ITO 25(2)3, MUMBAI vs. SIDDHIVINAYAK CONSTRUCTION, MUMBAI

Assessee by: Shri Rajesh S. Shah Department by: Shri Chandrajit Singh सुनवाई क" तार"ख / Date of Hearing: 29.03.2016 घोषणा क" तार"ख /Date of Pronouncement: 18.05.2016 आदेश / O R D E R PER AMARJIT SINGH, JM:

The revenue has filed the present appeal against the order dated 31.12.2012 passed by the Commissioner of Income Tax (Appeals)-35, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the assessment year 2006-07.

3. We have heard the arguments advanced by the learned representative of the parties and perused the record carefully. The sole grievance of the revenue is that the Assessing Officer has reopened the assessment u/s. 147 of the Act in accordance with law but the learned CIT(A) has wrongly set aside the said assessment u/s.147 of the Act. On appraisal of the record available in the file it came into notice that the assessee was following the project completion method from very beginning. The assessee’s income tax return for the A.Y.2001-02 to 2005-06 were accepted u/s.143(3) of the Act which were submitted on the basis of project completion method. At the time of completion of the assessment before Assessing Officer for the A.Y.2005-06, the Assessing Officer has also given the finding to the effect that the construction of “A” Wing was going on and 20 flats were constructed. The said contention has been accepted by the Assessing Officer that no new flats were constructed but the construction of the building of 2 Assessment Year: 2006-07 rehabilitation was being carried out. The necessary details of the project and method of accounting system were submitted before the Assessing Officer. The Assessing Officer has given its opinion while finalising the said assessment for the A.Y.2005-06. The assessee disclosed the material evidence before the Assessing Officer. While reopening the assessment u/s.147 of the Act, the Assessing Officer did not brought any new material on record for the reopening of the assessment. The reopening was initiated on the objection of audit party. There is no new ground on the file to which it can be assumed that the reopening was done by the Assessing Officer on the basis of any other grounds. The assessee was following the project completion method for the period from A.Y.2001-02 to 2005-06. At the time of reopening the assessment the Assessing Officer is of the opinion that the assessee should follow the percentage completion method and to declare the profit on yearly basis. It is merely change of opinion and assessment was not required to be reopen u/s.147 of the Act. We also placed reliance upon law settled in [2010] 187 taxman 312 (SC) Vs. Kelvinator of India Ltd. It is also apparent on record that there is no material with the Assessing Officer with regard to the escapement of income therefore in the said circumstances the reopening u/s. 147 of the Act does not seems justifiable. Reliance placed upon the 20 taxman.com 784 (Guj.) Sadhbhav Engineering Ltd. Vs. DCIT and ACIT Vs. Rajesh Jhaveri Stock Broker Pvt. Ltd. 291 ITR 500 (SC) and Teleco Dadajee Dhackjee Ltd. Vs. DCIT in ITA No. 4163/Mum/2005. No doubt in view of the said circumstances the learned CIT(A) has passed the order 3 Assessment Year: 2006-07 in question judiciously and correctly which does not require to be interfere with at this appellate stage.