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TMI Blog2017 (2) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... wn Annexure-II and Annexure-III to find out sale price on the basis of date of booking of flat, flat number, area, agreement value, booking date, advance received etc., However, without controverting all these findings of the AO, CIT(A) after giving general observation deleted the addition. We do not find any merit in the order of CIT(A). Accordingly, the same is set aside and matter is restored back to him for deciding afresh after controverting the findings recorded by AO as discussed above. X X X X Extracts X X X X X X X X Extracts X X X X ..... though the doctrine of res judicata does not apply, in particular, to income-tax proceedings. Nevertheless, at the same time, the Hon'ble Supreme Court in the case of Radhasoami Satsang v. CIT [1992] 193 ITR 3211 (SC) declared that though the principles of res judicata do not apply to income-tax proceedings, each assessment year being a unit by itself, yet in cases, when a fundamental, aspect permeating through the different assessment years has been found as a fact one way or the other and parties have been allowed that position to be sustained by not challenging the order, it may not be appropriate to allow that position to be changed in a subsequent year. Their cardships extracted with approval the following passage from Hoysted v. Commissioner of Taxation [1926] AC 155 (PC) (page 328): «Parties are not permitted to begin fresh litigations because of new views held may entertain of the law of the case, or new versions which they present as to what should be a proper apprehension by the court of the legal result either of the construction of the documents of the weight of certain circumstances. If this were permitted litigation would have no end, except when legal in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hod. Standards permit both these methods. 4.10 The nature of business of a builder is often confused with the business of a construction contractor, but the only similarity in their activity is that both are engaged in civil construction; the nature of business of a builder and a contractor is completely different and distinct. A construction Contractor engages in civil construction on behalf of others under a contract. His gross revenue is known or can be reasonably estimated before he commences work and is fixed under the contract. A builder or a developer is as much in business of purchase and sale as any other trader Or manufacturer. It is only the nature of 'product' which is different, but the nature of transaction is of sale. A builder purchases land and he constructs buildings or bungalows on such land and sells such houses. He engages in civil construction for benefit of his own business and the nature of transaction for him is of sale. Income accrues to a builder or developer only when transaction of sale is complete and any advances received under the agreement for sale are mere earnest money and cannot be taxed as income before the transaction of sale is compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Matunga project was commenced during the year ended 31-3-2005. Even in the assessment order for the assessment year 2005-06 (copy filed) the Assessing Officer, while examining the return, would appear to have asked the assessee by letter dated 15-11-2007 (page 112 of the paper book) as to why revenue should not be taken credit on the basis of "percentage completion method" since in that year 26% of the project had been completed. On being informed (by letter dated 22-11-2007 at page 113 of the paper book) that the assessee is following the project completion method, the Assessing Officer did not pursue the matter further and accepted the assessee to carry forward the work-in-progress. In accordance with the method adopted by the assessee, he has shown the profit from the Matunga project in the return filed for the assessment year 2007-08. A perusal of the return (pages 68-93 of the paper book) shows that after claiming depreciation and remuneration paid to partners the profit from the project has been shown at ₹ 14,69,036; before these deductions, the profit is ₹ 23,90,873/-. These facts have also been pointed out to the Assessing Officer during the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be an effective criterion for assessment of the profits from the housing projects. 12. Another point made by the learned Sr.DR was that the letter of the Executive Engineer referring to the completion certificate dated 24-4-2006 might be indicative of the fact that even on 31-3-2006 the project was substantially completed. There is some force in the point, but when we take into account the fact that the possession has been handed over only in May, June and November 2006 coupled with the confirmation from the water supply authorities in June 2006 that adequate supply to the premises has been ensured, it would appear that it cannot be categorically asserted that the project was fully or substantially completed in the year ended 31-3-2006. What clinches the issue in favour of the claim that the project was completed in the year ended 31-3-2007 (asst.year 2007-08) is that the project account (page 89 of the paper book) for the year ended 31-3-2007 shows, in addition to the opening work-in- progress of ₹ 4,88,30,226, purchases amounting to ₹ 53,25,795 which is quite substantial. If in the next year the assessee had to buy materials for such a substantial amount, which a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount actually treated as the assessee's income are more than sufficient to take care of any such contingency. 11. We have considered rival contentions and carefully gone through the orders of the authorities below. From the record, we found that the possession of all flat owners of Balaji Avenue was not handed over by the assessee in the year under consideration and actual possession was handed over in financial year 2011-12 relevant to the assessment year 2012-2013. Corresponding income has also been offered by AO in the Assessment Year 2012-13. A clear finding to this effect has also been recorded by CIT(A). In view of this finding, CIT(A) was justified in deleting the addition of ₹ 58,97,073/- on account of flat sold in Balaji Avenues. 12. Next grievance of revenue relates to deletion of addition of ₹ 241.26 lacs on account of large variation in the rates of sale of flats. Facts in brief are that during the course of assessment proceedings, the assessee was asked to give name & address of the customer, flat no, area, agreement value, booking date, advances received as on different dates etc. The assessee submitted required details vide its submission dated 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of the assessee is to go for estimation of profit as per Section 144 of the Income Tax Act, 1961. 16. On the basis of tables drawn at page 17 and 18 of his order, the AO worked out unaccounted sale receipts of ₹ 2,41,26,879/-. 17. By the impugned order CIT(A) deleted the addition by observing as under:- 5.5 I have gone through the assessment order and submissions made by the appellant in this behalf. It is undisputed fact that the addition is made by AO on account of variation in prices of sale of flats and the basis of such addition was also information available to AO on a private website. Apart from this AO did not bring on record any material showing that assessee did receive cash from its customers. This act of the AO in estimating income cannot be justified on one more ground. If for the time being information on the private website is held to be sacrosanct, it should have been applied in all the cases. Wherever AO found that actual price received by the appellant is more than price shown by the appellant, such price has been conveniently ignored by him under the style "aberration". The approach of the AO is akin to saying "Head I win , Tell you l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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