9911796707
TMI Blog2022 (5) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... td. (hereinafter referred to as "the said Societies"). By an Agreement dated 20th July, 1993, the said Societies appointed one Mayuresh Builders as Contractor to construct buildings on the said plot of land (the said project). 3. In respect of the said project, Mayuresh Builders was following completed contract method of accounting, i.e., the amounts received from the members of the Societies were shown as advance received in its balance sheet and the amounts spent on the construction of the project was shown as capital work in progress. The revenue accepted this position for Assessment Years 1994-95, 1995-96 and 1996-97. For Assessment Year 1997-98 the Assessing Officer took a stand that a part of the income from the project should be assessed to tax based on percentage completion method. The Assessing Officer accordingly estimated 15% of the expenditure incurred by them for Assessment Year 1997-98 as profit for that year. The said issue was carried in Appeal, wherein, it was urged that they were following completed contract method as per which, income from the project would be offered for tax in the year of completion of the project. The Tribunal accepted the contention of Mayur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 90,038/- being 15% of the total capital work in progress upto previous year relevant to Assessment Year 2000- 01, i.e., Rs.23,32,66,919/-. Petitioner being aggrieved by the said assessment order, filed an appeal before the Commissioner of Income-tax and then to the Tribunal. 8. According to Petitioner, the Tribunal in its Order dated 24th November, 2010, recorded the finding that, "once the income is taxed in assessment year 2003-04 on the completion of the project, there cannot be any question of taxing the same amount in the earlier years by applying a particular percentage on the amount of work in progress shown in the balance-sheet". According to Petitioner, the Tribunal has however, observed that there appears to be confusion with respect to the fact that the project which was completed in Assessment Year 2003-04 was the same project which was shown as work in progress in Assessment Year 2000-01 and restored the matter to Respondent No.1 for the limited purpose of ascertaining whether the two projects referred to in the assessment order for Assessment Year 2000- 2001 was part of the project completed in Assessment Year 2003-04 and offered for taxation in that year. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the findings and or directions of the Appellate Authority is not applicable in the present case because there is no finding or directions in the Order dated 24th November, 2010 of the Tribunal to re-open assessment for the Assessment Years in question. It is submitted that even otherwise, the order, which Respondent No.1 had passed pursuant to the order of the Tribunal dated 24th November, 2010 came to be set aside in the appeal filed by Petitioner and method of accounting of completed contract method for the Assessment Year 2000-01 came to be accepted. 13. On the other hand, the Learned Counsel for the Revenue submits that Petitioner misrepresented to the Tribunal in relation to income arising from the work done in the project in question. It is submitted in fact Assessment Year 2003-04 do not represent the income arising from the work done in the said project in question. The Learned Counsel for the Revenue submits that the question of limitation of six years would not arise as the impugned notices came to be issued in consequence of and to give effect to the Tribunal's Order dated 24th November, 2010 in terms of Section 150 of the Act. Accordingly, it is submitted that all Peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of profit and loss account and balance sheet for assessment year 2003-2004 has been placed on record from where it can be seen that income has been shown to the credit side of the profit and loss account from the contract and there is no work in progress in the balance sheet for the said year. It, therefore, transpires that following the project completion method the assessee offered income in respect of these projects in assessment year 2003-2004 which has been accepted by the Revenue. Once the income is taxed in assessment year 2003-2004 on the completion of the project, there cannot be any question of taxing the same amount in the earlier years by applying a particular percentage on the amount of work in progress shown in the balance sheet. 4. However, the learned Departmental Representative brought to our notice that the Tribunal in assessment year 1997-98 recorded a categorical finding that the total work done up to assessment year 1997-98 was Rs.36.78 crores and the total work in progress up to assessment year 2000-2001 was about Rs.63.67 crores. It was contended that the Assessing Officer in assessment year 2001-2002 has noted that the total work in progress was only Rs.