M/s. South City Projects (Kolkata) Ltd., , Kolkata V. DCIT, Circle - 10(2), Kolkata , Kolkata

CO 45/KOL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4516 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-02-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-01-2020
• Assessment Year: 2008-2009
• Appeal Filed On: 19-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: RAM BILASH MEENA
• Keywords: Reopening of assessment; Tangible material; Reason to believe
• Section: 143(3); 73; 13; 22; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A, BENC H KOLKATA BEFORE SHRI S.S.GODARA, JM &DR. A.L.SAINI, AM ./ITA NO.268/KOL/2018 ( / ASSESSMENT YEAR:2008-09) ACIT, CIRCLE-10(2), KOLKATA VS. M/S SOUTH CITY PROJECTS (KOLKATA) LTD. 375, PRINCE ANWAR SHAH ROAD, KOLKATA-700068 ./ ./PAN/GIR NO.: AAACD 8933 A (APPELLANT) .. (RESPONDENT) C.O. NO. 45/KOL/2018 (ARISING OUT OF ./ITA NO.268/KOL/2018) ( / ASSESSMENT YEAR: 2008-09) M/S SOUTH CITY PROJECTS (KOLKATA) LTD. 375, PRINCE ANWAR SHAH ROAD, KOLKATA-700068 VS. ACIT, CIRCLE-10(2), KOLKATA ./ ./PAN/GIR NO.: AAACD 8933 A (CROSS OBJECTOR) .. (RESPONDENT) APPELLANT BY : SHRI RAM BILASH MEENA, CIT DR RESPONDENT BY :SHRI AKKALDUDHWEWALA, FCA / DATE OF HEARING : 16/01/2020 /DATE OF PRONOUNCEMENT : 26/02/2020 M/S SOUTH CITY PROJECTS (KOLKATA) LTD. ITA NO.268/KOL/2018&C. O. NO. 45/KOL/2018 ASSESSMENT YEAR:2008-09 P PP PA AA AG GG GE EE E | || | 2 22 2 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE REVENUE AND T HE CROSS OBJECTION FILED BY THE ASSESSEE , PERTAINING TO ASSESSMENT YEAR 200 8-09, ARE DIRECTED AGAINST THE COMMON ORDER PASSED BY THE COMMISSIONER OF INCOME T AX (APPEAL)-4, KOLKATA, IN APPEAL NO. 86/CIT(A)-4/2016-17/KOL, WHICH IN TUR N ARISE OUT OF COMMON ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U /S 147 / 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 29/03/2016 . 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS FOLLOWS: 1. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS IN F ACT IN DELETING AN ADDITION OF RS. 12,00,00,000/- MADE ON ACCOUNT OF PROVISION FOR UNASCERTAINED LIABILITY AS IT APPEARS THAT THE PROVISIONS MADE RE MAINED UNASCERTAINED AND WAS EVENTUALLY WRITTEN BACK. 2. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS IN FA CT IN CONSIDERING THAT IF THE ASSESSEE HAS CLAIMED U/S 80IB(10) AND INCOME ON ACCOUNT OF ADDITION WOULD HAVE BEEN SET OFF IS ONLY HYPOTHETICAL. 3. THAT THE APPELLANT CRAVES TO ADD, ALTER OR DELET E ANY OR ALL OF THE GROUNDS OF APPEAL DURING THE COURSE OF APPELLATE PROCEEDING S. 3. BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSESSEE FILED E-RETURN OF INCOME FOR THE A.Y.2008-09 ON 22.09.2008 DISCLOSING TOTAL INCOME O F RS. 12,42,46,566/-. THE ASSESSEE COMPANY WAS ENGAGED IN THE CONSTRUCTION OF BUILDING & REAL ESTATE DEVELOPMENT. LATER ON, ASSESSEES CASE WAS REOPENED U/S 147 OF THE ACT AND A NOTICE DATED 09.03.2015 U/S.148 OF THE I.T. ACT, 19 61 WAS ISSUED AND DULY SERVED ON THE ASSESSEE. THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT ARE REPRODUCED AS BELOW: THE ASSESSEE ON 02.06.2008 PAID A SUM OF RS.80,00,0 