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TMI Blog2012 (5) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... A), the assessee is in appeal before us. 4. Grounds of appeal No. 1,2 and 4 are against the sustenance of addition of ₹ 2,14,50,000/-. 5. Facts of the above issue are that in the course of the assessment proceedings, on perusal of the balance sheet of the assessee as on 31.3.2007, it was found that the assessee had shown advances received amounting to ₹ 2,43,00,000/- under the head current liabilities . From the details submitted by the assessee in support of the claim, it was found that the advances were from M/s Siddhi Vinayak Securities Pvt Ltd. amounting to ₹ 1,23,75,000/-, M/s Radhika S. Gaekad amounting to ₹ 10,00,000/- and M/s. Manomay Estates Pvt. Ltd. amounting to ₹ 90,75,000/-. This led the Assessing Officer to opine that the assessee had received the entire sale consideration of flat No. 24B allotted to M/s. Siddhi Vinayak Securities Pvt. Ltd., amounting to ₹ 1,23,75,000/- and of flat No. 23B allotted to M/s. Manomay Estates Pvt. Ltd. amounting to ₹ 90,75,000/-. It was the assessee's defence that the possession of flats was not taken by the allottees as small interior work was not fully completed till 31.3.2007 and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he income of the present year under consideration instead of 'advances' as projected by the assessee 6. On appeal, the ld. CIT(A) after relying on the ratio of the decisions mentioned in para 3.3.1 of his order has observed that the appellant received the entire sale consideration by passing on all the benefits, risks and rewards to the buyer while issuing the allotment letters. He further observed that postponement of the possession or the registration is artificially superimposed to put a mask on the receipt of the entire sale consideration. It defies logic why a buyer will pay the entire consideration without being sure of the flats being complete in all respects and ready for possession. Further, significantly, payment of full consideration can never be treated as 'advance' as claimed by the appellant. In this respect the A.O. has been very just and judicious that he has not brought to tax the sum of ₹ 10 lacs received from M/s Radhika S. Gaikwad as this was only a part payment towards the full sale consideration of ₹ 1,23,75,000/- and accordingly confirmed the addition made by the A.O. 7. At the time of hearing, the ld. counsel for the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting (AS): 5) J.K. Industries Ltd. Vs. Union of India [2007] 165 Taxman 323 (SC). 6) MKB (Asia) (P.) Ltd. Vs. CIT [2008] 167 Taxman 256 (GAU.) On consistency: 7) Radhasoami Satsang v. CIT [1992] 193 ITR 321(SC) 8) CIT vs. Darius Pandole [2011] 330 ITR 485 (Bom) On accrual of income: 9) E.D. Sassoon Company Ltd. And Others v. CIT [1954] 26 ITR 27 (SC). 10) CIT vs. Shri Goverdhan Ltd. [1968] 69 ITR 675 (SC) 11) CIT vs. A. Gajapathy Naidu [1964] 53 ITR 114 (SC) 12) CIT vs. Asokbhai Chimanbhai [1965] 56 ITR 42 (SC). 8. In the alternative, he submits that against the amount added by the A.O. in the year under consideration, the corresponding cost of the flats may be allowed which was debited by the assessee in the next A.Y. 2008-09 and for this proposition, reliance was also placed on the following decisions:- 1) Calcutta Co. Ltd. vs. CIT [1959] 37 ITR 01 (SC) 2) Taparia Tools Ltd. vs. Jt. CIT/ CIT vs. Taparia Tools Ltd. [2003] 260 ITR 102(Bom). 3) Dy. CIT vs. Rajgir Builders [1999] 70 ITD 226 (Mum). He, therefore, submits that the addition made by the A.O. and sustained by the ld. CIT(A) be deleted. 9. On the other hand, the ld. D.R. w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in showing the sale proceeds of these two flats in the A.Y.2008- 09 which has also been accepted by the Revenue in the A.Y. 2008-09, therefore, the addition made by the A.O. and sustained by the ld. CIT(A) be deleted. 11. We have carefully considered the submissions of the rival parties and perused the material available on record. We find that there is no dispute that the assessee is following the mercantile system of accounting and the assessee showing the sale of the flats in the year in which the possession was given to the buyer. It is also not in dispute that the said system of accounting has been accepted by the Revenue in the past and also in subsequent A.Y. including the A.Y. 2008-09. During the year under consideration, the assessee has issued letters of allotment dtd. 15-3-2007 for flat No. 24/B to Sidhi Vinayak Securities Pvt. Ltd. for a total consideration of ₹ 1,23,75,000/- and similar letter of allotment dtd. 14-3-2007 for flat No. 23/B was issued to M/s Manomay Estates Pvt. Ltd. for a total consideration of ₹ 90,75,000/-. The relevant clauses of the letter of allotment dtd. 15-3-2007 are reproduced as under:- Clause 5:- The said premises has one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the area of the flat and the amount is in respect of Flat No. 23B. We further find that the registration of the above two flats was taken place on 30-11-2007. 