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar year. Similarly, a "direction" can be issued only by an authority under the powers conferred on it. Moreover, a direction by a statutory authority is in the nature of an order requiring positive compliance. When it is left to the option and discretion of the Income Tax Officer whether or not to take action, it cannot be described as a "direction". The Apex Court in Income Tax Officer V/s. Murlidhar Bhagwan Das (Supra) held that "a "finding", therefore, can be only that which is necessary for the disposal of an appeal in respect of an assessment of a particular year. The Appellate Assistant Commissioner may hold, on the evidence, that the income shown by the assessee is not the income for the relevant year and thereby exclude that income from the assessment of the year under appeal. The finding in that context is that that income does not belong to the relevant year. He may incidentally find that the income belongs to another year, but that is not a finding necessary for the disposal of an appeal in respect of the year of assessment in question. The expression "direction" cannot be construed in vacuum, but must be collated to the directions which the Appellate Assistant Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercentage on the amount of work in progress shown in the balance-sheet. Even for a moment we assume that the observations of the Tribunal could be stated to be a finding or a direction as contemplated by Section 150 of the Act, still in view of the proviso to Section 147 of the Act, the reopening cannot be stated to be valid. There is nothing in the reasons for reopening to indicate that there was any escapement of income due to failure on the part of the assessee to truly and fully disclose material fact. We would say that even in the reasons recorded, there is not even a finding that there was any such failure. 17. Even otherwise after the order of the Tribunal dated 24th November, 2010, the Assessment Officer had passed the fresh Assessment Order dated 29th December, 2011 making certain additions. Appeal was filed against the said order, which came to be allowed during the pendency of present Petition on 12th March, 2014. The Appellate Authority while allowing the appeal has held : "4.7 In A.Y. 2000-01 under consideration, the Hon'ble ITAT had observed certain discrepancies in the figures of WIP referred in orders for previous assessment years, such that the WIP upto A.Y. 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , has clarified most of such discrepancies reported in the remand report. 4.10 Considering the purpose for which the matter had been set aside by Hon'ble ITAT to AO, and the Appellant's explanation to the confusion in figures over which the matter was so set aside and also the Appellant's proving a fact that there was no other project under WIP in any of the years except the development of sale to societies, I feel no justification in going beyond the directions of Hon'ble ITAT and thereby questioning the revenue recognized in A.Y. 2003-04. Further, when the revenue recognized in A.Y. 2003-04 is not to be questioned, there can also be no justification in assessing the revenue for current year no presumptive basis, as it would amount to taxation. It is also a fact that the Appellant's own cases in prior/subsequent years on similar issue have finally decided in favour of the Appellant, and hence there is no justification in deviating from the same. 4.11 In view of the above, the addition made of Rs.1,86,61,354/- in the assessment order is deleted, and the grounds No.1 to 4 of Appeal are allowed." 18. Against the Order of the Appellate Authority dated 12th March, 2014, the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in previous year 2002-03 relevant to AY 2003-04 and the income earned from the construction work carried out with respect to these societies were ultimately offered for taxation in AY 2003-04 and due taxes paid to Revenue. The detailed reasoning is outlined by us in our conclusions as above in preceding para's of this order. Now it was for the Revenue to have brought on record cogent incriminating material to disprove and dislodge the contentions of the assessee by making necessary enquiries and investigations which in our considered view, the Revenue failed to bring on record any cogent incriminating material to dislodge contention of the assessee and we have no hesitation in confirming the well reasoned appellate order dated 12.03.2014 passed by learned CIT(A). We have also observed that in ground number 3 raised by Revenue it is averred that learned CIT(A) relied upon Judgment of Courts/tribunal while granting relief to the assessee, while the fact of the matter is that the learned CIT(A) decided the appeal on merits by following directions of ITAT in first round of litigation rather than relying on the Judgments as cited by Revenue in ground No.3. Revenue fails in this appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
