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Facts
The assessee company was engaged in the construction of AEZ Project Vaishali and filed its return of income. A search operation was conducted, and information from seized hard disks indicated the appellant received Rs.3,84,86,000/- in cash as advances. Consequently, reassessment proceedings were initiated under section 147/148 of the Income Tax Act, 1961.
Held
The Assessing Officer reassessed the income, but no addition was made for the year under consideration, leaving the issue of cash received for taxation in the year the project is completed. The CIT(A) upheld the assessment findings.
Key Issues
Whether the reassessment proceedings initiated under Section 148 were valid, and if the undisclosed income of Rs.3,84,86,000/- should be taxed in the assessment year 2005-06 or upon completion of the project.
Sections Cited
143(3), 147, 148, 139(1), 132, 153, 147 1st proviso
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Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI
Before: Sh. Satbeer Singh Godara & Sh. Naveen Chandra
ORDER
Per Satbeer Singh Godara, Judicial Member:
This assessee’s appeal for Assessment Year 2005-06 arises against the CIT(A)-XXVII, New Delhi’s dated 27.11.2014, in case No. 407/13-14/CIT(A)-XXVII/2014-15, in proceedings u/s 143(3)/147 of the Income Tax Act, 1961 (in short “the Act”).
Heard both the parties at length. Case file perused.
The assessee’s main as well as additional/revised grounds raised in the instant appeal seeks to reverse both the lower authorities’ respective findings in assessment order dated 30.03.2013 as well as in the lower appellate discussion inter alia initiating section 148 proceedings culminating in the addition of undisclosed income of Rs.3,84,86,000/- in question.
Learned CIT(A)’s lower appellate discussion appears to have upheld the assessment findings to this effect as under: “2. The brief facts of the case are that the appellant company during the year under consideration was engaged in the construction of project namely AEZ Project Vaishali. The appellant filed its return of income originally with the ACIT, Central Circle-08 on 29.10.2005 vide acknowledgment no.96 declaring a total income of Rs.62,910/-. Later on, the case of the appellant was decentralized to ITO Ward-5(2), New Delhi. A search and seizure operation u/s 132 was conducted by the department in the Aerens group of cases on 17.08.2011. Subsequently, search action was also carried out on 10.02.2012 on certain investors who had invested substantial unaccounted money in the projects of AEZ group, an associate of the Aerens group. From the details contained in the seized material, it was found that the AEZ group had received substantial unaccounted money against the sale of its projects. It was also found that the project AEZ Vaishali of AEZ group was constructed by the appellant. The seized material also contained hard disks which were seized from the registered office of the company situated at Nehru Place, New Delhi. In these hard disks some excel files were found which showed that the appellant company received a sum of Rs.3,84,86,000/- in cash. On the basis of this information, the Assessing Officer, Ward-5(2), New Delhi after recording the reasons, issued a notice u/s 148 on 19.03.2012 to the appellant company, in response to which the appellant filed a letter stating that the original return filed u/s 139(1) be treated as return filed u/s 148. Thereafter, the case of the appellant was centralized with the present Assessing Officer, Central Circle-9, New Delhi and therefore, a fresh notice u/s 143(2) was issued to the appellant company. In response to the same, the AR of the appellant attended the assessment proceedings on various dates and filed the written submissions which were placed on record. Thereupon, the Assessing Officer completed the assessment wherein the income of Rs.62,910/- originally assessed vide order u/s 143(3)
dated 19.12.2007 was again re-assessed in terms of an order dated 30.03.2013 u/s 143(3)/147 of the IT Act, 1961, which is now in appeal. 2.1 While completing the impugned assessment the Assessing Officer observed as under: "The AR of assessee submitted the copy of Accounting Standard-9, issued by the Institute of Chartered Accountant of India. The assessee had adopted contract completion method "CCM”, and its income can be recognized in his hands in the assessment year in which the project was completed. The assessee requested that the assessee has regularly adopted the "CCM’ and the last assessment was done on the "CCM" Method. Even if we adopted the Percentage completion method "PCM" the minimum thresh hold limit for minimum completion of project is 25% as per theAS-9 whereas the assessee had completed on 24.24% which is lower than the prescribed limit. It is undisputed that the assessee had received cash amounting to Rs.3,84,86,000/- as advances from the customers during the F.Y, 2004-05. The main question is that in which A.Y. the revenue will be recognized. The assessee has stated that this year was the first year of bookings. Keeping in the view the facts and submission of the assessee, it is seen that even if the CCM or PCM Method is applied, no revenue was recognized in F.Y. 2004-05 i.e. A.Y. 2005-06. With these remarks the income of the assessee originally assessed u/s 143(3) at Rs. 62,910/- dated 19.12.2007 is being assessed u/s 143(3)/147 of the Income Tax Act, 1961. The amount of undisclosed income of Rs.3,84,86,000/- will be taxed in the year when the project was completed."