00/- THROUGH CHEQUE NO.049479ON HDFC BANK TO M/S. KOLKATA MUNICIPAL COR PORATION FOR DEVELOPMENT OF ROADS AND OTHER INFRASTRUCTURE AT PR INCE ANWAR SHAH ROAD. THE BALANCE OF RS.9,20,00,000/- REMAIN OUTSTANDING AS O N 31.03.2009, 31.03.2010 AND 31.03.2011. ON 31.03.2012 THE ASSESSEE HAS WRITTEN BACK A SUM OF RS. 8,71,51,000/- TO ITS PROFIT&LOSS ACCOUNT FOR THE F. Y.2011-12 RELATED TO A.Y.2012- 13. THE ASSESSEE HAS ALSO CLAIMED DEDUCTION OF RS. 8,03,50,538/- U/S.80IB(10) OF THE ACT THAT ALMOST NULLIFIES THE INCOME WRITTEN BA CK. HENCE, THERE WAS NO JUSTIFICATION FOR THE PROVISION CREATED IN THE SINCE THE AMOUNT OF RS.9,20,00,000 WAS A PROVISION CREATED NOT FOR ANY DEFINITE EXPENDITURE THE SAID PROVISION REMAINED AN UNASCERT AINED LIABILITY 2008- 09. THE ASSESSEE ALSO DID NOT RECEIVE ANY BILL OR D EMAND NOTICE FR KOLKATA MUNICIPAL CORPORATION DURING F.Y. 2007 PROVISION IN A Y.2008 ACTUALLY FRUCTIFIED OR CRYSTALLIZED DURING A.Y. 200 8 CLAIMED DEDUCTION 9,20,00,000/- . THEREFORE, RS.9,20,00,000/ MEANING OF SECTION 147 FOR THE 2008 NOTICE U/ S. 148 FOR THE A.Y. 2008 4. IN RESPONSE TO THE NOTICE ISSUED BY THE ASSESSIN G OFFICER THE ASSESSEE FILED WRITTEN SUBMISSION BEFORE THE ASSESSING OFFICER WHI CH ARE REPRODUCED BELOW: 3. IN RESPONSE TO THAT THE ASSESSEE FILED A LETTER DATED 09.04.2015 WITH A REQUEST TO TREAT THE RETURN FILED ON 22.09.2008 FOR A.Y. 2008 COMPLIANCE WITH THE NOTICE DATED 09.03.2015 ISSUED U/S 148 OF THE I. T. ACT, 1961. THE ASSESSEE ASKED FOR THE COPY OF REASONS RECORDED FOR REOPENING OF ASSESSMENT AND WAS PROVIDED A COPY OF THE SAME. THE ASSESSEE HAD RAISED CERTAIN OBJECTIONS WITH REGARD TO REASONS RECORDED FOR REOPENING OF AS SESSMENT VIDE A LETTER DATED 22.07.2015. THE OBJECTIONS RAISED BY THE ASSESSEE H AD NOT BEEN ACCEPTED AND THE REASONS FOR NOT ACCEPTING THE SAM DATED 24.11.2015. THE OBJECTIONS RAISED BY YOU WITH REGARD TO REASONS RECORDED FOR REOPENING OF ASSESSMENT HAVE BEEN PERUSED AND D ULY CONSIDERED. THE OBJECTIONS RAISED BY THE ASSESSEE. WITH REGARD TO T HE REA REOPENING OF THE ASSESSMENT ARE SUMMARIZED BELOW FO R SAKE OF CONVENIENCE: M/S SOUTH CITY PROJECTS (KOLKATA) LTD. ITA NO.268/KOL/ 2018&C. O. NO. ASSESSMENT YEAR: THE ACT THAT ALMOST NULLIFIES THE INCOME WRITTEN BA CK. HENCE, THERE WAS NO JUSTIFICATION FOR THE PROVISION CREATED IN THE ASSESSMENT YEAR 2008 SINCE THE AMOUNT OF RS.9,20,00,000 WAS A PROVISION CREATED NOT FOR ANY DEFINITE EXPENDITURE THE SAID PROVISION REMAINED AN UNASCERT AINED LIABILITY 09. THE ASSESSEE ALSO DID NOT RECEIVE ANY BILL OR D EMAND NOTICE FR KOLKATA MUNICIPAL CORPORATION DURING F.Y. 2007 - 08 AS SUCH THE CREATION OF PROVISION IN A Y.2008 - 09 WAS UNWARRANTED IN SO FAR AS NO LIABILITY FOR EX PENDITURE ACTUALLY FRUCTIFIED OR CRYSTALLIZED DURING A.Y. 200 8 - 09. ASSESSEE HAS ALREADY ON ACCOUNT OF MERE PROVISION OF INCOME TO THE EXTEN T OF . THEREFORE, RS.9,20,00,000/ - HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 FOR THE 2008 - 09. I CONSIDER THIS TO BE A FIT CASE FOR ISSUE OF NOTICE U/ S. 148 FOR THE A.Y. 2008 - 09.' 