SUPER CONSTRUCTION CO., NAVI MUMBAI V. DCIT C23(3), NAVI MUMBAI

ITA 3998/MUM/2009

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3633 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 02-04-2013
• Assessment Year: 2001-2002
• Appeal Filed On: 25-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K GHOSH
• Keywords: Revision of order; Charitable institution; Difference of opinion; Change of opinion
• Section: 143(3); 147; 148; 263

Judgement Text

, / IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI , . . !'# , $ BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM & SHRI N K BILLAIYA, AM & SHRI N K BILLAIYA, AM & SHRI N K BILLAIYA, AM & SHRI N K BILLAIYA, AM ./ I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO. 3998 3998 3998 3998/MUM/20 /MUM/20 /MUM/20 /MUM/2009 0909 09 ( (( ( % % % % &% &% &% &% / ASSESSMENT YEAR :200 ASSESSMENT YEAR :200 ASSESSMENT YEAR :200 ASSESSMENT YEAR :2001 11 1- -- -02 0202 02) )) ) SUPER CONSTRUCTION CO MANGAL MURTI PLOT NO. 17 SECTOR 30, SANPADA NAVI MUMBAI / VS. THE DY COMMR OF INCOME TAX CEN.22(3), NAVI MUMBAI ' $ ./ ) ./ PAN/GIR NO. : AADFS1973R ( '* / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( +,'* / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) ./ I.T.A. NO. 4005/MUM/2009 I.T.A. NO. 4005/MUM/2009 I.T.A. NO. 4005/MUM/2009 I.T.A. NO. 4005/MUM/2009 ( (( ( % % % % &% &% &% &% / ASSESSMENT YEAR :2002 ASSESSMENT YEAR :2002 ASSESSMENT YEAR :2002 ASSESSMENT YEAR :2002- -- -03 ) 03 ) 03 ) 03 ) THE DY COMMR OF INCOME TAX CEN.22(3), NAVI MUMBAI / VS. SUPER CONSTRUCTION CO MANGAL MURTI PLOT NO. 17 SECTOR 30, SANPADA NAVI MUMBAI ( '* / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( +,'* / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) '* - '* - '* - '* - / APPELLANT BY : APPELLANT BY : APPELLANT BY : APPELLANT BY : SHRI A K GHOSH +,'* . - +,'* . - +,'* . - +,'* . - /RESPONDENT /RESPONDENT /RESPONDENT /RESPONDENT BY BYBY BY : : : : SH S D SRIVASTAVA . /$ . /$ . /$ . /$ / DT. OF DT. OF DT. OF DT. OF HEARING : HEARING : HEARING : HEARING : 10 TH APRIL 2013 01& 01& 01& 01& ./$ ./$ ./$ ./$ / // / DT.OFPRONOUNCEMENT: DT.OFPRONOUNCEMENT: DT.OFPRONOUNCEMENT: DT.OFPRONOUNCEMENT: 19 TH APRIL 2013 2 / O R D E R PER : PER : PER : PER : , . . / VIJAY PAL RAO, JM THESE APPEALS BY ASSESSEE AND THE REVENUE ARE DIREC TED AGAINST SEPARATE ORDERS BOTH DATED 23.3.2009 OF THE CIT(A) FOR THE ASSESSMENT YEARS 2001--02 AND 2002-03 RESPECTIVELY. ITA NO..3998 & 4005/MUM/2009 . 2 I.T.A. NO. 3998/MUM/2009 (BY THE ASSESSEE) I.T.A. NO. 3998/MUM/2009 (BY THE ASSESSEE) I.T.A. NO. 3998/MUM/2009 (BY THE ASSESSEE) I.T.A. NO. 3998/MUM/2009 (BY THE ASSESSEE) 2 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND LAW THE COMMISSIONER OF INCOME TAX(APPEALS) ERRED TO HOLD T HAT THE ASSESSING OFFICER WAS JUSTIFIED IN REOPENING THE AS SESSMENT U/S 147 BY ISSUE OF NOTICE U/S 148 DT 5.2.2007 II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE CIT ERRED IN NOT HOLDING THAT THE REOPENING OF ASS ESSMENT U/S 1457 IS BARRED BY LIMITATION IN VIEW OF THE FIRST PROVIS O TO SEC. 147. 