TMI Blog2013 (8) TMI 524X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Respondent : Bharat Ji Agarwal and Ashok Kumar. ORDER:- PER : Prakash Krishna The petitioner an 'authority' constituted under provisions of the U.P. Urban Planning and Development Act, 1973 has filed the present writ petition questioning the legality and validity of the order passed under section 142 (2A) of the Income Tax Act for the Assessment Year 2005-2006 i.e. the Financial Year 2004-2005. The petitioner claims that its income has been exempted vide certificate dated 25th of July, 2005 issued under section 12A of the Income Tax Act. Its return of income was exempt for the Assessment Year 2003-2004 and assessment for the Assessment Year 2004-2005 is pending. Its income of return for the relevant Assessment Year 2005-2006 was filed on 29th of October, 2005 claiming exemption under section 11 read with section 12 of the Act. The return was accompanied with an audited statement of account, tax audit report in form no.3 CD under section 44AB of the Act. The notice for assessment was issued on 19th of July, 2006, in response thereof the petitioner appeared and sought adjournment. During the course of assessment proceedings, the Assessing Authority raised number of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been reiterated. Heard Sri S.K. Garg, learned counsel for the petitioner and Sri Ashok Kumar, learned standing counsel for the respondents. When the matter was taken up earlier, the learned counsel for the petitioners had submitted that on the like grounds, for the preceding Assessment Year order was passed under section 142 (2A) of the Act which was challenged in the Writ Tax No.587 of 2007 and was allowed on 9th November, 2010. It was also submitted that since the petitioner has not been served with any demand notice thereafter, it is reasonable to presume that the return income of the petitioner has been accepted. This necessitated the adjournment of the case asking the respondent to clarify the position after getting instructions. A supplementary affidavit has been brought on record stating that the assessment proceeding for the immediately preceding Assessment Year is still pending as the petitioner who was under an obligation to approach the Department along with the certified copy of the judgment delivered in the above referred writ petition failed to approach. The assessment matter is still pending consideration. We find that the said writ petition was allowed on the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... November, 2007 as to why a reference be not made in view of the proviso to section 142 (2A) of the Act. Admittedly, the petitioner submitted the reply vide Annexure-D to the writ petition. In the reply the petitioner insisted that a receipt method of accounting followed by 'institution' recognised under section 12A, the particulars of the 'receipts' and also 'utilization' thereof have been given on cash basis. As a consequence thereof, all the objections raised by the Department on the maintenance of the accounts, specially those regarding valuation of the shop, profit and loss on the building operations, remarks given in the tax audit report according to the petitioner have no bearing on the return and assessment of the petitioner as it is claiming exemption under section 11 read with section 12 of the Income Tax Act. It further shows that the petitioner had submitted the print out of General Ledger Volumes-I and II of books of accounts on 12th of November, 2007 before initiation of proceedings under section 142 (2A) of the Act. The books of accounts submitted by the petitioner run approximately into 2500 pages of computer print. This negates the above contention of the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Method of accounting employed in the previous year. CASH BASIS. Except as otherwise situated in the statement of accounting policies annexed to the accounts. (b) Whether there has been any change in the method of accounting employed vis-a-vis the method employed in the immediately preceding previous year. N.A. As this is the first year that the Authority is migrating to the mercantile system of accounting. (c) If answer to (b) above is in the affirmative, give details of such change, and the effect thereof on the profit or loss. N.A. (d) Details of deviation, if any, in the method of accounting employed in the previous year from accounting standards prescribed under section 145 and the effect thereof on the profit or loss. Generally NO. This is the third year that the Authority is migrating to the mercantile system of accounting it is not possible to qualify the effect, if any, due to deviations. The significant Accounting Policies and Notes on accounts adopted in the preparation and presentation of financial statements from a part of the final accounts. The auditor in the audit report at serial no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the books of accounts and qualificatory remarks in the audit report. Few paragraphs from the show cause notice i.e. 5.1, 5.2 and 5.3 are being produced below:- 5.1 During the course of assessment proceedings, the assessee has submitted written reply dated 12.11.2007 and 21.11.2007. However, only part compliance was made. The assessee has not made compliance of various queries and the defects in maintenance of books of accounts as pointed out by the assessee's own auditor has also not been removed. The assessee has claimed that its entire activity including acquisition/construction of land and building and its sale constitute activity of charitable in nature and it has carried out its activity in accordance with the law and procedure prescribed under the U.P. Urban and Planning Act, 1973. 5.2 In order to verify correctness of claim made by the assessee, it was required to furnish project wise details of inventory of opening and closing stock, details of sale and purchase which is very vital to determine whether the assessee had ventured into such activity with a profit motive or not. The assessee has neither furnished these details before the auditor nor did it compl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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