4. IN RESPONSE TO THE NOTICE ISSUED BY THE ASSESSIN G OFFICER THE ASSESSEE FILED WRITTEN SUBMISSION BEFORE THE ASSESSING OFFICER WHI CH ARE REPRODUCED BELOW: 3. IN RESPONSE TO THAT THE ASSESSEE FILED A LETTER DATED 09.04.2015 WITH A REQUEST TO THE RETURN FILED ON 22.09.2008 FOR A.Y. 2008 - 09 TO TREAT AS RETURN FILED IN COMPLIANCE WITH THE NOTICE DATED 09.03.2015 ISSUED U/S 148 OF THE I. T. ACT, 1961. THE ASSESSEE ASKED FOR THE COPY OF REASONS RECORDED FOR REOPENING OF ASSESSMENT A COPY OF THE SAME. THE ASSESSEE HAD RAISED CERTAIN OBJECTIONS WITH REGARD TO REASONS RECORDED FOR REOPENING OF AS SESSMENT VIDE A LETTER DATED 22.07.2015. THE OBJECTIONS RAISED BY THE ASSESSEE H AD NOT BEEN ACCEPTED AND THE REASONS FOR NOT ACCEPTING THE SAM E WAS COMMUNICATED TO THE ASSESSEE VIDE A LETTER DATED 24.11.2015. THE OBJECTIONS RAISED BY YOU WITH REGARD TO REASONS RECORDED FOR REOPENING OF ASSESSMENT HAVE BEEN PERUSED AND D ULY CONSIDERED. THE OBJECTIONS RAISED BY THE ASSESSEE. WITH REGARD TO T HE REA SONS RECORDED FOR REOPENING OF THE ASSESSMENT ARE SUMMARIZED BELOW FO R SAKE OF CONVENIENCE: M/S SOUTH CITY PROJECTS (KOLKATA) LTD. 2018&C. O. NO. 45/KOL/2018 ASSESSMENT YEAR: 2008-09 P PP PA AA AG GG GE EE E | || | 3 33 3 THE ACT THAT ALMOST NULLIFIES THE INCOME WRITTEN BA CK. HENCE, THERE WAS NO ASSESSMENT YEAR 2008 -09. SINCE THE AMOUNT OF RS.9,20,00,000 WAS A PROVISION CREATED NOT FOR ANY DEFINITE EXPENDITURE THE SAID PROVISION REMAINED AN UNASCERT AINED LIABILITY FOR THE A. Y. 09. THE ASSESSEE ALSO DID NOT RECEIVE ANY BILL OR D EMAND NOTICE FR OM 08 AS SUCH THE CREATION OF 09 WAS UNWARRANTED IN SO FAR AS NO LIABILITY FOR EX PENDITURE 09. ASSESSEE HAS ALREADY ON ACCOUNT OF MERE PROVISION OF INCOME TO THE EXTEN T OF HAS ESCAPED ASSESSMENT WITHIN THE 09. I CONSIDER THIS TO BE A FIT CASE FOR ISSUE OF 4. IN RESPONSE TO THE NOTICE ISSUED BY THE ASSESSIN G OFFICER THE ASSESSEE FILED WRITTEN SUBMISSION BEFORE THE ASSESSING OFFICER WHI CH ARE REPRODUCED BELOW: 3. IN RESPONSE TO THAT THE ASSESSEE FILED A LETTER DATED 09.04.2015 WITH A REQUEST TO 09 TO TREAT AS RETURN FILED IN COMPLIANCE WITH THE NOTICE DATED 09.03.2015 ISSUED U/S 148 OF THE I. T. ACT, 1961. THE ASSESSEE ASKED FOR THE COPY OF REASONS RECORDED FOR REOPENING OF ASSESSMENT A COPY OF THE SAME. THE ASSESSEE HAD RAISED CERTAIN OBJECTIONS WITH REGARD TO REASONS RECORDED FOR REOPENING OF AS SESSMENT VIDE A LETTER DATED 22.07.2015. THE OBJECTIONS RAISED BY THE ASSESSEE H AD NOT BEEN ACCEPTED AND THE E WAS COMMUNICATED TO THE ASSESSEE VIDE A LETTER DATED 24.11.2015. THE OBJECTIONS RAISED BY YOU WITH REGARD TO REASONS RECORDED FOR REOPENING OF ASSESSMENT HAVE BEEN PERUSED AND D ULY CONSIDERED. THE SONS RECORDED FOR REOPENING OF THE ASSESSMENT ARE SUMMARIZED BELOW FO R SAKE OF CONVENIENCE: - M/S SOUTH CITY PROJECTS (KOLKATA) LTD. ITA NO.268/KOL/ 2018&C. O. NO. ASSESSMENT YEAR: M/S SOUTH CITY PROJECTS (KOLKATA) LTD. 2018&C. O. NO. 45/KOL/2018 ASSESSMENT YEAR: 2008-09 P PP PA AA AG GG GE EE E | || | 4 44 4 THE ASSESSING OFFICER REJECTED THE ASSESSEES PLEA OF R EOPENING U/S 147 OF THE ACT AND FRAMED THE ASSESSMENT ON MERITS AND MADE ADDITION T O THE TUNE OF RS. 12,00,00,000/-. 