3 IN THIS CASE, THE ORIGINAL ASSESSMENT WAS COMPLET ED U/S 143(3) ON 24.3.2004 DETERMINING THE TOTAL INCOME OF RS. 33,40 ,430/- AS AGAINST THE RETURNED INCOME OF RS.31,33,659/-. CONSEQUENTLY, T HE ASSESSMENT WAS REOPENED BY ISSUE OF NOTICE U/S 148 ON 5.2.2007, PU RPORTEDLY, IN PURSUANT TO THE SHOW CAUSE NOTICE ISSUED U/S 263 BY THE CIT AS WELL AS THE REVISION ORDER PASSED U/S 263 ON 19.2.2007 FOR THE AY 2003-0 4 IN THE CASE OF THE ASSESSEE. IN RESPONSE TO THE NOTICE U/S 148, THE A SSESSEE FILED RETURN ON 7.3.2007 SHOWING THE TOTAL INCOME OF RS. 33,40,430/ -. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) R.W.S 1 47 ON 31.12.2007 DETERMINING THE TOTAL INCOME AT RS. 36,56,588/-. 3.1 THE ASSESSEE CHALLENGED THE ACTION OF THE ASSES SING OFFICER INCLUDING THE VALIDITY OF REASSESSMENT BEFORE THE CIT(A). THE CIT(A), THOUGH GRANTED RELIEF TO THE ASSESSEE WITH RESPECT TO THE ISSUE OF ADDITION ON ACCOUNT OF METHOD OF ACCOUNTING AND RENTAL INCOM E WHICH WAS THE BASIS OF REOPENING; HOWEVER, THE OBJECTION OF THE A SSESSEE AGAINST VALIDITY ITA NO..3998 & 4005/MUM/2009 . 3 OF THE NOTICE U/S 148 WAS REJECTED BY THE CIT(A). THE ASSESSEE HAS FILED THIS APPEAL RAISING THE GROUND OF VALIDITY OF REOPE NING U/S 148. 4 BEFORE US, THE LD AR HAS SUBMITTED THAT REASONS R ECORDED IN THE IMPUGNED ORDER PASSED U/S. 143(3) R.W.S. 147 THE AS SESSING OFFICER HAS NOT BROUGHT OUT ANYTHING ON RECORD TO SHOW THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE ASSESSMENT YE AR UNDER CONSIDERATION BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NEC ESSARY FOR THE PURPOSE OF COMPLETION OF THE ASSESSMENT FOR THE YEAR UNDER CON SIDERATION. IT WAS SUBMITTED THAT THE ASSESSEE HAD DISCLOSED FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR THE PURPOSE OF COMPLETION OF AS SESSMENT U/S. 143(3) AND THE ASSESSING OFFICER HAS PASSED THE REGULAR AS SESSMENT ORDER ON 24.03.2004 ON THE BASIS OF ALL THE MATERIAL FACTS D ISCLOSED BY THE ASSESSEE. 4.1 FURTHER, IT WAS SUBMITTED THAT THE REASON RECOR DED BY THE ASSESSING OFFICER HAS BEEN PICKED UP BY THE ASSESSING OFFICER FROM THE DETAILS FILED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME AND DURING THE COURSE OF REGULAR ASSESSMENT PROCEEDINGS AS WELL AS FROM THE SHOW CAUSE NOTICE ISSUED BY THE COMMISSIONER U/S.263. THE LD AR HAS C ONTENDED THAT IN THE INSTANT CASE, THE ORIGINAL ASSESSMENT U/S. 143(3) W AS COMPLETED ON 24.03.04 AND THERE WAS NO FAILURE ON THE PART OF TH E ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR IT S ASSESSMENT, FOR THE ASSESSMENT YEAR 2001-02. THEREFORE, NO ACTION CAN B E TAKEN U/S. 147 ITA NO..3998 & 4005/MUM/2009 . 