost and sales of the Projects, present future as well. Keeping in view the above mentioned facts and documental evidences there cannot be any correlation with the apparition that the company has suppressed its sales. Further, in order to determine and verification of facts there can be independent field enquiry also in respect of the existing progress of Jaipur Project, regarding sale of Mall project, the transaction for registration of the shops are at the sector-8 or above, this facts can be verified from the sale deeds already filled with our previous submission. 5.3 The assessee further submitted a letter of Sh. Abdul Bari contending therein as under: 1. I was working as Sr. VP sales and marketing with Magestic Properti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eft the job. It is surprised to note here that the Abdul Bari has not remembered as to when he had resigned from the job and has sent only the afterthought that these are merely estimated sales. The assessee company was not asked to submit confirmation of Sh. Abdul Bari. His present letter is self serving at the fag end of proceeding. It has no merit. So the contradictory state of affairs has been furnished by the assessee. The same are, therefore, rejected. (iii) Now come to the chart with the heading Target Sales Realization , seized during the course of search. The same has already been reproduced above in preceding para. If we go by the version of contention of the assessee, furnished by it during the course of hearing, in this chart, the target sale have been mentioned. If we correlate the chart with the letter of Sh. Abdul Bari, as has been done by the assessee itself in its reply, reproduced above in preceding para, then we will realize that they have a close connection between themselves and they are very much sequential. As is seen and summarized here that the target given in the chart till June 2008, then there is resignation of Sh. Abdul Bari of September, 2008 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or and on the other floors of the Mall, hence, in the absence of uniformity, the working of profit ratio as to the booking made by the assessee becomes difficult. Therefore, the net profit, keeping in view the project is a commercial project, is taken at @ 12% of the total sales, i.e., Rs. 60,00,00,000/-, which comes to Rs. 7,20,00,000/-. The same is distributed in the earlier years with a view that the assessee has been maintaining net profit margin of 12% from the first year, since when it had started accepting booking against its project. The working of this net profit year-wise is given below in the chart. Meerut Project Jaipur Project Asstt. Year Booking accounted for of Meerut Project Distribution of unaccounted profit being 12% N.P. (in Booking amount ratio) WIP of Jaipur Project Distribution of profit (in WIP ratio) Total Addition al Profit (Meerut + Jaipur) 2004-05 8114300 1828800 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon a letter marked as page nos. 40-42 of Annexure A-3 of SOB-6 and Page nos. 33-38 of Annexure A-2 of SOB 6A. The first one is a letter written by Marketing Head Mr. Abdul Bari on 03.01.2008 after leaving the job from appellant company and the other one is the calculation sheets for costing and selling/booking price of flats of Housing Project at Jaipur. These papers apparently speak the truth and facts. Ld. AO has taken an imaginary cognizance without support of any evidence and even disregarding the contents of the papers and the dates and year mentioned thereon. Under what method of accounting and system the profitability of any construction project can be calculated even when only the land is purchased and no construction was carried on, merely nominal booking amounts were received from prospective buyers and the same were shown as current liabilities . Moreover, out of these bookings some of them were refunded also. 10. Regarding these papers, a detailed submission was made during assessment proceedings as has been mentioned hereinabove. The entire correlation of the facts and figures was given. During assessment proceedings as mentioned by Ld AO in para no. 5.3 of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 0 50527944 Expenses 185867 41972187 98780320 303120722 144454290 14422173 602935559 29637324 63048674 98780320 303120722 144454290 14422173 653463503 Investment in Jaipur (WIP) Land Purchase 0 138273760 7717900 2149700 0 0 148141360 Other Exp. 0 166142 8267178 35374174 36693692 26322913 106824099 0 138439902 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence by disregarding the entire contents of books of accounts and other bi l ls and vouchers. Besides, the calculation of pro rata prof it for different years has been calculated on the basis of Work In Progress. The above mentioned chart clearly mentions that the initial years investment in Jaipur Project is nothing but the purchase of land and no work was done. The inference should be drawn on totality of the circumstances CIT Vs Naresh Khattar (HUF) 261 ITR 664 (Delhi). 13. Further, the adoption of calculation of year wise profits from Meerut Project on the basis of booking money and that in case of Jaipur project on the basis of work in progress prima facie proves the uncertainty in the mind of Ld AO for the income earned by the appellant from these projects. 