5. AGGRIEVED BY THE STAND SO TAKEN BY THE ASSESSING OFFICER THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELETED THE ADDITION MADE BY THE ASSE SSING OFFICER OBSERVING THE FOLLOWING: I HAVE PERUSED THE ASSESSMENT ORDER, THE SUBMISSIO NS OF THE LD. A.R. I HAVE ALSO SEEN THE CORRESPONDENCES WITH KMDA AND KMC. I) THE AO HAS MADE THE DISALLOWANCE ON THE GROUND THAT IT WAS AN UNASCERTAINED LIABILITY AS WAS ALSO NOT DEFINITE. HOWEVER, IT HAS TO BE NOTED THAT: II) THE PROVISION OF RS. 12,00,00,000/ ROAD AND OTHER INFRASTRUCTURE AT PRINCE. ANWAR SHAH COMMITMENTS MADE TO OFFICIALS DURING FINANCIAL YEAR 2007 M/S SOUTH CITY PROJECTS (KOLKATA) LTD. ITA NO.268/KOL/ 2018&C. O. NO. ASSESSMENT YEAR: ASSESSING OFFICER REJECTED THE ASSESSEES PLEA OF R EOPENING U/S 147 OF THE ACT FRAMED THE ASSESSMENT ON MERITS AND MADE ADDITION T O THE TUNE OF RS. 5. AGGRIEVED BY THE STAND SO TAKEN BY THE ASSESSING OFFICER THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELETED THE ADDITION MADE BY SSING OFFICER OBSERVING THE FOLLOWING: I HAVE PERUSED THE ASSESSMENT ORDER, THE SUBMISSIO NS OF THE LD. A.R. I HAVE ALSO SEEN THE CORRESPONDENCES WITH KMDA AND KMC. AO HAS MADE THE DISALLOWANCE ON THE GROUND THAT IT WAS AN UNASCERTAINED LIABILITY AS THE WORK HAS NOT YET STARTED AND ITS QUANTUM WAS ALSO NOT DEFINITE. HOWEVER, IT HAS TO BE NOTED THAT: THE PROVISION OF RS. 12,00,00,000/ - WAS MADE TOWARDS DEVELOPMENT OF ROAD AND OTHER INFRASTRUCTURE AT PRINCE. ANWAR SHAH COMMITMENTS MADE TO KMDA AND KMC IN THE MEETING HELD WITH THEIR OFFICIALS DURING FINANCIAL YEAR 2007 - 08. M/S SOUTH CITY PROJECTS (KOLKATA) LTD. 2018&C. O. NO. 45/KOL/2018 ASSESSMENT YEAR: 2008-09 P PP PA AA AG GG GE EE E | || | 5 55 5 ASSESSING OFFICER REJECTED THE ASSESSEES PLEA OF R EOPENING U/S 147 OF THE ACT FRAMED THE ASSESSMENT ON MERITS AND MADE ADDITION T O THE TUNE OF RS. 5. AGGRIEVED BY THE STAND SO TAKEN BY THE ASSESSING OFFICER THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELETED THE ADDITION MADE BY I HAVE PERUSED THE ASSESSMENT ORDER, THE SUBMISSIO NS OF THE LD. A.R. I HAVE ALSO AO HAS MADE THE DISALLOWANCE ON THE GROUND THAT IT WAS AN THE WORK HAS NOT YET STARTED AND ITS QUANTUM WAS MADE TOWARDS DEVELOPMENT OF ROAD AND OTHER INFRASTRUCTURE AT PRINCE. ANWAR SHAH ROAD BASED ON KMDA AND KMC IN THE MEETING HELD WITH THEIR M/S SOUTH CITY PROJECTS (KOLKATA) LTD. ITA NO.268/KOL/2018&C. O. NO. 45/KOL/2018 ASSESSMENT YEAR:2008-09 P PP PA AA AG GG GE EE E | || | 6 66 6 III) THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEED INGS ALSO PRODUCED MINUTES OF THE MEETING AND CORRESPONDENCE WITH KMDA AND KMC AUTHORITIES EVIDENCING THIS COMMITMENT AND THE PLAN . IV) THE FACT REMAINS THAT THE ASSESSEE HAS PAID RS. 2,0 0,00,000/- ON 14.03.2008 AND RS. 80,00,000/- ON 02.06.2008. THIS INDICATES THAT THIS PROJECT WAS NOT AT CONCEPTUAL LEVEL BUT WAS DEFINIT ELY IN THE IMPLEMENTATION PHASE. HAD THERE BEEN NO ACCRUED LIA BILITY, THE ASSESSEE WOULD NOT HAVE PAID SUCH SUBSTANTIAL SUM OF RS. 2,8 0,00,000/- TO GOVERNMENT AUTHORITIES. V) THE ASSESSEES RELIANCE ON BHARAT EARTH MOVERS VS. CIT (245 ITR 428) (SC) AND ON THE CASE