CMD Ratnakar DY. Commissioner Of Income Tax Circle-2(1), Hyderabad V. Time Projects Private Limited, Hyderabad

ITA 118/Hyd/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6587 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-B
• Assessment Year: 2007-2008
• Appeal Filed On: 16-02-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A V RAGHURAM
• Keywords: Reopening of assessment; Difference of opinion; Change of opinion
• Section: 143(3); 147

Judgement Text

ITA NO 118 OF 2021 TIME PROJECTS P LTD HYDERABAD PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO.118/HYD/2021 ASSESSMENT YEAR: 2007-08 DY. C.I.T CIRCLE 2(1) HYDERABAD VS. TIME PROJECTS (P) LTD HYDERABAD PAN:AACCT1128K (APPELLANT) (RESPONDENT) REVENUE BY: SRI ROHIT MUJUMDAR ASSESSEE BY : SRI A.V. RAGHURAM, DR DATE OF HEARING: 25/08/2021 DATE OF PRONOUNCEMENT: 08/09/2021 ORDER PER S. S. GODARA, J.M. THIS REVENUES APPEAL FOR THE A.Y 2007-08 AGAINST T HE ORDER OF THE CIT (A)-11, HYDERABAD IN APPEAL NO.103 12/2019-20, DATED 01.10.2020 IN PROCEEDINGS U/S 143(3) RWS 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. COMING TO THE REVENUES FIRST AND FOREMOST SUBSTANTIVE GRIEVANCE THAT THE CIT (A) ERRED IN LAW AND ON FACTS IN QUASHING THE IMPUGNED REOPENING AS AN INVALID ONE, WE NOTE THAT THE ASSESSING OFFICER HAD RECORDED HIS REOPENING RE ASONS DATED 10.01.2013 AS UNDER: TO THE PRINCIPLE OFFICER, M/S. TIME PROJECTS PVT. LTD., POTHULA TOWERS ANNEXE, 6-3-883/FL, 2ND FLOOR, ITA NO 118 OF 2021 TIME PROJECTS P LTD HYDERABAD PAGE 2 OF 4 SOMAJIGUDA CIRLE, BEGUMPET ROAD, HYDERABAD-5000 16. SIR/MADAM, SUB: REASONS FOR THE RE-OPENING OF ASSESSMENT U/S.1 47 OF I T. ACT, 1961 IN YOUR CASE - ASST. YEAR 2007-08 - COMMUNICA TING - REG. ***** THE REASONS FOR RE-OPENING OF ASSESSMENT U/S.147 OF THE INCOME TAX ACT, 1961, FOR THE ASST. YEAR 2007-08. ARE FURN ISHED AS UNDER:- IT WAS NOTICED VIDE 'SCHEDULE 12 (DEVELOPMENT ADMIN ISTRATIVE AND SELLING EXPENSES]' FORMING PAN OF P&L ACCOUNT FOR T HE YEAR ENDING 31.03.2007 THAT AN AMOUNT OF RS.2,86,13,678/- WAS D EBITED TOWARDS SITE DEVELOPMENT EXPENSES. THE LEDGER ACCOU NT OF 'SITE DEVELOPMENT ACCOUNT' FOR THE PERIOD 01.04.2006 TO 3 1.03.2007 SHOWS AN AMOUNT OF RS.2.24,21.116/- WAS ACCOUNTED A S PROVISIONS IN RESPECT OF THREE PROJECTS NAMELY (I) GOLDEN RIDGE [GR) PHASE-I- RS.1,08,75,811/- (II) GOLDEN RIDGE [GR] PH ASE -II, RS.L,10,95,305/- AND (III) TIME CITY PHASE-I, RS.4, 50,000/-. IN ORDER TO SUBSTANTIATE ITS CLAIM OF THIS PROVISIONAL SITE DEVELOPMENT EXPENDITURE OF RS.2,86,13,678/-, THE ASSESSEE COMPA NY IN ITS LETTER DATED 28.08.2009 STATED THAT THE PROVISIONS FOR EXPENSES WAS CREATED TO SPENT ONCE IT HAD