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2021 (10) TMI 238 - HC - Income TaxReopening of assessment u/s 147 - retention money for the completed projects - mercantile system of accounting - whether there was an allegation that the assessee failed to fully and truly disclose all material facts and particulars at the first instance, when the assessment was completed? - HELD THAT:- As after completion of the assessment u/s143(3) of the Act, the AO has issued notice seeking certain clarifications - no power vested with the AO to seek such clarifications, as the AO does not possess power under Section 154 - assessee has furnished the reply and the reply specifically stated that the retention money has already been offered to tax in the subsequent period. Hence, charging to tax will not be in compliance of the Accounting Standards and the provisions of the Act and the same income cannot be taxed twice. Concept as to why the retention money is retained by the assessee was explained by stating that the retention money accrues only after the defect liability period is over, which is generally one year after the execution of works contract and until the project is not completed, there is no right to receive the money. When there is no right to receive the money, the income does not accrue or arise to the assessee. Further, if this income has not been offered at the time of execution of the contract it is not possible, since the quantum of how much amount would be known only after the defect liability period. As pointed out that the assessee has been consistently following the same method of accounting for the last twenty five (25) years and there is no change in the method of accounting is warranted on a continuing job. Thus, it is clear that the Assessing Officer seeks to review the decision taken by its predecessor in office under the guise of exercise of power under Section 147/148, which is impermissible under law. On facts we have satisfied that there is no allegation against the assessee on any failure on his part to disclose full particulars at the time of original assessment, nor there is any fresh tangible material brought out by the assessee on record justifying his exercise of power under Section 147 of the Act. Therefore, we hold that the reopening proceedings is bad in law. - Decided in favour of assessee.
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