OF METAL BOX COMPANY OF INDIA LIMITED VS. WORKMEN (73 ITR 53) (SC) IS ALSO ON THE ISSUE AT HA ND AND SUPPORTS THE CASE OF THE ASSESSEE WHERE IT HAS BEEN HELD THAT THE LAW IS SETTLED: IF A BUSINESS LIABILITY HAS DE FINITELY ARISEN IN THE ACCOUNTING YEAR, THE DEDUCTION SHOULD BE ALLOWED AL THOUGH THE LIABILITY MAY HAVE TO BE QUANTIFIED AND DISCHARGED AT A FUTUR E DATE. WHAT SHOULD BE CERTAIN IS THE INCURRING OF THE LIABILITY. IT SHOUL D ALSO BE CAPABLE OF BEING ESTIMATED WITH REASONABLE CERTAINTY THOUGH THE ACTU AL QUANTIFICATION MAY NOT BE POSSIBLE. IF THESE REQUIREMENTS ARE SATISFIE D THE LIABILITY IS NOT A CONTINGENT ONE. THE LIABILITY IS IN PRESENT THOUGH IT WILL BE DISCHARGED AT A FUTURE DATE. IT DOES NOT MAKE ANY DIFFERENCE IF THE FUTURE DATE ON WHICH THE LIABILITY SHALL HAVE TO BE DISCHARGED IS NOT CERTAI N IN THE CASE OF METAL BOX COMPANY OF INDIA LTD VS WO RKMEN(1969) 73 ITR 53 THE HONOURABLE SUPREME COURT HAS HELD AS UNDER:- CONDITION SUBSEQUENT, THE FULFILLMENT OF WHICH MAY RESULT IN THE REDUCTION OR EVEN EXTINCTION OF THE LIABILITY, WOULD NOT HAVE THE EFFECT OF CONVERTING THAT LIABILITY INTO A CONTINGENT LIABILITY. VI) SINCE THE ASSESSEE IS FOLLOWING MERCANTILE METHOD O F ACCOUNTING, THEREFORE, ALL ACCRUED LIABILITY HAVE TO BE ACCOUNT ED FOR IN THE YEAR IN WHICH THE LIABILITY MATERIALIZE. IN CASE ANY LIABIL ITY CANNOT BE ACCURATELY QUANTIFIED, THE PROVISION CAN BE MADE ON BASIS OF F AIR ESTIMATES. THIS IS AN ACCEPTED PRINCIPLE OF ACCOUNTING. VII) IN ANY CASE THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S. 80IB(10) ON ITS INCOME, THEREFORE, THE AO WOULD HAVE ALLOWED DEDUCT ION U/S 80IB(10) ON THE INCREASED INCOME AS A RESULT OF THE ADDITION. VIII) IN ANY CASE THE ASSESSEE HAS WRITTEN BACK THE PROVI SION IN SUBSEQUENT YEARS AND HAS THEREFORE, OFFERED THIS AMOUNT FORTAX ATION IN A.Y. 2012-13, THEREFORE, REVENUE WOULD NOT BE SUBSTANTIALLY IMPAC TED BY THE PROVISIONING. IN VIEW OF THE ABOVE DISCUSSION I AM OF THE OPINION THAT THE LIABILITY FOR CONSTRUCTION OF BRIDGE / ROAD HAD CRYSTALLIZED IN F .Y. 2007-08 AND THEREFORE, THE PROVISION MADE BY THE ASSESSEE IN THAT YEAR IS ALLO WABLE. THEREFORE, GROUND NO. 2 IS ALLOWED. 6. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE RE VENUE IS IN APPEAL BEFORE US. M/S SOUTH CITY PROJECTS (KOLKATA) LTD. ITA NO.268/KOL/2018&C. O. NO. 45/KOL/2018 ASSESSMENT YEAR:2008-09 P PP PA AA AG GG GE EE E | || | 7 77 7 7. THE LD. DR HAS PRIMARILY REITERATED THE STAND TA KEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY AND ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE ORDER OF THE LD. CIT(A). 8. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GON E THROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCU MENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLUDING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIAL AVAILABLE ON RECORD. WE N OTE THAT THE LEARNED AO HAS ADDED A SUM OF RS. 12,00,00,000/- TO THE TOTAL INCO ME ALTHOUGH IN THE REASONS RECORDED THE AMOUNT REFERRED BY HIM IS RS. 9,20,00 ,000/- WHEREAS THE AMOUNT DEBITED TO PROFIT AND LOSS ACCOUNT IS RS. 8,72,88,0 00/ - OUT OF THE TOTAL PROVISIONS OF RS. 12,00,00,000/-.THE PROVISION OFRS. 12,00,00,000 WAS MADE BY THE ASSESSEE DURING FY 2007-08 TOWARDS DEVELOPMENT OF ROADS AND OTHER INFRASTRUCTURE AT PRINCE ANWAR SHAH ROAD; BASED ON THE COMMITMENTS MA DE TO KMDA & KMC I.E. WEST BENGAL GOVERNMENT AUTHORITY IN THE MEETING HEL D WITH THEIR OFFICIALS FROM TIME TO TIME DURING FY 2007-08 INCLUDINGON 31-03- 2 008. THE ASSESSEE COMPANY IS FOLLOWING MERCANTILE/ ACCRU AL METHOD OF ACCOUNTING. ACCORDINGLY, ALL ACCRUED LIABILITIES, ASSETS, INCOM EAND EXPENDITURES HAVE TO BE ACCOUNTED FOR IN THE YEAR IN WHICH LIABILITY IS MAT ERIALISED. IN CASE, ANY LIABILITY IS NOT FULLY/ PARTLY QUANTIFIED, PROVISIONS ARE REQUIR ED TO BE MADE ON FAIR ESTIMATES. BASED ON THE ACCOUNTING POLICY CONSISTENTLY FOLLOWE D BY THE ASSESSEE COMPANY MADE PROVISIONS OF RS. 12,00,00.000 IN THE FY 2007- 08 I.E , IN THE YEAR IN-WHICH LIABILITY AROSE. AS AN EVIDENCE COPY OF MINUTES DAT ED 18-12-2013 OF THE MEETING OF THE DIRECTORS OF THE COMPANY AND GOVERNMENT OFFICIA LS INCLUDING THE MINISTER INCHARGE OF URBAN DEVELOPMENT & CHAIRMAN KMDA, MAYO R, KMC HAS BEEN REFERRED. FURTHER, THE ASSESSEE DID NOT DEBIT THE ENTIRE AMOU NT OF RS. 12,00,00,000/- (AS SUBMITTED DURING THE APPELLATE PROCEEDINGS) TO ITS PROFIT &LOSS ACCOUNT BUT ACCOUNTED FOR AS UNDER: HOWEVER, THE LEARNED AO HAS WRONGLY CONCLUDED THAT THE ENTIR E AMOUNT OF RS. 12,00,00,000/- WAS DEBITED TO PROFIT PROVISION OF RS. 12,00,00,000 AND COMMITTED LIABILITY. NO PART OF THE SAME WAS CLAIMED AS DEDUCTION FROM T HE TOTAL INCOME FOR THE YEAR UNDER ASSESSMENT. THE AMO UNT DEBITED TO LOSS ACCOUNT WAS CARRIED AS INVENTORY AND SUBSEQUENTLY ADJUSTED AGAINST THE SALE PROCEEDS OF THE HOUSING PROJECT ELIGIBLE FOR D EDUCTION U/S 80 ACT. THE ASSESSEE WAS ENGAGED IN THE DEVELOPMENT OF A HO USING PROJECT WHOSE INCOME WAS ELIG IBLE FORDEDUCTION U/ AND ALLOWED IN VARIOUS ASSESSMENT YEARS COMMENCING FROM AY 2009 ONWARDS. SO EVEN IN CASE IF THE PROVISION FOR LIABI LITY TOWARDS KMDA AND KMC WAS NOT MADE; THEN THE CLAIM U/S 80 RESULT IN NO REVENUE LOSS.OUT OF ABOVE PROVISION OF RS. 12,00,00,000 2,80,00,000/- WAS PAID AS FOLLOWS: RS. 2,00,00,000 ON 14- 03 RS. 80,00,000 ON 02-06- 2008 M/S SOUTH CITY PROJECTS (KOLKATA) LTD. ITA NO.268/KOL/ 2018&C. O. NO. ASSESSMENT YEAR: THE LEARNED AO HAS WRONGLY CONCLUDED THAT THE ENTIR E AMOUNT OF RS. WAS DEBITED TO PROFIT &LOSS ACCOUNT AND CLAIMED AS DEDUCTION. THE PROVISION OF RS. 12,00,00,000 /- AS ABOVE WAS CREATED AGAINST ACTUAL, ASCERTAINED NO PART OF THE SAME WAS CLAIMED AS DEDUCTION FROM T HE TOTAL INCOME FOR THE YEAR UNDER ASSESSMENT. THE AMO UNT DEBITED TO WAS CARRIED AS INVENTORY AND SUBSEQUENTLY ADJUSTED AGAINST THE SALE PROCEEDS OF THE HOUSING PROJECT ELIGIBLE FOR D EDUCTION U/S 80 THE ASSESSEE WAS ENGAGED IN THE DEVELOPMENT OF A HO USING PROJECT WHOSE INCOME IBLE FORDEDUCTION U/ S 80IB(10) OF THE ACT . THE CLAIM HAS BEEN CONSIDERED AND ALLOWED IN VARIOUS ASSESSMENT YEARS COMMENCING FROM AY 2009 ONWARDS. SO EVEN IN CASE IF THE PROVISION FOR LIABI LITY TOWARDS KMDA AND KMC WAS NOT MADE; THEN THE CLAIM U/S 80 IB (10) WOULD INCREASE; WHICH