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TMI Blog2021 (10) TMI 238X X X X Extracts X X X X X X X X Extracts X X X X ..... d is over, which is generally one year after the execution of works contract and until the project is not completed, there is no right to receive the money. When there is no right to receive the money, the income does not accrue or arise to the assessee. Further, if this income has not been offered at the time of execution of the contract it is not possible, since the quantum of how much amount would be known only after the defect liability period. As pointed out that the assessee has been consistently following the same method of accounting for the last twenty five (25) years and there is no change in the method of accounting is warranted on a continuing job. Thus, it is clear that the Assessing Officer seeks to review the decision taken by its predecessor in office under the guise of exercise of power under Section 147/148, which is impermissible under law. On facts we have satisfied that there is no allegation against the assessee on any failure on his part to disclose full particulars at the time of original assessment, nor there is any fresh tangible material brought out by the assessee on record justifying his exercise of power under Section 147 of the Act. Therefore, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged that the assessee had offered the retention money for the completed projects, which was shown in the sundry debtors list. However, while reckoning the value of Work In Progress (WIP) of the on-going projects, the assessee had deducted the retention money from the WIP and when the assessee had followed mercantile system as mentioned in the letter dated 25.02.2014, the assessee should have offered the retention money or else the assessee should have claimed the expenses related to the retention money. But, the assessee had claimed the expenses in relation to retention money in the on-going projects expenditure. Along with the said reasons, the Assessing Officer also made an analysis as to how he proposes to proceed. The assessee submitted their objections dated 17.12.2018 for the assessment year 2011-12. 6. Apart from stating that the reopening is bad in law, it was contended that the retention money is not in the nature of income till such time the contractual obligations are performed or fully performed to the satisfaction of the customer by the assessee and therefore, the retention money cannot be regarded as 'income' even for the purpose of book profits under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e were disposed of by speaking order dated 18.12.2018 reiterating the earlier stand and also stating that the Assessing Officer was in possession of material in the form of audited balance sheet, computation of total income and the Assessing Officer had verified the information available on record, analyzed the provisions of the Act and thereafter, arrived at the conclusion that the assessee has made incorrect claim and reduced income. 9. Further, it was observed that in the assessment year or during the course of assessment proceedings [scrutiny assessment under Section 143(3)], the Assessing Officer has not formed any opinion on the issue of retention money and not considered the WIP and there is no change of opinion. The assessee challenged the said order by filing a writ petition stating that there is no allegation against the assessee for having not fully and truly disclosing all the relevant materials at the time of relevant assessment proceedings and there is no whisper of suppression of materials by the assessee and the respondent having not disputed the said fact, the question of reopening of assessment would not arise, especially, when the Assessing Officer had not poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. Further, if this income has not been offered at the time of execution of the contract it is not possible, since the quantum of how much amount would be known only after the defect liability period. 13. Further, it was pointed out that the assessee has been consistently following the same method of accounting for the last twenty five (25) years and there is no change in the method of accounting is warranted on a continuing job. Thus, it is clear that the Assessing Officer seeks to review the decision taken by its predecessor in office under the guise of exercise of power under Section 147/148, which is impermissible under law. 14. On facts we have satisfied that there is no allegation against the assessee on any failure on his part to disclose full particulars at the time of original assessment, nor there is any fresh tangible material brought out by the assessee on record justifying his exercise of power under Section 147 of the Act. Therefore, we hold that the reopening proceedings is bad in law. 15. In Commissioner of Income-tax -vs- Ignifluid Boilers (I) Ltd. reported in 2006 283 ITR 295 (Madras) , the assessee was carrying on business of erection and sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in book-keeping, an entry is made about a 'hypothetical income', which does not materialise. Where income has, in fact, been received and is subsequently given up in such circumstances that it remains the income of the recipient, even though given up, the tax may be payable. Where, however, the income can be said not to have resulted at all, there is obviously neither accrual nor receipt of income, even though an entry to that effect might, in certain circumstances, have been made in the books of account. This is what exactly happened in this case. In view of the categorical pronouncement of the Supreme Court and the facts and circumstances of the case, we are of the view that the appellate authority as well as the Tribunal are correct in their view. The order of the Tribunal requires no interference. Accordingly, the tax case (appeal) is dismissed. 16. As pointed that the legal issue is also squarely covered in favour of the assessee. Though we may not be required to consider the said aspect, nevertheless since the Hon'ble Division Bench of this court has settled the legal position in a tax case appeal, we are obliged to point out the same at this juncture ..... X X X X Extracts X X X X X X X X Extracts X X X X
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