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TMI Blog2013 (11) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer has duly recorded and acknowledged the facts that the assessee is declaring profit of work-in-progress method. Therefore, undoubtedly there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment on this issue. As regards the non offering of rental income is concerned, the Assessing Officer has recorded in the reasons that the assessee has shown the bungalows in question in the balance sheet and no new material or information came to the knowledge of the Assessing Officer after the completion of the assessment u/s 143(3). The Assessing Officer accepted the fact that the assessee has already shown the rental income in the P&L account. Therefore, the reasons regarding reopening on this issue is vague so far as the rental income in respect of the bungalow at Belapur has been duly offered to tax by the assessee as the same was shown as income in the P&L account. Thus, the reasons for reopening on this issue is contrary to the fact that has already existed on record. Thus, in the absence of any new tangible material as well as failure on the part of the assessee to disclose duly and truly all material necessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f reopening; however, the objection of the assessee against validity of the notice u/s 148 was rejected by the CIT(A). The assessee has filed this appeal raising the ground of validity of reopening u/s 148. 4. Before us, the ld AR has submitted that reasons recorded in the impugned order passed u/s. 143(3) r.w.s. 147 the Assessing Officer has not brought out anything on record to show that any income chargeable to tax has escaped assessment for the assessment year under consideration by reason of the failure on the part of the assessee to disclose fully and truly all the material facts necessary for the purpose of completion of the assessment for the year under consideration. It was submitted that the assessee had disclosed fully and truly all the material facts necessary for the purpose of completion of assessment u/s. 143(3) and the Assessing Officer has passed the regular assessment order on 24.03.2004 on the basis of all the material facts disclosed by the assessee. 4.1 Further, it was submitted that the reason recorded by the Assessing Officer has been picked up by the Assessing Officer from the details filed by the assessee along with the return of income and during the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners and employees of the assessee company. The ground floor is used as office of the assesse company. Since the building is occupied by the assessee for the purpose of its business there is no annual value can be estimated u/s 22. 4.4 The ld AR has pointed that the assessee has declared the rental income in the P L account with respect to the Belapur bungalow whereas the property at Vashi has been used as a Guest House; therefore, no ALV can be assessed in respect of the property which is used by the assessee as Guest House. He has referred the P L account at page 31 of the paper book and submitted that the assessee has admitted the rental income of Rs. 8,64,755/- which was accepted by the Assessing Officer even in the reassessment order and therefore, the ground of reopening is contrary to the fact as accepted by the Assessing Officer. 4.5 The reopening is after four years is not permitted under the provisions of law when the Assessing Officer has not made out that the assessee failed to disclose fully and truly all material facts necessary for the assessment. 4.6 On the other hand, the ld DR has submitted that the reopening after four years is also permitted, if the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 18,74,92,324/- in respect of the completed projects as under: a) Sai Sagar Rs. 9,05,33,165 b) Sal Sangam Rs. 8,75,53,013 c) Misc Charges Rs. 62,93,253 d) Extra Amenities Rs. 23, 14,943 e) Parking charges Rs. 7,97,950 Rs.18,74,92,324 The total opening work in progress in respect of these completed projects has been shown at Rs. 19,92,22,578/- and the value of closing stock of unsold flats/ shops has been shown at Rs. 1,89,46, 900/- (Sal Sangam 1,25,00,600 and Sai Sagar Rs,64,46,300). The value of stock sold during the year out of these two projects comes to Rs. 18,02,75,678/- (Opening stock Rs. 19,92,22,578 - closing stock Rs. 1,89,46,900). The difference in the sale proceeds and the value of stock sold comes to Rs. 72, 16,646/- (18,74,92,324 - 18,02,75,678). The various expenses claimed in the P L account are not directly related to completed projects, except commission and brokerage amounting to Rs.28,500/-. Certain part of indirect expenses such as travelling and conveyance, telephone charges, salary, vehicle expenses etc could be indirectly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble High Court Mumbai, it is to be held that the order is final and is to be followed by the lower authorities. The judicial discipline does not permit a divergent view on the matter and keeping this in mind regarding the issue of method of accounting adopted by the appellant, the action of the Assessing Officer based on the findings of the Ld. C.I.T-22 in his order u/s. 263 dated 19.02.2007 cannot be accepted and the contention of the appellant is therefore being accepted and therefore income on building contract as declared by the appellant for A.Y. 2001-02 which was earlier assessed vide order dated 24.3.2004 u/s 143(3) of the IT. Act will stand and will not be open for any change. Here it is to be kept in mind that the very basis of the current order under appeal has been cancelled by the Hon ble ITAT vide their order dated 10.11.2008 when they decided the appeal against the order u/s. 263 of the I.T. Act for A.Y. 2003-04 in the case of the appellant. Therefore respectfully following the decision of the Hon ble Tribunal, the Assessing Officer is directed to accept the method of accounting as declared by the appellant as was done vide order u/s 143(3) of the I.T Act dt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the P L account. Thus, the reasons for reopening on this issue is contrary to the fact that has already existed on record. 5.6 Further, the second bungalow at Vashi was claimed by the assessee used as Guest House was not found false by the Assessing Officer; but the Assessing Officer treated the said bungalow as self occupied and computed ALV u/s 23(1)(a). This facts itself shows that the claim of using the bungalow as guest house is not false and taxing the income from house property by computing the ALV u/s 23(1)(a) of the Act is highly datable issue. 5.7 Thus, in the absence of any new tangible material as well as failure on the part of the assessee to disclose duly and truly all material necessary for assessment, the reopening on this issue is not permissible after expiry of four years as the same is hit by the proviso to sec. 147 of the act. The Commissioner of Income Tax(Appeals) has already decided this issue in favour of the assessee subject to verification. Hence, both the issues on merit were decided in favour of the assessee by the CIT(A). Therefore, the reopening on such issue is not sustainable, particularly in the facts of the present case. 5.8 As regards the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ksaria Charitable Trust vs. ITO Ors, 168 1TR 387 (MP) 3.2 In view of this, even though department has not accepted the decision of the Hon ble Tribunal and has preferred an appeal before the Hon ble High Court, till the time the decision of the Hon ble Tribunal Mumbai is either set aside or cancelled by the Hon ble High Court Mumbai, it is to be held that the order is final and is to be followed by the lower authorities. The judicial discipline does not permit a divergent view on the matter and keeping this in mind regarding the issue of method of accounting adopted by the appellant, action of the Assessing Officer based on the findings of the Ld C I T-22 in his order u/s 263 dated 19 02 2007 cannot be accepted and the contention of the appellant is therefore being accepted and therefore income on building contract as declared A Y 2002-03 will stand and will not be open for any change. Here it is to be kept in mind that the very basis of the current order under appeal has been cancelled by the Hon ble Income Tax Appellate Tribunal vide their order dated 10.11.2008 when they decided the appeal against the order u/s. 263 of the I.T. Act for A.Y. 2003- 04 in the case of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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