Profits may be recognized on sale even if Assessee follows project completion method if all risk and reward been passed on

Brief Facts of the case-

• The assessee firm is a builder and developer and is assessed in the status of AOP.
• During the year under consideration, the assessee was developing a residential project which involved construction of 182 flats.
• The assessee did not disclose any income out of these projects on the plea that it was following ‘project completion method’ and offered income on these in AY 2010-11
• The A.O., however, noticed that the assessee has received major portion of advances and also completed major portion of the construction activity by 31-3-2008,
• The A.O. further noticed that the assessee has realized full sales consideration in respect of 33 units and more than 90% of the sales value in respect of 59 units out of total units of 190.
• Accordingly, the AO took the view that the assessee should have offered the income pertaining to the above said 92 units and estimated the profit at Rs. 6.48 crores on the basis of GP ratio of AY 2010-11.
• AO further made an addition of Rs. 55 lacs u/s 69C of the Act considering that the assessee must have incurred expenditure under the various heads without recording the same in the books of account.
• The CIT(A) granted relief on both the issues and now the revenue is in appeal before ITAT.

Contention of Assessee