4 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF RELE VANT ASSESSMENT YEAR. IT IS THEREFORE, SUBMITTED THAT THE TIME LIMIT FOR INI TIATION OF ACTION U/S. 147 HAS EXPIRED ON 31.03.06 AND IN THE INSTANT CASE THE NOTICE U/S. 148 HAS BEEN ISSUED ON 05.02.07. THEREFORE, IT IS SUBMITTED THAT THE ISSUE OF NOTICE U/S. 148 AND THE CONSEQUENT ASSESSMENT U/S. 143(3) R.W.S. 147 IS ILLEGAL AS THE SAME IS BARRED BY LIMITATION IN VIEW OF THE FIR ST PROVISO TO SEC. 147 AND THEREFORE, THE SAME IS LIABLE TO BE QUASHED. IN SUP PORT OF HIS CONTENTION, HE HAS RELIED UPON THE FOLLOWING THE DECISIONS OF T HE HONBLE JURISDICTIONAL HIGH COURT: 1. IPCA LABORATORIES LTD. VS. GAJANAND MEENA, DCIT & OTHERS- 251 ITR 416 2. ICICL BANK LTD. VS. K.J. RAO AND ANOTHER- 268 IT R 203 3. HINDUSTAN LEVER LTD. VS. R. B. WADKAR, ACIT AND OTHERS -268 ITR 332 4. DEVIDAYAL ROLLING MILL AND ANR VS. YR. SAINI, AC IT & ORS -285 ITR 514 4.2 AS REGARDS THE METHOD OF ACCOUNTING IS CONCERNE D, THE LD AR HAS SUBMITTED THAT THE ASSESSEE IS CONSISTENTLY FOLLOWI NG THE WORK-IN- PROGRESS/PERCENTAGE COMPLETION METHOD OF ACCOUNTING AND ACCORDINGLY, CERTAIN PERCENTAGE OF PROFIT IS ESTIMATED IN RESPEC T OF DIRECT EXPENDITURE INCURRED FOR VARIOUS PROJECTS AND THE GROSS PROFIT IS OFFERED FOR TAX IN THE RESPECTIVE YEARS. THE SAID METHOD OF ACCOUNTING WH ICH HAS BEEN CONSISTENTLY FOLLOWED BY THE ASSESSEE WAS ACCEPTED BY THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT AS WELL AS FOR T HE AY 2002-03 AND 03-04. HE HAS FURTHER SUBMITTED THAT ONLY BECAUSE OF THE O RDER U/S 263, THE ASSESSING OFFICER REOPENED THE ASSESSMENT ON THE GR OUND OF METHOD OF ITA NO..3998 & 4005/MUM/2009 . 5 ACCOUNTING AND FURTHER ON THE GROUND OF NOT SHOWING THE RENTAL INCOME FROM BUNGALOWS. 4.3 FURTHER, IT WAS SUBMITTED THAT THE BUNGALOW AT VASHI HAS BEEN USED FOR THE PURPOSE OF THE BUSINESS AS THE SAME HAS BEE N USED AS GUEST HOUSE AND OFFICE OF THE ASSESSEE FIRM. THE FIRST AN D SECOND FLOOR OF THE HOUSE IS USED AS GUEST HOUSE FOR THE USE OF THE PAR TNERS AND EMPLOYEES OF THE ASSESSEE COMPANY. THE GROUND FLOOR IS USED A S OFFICE OF THE ASSESSE COMPANY. SINCE THE BUILDING IS OCCUPIED BY THE ASS ESSEE FOR THE PURPOSE OF ITS BUSINESS THERE IS NO ANNUAL VALUE CAN BE EST IMATED U/S 22. 4.4 THE LD AR HAS POINTED THAT THE ASSESSEE HAS DEC LARED THE RENTAL INCOME IN THE P&L ACCOUNT WITH RESPECT TO THE BELAP UR BUNGALOW WHEREAS THE PROPERTY AT VASHI HAS BEEN USED AS A GUEST HOUS E; THEREFORE, NO ALV CAN BE ASSESSED IN RESPECT OF THE PROPERTY WHICH IS USED BY THE ASSESSEE AS GUEST HOUSE. HE HAS REFERRED THE P&L ACCOUNT AT PAGE 31 OF THE PAPER BOOK AND SUBMITTED THAT THE ASSESSEE HAS ADMITTED T HE RENTAL INCOME OF RS. 8,64,755/- WHICH WAS ACCEPTED BY THE ASSESSING OFFICER EVEN IN THE REASSESSMENT ORDER AND THEREFORE, THE GROUND OF REO PENING IS CONTRARY TO THE FACT AS ACCEPTED BY THE ASSESSING OFFICER . 4.5 THE REOPENING IS AFTER FOUR YEARS IS NOT PERMIT TED UNDER THE PROVISIONS OF LAW WHEN THE ASSESSING OFFICER HAS NO T MADE OUT THAT THE ASSESSEE FAILED TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACTS NECESSARY FOR THE ASSESSMENT. ITA NO..3998 & 4005/MUM/2009 . 6 4.6 ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT THE REOPENING AFTER FOUR YEARS IS ALSO PERMITTED, IF THE ASSESSEE FAILE D TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSME NT. HE HAS RELIED UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COU RT IN THE CASER OF SIEMENS INFORMATION SYSTEMS LTD V ACIT REPORTED I N 333 ITR 188. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW . 5 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE ASSESSMENT WAS REOPENED AFT ER EXPIRY OF FOUR YEARS FROM THE RELEVANT ASSESSMENT YEAR. THEREFORE, THE PROVISO TO SEC. 147 IS APPLICABLE ON THIS CASE. THE MANDATORY CONDI TION FOR REOPENING OF THE ASSESSMENT AFTER THE EXPIRY OF 4 YEARS FROM TH E END OF THE ASSESSMENT YEAR IS THAT THERE IS FAILURE ON THE PAR T OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE RELEVANT MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT ON THE GROUND AS RECORDED IN THE REASSESSMENT ORDER AS UND ER: IN THIS CASE, RETURN OF INCOME WAS FILED ON 31. 10 .2001 DECLARING TOTAL INCOME OF RS. 31,33,659/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF ACT ON 24.3.2004 ASSESSING TOTAL INCOME A T RS. 33,40,430/- . IT IS NOTICED THAT THE INCOME OF THE ASSESSEE FOR A. Y 2001-02 HAS ESCAPED ASSESSMENT ON THE FOLLOWING GROUNDS: IN THE BALANCE SHEET AS AT 31.3.2001, THE ASSESSEE HAS SHOWN TWO BUNGALOWS OF THE BOOK VALUE OF RS.46,32,3 60/- AND RS.46,2!,933/- AT VASHI AND PARSIK HILL RESPECTIVEL Y. NO RENTAL INCOME IS SHOWN FROM THESE TWO PROPERTIES. AS PER T HE PROVISIONS OF SECTION 22 AND 23 OF THE ACT, THE AS SESSEE WAS REQUIRED TO OFFER RENTAL INCOME FOR TAXATION ON A N OTIONAL BASIS. THE REASONABLE RATE OF RETURN ON INVESTMENT IN THESE TWO BUNGALOWS WOULD BE 12%. THE ANNUAL RENTAL VALUE @ 1% ON THE INVESTMENT IN THESE TWO BUNGALOWS OF RS.92,5 7,293/- WORKS OUT TO RS. 11,10,875/-. AFTER ALLOWING STANDA RD DEDUCTION U/S 24(A) OF THE ACT 30% OF THE ALV OF RS. 11,10,875/- THE INCOME FROM HOUSE PROPERTY WOUL D WORK ITA NO..3998 & 4005/MUM/2009 . 7 OUT TO RS. 7,77,613/- (11,10,8753,33,262) INCOME O F RS. 7,77,613/- HAS, THEREFORE, ESCAPED ASSESSMENT. OUT OF THE SEVEN PROJECTS IN HAND, TWO PROJECTS VIZ SAI SAGAR AT PLOT NO. 69, SECTOR 15, CBD BELAPUR AND SAL SANGAM AT PLOT NO. 85, SECTOR 15, CBD BELAPUR, WERE COMPLETED DURING THE Y EAR END THE ENTIRE WORK IN PROGRESS AMOUNTING TO RS,5,46,43 ,396L AND RS. 5,80,48,241/- RESPECTIVELY WAS DEBITED TO THE P & L ACCOUNT. THE ASSESSEE HAS DECLARED TOTAL SALE PROCE EDS OF RS. 18,74,92,324/- IN RESPECT OF THE COMPLETED PROJECTS AS UNDER: A) SAI SAGAR RS. 9,05,33,165 B) SAL SANGAM RS. 8,75,53,013 C) MISC CHARGES RS. 62,93,253 D) EXTRA AMENITIES RS. 23, 14,943 E) PARKING CHARGES RS. 7,97,950 RS.18,74,92,324 THE TOTAL OPENING WORK IN PROGRESS IN RESPECT OF TH ESE COMPLETED PROJECTS HAS BEEN SHOWN AT RS. 19,92,22,578/- AND T HE VALUE OF CLOSING STOCK OF UNSOLD FLATS/ SHOPS HAS BEEN SHOWN AT RS. 1,89,46, 900/- (SAL SANGAM 1,25,00,600 AND SAI SAGAR RS,64,4 6,300). THE VALUE OF STOCK SOLD DURING THE YEAR OUT OF THESE TW O PROJECTS COMES TO RS,. 