13. In the case of CIT v. Bilahari Investment P. Ltd. [2008] 299 ITR 1 (SC) it has been held (Head note): Every assessee is entitled to arrange its affairs and follow the method of accounting, which the Department has earlier accepted. It is only in those cases where the Department records a finding that the method adopted by the assessee results in distortion of profits that the Department can insist on substitution of the existing method. The assessees, certain private companies, subscribed to chits as their business activities. They maintained their accounts on the mercantile basis and computed the profit/loss at the end of the chit period following the completed contract method. This was accepted by the Department, but for the assessment years 1991-92 to 1997-98 the Assessing Officer came to the conclusion that the completed contract method for chit discount was not accurate in recognizing/identifying income and that the percentage of completion method was to be preferred. The High Court held that the completed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dispute is only about the year of taxability and not the amount which is to be taxed. 3. In a decision rendered about 50 years ago, the Bombay High Court, speaking through Chief Justice Tendolkar in Commissioner of Income Tax, Delhi, Ajmer, Rajasthan and Madhya Pradesh vs. Nagri Mills Co. Ltd. [1958] 33 ITR 681 observed as follows :- We have often wondered why the Income tax authorities, in a manner such as this where the deduction is obviously a permissible deduction under the Income tax Act, raise disputes as to the year in which the deduction should be allowed. The question as to the year in which a deduction is allowable may be material when the rate of tax chargeable on the assessee in two different years is different; but in the case of income of a company, tax is attracted at a uniform rate and whether the deduction in respect of' bonus was granted in the assessment year 1952-53 or in the assessment year corresponding to the accounting year 1952, that is in the assessment year 1953-54, should be a matter of no consequence to the Department; and one should have thought that the Department would not fritter away its energies in fighting matters of this kind. But, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts that consequential relief be allowed to the assessee. 20. On the other hand, the ld. D.R. supports the order of the ld. CIT(A). 21. Having carefully heard the submissions of the rival parties and perusing the material available on record and keeping in view of our finding recorded in para 11 to 16 of this order, the A.O. is directed to allow consequential relief in respect of levy of interest u/s 234B and 234C of the Act. The ground taken by the assessee is, therefore, partly allowed. 22. Ground of appeal No. 5 reads as under:- Learned Commissioner of Income Tax (Appeals) erred in law and on facts in confirming the action of the learned Assessing Officer in not correcting the amount of Licence Fees, at ₹ 1,99,53,314/- as per audited accounts submitted in place of ₹ 1,83,53,314/- taken due to clerical error while filing the return of income, and re-computing Property Income under the provisions of the Income Tax Act, 1961. 23. Brief facts of the above issue are that during the course of assessment proceeding, the assessee vide letter dtd. 26-10-2009 has furnished the revised computation declaring total income at ₹ 2,08,52,028/- as against return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Head note): The income-tax authorities under the Income-tax Act, 1961, are under an obligation to act in accordance with law. Tax can be collected only as provided under the Act. If an assessee, under a mistake, misconception or on not being properly instructed, is over-assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected. In this view of the matter we are of the view that the matter should go back to the file of the A.O. and accordingly we set aside the order passed by the Revenue Authorities on this account and restore the matter to the file of the A.O. to decide the same afresh in the light of our observation hereinabove and in accordance with law after providing reasonable opportunity of being heard to the assessee. The ground taken by the assessee is, therefore, partly allowed for statistical purpose. 28. Grounds of appeal No. 6,7 8 taken by the assessee are general in nature and at the time of hearing the same were not pressed by the ld. Counsel for the assessee which was also not objected to by the ld. D.R. 29. That being so and in the absence of any supporting material placed on record by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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