TMI Blog2011 (1) TMI 1116X X X X Extracts X X X X X X X X Extracts X X X X ..... UDHAKAR Reddy, V. DURGA RAO, JJ. Sanjiv M. Shah for the Appellant. S.K. Pahwa for the Respondent. ORDER J. Sudhakar Reddy, Accountant Member The order of the Bench was delivered by Sudhakar Reddy (Accountant Member).-This is an appeal filed by the assessee directed against the order of the Commissioner of Income-tax-19, Mumbai, under section 263 of the Income-tax Act, 1961, dated March 25, 2010. 2. The facts of the case are brought out at paragraphs 1 and 2 of the order under section 263 which is extracted below for ready reference : "The assessee-firm had filed return of income on February 29, 2008 declaring business income of Rs. 2,43,54,770. The Assessing Officer has completed the assessment vide order dated December 29, 2008 at an assessed income of Rs. 2,46,66,733 by making addition on account of ad hoc disallowance towards motor car expenses, telephone expenses to the extent of Rs. 3,11,963. As regards, the nature of business of the assessee, the assessee is engaged in business of construction of buildings and development. The firm had been following 'project completion method of accounting'. During the assessment year 2002-03, the assessee-firm h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abilities. (4) The Assessing Officer has failed to take cognizance of the delay in filing the return of income for the impugned assessment year and had not called for any explanation in this respect. (5) As the assessee maintained the accounts under the mercantile system of accounting, taxability is to be ascertained on accrual basis and not on receipt basis and thus liability must be allowed only if it is ascertained. (6) The Assessing Officer has to verify the facts and examine the liabilities, particularly provisions for construction expenditure amounting to Rs. 2,34,03,341. 4. Mr. Sanjiv M. Shah, learned counsel for the assessee, filed paper books running into 816 pages in two box files. He further filed another set of paper book consisting of copies of 32 case laws which run from pages 1 to 212. At this juncture we extract rule 18(6) of the Income-tax (Appellate Tribunal) Rules, 1963 which reads as follows : "Documents that are referred to and relied upon by the parties during the course of arguments shall alone be treated as part of the record of the Tribunal." 5. Accordingly we would consider only such documents and papers, from the paper books, which are refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oneous. He submitted that the expenses have to be allowed in the same year. For this proposition he relied on the judgment in the case of CIT v. Gabriel India Ltd. [1993] 203 ITR 108/71 Taxman 585 (Bom) and the judgment of the Rajasthan High court in the case of CIT v. Ganpat Ram Bishnoi [2008] 296 ITR 292/[2006] 152 Taxman 242. 10. The next proposition is that the Assessing Officer has taken a plausible view and hence the revision is bad in law. He relied on the following case law : Prudential Assurance Co. Ltd. v. Director of Income-tax (International taxation) [2010] 324 ITR 381/191 Taxman 62 (Bom). 11. He further submitted that the expenditure in question is not the contingent liability and for this proposition he relied upon the decision of the hon'ble Supreme Court in the case of Bharat Earth Movers v. CIT [2000] 245 ITR 428/112 Taxman 61 and in the case of Nav Bharat Nirman (P.) Ltd. v. CIT [1983] 141 ITR 723/[1982] 9 Taxman 174 (Delhi). He further submitted that the assessee follows the project completion method and this was approved by the Supreme Court in the case of CIT v. Bilahari Investment (P.) Ltd. [2008] 299 ITR 1/168 Taxman 95. 12. He referred to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer in his letter dated September 18, 2008, addressed to the assessee. During the assessment proceedings for the assessment year 2006-07, has asked for numerous details, some of which are extracted below for ready reference : (1) Full details of each of the projects which was either in progress or completed during the financial year 2005-06, including the full postal address of the project, details as to whether the project was undertaken on development basis or ownership basis, total area of the project, etc. (2) Copies of development agreements/purchase deeds relating to each project ; (3) Copy(ies) of completion certificate(s) obtained, in respect of the projects completed during the year, along with details of the expenditure incurred under various heads for various years, from the inception of the projects to the completion ; (4) Copy(ies) of all partnership deed(s) applicable to the financial year 2005-06. (5) Details and ledger account copy of 'sale of units' of Rs. 18,17,11,125 credited to the profit and loss account ; (6) Quantitative and monetary details of 'stock of unsold units' as on March 31, 2006 ; (7) Details and ledger account cop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held as follows (headnote) : "An order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes certain assessment, the same cannot be branded as erroneous by the Commissioner simply because according to him the order should have been written more elaborately." 19. Applying this decision to the facts of this case, we have to necessarily reject the contention of the learned Departmental representative that the Assessing Officer has not applied his mind to the facts of the case. In any event, it is not the case of the Commissioner while passing the order under section 263, that the Assessing Officer should have written the order more elaborately. The above extracts from the assessment record demonstrate that the Assessing Officer had called for details and after examining the same, had accepted the claims of the assessee. When such an exercise has been done, the conclusion drawn by the Assessing Officer, cannot be said to be erroneous. 20. The assessee-firm vide letter dated October 7, 2008 submitted complete details of sales of plot, closing stock of units of the construction project known as "Sangeeta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition against it, express or implied, in the Act. Having accepted the receipts of Rs. 43,692-11-9 in their totality even though a sum of Rs. 29,392-11-9 only was actually received by the appellant in cash, thus making the appellant liable for income-tax on a sum of Rs. 14,300 which had not been received by it during the accounting year, it was hardly open to the Revenue to urge that the sum of Rs. 24,809 should not have been allowed as a permissible deduction before arriving at the profits or gains of the appellant which were liable to tax. Consistently enough with this attitude, the Revenue ought to have expressed its willingness to treat only a sum of Rs. 29,392-11-9 as the actual receipt of the appellant during the accounting year and made up the computation of the profits and gains of the appellant's business on that basis. The Revenue, however, did nothing of the sort and insisted upon having its pound of flesh, asking us to delete the whole of the item of Rs. 24,809 from the debit side of the account which it was certainly not entitled to do." 22. Thus the view taken by the Assessing Officer is a possible view and the Commissioner of Income-tax has not demonstrated that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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