18,02,75,678/- (OPENING STOCK RS. 19,92,22, 578 - CLOSING STOCK RS. 1,89,46,900). THE DIFFERENCE IN THE SALE PROCEEDS AND THE VALUE OF STOCK SOLD COMES TO RS. 72, 16,646/- (18,7 4,92,324 18,02,75,678). THE VARIOUS EXPENSES CLAIMED IN THE P &L ACCOUNT ARE NOT DIRECTLY RELATED TO COMPLETED PROJECTS, EXC EPT COMMISSION AND BROKERAGE AMOUNTING TO RS.28,500/-. CERTAIN PAR T OF INDIRECT EXPENSES SUCH AS TRAVELLING AND CONVEYANCE, TELEPHO NE CHARGES, SALARY, VEHICLE EXPENSES ETC COULD BE INDIRECTLY RE LATING TO SUCH SALES, WHICH COULD BE ESTIMATED AROUND RS. 1 LAKH. THUS, THE NET PROFIT FROM THE COMPLETED PROJECTS WORKS OUT TO RS. 70,88,146/- (72,16,6461,28,500). THE ASSESSEE HAS DECLARED REN T INCOME OF RS. 8,64,755/- ON ACCOUNT OF UNSOLD FLATS / SHOPS I N THE COMPLETED PROJECTS. THERE DOES NOT APPEAR TO BE ANY DIRECT EX PENSE ON THESE RECEIPTS. IN VIEW OF THE ABOVE, THE MINIMUM PROFIT FOR THE YEAR UNDER CONSIDERATION SHOULD BE RS.79,52,901 (7088146 + 864755) A AGAINST PROFIT DECLARED IN THE P & L ACCOUNT OF RS . 30,91,543/-. THE ASSESSEE HAS, THUS, ADJUSTED THE PROFIT OF THE COMP LETED PROJECTS AGAINST THE EXPENSES OF THE ONGOING PROJECTS AND HA S REDUCED THE INCOME DURING THE YEAR. THERE IS, THEREFORE, AN UNDER ASSESSMENT OF INCOME OF RS.48 61,358/- (79,52,901- 30,9 1,543) ON THIS ACCOUNT. IN VIEW OF THE ABOVE DISCUSSION, INCOME OF THE ASS ESSEE TO THE TUNE OF RS. 56,38,971/- (RS. 7,77,613 + 48,61,358) HAS ESCAPED ASSESSMENT FOR A. Y 2001-02. ITA NO..3998 & 4005/MUM/2009 . 8 5.1 IT IS CLEAR FROM THE REASONS GIVEN IN THE REASS ESSMENT ORDER THAT THE ASSESSMENT WAS REOPENED ON TWO GROUNDS I.E. METHOD OF ACCOUNTING AND NON ADMISSION OF RENTAL INCOME. 5.2 AS REGARDS THE METHOD OF ACCOUNTING IS CONCERNE D, THE ASSESSING OFFICER HAS DULY ACCEPTED THE PROFIT ON WORK-IN-PRO GRESS DECLARED BY THE ASSESSEE IN THE ORIGINAL ASSESSMENT AS WELL AS IN T HE SUBSEQUENT YEARS. THUS, IT IS CLEAR THAT THE ASSESSEE HAS BEEN FOLLOW ING THE PERCENTAGE COMPLETION PROJECT METHOD OF ACCOUNTING AND ACCORDI NGLY DECLARING THE PROFIT. IN THE ORIGINAL ASSESSMENT ORDER PASSED U/ S 143(3), THE ASSESSING OFFICER HAS DULY RECORDED AND ACKNOWLEDGED THE FACT S THAT THE ASSESSEE IS DECLARING PROFIT OF WORK-IN-PROGRESS METHOD. THEREF ORE, UNDOUBTEDLY THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLO SE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT ON THIS ISSUE. 5.3 EVEN OTHER WISE, THE ASSESSING OFFICER HAS NOT WHISPERED ABOUT THE NON DISCLOSURE OF MATERIAL FACTS BY THE ASSESSEE WI TH RESPECT TO THIS ISSUE. FURTHER, THE COMMISSIONER OF INCOME TAX(APPEALS) HA S REVERSED THE REASSESSMENT OF THE INCOME ON THIS ISSUE IN PARAS 3 .1 & 3.2 AS UNDER: 3.2 IN VIEW OF THIS, EVEN THOUGH DEPARTMENT HAS NO T ACCEPTED THE DECISION OF THE HONBLE TRIBUNAL AND HAS PREFERRED AN APPEAL BEFORE THE HONBLE HIGH COURT, TILL THE TIME THE DECISION OF THE HONBLE TRIBUNAL MUMBAI IS EITHER SET ASIDE OR CANCELLED BY THE HONBLE HIGH COURT MUMBAI, IT IS TO BE HELD THAT THE ORDER IS FI NAL AND IS TO BE FOLLOWED BY THE LOWER AUTHORITIES. THE JUDICIAL DIS CIPLINE DOES NOT PERMIT A DIVERGENT VIEW ON THE MATTER AND KEEPING T HIS IN MIND REGARDING THE ISSUE OF METHOD OF ACCOUNTING ADOPTED BY THE APPELLANT, THE ACTION OF THE ASSESSING OFFICER BASE D ON THE FINDINGS OF THE LD. C.I.T-22 IN HIS ORDER U/S. 263 DATED 19. 