In response to the notice issued u/s 250 of the IT Act, 1961 Sh. Rajeshwar Prasad Painuly, CA attended the proceedings and filed a paper book containing the written submissions, copy of the notice u/s 148, copy of the reasons recorded by the Assessing Officer, copy of the objections filed on the reasons recorded by the Assessing Officer and the copies of the submissions made during
the course of assessment proceedings through various replies. On going through the submissions of the appellant, I find that the appellant has challenged the issue of notice u/s 148 of the IT Act, 1961 as null and void for the reasons stated in the grounds of appeal and in the written submissions filed. The appellant is also aggrieved with the finding of the Assessing Officer that the appellant had received an unaccounted cash of Rs.3,84,86,000/- from AEZ group of companies as per details contained in the excel file of hard disks found and seized during the course of search proceedings in Aerens group of cases. However, on going through the assessment order, I find that there is no cause for any grievance for the appellant so far as the present assessment under appeal is concerned. In the re- assessment proceedings u/s 147 read with section 148, the Income Tax Officer accepted the return of income filed in response to notice u/s 148 as it is on the basis of which the assessment of the appellant was earlier completed in terms of order u/s 143(3) dated 19.12.2007 at the returned income, except for the observation with regard to the cash received by the appellant as advance from the customers. Since, no addition was made in the assessment of the appellant for the assessment year under consideration and the issue of cash amounting to Rs.3,84,86,000/- received by the appellant was left to be considered for taxation in the year when the project would be completed, there is no reason to interfere with the present assessment order of the Assessing Officer as no grievance arises out of such an order passed by the Assessing Officer. It is pertinent to mention that when the returned income was accepted, all the other actions of the Assessing officer relating to re-assessment proceedings u/s 147 read with section 148 becomes infructuous and therefore, there should not be any cause of grievance on this count also.
4. In view of the above discussion, the appeal is dismissed.” 4.1 This is what leaves the assessee aggrieved.
5. Learned counsel’s first and foremost argument seeks to invoke violation of section 147 1st proviso that the reopening herein had been set into motion beyond four years from the end of the relevant assessment year which is not sustainable in law. Learned counsel fairly submits that he does not even have reopening reasons in the case records. We are of the considered view that the impugned reopening could not be disturbed in absence of such reopening reasons. Rejected accordingly.
6. Learned counsel’s second argument before us is that both the lower authorities ought to have invoked section 153 of the Act than reopening section 148 which is not sustainable in law since involving the search action herein on 17.08.2011. We find no merit in the assessee’s instant second substantive ground as well in light of CIT Vs. Naveen Kumar Gupta (2025) 479 ITR 586 (Del.) settling the issue in the department’s favour that section 148 proceedings could indeed be initiated even in an instance involving section 132 search action. Rejected accordingly.
7. Learned counsel’s third argument is that the impugned addition of the assessee’s alleged undisclosed income of Rs.3,84,86,000/- is merely based on some loose excel sheet than followed by due corroboration thereof by the departmental authorities herein. We notice herein as well that the assessee has not been bothered to place on record the said alleged loose sheet in support of it’s arguments. We thus see no reason to interfere with the impugned addition on merits as well.
8. No other ground or argument has been pressed before us.