Commissioner Of Income Tax (Central) Surat v. Happy Home Corporation

C/TAXAP/465/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 465 of 2018 ========================================================== COMMISSIONER OF INCOME TAX (CENTRAL) SURATVersusHAPPY HOME CORPORATION ==========================================================Appearance: MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHIandHONOURABLE MR.JUSTICE B.N. KARIA Date : 09/05/2018 ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1.Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal dated 01.06.2017 raising following question for our consideration: “Whether on the facts and the circumstances of the case and in law, the Appellate Tribunal was justified in confirming the findings of the CIT(A) in respect of deleting the addition made by the Assessing Officer on account of undisclosed income to the tune of Rs.26,05,00,000/- disclosed during the course of survey u/s. 133A of the I.T. Act, 1961 ?” 2.Broadly stated, the facts are that the respondent assessee is engaged in construction business. The respondent was subjected to a survey action which was conducted on the business premises on 18.10.2010. During such survey, incriminating documents were impounded. Statement of Shri Mukesh Patel, the partner of the respondent firm was recorded. In such statement, he admitted the firm having received a sum of Rs.26,05,00,000/- which was not disclosed in the account or to the income tax department. He agreed that the said was firm's unaccounted income and also agreed to pay tax on the same. He also stated that the same pertained to the income of the current year. While doing so, he added that however, the same would be subject to the registration of the sale deeds. 3.When the assessment was undertaken, the assessee contended that the firm is following Project Completion Method of accounting and the income would be offered to tax as and when the final sale deeds are registered. He offered only a sum of Rs.1 crore during the year under consideration. The Assessing Officer rejected the stand and pinned down the assessee to the statement of the partner, contents of which we have noted above. He added the entire amount of Rs.26.05 crores as the income of the assessee during the current year. C/TAXAP/465/2018 ORDER 4.Commissioner of Income Tax (Appeals) deleted such addition which was confirmed by the Tribunal. The Tribunal accepted the assessee's contention that since the firm was following Project Completion Method for offering the income to tax, the same would be subjected to tax upon completion of sale, though the amount may have been received earlier from the buyer. We notice that Commissioner of Income Tax (Appeals) made a specific mention of the fact that the assessee in fact, had offered such income to tax in the later years as and when the sale deeds were executed. The Tribunal thus confirmed this view of the Commissioner of Income Tax (Appeals). 5.The Revenue does not object to the assessee's following Project Completion Method of accounting. The Revenue also does not dispute the findings of the Commissioner of Income Tax (Appeals) that the same income was offered to tax in the later years as and when the sale deeds were executed. The Revenue only objects to the stand of the assessee on the ground that in his statement, the partner of the firm had disclosed the entire amount as the income of the current year. We have noticed that the contents of 5.The Revenue does not object to the assessee's following Project Completion Method of accounting. The Revenue also does not dispute the findings of the Commissioner of Income Tax (Appeals) that the same income was offered to tax in the later years as and when the sale deeds were executed. The Revenue only objects to the stand of the assessee on the ground that in his statement, the partner of the firm had disclosed the entire amount as the income of the current year. We have noticed that the contents of C/TAXAP/465/2018 ORDER the statement, in which, while agreeing that the said sum of Rs.26.05 crores was the undisclosed income of the assessee for the current year, he added a clarification that the same would be subject to execution of the sale deeds. We therefore find no error in the view of the Tribunal. 6.Tax Appeal is dismissed. (AKIL KURESHI, J) ANKIT SHAH (B.N. KARIA, J)