02.2007 CANNOT BE ACCEPTED AND THE CONTENTION OF THE APPELLANT IS THE REFORE BEING ACCEPTED AND THEREFORE INCOME ON BUILDING CONTRACT AS DECLARED BY THE APPELLANT FOR A.Y. 2001-02 WHICH WAS EARLIER AS SESSED VIDE ORDER ITA NO..3998 & 4005/MUM/2009 . 9 DATED 24.3.2004 U/S 143(3) OF THE IT. ACT WILL STAN D AND WILL NOT BE OPEN FOR ANY CHANGE. HERE IT IS TO BE KEPT IN MIND THAT THE VERY BASIS OF THE CURRENT ORDER UNDER APPEAL HAS BEEN CA NCELLED BY THE HONBLE ITAT VIDE THEIR ORDER DATED 10.11.2008 WHEN THEY DECIDED THE APPEAL AGAINST THE ORDER U/S. 263 OF THE I.T. A CT FOR A.Y. 2003-04 IN THE CASE OF THE APPELLANT. THEREFORE RESPECTFULL Y FOLLOWING THE DECISION OF THE HONBLE TRIBUNAL, THE ASSESSING OFF ICER IS DIRECTED TO ACCEPT THE METHOD OF ACCOUNTING AS DECLARED BY THE APPELLANT AS WAS DONE VIDE ORDER U/S 143(3) OF THE L.T ACT DT 24 .3.2004 BY THE ASSESSING OFFICER. 4.1 IT IS HELD THAT EVEN THOUGH DEPARTMENT HAS NOT ACCEPTED THE DECISION )F THE HONBLE TRIBUNAL AND HAS PREFERRED AN APPEAL BEFORE THE HONBLE HIGH COURT, TILL THE TIME THE DECISION OF THE HONBLE TRIBUNAL MUMBAI IS EITHER SET ASIDE R CANCELLED BY THE HONBLE HIGH COURT MUMBAI, THE ORDER IS FINAL AND IS TO THE FOLL OWED BY THE LOWER AUTHORITIES. FOLLOWING THE DIRECTION OF THE HONBLE ITAT N THE CASE OF THE APPELLANT FOR THE ASSESSMENT YEAR 2003-04, THE ASSESSING OFFICER IS DIRECTED TO EXAMINE AND DECIDE WHETHER T HE PROPERTY IS USED FOR BUSINESS OR NOT AND IF NOT, ESTIMATE THE I NCOME ACCORDING TO THE ESTABLISH D JUDICIAL PRINCIPLES AND LAW IRRE SPECTIVE OF THE CONCLUSION ARRIVED AT BY TI E ASSESSING OFFICER IN THE ORDER DATED 31.12.2007 U/S. 143(3) R.W.S. 147 FOR ASSESSMENT YE AR 2001-02. THIS IS BECAUSE THE ASSESSING OFFICERS CONCLUSION REGAR DING INCORR E ESCAPING ASSESSMENT ON ACCOUNT OF NON DECLARATION O F HOUSE PROPERTY INCOME S BASED ON THE ORDER U/S. 263 OF TH E IT. ACT DATED 19.02.2007 OF LD. CLIT MUMBAI ON WHICH THE HONBLE ITAT HAS GIVEN SPECIFIC DIRECTIONS. THIS GROUND OF APPEAL IS ALLOW ED SUBJECT TO THE COMPLIANCE OF THE DIRECTIONS OF THE HONBLE ITAT GI VEN IN A.Y. 2003- 04 VIDE THEIR ORDER DATED 10.11.2008. 5.4 SINCE THIS ISSUE WAS CONSIDERED AND DECIDED BY THIS TRIBUNAL IN THE APPEAL AGAINST THE REVISION ORDER PASSED U/S 263 FO R THE AY 2003-04, AND THE REVENUE HAS NOT CHALLENGED THE FINDING OF THE C IT(A) FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. FURTHER, WHEN THE ISSUE HAS BEEN DECIDED BY THIS TRIBUNAL IN FAVOUR OF THE ASSESSEE, THEN, REOPENING ON THIS ISSUE IS NOT SUSTAINABLE AS THE SAME IS ON THE BASI S OF CHANGE OF OPINION AND IN CONTRAVENTION TO THE PROVISO TO SEC. 147. ITA NO..3998 & 4005/MUM/2009 . 10 5.5 AS REGARDS THE NON OFFERING OF RENTAL INCOME I S CONCERNED, THE ASSESSING OFFICER HAS RECORDED IN THE REASONS THAT THE ASSESSEE HAS SHOWN THE BUNGALOWS IN QUESTION IN THE BALANCE SHEE T AND NO NEW MATERIAL OR INFORMATION CAME TO THE KNOWLEDGE OF TH E ASSESSING OFFICER AFTER THE COMPLETION OF THE ASSESSMENT U/S 143(3) . THE ASSESSING OFFICER ACCEPTED THE FACT THAT THE ASSESSEE HAS ALREADY SHO WN THE RENTAL INCOME IN THE P&L ACCOUNT. THEREFORE, THE REASONS REGARDIN G REOPENING ON THIS ISSUE IS VAGUE SO FAR AS THE RENTAL INCOME IN RESPE CT OF THE BUNGALOW AT BELAPUR HAS BEEN DULY OFFERED TO TAX BY THE ASSESS EE AS THE SAME WAS SHOWN AS INCOME IN THE P&L ACCOUNT. THUS, THE REAS ONS FOR REOPENING ON THIS ISSUE IS CONTRARY TO THE FACT THAT HAS ALREADY EXISTED ON RECORD. 