9911796707
TMI Blog2011 (2) TMI 1480X X X X Extracts X X X X X X X X Extracts X X X X ..... peals by way of consolidated order. 2. Grounds of appeal raised by the revenue in both the appeals are common and the same is pertaining to deletion of addition under section 153A /C of the Act. 3. Briefly the facts of the case are that the assessee company is in the business of real estate development and construction as developer and builder. A search and seizure operation under section 132 of the Act was carried out in the business premises of one of the group companies, namely, Ambience Properties P. Ltd., in which, books of account and other incriminating material pertaining to the assessee company were found and seized. Accordingly, the assessing officer issued notice under section 153C of the Act to file return of income, against w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounting policy, the expenditures debited to the Profit and Loss Account could not be claimed, which had ultimately resulted in loss for both the years under consideration. The assessing officer also observed that the method followed by the assessee is in violation of accounting standard-9 and accounting standard-7 relating to recognition of revenue. After analyzing the provisions contained in accounting standards, the assessing officer was of the view that the assessee should have recognized its revenue in terms of the said accounting standard on the basis of percentage completion method. The assessing officer was of the view that the assessee ought to have recognized the revenue on pro-rata cost incurred during the year following the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or unusual. He further stated that similar method is also followed by many other listed companies in the real estate business like DLF Ltd., HDIL, Unitech Ltd., etc. The assessee filed copies of the accounts of the said companies where assessments had been completed without any adverse remark on the accounting policy and method adopted by the said companies in support of his case. On being requested to comment by the CIT(A) on the submission of the assessee that the assessment has been made under section 143(3) read with section 153A without there being any incriminating material and also to comment on the assessee's contention that revenue recognition beyond a threshold limit is prevalent in the industry and some of the peers like DLF, Uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l before us. 6. Before us, the learned departmental representative has submitted that the assessing officer is empowered to make regular additions apart from additions based on material seized. The Departmental Representative has submitted that as regards revenue recognition, the assessee has not followed the accounting standards prescribed by ICAI and contended that by following their own method of revenue recognition, the assessee company intended to postpone the tax liability. Defending the order of assessing officer, the departmental representative submitted that unless otherwise the assessing officer did such exercise it will lead to loss of revenue and would become major audit objections. It is submitted that the assessment made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad with section 153A of the Act in the case of Ambience Properties Ld. And Universal Realtors Pvt. Ltd. and no adverse inference or additions made on the basis of accounting policy, therefore, the assessing officer cannot apply different yard stick for computing the income when the same accounting policy is being adopted. It is finally submitted that the CIT (A) has appreciated the facts of the case of the assessee and directed the assessing officer to delete the additions made; therefore, the order of the CIT (A) may be upheld. 8. We have heard the learned representatives of the parties and perused the record as well as gone through the orders of the authorities below. The assessing officer in his report to the CIT (A) clearly mentioned t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions made by the assessing officer are not supported by any facts and figures which can demonstrate that the impugned method of accounting policy adopted by the assessee company resulted in under estimation of profit. Although the assessing officer discussed in detail about the accounting aspects in his order, however no conclusion has been reached by the assessing officer. The assessing officer has taken estimated revenue from the projects without considering the fact that whether the units are sold or not. In other words, profit is being estimated on unsold stock also. We find that pre-revised AS-7 issued by the ICAI in the year 1983 specifically included companies undertaking construction activities on their own, builders and developer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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