AGAIN SHALL RESULT IN NO REVENUE LOSS.OUT OF ABOVE PROVISION OF RS. 12,00,00,000 WAS PAID AS FOLLOWS: 03 -2008 AND 2008 M/S SOUTH CITY PROJECTS (KOLKATA) LTD. 2018&C. O. NO. 45/KOL/2018 ASSESSMENT YEAR: 2008-09 P PP PA AA AG GG GE EE E | || | 8 88 8 THE LEARNED AO HAS WRONGLY CONCLUDED THAT THE ENTIR E AMOUNT OF RS. AND CLAIMED AS DEDUCTION. THE AS ABOVE WAS CREATED AGAINST ACTUAL, ASCERTAINED NO PART OF THE SAME WAS CLAIMED AS DEDUCTION FROM T HE TOTAL INCOME FOR THE YEAR UNDER ASSESSMENT. THE AMO UNT DEBITED TO PROFIT & WAS CARRIED AS INVENTORY AND SUBSEQUENTLY ADJUSTED AGAINST THE SALE PROCEEDS OF THE HOUSING PROJECT ELIGIBLE FOR D EDUCTION U/S 80 IB(10)OF THE THE ASSESSEE WAS ENGAGED IN THE DEVELOPMENT OF A HO USING PROJECT WHOSE INCOME . THE CLAIM HAS BEEN CONSIDERED AND ALLOWED IN VARIOUS ASSESSMENT YEARS COMMENCING FROM AY 2009 -10 AND ONWARDS. SO EVEN IN CASE IF THE PROVISION FOR LIABI LITY TOWARDS KMDA AND KMC (10) WOULD INCREASE; WHICH AGAIN SHALL RESULT IN NO REVENUE LOSS.OUT OF ABOVE PROVISION OF RS. 12,00,00,000 /- RS. THE BALANCE AMOUNT OF RS. 9,20,00,000/ 31.03.2010 AND 31.03.2011 AND WAS SUBSEQUENTLY WRIT TEN BACK DURING FY 2011 AS UNDER (WHICH IS SUBMITTED BY THE ASSESSEE DURING THE APPE LLATE PROCEEDINGS) THE LEARNED AO HAS WRONGLY ALLEGED THAT THE WRITE B ACK O FY2011- 12 IS NOT SUPPORTED BY ANY EVIDENCE. IN THE REASONS RECORDED FOR RE OPENING THE ASSESSMENT; THE LEARNED AO HAS HIMSELF STATED THAT THE ASSESSEE HAS WRITTEN BACK AMOUNTS TO ITS PROFIT & LOSS A FOR AY 2012- 13 IS ALREADY COMPLETED WHEREIN THE AMOUNT OF WRITE BACK WAS SUBJECT MATTER OF CONSIDERATION. AS PER PROVISIONS OF SEC TION THERE IS ANY REASON TO BELIEVE THAT ANY INCOME CHAR GEABLE TO TAX HAS ESCAPED ASSESSMENT. HOWEVER, IN THIS CASE AY2008-09 (THERE IS NO TANGIBLE MATERIAL) M/S SOUTH CITY PROJECTS (KOLKATA) LTD. ITA NO.268/KOL/ 2018&C. O. NO. ASSESSMENT YEAR: THE BALANCE AMOUNT OF RS. 9,20,00,000/ - REMAINED OUTSTANDING AS ON 31.03.2009, 31.03.2010 AND 31.03.2011 AND WAS SUBSEQUENTLY WRIT TEN BACK DURING FY 2011 (WHICH IS SUBMITTED BY THE ASSESSEE DURING THE APPE LLATE PROCEEDINGS) THE LEARNED AO HAS WRONGLY ALLEGED THAT THE WRITE B ACK O F RS. 9,20,00,000 IN 12 IS NOT SUPPORTED BY ANY EVIDENCE. IN THE REASONS RECORDED FOR RE OPENING THE ASSESSMENT; THE LEARNED AO HAS HIMSELF STATED THAT THE ASSESSEE HAS WRITTEN BACK AMOUNTS TO ITS PROFIT & LOSS A CCOUNT IN FY 2011- 12. THE ASSESSMENT 13 IS ALREADY COMPLETED WHEREIN THE AMOUNT OF WRITE BACK WAS SUBJECT MATTER OF CONSIDERATION. TION 147 OF THE IT ACT; AN ASSESSMENT SHALL BE RE THERE IS ANY REASON TO BELIEVE THAT ANY INCOME CHAR GEABLE TO TAX HAS ESCAPED IN THIS CASE , NO INCOME HAS ESCAPED ASSESSMENT DURING (THERE IS NO TANGIBLE MATERIAL) FOR THE REASONS STATED BELOW: M/S SOUTH CITY PROJECTS (KOLKATA) LTD. 2018&C. O. NO. 45/KOL/2018 ASSESSMENT YEAR: 2008-09 P PP PA AA AG GG GE EE E | || | 9 99 9 REMAINED OUTSTANDING AS ON 31.03.2009, 31.03.2010 AND 31.03.2011 AND WAS SUBSEQUENTLY WRIT TEN BACK DURING FY 2011 -12 (WHICH IS SUBMITTED BY THE ASSESSEE DURING THE APPE LLATE PROCEEDINGS) : F RS. 9,20,00,000 IN 12 