5.6 FURTHER, THE SECOND BUNGALOW AT VASHI WAS CLAIM ED BY THE ASSESSEE USED AS GUEST HOUSE WAS NOT FOUND FALSE BY THE ASSE SSING OFFICER; BUT THE ASSESSING OFFICER TREATED THE SAID BUNGALOW AS SEL F OCCUPIED AND COMPUTED ALV U/S 23(1)(A). THIS FACTS ITSELF SHOWS THAT THE CLAIM OF USING THE BUNGALOW AS GUEST HOUSE IS NOT FALSE AND TAXING THE INCOME FROM HOUSE PROPERTY BY COMPUTING THE ALV U/S 23(1)(A) OF THE ACT IS HIGHLY DATABLE ISSUE. 5.7 THUS, IN THE ABSENCE OF ANY NEW TANGIBLE MATERI AL AS WELL AS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE DULY AND TR ULY ALL MATERIAL ITA NO..3998 & 4005/MUM/2009 . 11 NECESSARY FOR ASSESSMENT, THE REOPENING ON THIS ISS UE IS NOT PERMISSIBLE AFTER EXPIRY OF FOUR YEARS AS THE SAME IS HIT BY TH E PROVISO TO SEC. 147 OF THE ACT. THE COMMISSIONER OF INCOME TAX(APPEALS) H AS ALREADY DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE SUBJECT TO VER IFICATION. HENCE, BOTH THE ISSUES ON MERIT WERE DECIDED IN FAVOUR OF THE ASSES SEE BY THE CIT(A). THEREFORE, THE REOPENING ON SUCH ISSUE IS NOT SUS TAINABLE, PARTICULARLY IN THE FACTS OF THE PRESENT CASE. 5.8 AS REGARDS THE DECISION OF THE HONBLE JURISDIC TIONAL HIGH COURT, IN THE CASE OF SIEMENS INDIA LTD (SUPRA) RELIED UPON B Y THE LD DR IN THE SAID CASE REOPENING OF THE ASSESSMENT FOR THE ASSESSMENT YEAR 2004-05 WAS BASED ON ASSESSMENT IN THE SUBSEQUENT YEAR 2006-07 WHEREIN THE ASSESSEE MADE DECLARATION IN THE ASSESSMENT PROCEED INGS WHICH WAS NOT MADE DURING THE COURSE OF ASSESSMENT FOR THE AY 200 5-06. IT WAS CLEAR THAT NON-DECLARING OF FULLY AND TRULY ALL MATERIAL FACTS RELEVANT TO THE ASSESSMENT YEAR WHICH WAS DISCLOSED BY THE ASSESSE E IN THE SUBSEQUENT YEAR AND THUS, AND ON THE BASIS OF NEW FACTS DISCLO SED IN THE SUBSEQUENT YEAR, THE ASSESSING OFFICER REOPENED THE EARLIER AS SESSMENT YEAR. ACCORDINGLY, THE SAID DECISION WOULD NOT HELP THE C ASE OF THE ASSESSEE IN THE FACTS OF THE PRESENT CASE IN CASE. 6 IN VIEW OF THE ABOVE DISCUSSION AND FACTS AND CIR CUMSTANCES OF THE CASE, WE HOLD THAT REOPENING AFTER FOUR YEARS IS NO T VALID FOR WANT OF THE CONDITIONS AS PRESCRIBED UNDER THE PROVISO TO SEC. 147. ITA NO..3998 & 4005/MUM/2009 . 12 ITA NO. 4005/MUM/2009 (BY THE REVENUE) ITA NO. 4005/MUM/2009 (BY THE REVENUE) ITA NO. 4005/MUM/2009 (BY THE REVENUE) ITA NO. 4005/MUM/2009 (BY THE REVENUE) 7 THE REVENUE IN THIS APPEAL HAS RAISED VARIOUS GRO UNDS; HOWEVER, THE ONLY ISSUE ARISES FOR OUR CONSIDERATION IS WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) IS JUSTIFIED I N DIRECTING THE ASSESSING OFFICER TO ACCEPT THE METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE. 8 WE HAVE HEARD THE LD DR AS WELL AS THE LD AR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AS WE HAVE ALREADY DIS CUSSED THE ISSUEIN THE FOREGOING PARAGRAPHS MTHAT WHILE DECIDING THE APPEA L