14. Sir, Real Estate development is the business for which there are no accounting standards nor treatment in text books to suggest any uniform method of accounting. It is therefore, to conform to the generally accepted accounting principles To recognize the accrual of revenue from real estate development business, there is an Accounting Standards i.e. AS-7, issued by The Institute of Chartered Accountants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the letter Personal Meeting with Mr. Anurag Gupta, M.D. on 29.12.08 has been mentioned as also the fact that elsewhere in this letter reference to emails and telecoms since Sept. 2008 have been made, there is no doubt in my mind that the date mentioned as January, 8 2008 is a typographical error and that the date on the letter should be correctly taken as January, 03 2009. This view is further supported from the fact that the Sh. Abdul Bari had resigned from the appellant company in Sept. 2008 and therefore the date of this letter cannot be January 03 2008. Coming to the contents of this letter it is observed that Sh. Abdul Bari has in this letter essentially protested against the unprofessional, unfair and unethical attitude of the company in not making the full and final settlement of his accounts upon his resignation from the Company as Senior Vice President (Marketing). In para 5 (B) of this letter Sh. Abdul Bari has calculated sales incentive receivable by him @ of 1% of sale value in case of Meerut Mall and Jaipur Township for Rs. 2,61,37,500/- in totality. The relevant part of this letter is as below:- 5.(B) Sales Incentive *(@ 1% of sale value) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the whole working of income on Meerut Project has originated on basis of the letter written by Sh. Abdul Bari, upon leaving the job. That the AO has taken a imaginary cognizance of this letter without any evidence even when only the land at Meerut is purchased during the year and no construction was carried on for the Meerut project. That merely nominal booking amounts were received from prospective buyers which are shown as current liabilities in the balance sheet. The assessee also referred to another letter filed by Sh. Abdul Bari during the assessment proceedings which is to the effect that the figures mentioned in his letter dated 3 Jan. 2008(2009) were merely estimated one compiled during his employment so that the selling price could be worked out. It has been submitted that Sh. Bari s letter was of an aggrieved employee who made unrealistic and arbitrary claims against the appellant company. The assessee has also furnished details of the booking amount received for Meerut project relevant for AY 2005-06 which is for Rs. 1,58,05,034/- from prospective investors. From the copy of balance sheet filed it has also been substantiated that the investment in Meerut project on land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentions that the initial years investment in Jaipur Project is nothing but the purchase of land and no work was done. The inference should be drawn on totality of the circumstances as held in CIT Vs Naresh Khattar (HUF) 261 ITR 664 (Delhi). Again referring to the accounting standards that is AS-7 issued by the Institute of Chartered Accountants of India the appellant has argued that there are two methods of recognizing accrual of revenue from real estate development business that is percentage to completion and completion of project method and that neither of these two methods are applicable in the facts of the case. That in this case only the land was bought, no construction work could be started merely nominal present and future bookings from parties were received. For verification of all the facts and figures, the balance sheet is being enclosed. Upon a careful consideration of the AO s finding and appellant s submission it is observed that the letter dated 03.01.08 (correctly read as 03.01.2009) written by Sh. Abdul Bari has to be taken with a pinch of salt as apparently this letter is written by a former employee who is not satisfied with the settlement of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05 only 14.18% of the total cost has been incurred and booking amount for only Rs. 2.39 Crores have been received therefore accrual of income from the project cannot be computed in terms of AS-7. It is seen from the order that the AO has rejected the book results and the provisions of section 145(3) of the IT Act have been invoked. However, there is no discussion in the order as to on what specific ground the AO is not satisfied about the correctness or completeness of the accounts of the assessee neither there is any reference as to non following of the method of accounting regularly followed by the assessee or violating the Accounting Standards as notified under sub section (2) of section 145 of the Act. Keeping in view the above discussion in totality and entirety it is held that the addition made for Rs. 35,64.000/- as additional prof it from Meerut project is totally based on conjecture and surmise and is therefore directed to be deleted. Further the prof it estimated by the AO for Rs. 14,67,24,986/- on Jaipur Project is also devoid of any substance on account of following reasons:- On a perusal of pages 33 to 38 of A-2 SOB 6A it is apparent that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,24,986/- as additional prof it from Jaipur project is totally based on conjecture and surmise and is therefore directed to be deleted. 7. Before us, during the arguments, the ld. DR strongly relied on the order of the Assessing Officer whereas the ld. AR supported the order of the ld. CIT(A) referring to the contents of the paper book fi led. 8. Heard the arguments of both the parties and perused the material available on record. Undisclosed Investment (Interest): Ground No. 1 : A.Y. 2005-06 9. The interest has been disallowed by the ld. CIT(A) on the grounds that unaccounted interest was computed by the revenue authorities on assumption basis. On going through the entire contents, since no amount receivable could deciphered, we decline to interfere with the reasoned order of the ld. CIT(A) on this issue. Undisclosed Receipts: 10. We have gone through the entire contents. The revenue authorities determined unaccounted prof it on Meerut project and Jaipur project. The sole basis for making the addition was the letter dated 03.01.2008 written by the marketing head Sh. Abdul Bari after leaving the job from the assessee company. In the letter, the market ..... X X X X Extracts X X X X X X X X Extracts X X X X
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