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

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ITA 1887/MUM/2013Status: DisposedITAT Mumbai18 May 2016AY 2006-074 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the reopening of assessment under Section 147 was based on a change of opinion by the Assessing Officer, as the assessee had consistently followed the project completion method. No new material was brought on record to justify the reopening.

What were the facts?

The assessee, a partnership firm, initially declared Nil income. The assessment was completed at Nil income. Later, the assessment was reopened under Section 147, and the total income was determined at Rs. 37,08,135/-. The CIT(A) set aside the reassessment, holding the reopening to be bad in law.

What were the issues?

Whether the reopening of assessment under Section 147 was justified when it was based on a change of opinion without any new material.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 148

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI

Before: S/SHRI B.R.BASKARAN & AMARJIT SINGH

For Appellant: Shri Rajesh S. Shah
Hearing: 29.03.2016Pronounced: 18.05.2016

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.

2.

The brief facts of the case are that the assessee is a partnership firm and has filed its original return of income declaring Nil income on 31.10.2006. Subsequently, assessment u/s. 143(3) of the Income Tax Assessment Year: 2006-07 Act, 1961( in short “the Act”) was completed by the Assessing Officer on 29.12.2008 determining total income at Rs. Nil. The assessment was reopened by issuance of notice u/s.148 the Act on 28.03.2011 by the Assessing Officer. Subsequently the Assessing Officer completed assessment u/s. 143(3) r.w.s 147 of the Act determining the total income of the appellant at Rs.37,08,135/-. Aggrieved by this order the assessee filed appeal before learned CIT(A) and the learned CIT(A) arrived at this conclusion that the reopening of the assessment u/s.147/148 of the Act is bad in law and set aside the said assessment. Feeling aggrieved the revenue is in appeal before us.

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.

3.

In result the appeal of the revenue is hereby dismissed accordingly.

Order pronounced in the open court on 18th May, 2016 (AMARJIT SINGH) (B.R.BASKARAN) लेखा सद"य / ACCOUNTANT MEMBER "या"यक सद"य/JUDICIAL MEMBER मुंबई Mumbai; "दनांक Dated : 18th May, 2016 MP MP MP MP

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