OF THE ASSESSEE AGAINST THE REVISION ORDER PASSED U/S 263 FOR THE A SSESSMENT YEAR 2003- 04, THE TRIBUNAL HAS ADJUDICATED THIS ISSUE IN FAVO UR OF THE ASSESSEE. THE CIT(A) HAS DECIDED THIS ISSUE BY FOLLOWING THE ORDE R OF THE TRIBUNAL IN PARAS 3.1 AND 3.2 AS UNDER: 3.1 FROM THE PERUSAL OF THIS ORDER, IT IS SEEN THAT THE HONBLE ITAT, MUMBAI HAS UPHELD THE METHOD OF ACCOUNTING FOLLOWED BY THE APPELLANT AND CANCELLED THE ORDER U/S 263 OF THE I T ACT FOR ASSESSMENT YEAR 2003-04. AS THE HONBLE LTAT MUMB AI IS THE JURISDICTIONAL TRIBUNAL, I HAVE NO OPTION, BUT TO R ESPECTFULLY FOLLOW THE DIRECTIONS AND DECISIONS OF THE HONBLE ITAT ON THE BASIS OF VARIOUS DECISIONS ON JUDICIAL DISCIPLINE AS IN THE FOLLOWIN G CASES: 1. AGRAWAL WAREHOUSING & LEASING LTD. VS. CIT, 257 ITR 235(MP) 2. BANK OF BARODA VS. H. C. SHRIVASTAVA, 256 ITR 38 5 (BORN) 3. SHRI GOVINDRAM SEKSARIA CHARITABLE TRUST VS. ITO & ORS, 168 1TR 387 (MP) 3.2 IN VIEW OF THIS, EVEN THOUGH DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THE HONBLE TRIBUNAL AND HAS PREFERRED AN APPEAL BEFORE THE HONBLE HIGH COURT, TILL THE TIME THE DECISION OF THE HONBLE TRIBUNAL MUMBAI IS EITHER SET ASIDE OR CANCELLED BY THE HONBLE HIGH COURT MUMBAI, IT IS TO BE HELD THAT THE ORDER IS FI NAL AND IS TO BE FOLLOWED BY THE LOWER AUTHORITIES. THE JUDICIAL DIS CIPLINE DOES NOT PERMIT A DIVERGENT VIEW ON THE MATTER AND KEEPING T HIS IN MIND ITA NO..3998 & 4005/MUM/2009 . 13 REGARDING THE ISSUE OF METHOD OF ACCOUNTING ADOPTED BY THE APPELLANT, ACTION OF THE ASSESSING OFFICER BASED ON THE FINDINGS OF THE LD C I T-22 IN HIS ORDER U/S 263 DATED 19 02 20 07 CANNOT BE ACCEPTED AND THE CONTENTION OF THE APPELLANT IS THE REFORE BEING ACCEPTED AND THEREFORE INCOME ON BUILDING CONTRACT AS DECLARED A Y 2002-03 WILL STAND AND WILL NOT BE OPEN FOR ANY CHA NGE. HERE IT IS TO BE KEPT IN MIND THAT THE VERY BASIS OF THE CURRE NT ORDER UNDER APPEAL HAS BEEN CANCELLED BY THE HONBLE INCOME TA X APPELLATE TRIBUNAL VIDE THEIR ORDER DATED 10.11.2008 WHEN TH EY DECIDED THE APPEAL AGAINST THE ORDER U/S. 263 OF THE L.T. ACT F OR A.Y. 2003- 04 IN THE CASE OF THE APPELLANT. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE TRIBUNAL, THE ASSESSING OF FICER IS DIRECTED TO ACCEPT THE METHOD OF ACCOUNTING AS DECLARED BY THE APPELLANT. 8.1 THUS, IT IS CLEAR THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ACCORDINGLY, WE DECIDE THI S ISSUE AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. 9 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED WHEREAS THE APPEAL OF THE REVENUE IS DISMISSED. 3 /4 %3/ . 5 / . / 6' 7 . 5 $3 . / 6' ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 9 TH , APRIL 2013 2 . 1& $ 5 8 4 19TH APRIL 2013 1 . 9 SD/- SD/- ( (( ( . . !'# , ) )) ) $ ( (( ( N K BILLAIYA N K BILLAIYA N K BILLAIYA N K BILLAIYA ) ) ) ) ACCOUNTANT MEMBER ( (( ( ) , (VIJAY PAL RAO ) (VIJAY PAL RAO ) (VIJAY PAL RAO ) (VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 19 TH , APRIL 2013 RAJ* RAJ* RAJ* RAJ* ITA NO..3998 & 4005/MUM/2009 . 14 COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI