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TMI Blog2015 (6) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... ad in law. 1.2 That on the facts and circumstances of the case, the CIT(A) has erred in holding that there was no conscious application of mind by the Assessing Officer at the time of regular assessment proceedings completed under sec. 143(3) of the Act, even though the entire material was available on record. 2. That on the facts and circumstances of the case, the CIT(A) has erred in upholding the action of the Assessing Officer in disallowing the deduction of "provision for construction" amounting to Rs. 2,77,52,000, claimed by the appellant during the relevant previous year. 2.1 That on the facts and circumstances of the case, the CIT(A) has erred in holding that the liability on account of construction cost did not accrue to the appellant during the relevant previous year. 2.2 Without prejudice, that the CIT(A) erred on facts and in law in not directing to allow the expenses in respect of which provision was made in the subsequent year(s)." Ground Nos. 1 to 1.2 2. In these grounds, validity of reassessment framed under sec. 147 read with 143(3) of the Income-tax Act, 1961 has been questioned on several basis. The Learned AR submitted that the assessee had filed return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd inclusion of estimated cost in the profits computation. From the above details/documents, it is apparent that on the issue of provisions for construction expenses, the assessee had made adequate disclosures and the Assessing Officer, in the original assessment proceedings, had, in fact, made specific inquiries/investigations. In support, he referred page Nos. 10 to 81 of the paper book i.e. details of provisions for construction work amounting to Rs. 2.77 crores along with the copies of bills submitted by the parties, before the Assessing Officer. The Assessing Officer after due application of mind and after duly considering the exhausted details/documents furnished by the assessee, aggrieved with the claim and, therefore, did not make any adjustment/disallowance on any of the aforesaid issues in the original assessment order. There is nothing to suggest, either from the reasons recorded and/or from the assessment order that any new fact/information came to the notice of the Assessing Officer subsequent to the original assessment. The Learned AR contended that on perusal of the reasons recorded by the Assessing Officer before initiating the impugned assessment proceedings, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed an expense of Rs. 57,71,65,568.61 P on account of construction expenses (Civil Work), which includes an amount of Rs. 2,77,52,000 as "Provision for construction". Under the Income-tax Act, 1961, a provision made in the accounts for an accrued or known liability is an admissible expenditure while other provisions made do not qualify for deduction. Since this liability has actually not arisen and incurred during the previous year, the same is not an allowable deduction for the assessment year 2000-01". I have reason to believe that an income of Rs. 2,77,52,000 chargeable to tax has escaped assessment for the assessment year 2000-01. Issue notice u/s. 148 for the A.Y. 2000-01." 7. On perusal of the above reasons, we find it apparent that the Assessing Officer has initiated reopening proceedings merely on reappraisal of the details forming part of the original assessment proceedings. It is evident from the paper book that vide letter dated 25.3.2003, the assessee had furnished details of provisions made for construction expenses as on 31.3. 2000 with copies of bills submitted by the parties, before the Assessing Officer during the original assessment proceedings. Thus, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an abuse of power by the Assessing Officer. In that case also, there was no whisper in the reasons recorded, of any tangible material which came to the possession of the Assessing Officer subsequent to the issue of the intimation. The Hon'ble High Court held that it reflects an arbitrary exercise of the powers conferred under sec. 147 of the Act. Almost similar are the facts of the present case before us. Though in the present case, original assessment was framed under sec. 143(3) of the Act after compliance of furnishing of the details of provisions made for construction expenses as on 31.3.2000 with copies of bills submitted by the parties mentioned therein (vide letter dated 25.3.2003 of the assessee ) as required by the Assessing Officer during the course original assessment proceedings. The assessee company was also required under the accrual concept of accounting to provide for all expenses related to the construction of the flats till 31.3.2000. In compliance, the assessee had submitted that this provision made was not an ad hoc provision but was made based on the invoices submitted by the various contractors who were engaged in the construction activity and payment was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idity of initiation of reopening proceedings and framing of reassessment in furtherance thereto is thus decided in favour of the assessee with this finding that the reassessment being invalid is quashed. These grounds are accordingly allowed. 9. Ground Nos. 2 to 2.2: In these grounds, the validity of disallowances made has been questioned. Since hereinabove we have, while deciding the ground Nos. 1 to 1.2, held that the initiation of reopening proceedings and framing of reassessment in furtherance thereto were invalid and the very reassessment has been quashed, the other grounds do not survive as the same have become academic only. 10. In result, the appeal is allowed. ITA No. 3812/Del/2010: 11. The Revenue has impugned the validity of the relief given by the Learned CIT(Appeals) while deleting the disallowances made by the Assessing Officer. 12. In the above appeal preferred by the assessee against the same First Appellate Order on the issue of validity of the reassessment order, we have held the reassessment as invalid and the same has been quashed as such the remaining grounds raised by the Revenue in the present appeal have become infructuous. These grounds are accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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