SUFFICIENT FUNDS. IT ALSO STATED THE DIFFERENCE BETWEEN SALES AND THE TOTAL EXPENSES ALREADY INCURRED AND THE PROVISIONS FOR FUTURE EXPENSES W AS SHOWN AS INCOME AND PAID NECESSARY TAX ON THE SAME. FURTHER, AS SEEN FROM THE ACCOUNTS OF THE THREE PRO JECTS, THE ASSESSEE MADE SALES AS FOLLOWS: TIME CITY PHASE-I RS. 12,34,695 2 GOLDEN RIDGE PHASE-I RS.2,21,49,639 3 GOLDEN RIDGE PHASE-IL RS.3,86,53,822 TOTAL RS.6,20,38,156 THE SAME WAS ACCOUNTED IN THE P&L ACCOUNT FOR THE Y EAR ENDED 31.03.2007. THE CLOSING WIP (WORK IN PROGRESS) OF ALL THE THREE PROJECTS AS PER RESPECTIVE ACCOUNTS SHOWS AS FOLLOWS: 1. TIME CITY PHASE I RS. 1,94,04,547 2. GOLDEN RIDGE PHASE-I RS. 82,72,285 3. GOLDEN RIDGE PHASE II RS. 39,48,585 TOTAL RS. 3,16,25,417 THE SAME WAS ACCOUNTED VIDE SCHEDULE-6 WORK IN PROG RESS. HENCE, FROM THE WORKING AS PROVIDED BY THE ASSESSEE COMPANY, THERE WAS NO ACCOUNT OF ANY PROVISIONAL INCOME ON T HE ABOVE THREE PROJECTS IN ORDER TO CLAIM ANY PROVISIONAL EXPENSES AGAINST IT. FURTHER, INCOME TAX DOES NOT RECOGNIZE ANY PROVISIO NAL INCOME OR PROVISIONAL EXPENSES. INCOME AND EXPENDITURE ACCRUE D AND DUE ARE ONLY TO BE ACCOMMODATED IN THE BOOKS OF ACCOUNT . ITA NO 118 OF 2021 TIME PROJECTS P LTD HYDERABAD PAGE 3 OF 4 IN VIEW OF THE ABOVE, THE PROVISIONAL EXPENDITURE O F RS.2,24,21,116/- DEBITED AGAINST THREE PROJECTS AS MENTIONED ABOVE CANNOT BE ALLOWED AS EXPENDITURE ACTUALLY INC URRED DURING THE PREVIOUS YEAR RELEVANT TO THE A.Y 2007-08. HENC E, THE SAME NEEDS TO BE DISALLOWED. SD/- (R.S.ARVINDHAKSHAN) DY.CIT, CIRCLE-2(3) HYDERABAD 3. SUFFICE TO SAY, WE NOTICE WITH THE ABLE ASSISTAN CE FROM BOTH THE PARTIES THAT WE ARE IN A.Y 2007-08 WHEREIN THE ASSE SSING OFFICER HAD FORMED HIS OPINION OF THE ASSESSEES TAXABLE INCOME HAVING ESCAPED ASSESSMENT BEYOND THE SPECIFIED PERIOD OF 4 YEARS F ROM THE END OF THE ASSESSMENT YEAR. AND FURTHER THAT THE ASSESSING OFF ICERS FOREGOING REASONS NOWHERE STATE THAT IT WAS ON ACCOUNT OF THE ASSESSEES FAILURE IN DISCLOSING FULLY AND TRULY ALL THE PARTICULA RS THAT ITS TAXABLE INCOME HAS ESCAPED THE ASSESSMENT IN THE LIGHT OF S ECTION 147 FIRST PROVISO. WE THEREFORE, ADOPT STRICTER APPROACH IN T HE LIGHT OF HON'BLE APEX COURTS RECENT LANDMARK DECISION COMMISSIONER OF CUSTOMS VS. DILEEP KUMAR RAI & OTHERS IN CIVIL APPEAL NO. 3327 OF 2007, DATED 30 TH JULY, 2018 TO HOLD THAT THE CIT (A) HAS RIGHTLY A CCEPTED THE ASSESSEES LEGAL GROUNDS VIDE FOLLOWING DETAILED DI SCUSSION: 5.2 I HAVE CONSIDERED THE REASONS RECORDED BY THE ASSESSING OFFICER, SUBMISSIONS 'OF THE APPELLANT, DIRECTIONS OF THE HON'BLE ITAT AND THE MATERIAL PLACED BEFORE ME. IT IS VERY CLEAR FROM THE REASONS RECORDED THAT THE MATERIAL