Question And Answer
Subject: ASSESSMENT U/SEC. 153A when no incriminating material found
Querist: Manoj jain
Answered by:
Tags: , ,
Date: April 5, 2022
Query asked by Manoj jain

Assessee is AOP engaged in the business of construction and developing of housing project . Assessee is consistently following project completion method for recognizing revenue . In this method , the assessee is offering the Revenue when the possession  of the unit is givne to buyer after obtaining completion certificate. During the course of search action nothing incriminating documents have been found . The Assessing Officer during the course of search recorded the statement of member of AOp and asked details of the project and about advances received from unit purchasers. On the basis of the details question was asked as to why assesseee is not recognized the Revenueon percentage completion method  when substantial amounts have been received and project also substantially.  completed . The reply was given that assessee followed project completion method as given above , however AO has not appreciated the submissions of the assessee and computed the income on the basis of percentage completion method as per guidance note of ICAI. AO has also not appreciated the contention of assesee that it had offered the income in next financial year as per the method of accounting of project completion method as it amounts to double taxation . Whether the Action of the AO is justified in law , when no incriminating material is found during the search. Whether the AO can disregard Project completion method followed by assesee consistently with out pointing any defects in the same . Pl guide .

File Uploaded: Not Available

When no incriminating material is found assessment u/s 153 A is bad in law . In PCIT (Central ) v. Jaypee Financial Services Ltd. (2021) 282 Taxman 475 (Delhi) (HC) the Court held that as no incriminating documents were found in the course of search and the assessment was not pending on the date of search . Deletion of addition was held to be justified. Also refer CIT v. Kabull Chawla ( 2016 ) 300 ITR 573 ( Delhi ) (HC). PCIT v. Caprihans India Ltd. (2020) 114 103 (Bom.)(HC), CIT v. All Cargo Global Logistics Ltd (2015) 374 ITR 645 (Bom.) (HC), CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 374 ITR 645 (Bom.) (HC)
The Assessing Officer is not justified in disregarding the project completion method followed by the assessee. Refer , CIT v. S. N. Builders and Developers (2021) 431 ITR 241/ 279 Taxman 347 (Karn)(HC), project completion method was accepted . Also refer , CIT v. Prestige Estate Projects (P) Ltd. (2020) 274 Taxman 6 (Karn.)(HC), CIT v. Jalaram Jagruti Development Pvt. Ltd. (Bom.)(HC) (UR)

Disclaimer: This article is only for general information and is not intended to provide legal advice. Readers desiring legal advice should consult with an experienced professional to understand the current law and how it may apply to the facts of their case. Neither the author nor and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any inaccurate or incomplete information in this article nor for any actions taken in reliance thereon. No part of this document should be distributed or copied (except for personal, non-commercial use) without express written permission of

Leave a Reply

Your email address will not be published. Required fields are marked *