IS NOT SUPPORTED BY ANY EVIDENCE. IN THE REASONS RECORDED FOR RE - OPENING THE ASSESSMENT; THE LEARNED AO HAS HIMSELF STATED THAT THE ASSESSEE HAS 12. THE ASSESSMENT 13 IS ALREADY COMPLETED WHEREIN THE AMOUNT OF WRITE BACK WAS 147 OF THE IT ACT; AN ASSESSMENT SHALL BE RE -OPENED IF THERE IS ANY REASON TO BELIEVE THAT ANY INCOME CHAR GEABLE TO TAX HAS ESCAPED NO INCOME HAS ESCAPED ASSESSMENT DURING REASONS STATED BELOW: THUS, IN VIEW OF ABOVE EXPLANATION STAGE ; IT IS EVIDENT THAT PROVISION OF RS. 12,00,00,000 CREATED BY THE ASSESSEE DURING FY 2007- 08 WAS NOT CLAIMED AS DEDUCTION F NO INCOME HAS ESCAPED ASSESSMENT FOR AY 2008 BEING SO, WE DECLINE TO INTERFERE IN THE ORDER PASS ED BY THE LD. CIT(A), HIS ORDER ON THIS ISSUE, IS HEREBY UPHELD AND THE GROUNDS OF APP EAL RAISED BY THE REVENUE IS DISMISSED. 9. THE CROSS OBJECTION RAISED BY THE ASSESSEE IN C. O. NO. 45/KOL/2018 IS ONLY SUPPORTIVE TO THE ORDER OF THE LD. CIT(A). SINCE WE HAVE CONFIRMED THE ORDER PASSED BY THE LD. CIT(A), THEREFORE, THE CROSS OBJE CTION RAISED BY THE ASSESSEE BECOMES INFRUCTUOUS. M/S SOUTH CITY PROJECTS (KOLKATA) LTD. ITA NO.268/KOL/ 2018&C. O. NO. ASSESSMENT YEAR: IN VIEW OF ABOVE EXPLANATION SUBMITTED BY THE ASSESSEE DURING THE APPELLATE ; IT IS EVIDENT THAT PROVISION OF RS. 12,00,00,000 CREATED BY THE ASSESSEE 08 WAS NOT CLAIMED AS DEDUCTION F ROM TOTAL INCOME AN NO INCOME HAS ESCAPED ASSESSMENT FOR AY 2008 - 09 RELEVANT TO FY 2007 BEING SO, WE DECLINE TO INTERFERE IN THE ORDER PASS ED BY THE LD. CIT(A), HIS ORDER ON THIS ISSUE, IS HEREBY UPHELD AND THE GROUNDS OF APP EAL RAISED BY THE REVENUE IS 9. THE CROSS OBJECTION RAISED BY THE ASSESSEE IN C. O. NO. 45/KOL/2018 IS ONLY SUPPORTIVE TO THE ORDER OF THE LD. CIT(A). SINCE WE HAVE CONFIRMED THE ORDER PASSED BY THE LD. CIT(A), THEREFORE, THE CROSS OBJE CTION RAISED BY THE ASSESSEE M/S SOUTH CITY PROJECTS (KOLKATA) LTD. 2018&C. O. NO. 45/KOL/2018 ASSESSMENT YEAR: 2008-09 P PP PA AA AG GG GE EE E | || | 1 11 10 00 0 SUBMITTED BY THE ASSESSEE DURING THE APPELLATE ; IT IS EVIDENT THAT PROVISION OF RS. 12,00,00,000 CREATED BY THE ASSESSEE TOTAL INCOME AN D THEREFORE 09 RELEVANT TO FY 2007 -08. THAT BEING SO, WE DECLINE TO INTERFERE IN THE ORDER PASS ED BY THE LD. CIT(A), HIS ORDER ON THIS ISSUE, IS HEREBY UPHELD AND THE GROUNDS OF APP EAL RAISED BY THE REVENUE IS 9. THE CROSS OBJECTION RAISED BY THE ASSESSEE IN C. O. NO. 45/KOL/2018 IS ONLY SUPPORTIVE TO THE ORDER OF THE LD. CIT(A). SINCE WE HAVE CONFIRMED THE ORDER PASSED BY THE LD. CIT(A), THEREFORE, THE CROSS OBJE CTION RAISED BY THE ASSESSEE M/S SOUTH CITY PROJECTS (KOLKATA) LTD. ITA NO.268/KOL/2018&C. O. NO. 45/KOL/2018 ASSESSMENT YEAR:2008-09 P PP PA AA AG GG GE EE E | || | 1 11 11 11 1 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALSO DISMISSED BEING INFRUCTUOUS . ORDER PRONOUNCED IN THE COURT ON 26.02.2020 SD/- ( S.S. GODARA ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 26/02/2020 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. DCIT, CIRCLE-10(2), KOLKATA 2. M/S SOUTH CITY PROJECTS (KOLKATA) LTD. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES