2016 (5) TMI 1413 - AT - Income Tax

Additional income offered voluntarily - return of income filed in response to notice u/s 153A - Addition made on the basis of declaration offered by the assessee during the search proceeding - Held that - As noticed that in the case of Bhoomi Construction Project Vs ACIT 2015 (6) TMI 5 - ITAT MUMBAI there is no finding that the assessee has been following percentage completion method regularly since beginning or in any other project. There is no such evidence or documents which have been found during the course of search indicating that the assessee had been following percentage completion method regularly. If the assessee has been following one of the recognized methods as prescribed by AS-9 then it cannot be held that the Revenue can impose a different method upon the assessee unless there is a finding of fact that such a method is not reflecting the true profits of the assessee. Now it has also been brought on record by the ld. Counsel that in the subsequent year i.e. in the year of completion of the project in A.Y. 2012-13 the Revenue itself has accepted the project completion method for recognition of revenue and accordingly has assessed the income of the project on the same method. Thus a contrary view cannot be taken for this year. - Decided against revenue.

Summary

Issues Involved:
Appeals filed by Revenue against CIT(A) order for AYs 2008-09 & 2009-10 regarding addition to total income based on percentage completion method.

Detailed Analysis:

Issue 1: Addition to Total Income based on Percentage Completion Method
The case involved appeals by Revenue against CIT(A) order for AYs 2008-09 & 2009-10 regarding addition of income based on percentage completion method. The search and seizure action under section 132(1) of the Income Tax Act was initiated in the case of a group, and the assessee's premises were also surveyed under section 133A. The assessee filed a return of income declaring total income. The Assessing Officer (AO) added income based on percentage completion method, which was admitted during the search proceedings. The CIT(A) concluded that the AO wrongly estimated the profit and accepted the appeal, stating that the assessee consistently followed the project completion method for revenue recognition. The Revenue argued that the addition was based on the assessee's voluntary statement during the search action. The AR of the assessee contended that they followed the project completion method and the statement made during search was not voluntary. The Tribunal referred to a similar case involving the assessee's sister concern where the addition was deleted, emphasizing the principle of consistency. The Tribunal upheld the CIT(A) order, dismissing the appeals filed by the Revenue.

Issue 2: Consistency in Decision
The Tribunal highlighted the principle of consistency in its decision, referring to a previous case involving the assessee's sister concern where a similar addition was deleted. The Tribunal emphasized that unless there is evidence that a different method is necessary, the Revenue cannot impose a method different from what the assessee has been consistently following. The Tribunal noted that in a subsequent year, the Revenue itself accepted the project completion method for revenue recognition, further supporting the decision to dismiss the appeals filed by the Revenue.

Conclusion:
The Tribunal upheld the CIT(A) order, dismissing the appeals filed by the Revenue for AYs 2008-09 & 2009-10. The decision was based on the principle of consistency and the assessee's consistent use of the project completion method for revenue recognition. The Tribunal's detailed analysis and reference to a similar case involving the assessee's sister concern reinforced the decision to reject the Revenue's appeals.