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TMI Blog2017 (1) TMI 942X X X X Extracts X X X X X X X X Extracts X X X X ..... see. In the scheme of percentage completion method adopted by the assessee and the adjustments of this in the earlier assessment years is not proper as the final assessments, if any, can be done in the year in which the project is conclusively completed ie AY 2005-06. We find no mistake in the order of the CIT on this issue. Therefore, in our opinion, the CIT (A)'s order on this issue is fair and reasonable and it does not call for any interference. Accordingly, grounds raised by the assessee are dismissed. - Decided against assessee - I.T.A. No.5695/M/2012 - - - Dated:- 18-11-2016 - SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER For The Appellant : Shri Anil Sathe For The Respondent : Shri A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under consideration as the assessee was consistently offering profits based on the percentage completion method‟ qua the WIP of the project completed. The percentage of profits qua the cost estimated over the years ie from AY 2000-01 to AY 2006-07 are 15%; 15%; 15%; 20%; 20% 16% and 12% respectively. When it comes to the 12% of the WIP (cost of the project) offered for the year under consideration, assessee returned the loss of ₹ 59.50 lakhs. During the scrutiny proceedings, Assessing Officer questioned the loss returned by the assessee raising questions relating to 12%, which is the least profit estimated in the earlier AYs from 2000-01 to 2005-06. Further, AO raised various questions relating to the method of accounting, ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 44AB of the Act, AO could not understand as to why the BMC letter subsequently dated 7.11.2006 should be the basis for the assessee to rectify any entries in such completed / closed books of accounts of the assessee. Resultantly, AO restored the profit of 16% adopted by the assessee in the AY 2005- 06 ie immediately preceding to the AY under consideration. AO also reasoned that the BMC‟s demand since relatable to the AY 2007-2008, the corresponding debits should only be made in the AY 2007-2008. However, Assessing Officer did not given relief amounting to ₹ 20,40,734/- to the assessee on this account in the AY 2007- 2008. Matter travelled to the first appellate authority. 3. During the proceedings before the first appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee filed paper book on 7.4.2014 and 8.9.2016 and relied heavily on the written submissions made before the CIT (A) vide letter dated 10.5.2010. Mentioning about the project, Ld Counsel for the assessee submitted that the Pusalkar project was intended to be completed in nine years time and the same is eventually considered completed in the AY 2007-2008 and the profit percentage of that year is only 10%. Otherwise, the assessee was offering differential percentages of profit varying from 15% to 20% for different assessment years. Referring to the AO‟s reasoning regarding the BMC‟s demand of ₹ 55,51,600/-, Ld Counsel for the assessee mentioned that the accounts of the assessee for the AY 2006-07 are outside to be rectifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts of the firm already closed, as discussed above. This kind of rectification with the back of the statutory auditors is unsustainable in law. He also submitted that the BMC‟s letter dated 7.11.2006 raising huge demand amounting to ₹ 55,51,600/- being connected to the later assessment year, cannot prompt the management to alter the profits of the year. Otherwise, he relied heavily on the order of the AO / CIT (A). During the rebuttal time, Ld Counsel for the assessee submitted that the contents of para 4.3 are cryptic and the conclusions are confusing and suffer from ambiguity. To demonstrate the same, Ld Counsel for the assessee submitted that the CIT (A) is not allowing the grounds of appeal in one way and granted relief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deferential profit rate of 4% for the AY 2005-06, is rectified this year in view of the drop in the overall profits of the project due to BMC‟s huge demands, is the core issue and if the same constitutes proper rectification. We need to decide if the same is permissible in law. We find, there is no dispute on the fact of completion of the assessments of the earlier years to which the said amount of ₹ 20,46,764/- belongs. In our view, this kind of rectification / reversal of entries constitutes the amendment to the account unauthorizedly done by the management and it is outside the Accounting Standard (AS)-7, relied upon by the assessee. In the scheme of percentage completion method adopted by the assessee and the adjustments ..... X X X X Extracts X X X X X X X X Extracts X X X X
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