RELIED ON BY THE ASSESSING OFFICER IS THE FINANCIAL STATEMENTS SUBMITTED BY TH E APPELLANT ALONG WITH THE RETURN OF INCOME AND THE EXPLANATION DT.28.08.2009 SUBMITTED BY THE APPELLANT DURING THE COURSE OF PROCEEDINGS U/S.143(3) BEFORE THE ASSESSING OFFICER . THERE IS NO NEW MATERIAL BROUGHT ON RECORD AND IT WAS THE SAME MATERIAL WHICH WAS BEFORE THE ASSESSING OFFICER WHILE CONCLU DING THE ASSESSMENT PROCEEDINGS WAS CONSIDERED BY THE ASSESS ING OFFICER. THE DETAILS REGARDING THE PROVISION FOR EXPENSES-WI P WERE SPECIFICALLY CALLED FOR BY THE ASSESSING OFFICER A ND SUBMITTED BY THE APPELLANT. THE ASSESSING OFFICER IS DEEMED TO H AVE TAKEN A CONSIDERED VIEW ON THE ABOVE MATERIAL. THE NEXT ASS ESSING OFFICER HAS TAKEN A DIFFERENT VIEW AND THE 'REASONS TO BELI EVE' THAT INCOME HAS ESCAPED ASSESSMENT WAS RECORDED. THE SAME AMOUN TS TO 'CHANGE OF OPINION' I.E FORMING TO DIFFERENT OPINIO N ON SAME SET OF FACTS. REOPENING OF ASSESSMENT ON MERE CHANGE OF O PINION IS NOT ALLOWED AS LAID DOWN BY VARIOUS DECISIONS OF ITAT/H IGH COURT/SUPREME COURT. IT IS SETTLED POSITION OF LAW THAT RE-OPENING ITA NO 118 OF 2021 TIME PROJECTS P LTD HYDERABAD PAGE 4 OF 4 OF ASSESSMENT ON CHANGE OF OPINION IS NOT ALLOWED . THE FOLLOWING DECISIONS ARE IN FAVOUR OF THE APPELLANT ON THIS IS SUE. A) CIT VS. KELVINATOR INDIA LTD, 320 ITR 561 S.C B) CIT VS. ORIENT CRAFT LTD 354 ITR 536 (DEL.) C) SURYALAKSHMI PEMMARAJU VS. INCOME TAX OFFICER (ITA NO.2222 & 2223/HYD/2011) D) ESS ESS CONSTRUCTIONS VS. ACIT ITA 632 & 633/HYD/ 2012. RESPECTFULLY FOLLOWING THE LAW LAID AS ABOVE, IT IS HELD THAT THE PROCEEDINGS U/S 147 ARE NOT VALIDLY INITIATED AND T HE CONSEQUENT ORDER IS SET-ASIDE. THE APPELLANT SUCCEEDS ON THE G ROUNDS RAISED 4. WE ACCORDINGLY SEE NO MERIT IN THE REVENUES INS TANT AND FOREMOST GRIEVANCE. HON'BLE BOMBAY HIGH COURT IN HI NDUSTAN LEVER LTD. VS R.B. WADKAR, ASSISTANT ON 25 FEBRUARY, 2004 (20 04) 190 CTR BOM 275 HOLDS THAT AN ASSESSING OFFICER REOPENING REASO NS HAVE TO BE READ ON STANDALONE BASIS WITHOUT HAVING SCOPE FOR ADDITI ON, DILUTION OR SUBSTANTIVE IMPROVEMENT THEREIN AT A LATER STAGE. 5. THIS REVENUES APPEAL IS DISMISSED IN ABOVE TER MS. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH SEPTEMBER, 2021. SD/- SD/- (LAXMI PRASAD SAHU) ACCOUNTANT MEMBER (S.S. GODARA) JUDICIAL MEMBER HYDERABAD, DATED 8 TH SEPTEMBER, 2021. VINODAN/SPS COPY TO: S.NO ADDRESSES 1 DY.CIT, CIRCLE 2(1) ROOM NO.514, 5 TH FLOOR, SIGNATURE TOWERS, KONDAPUR 500084 2 TIME PROJECTS (P) L T D, NO.6 - 3 - 883/F/A/ SOMAJIGUDA CI RCLE, BEGUMPET, HYDERABAD 500016 3 CIT (A)-11, HYDERABAD 4 PR. CIT -CENTRAL, HYDERABAD 5 DR, ITAT HYDERABAD BENCHES 6 GUARD FILE BY ORDER