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TMI Blog2022 (1) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee submitted the said details disclosing therein the fact of EDC received from land developers. Therefore, to say that the assessee had concealed any material fact relating to EDC, is not correct. That he had reflected it is as a liability in the Balance Sheet and not shown it as revenue receipt in its Profit Loss Account, is not a matter of fact but on the contrary it is an interpretation of the fact of receipt of EDC regarding its nature and the reasons do not bring out any material /information with the AO leading him to form this opinion of the EDC charges being Revenue in nature. DR has been unable to enlighten us as to what material fact relating to EDC was concealed by the assessee so as to empower the AO to assume jurisdiction to reopen the case of the assessee beyond four years from the relevant assessment year. No hesitation in holding that since the AO has failed to point out concealment of any material fact relating to income escaping assessment, being EDC, the reopening of the case of the assessee resorted to beyond four years from the assessment years, is against the provisions of law. The jurisdiction assumed by the AO therefore, to frame the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ginal assessment and, as such, this was merely a charge of opinion, which is not permitted by law. 2(c) That the CIT(A) has erred in not following the Judgment of the Hon'ble ITAT, Chandigarh Bench for the earlier years in the case of the Appellant for the AYs 2008-2009 and 2009-2010, where such re-assessment proceedings have been quashed. 5. Taking us through the facts of the case the Ld.Counsel for the assessee drew our attention to para 6 of CIT(A) s order wherein a brief history of the activities undertaken by the assessee alongwith objects clause was stated as under: 6. Before adjudicating the issues raised by the assessee, it would be pertinent to mention brief history of activities undertaken by the assessee alongwith its object clause. The Greater Mohali Area Development Authority (GMADA) was constituted under section 29(1) of PUNJAB REGIONAL AND TOWN PLANNING AND DEVELOPMENT ACT, 1995 covering the area of S.A.S. Nagar and the adjoining areas by Punjab Government Notification no.13/52/2006-lHG2/#7443 dated 14-082006.The Punjab Urban And Development Authority was demerged and GMADA was constituted through the above mentioned gazette notification as a S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iability in its Balance Sheet. The AO, the Ld.Counsel for the assessee stated, was of the view that the income on account of EDC received during the year had accordingly escaped assessment and, therefore, proceedings for reopening the case of the assessee were resorted to. Before proceeding further the Ld.Counsel for the assessee stated that certain further facts relating to the case needed to be brought to our notice which were to the effect that the assessee had filed a Civil Writ Petition(CWP) in Hon'ble Punjab Haryana High Court against the reopening of assessment u/s 147 of the Act in the impugned case which had been dismissed by the Hon'ble High Court vide its order dated 27-04-2018 in CWP No.26125 of 2017 (O M). That thereafter the assessee had filed SLP before the Hon'ble Supreme Court against the judgment of the Hon'ble Punjab Haryana High Court and the Hon'ble Supreme Court had dismissed the same noting that since re-assessment had been completed and the AO had passed the assessment order, there was no reason to interfere in the order of the Hon'ble High Court. He further pointed out that the Hon'ble Supreme Court further clarified that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee also pointed out that the facts for the impugned year demonstrated that the reopening was not in accordance with law. He pointed out that reopening of the case in the impugned year was done beyond four years from the assessment year and the AO had failed to comply with the statutory requirement of pointing out the material fact not disclosed by the assessee. He contended that the fact of EDC received by the assessee during the year was admittedly, as per the AO himself in his reasons recorded, disclosed in the financial statement of the assessee, that no new material had come in the knowledge of the AO. Therefore, the assessee could not be said to have concealed any material fact so as to empower the AO to invoke his powers of reassessment u/s 147 of the Act. Reliance was placed on various case laws. 9. The Ld. DR, on the other hand, heavily relied upon the order of the Hon'ble High Court stating that the Hon'ble Supreme Court had not quashed the order of the Hon'ble High Court and the findings of the Hon'ble High Court could not be ignored or wished away. 10. We have heard the contentions of both the parties and have taken note of the fact that the reo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is a regular, routine and re-occurring phenomenon as External Development Charges are being regularly received by the assessee from Land Developers/Colonizers/ Real Estate Builders/Promoters in every year and similarly these are being regularly expended/utilized/spent for the purpose of carrying out External Development Works and other related jobs. In light of the above, it is observed that both the receipts as well as the expenditure related to External Development Charges (EDC) are clearly revenue in nature as they are attributable to the regular business of the assessee and are also a routine, regular and re-occurring phenomenon. Accordingly, the assessee was required to credit the receipts of External Development Charges to its P L Account and debit the expenses incurred on account of the same. Since, the assessee is following Cash System of accounting, therefore, the net amount received bu the assessee during the year as External Development Charges was required to be brought to the ambit of tax by crediting the receipts earned during the year and debiting the expenses incurred on account of external development work and other related jobs. However, the assesses had fail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have concealed some material fact relating to the same for him to validly assume jurisdiction to reopen the case of the assessee u/s 147 of the Act, and the reasons recorded should have mentioned this act of concealment. But on the contrary we find, the reasons note that the EDC charges were shown by the assessee as a liability in its Balance Sheet under the head other liabilities (1st para of the reasons). The rest of the reasons is only the interpretation of the AO regarding the nature of the receipts of EDC being revenue in nature. In the last para of the reasons the AO again reiterates the disclosure of the EDC received by the assessee as a liability in its Balance Sheet. Except for the fact that the assessee received EDC during the year, no other fact has come to the knowledge of the AO and this fact as per his own admission, was disclosed by the assessee in his Balance Sheet as liability. Further it is a fact on record, which was brought to the notice of the CIT(A) also and has remained uncontroverted before us, that during assessment proceedings the assessee was asked to submit details of other liabilities, in response to which the assessee submitted the said details d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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