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TMI Blog2021 (4) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... cted. But, unlike many others, the assessee has not followed the practice of declaring income of a project in the final year only and he has been declaring certain income on estimated basis in the years prior to the final year and balance income is declared in the final year on actual working of receipt and expenditure. For showing income in the intermediate years the assessee has been following percentage of incremental work-in-progress method. This method of accounting has been accepted in all earlier years since A.Y.1996-97. 3. Assessee filed return of income for A.Y. 2009-10 on 29.09.2009 declaring total income of Rs..2,62,64,870/-. Assessing Officer completed the assessment u/s. 143(3) of the Act on 26.12.2011 determining total income at Rs..9,19,00,780/-. The difference between the returned income and assessed income had mainly arisen due to the Assessing Officer estimating the assessee's profit from building project "SAI STHAAN" and made an addition of Rs..6,31,61,224/- whereas a larger amount of Rs..6,45,83,979/- has been shown by the assessee for A.Y. 2011-12 which according to the assessee is the final year of the project SAI STHAAN. 4. Learned Counsel for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y 2010-11. 6. Learned Counsel for the assessee submitted that Assessing Officer has made the order of penalty u/s 271(1)(C) of the Act on 25.03.2014 more than seven months after ITAT order against the assessment order. It is submitted that Assessing Officer was aware of ITAT order as could be seen from his observations in Para No. 3 of the penalty order. It is submitted that Assessing Officer summarily refers to ITAT order and does not mention that the basis of huge addition made in the assessment order that A.Y. 2009-10 should be taken as the final year for assessment has been disapproved by ITAT and the addition made as such in the assessment order has been knocked down by ITAT. It is submitted that the Assessing Officer proceeds as if the income assessed by the Assessing Officer is final notwithstanding the ITAT order. 7. Ld. Counsel for the assessee submits that the Assessing Officer had only moved the assessee's income as disclosed in subsequent assessment year to assessment year under consideration. Otherwise learned Assessing Officer has not found any discrepancy and disputed neither expenditure nor receipt as declared by the assessee. In fact, the assessee has worked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standard (NAS) in relation to the real estate developers. As regards correctness and completeness of the accounts of the assessee there is not even a whisper in the assessment order or penalty order. It would be seen that it is not the case of the Assessing Officer that any receipt of the assessee from any project has been suppressed or deduction of any expenditure not actually incurred by the assessee has been claimed. The assessment order and the penalty order have been made on a wrongful assumption that the year in which occupation certificate is obtained would be the final year of assessment of the income from the project and this assumption has been rejected by the Tribunal. Learned Counsel for the assessee submitted that while Tribunal has computed higher income for assessment in this year but that has been done without interfering in the receipts and expenditure as disclosed by the assessee. 10. Ld. Counsel for the assessee further submits that Assessing Officer has entirely based the penalty levied by him on the assessment order after altogether ignoring ITAT order. It is therefore not necessary for the assessee to make any submissions in relation to the addition worked o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business under the name & style of "Concrete Builders. The appellant filed return of income declaring a total income of Rs. 2,62,64,870/-. The said income comprises of income from house property, income from business from proprietary concerns as well as income from other sources. During the scrutiny assessment proceedings, the AO made addition on following counts (i) Income on completion of the project (para 5.1 of assessment order) Rs. 6,31,61,224/-, (ii) Interest expenses Rs. 22,18,124/-) Para 5.2 of the assessment order) and (iii) Expenses of personal nature Rs. 2,56,562/- (para 5.3 of the assessment order). The AO initiated penalty proceedings for filing inaccurate particulars of income on disallowance of income on completion of project Rs. 6,31,61,224 within the meaning of section 271(1)(c) of the Income Tax Act, 1961. Further he initiated penalty proceedings for concealing taxable income by furnishing inaccurate particulars of income on disallowance of interest expenses Rs. 22,18,124/- within the meaning of section 271 (1 )(c) of the Income Tax Act, 1961. 6.7. Aggrieved by the above said additions, the appellant preferred appeal before the Ld.CIT(A). The CIT(A) vide his o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant is allowed to show completion of each unit at his whims and fancies, then there would be a huge loss to revenue. In this case, there was a deferment of tax liability since profits offered did not commensurate with the stage of completion of the project since the project was completed. Further, possession given to a customer is not a criteria for recognizing income by builder as stated above. The builders risk is over when the project is complete and most of the payment are received. The customer may or may not take possession as he may be an investor who will resell the flat and may not occupy. The appellant had booked sales in FY 2008-09 (the year under consideration) in respect of many flats. During the course of penalty proceedings the appellant did not adduce any evidence in respect of why the additional income should not be added to the returned income for the year under consideration. It is clear from the above facts that the appellant has not disclosed or offered the income voluntarily. The word 'voluntarily' means out of free will without any compulsion. In this case, income on completion of project and cash deposits could be identified only on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the current year in the given facts and circumstances of the case. Needless to add, the income as finally assessed on this project shall be given due credit of while determining the profit on the project for the terminal year. The Hon'ble ITAT further clarified that it would be noted that its order is in fact consistent with the decision in the case of Champion Construction Co. The ITAT directed application of the rate of profit (vis-à-vis the cost) for the only project for which adjustment has been made by the AO by adopting the same ratio reflected as per the appellant's accounts, consistent with the method being followed by him. 6.11. It is observed that difference between the returned income and assessed income has mainly arisen due to the assessing officer estimating the appellant's profit from building project `Sai Sthaan' on final basis and making an addition of Rs. 6,31,61,224/- whereas more or less the same amount (Rs. 6,45,83,979/-) has been shown by the appellant for Assessment Year 2011-12 which according to the appellant is the final year of the project `Sai Sthaan'. For assessment year 2009-10 under consideration, the appellant has offered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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