Sherla v. Itxa.484.2017_26.Doc

IN THE HIGH COURT OF JUDICATURE AT BOMBAYO.O.C.J. INCOME TAX APPEAL NO.484 OF 2017 The Pr. Commissioner of Income Tax - 28… Appellant Vs M/s.Gahlot Construction… Respondent Mr.N.C. Mohanty for the Appellant CORAM: AKIL KURESHI & S.J. KATHAWALLA, JJ. DATED: JULY 22, 2019 P.C.: 1.This Appeal is filed by the Revenue to challenge thejudgment of the Tribunal. The following question is presented forour consideration: a)Whether on the facts and in the circumstances of thecase and in Law, the Tribunal was justified in confirming thedecision of the CIT(A) to delete the addition of Rs.53 lakhsbeing the amount computed by adopting partial/percentagecompletion method, as admitted by the assessee undersection 132 (4) of the Income Tax Appeal, 1961 which hasbinding effect and full evidentiary value? 2.The issue pertains to the Assessment Year 2009-2010. Thefacts on record would suggest that the assessee, which is a firmengaged in real estate development, was subjected to searchaction and statement of one of the partners was recorded. It waspointed out out that after 1.4.2004, the assessee had to follow thepercentage completion method of accounting as a developer.Thereupon, the partner had agreed to offer an income of Rs.1.60crores for the said Assessment Year 2009-2010. However, in thereturn filed by the assessee post-search, no such additionalincome was offered to tax. Such addition was made by theAssessing Officer and challenged before the CIT (Appeals). Theissue eventually reached the Tribunal. The Tribunal by theimpugned judgment relied upon its earlier decision in the case ofone Bhoomi Construction Projects and deleted the addition. 3.Learned Counsel for the Revenue in addition to arguing theappeal on merits pointed out that the Department had carried thecase of Bhoomi Construction Projects before the High Court,however, such appeal was withdrawn on the ground of low taxeffect. 4.We are not basing our consideration on the decision in thecase of Bhoomi Construction. However, the facts on record wouldsuggest that the assessee was not following the project completionmethod but percentage completion method for income recognition.The Tribunal in the case of Bhoomi Construction had come to theconclusion that the Assessing Officer had not brought anyevidence that by such method, any income chargeable to theestate, the assessee was regularly following the said method forcomputing. 5.Under the circumstances, the addition made by theAssessing Officer merely on a statement made by one of thepartners of the firm recorded under section 132 (4) of the IncomeTax Act, 1961 without there being any independent additionalevidence, was rightly deleted by the Tribunal. No question of lawarises. Appeal is dismissed. (S.J. KATHAWALLA, J.) (AKIL KURESHI, J.)