TMI Blog2019 (4) TMI 1102X X X X Extracts X X X X X X X X Extracts X X X X ..... refore the Assessee is claiming double deduction, is contrary to facts and not supported by any material on record. On the contrary the Assessee has demonstrated before us that the gross receipts declared in the profit and loss account includes the sum claimed as retention money which was not offered to tax on account of its alleged non-accrual. Therefore, the argument of the DR that there was failure on the part of the Assessee to fully and truly disclose all material facts relevant for assessment of his income for the relevant Assessment year is without merit. Consequently, the proviso to Sec.147 of the Act is applicable in the present case. Since there was no failure on the part of the Assessee as is contemplated by the proviso to Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The return filed by the assessee was taken up for scrutiny assessment and order of assessment dated 13.12.2010 was passed by the AO in which the total income declared by the Assessee in the return of income was accepted by the AO after disallowance of certain expenses. 3. The AO issued a notice u/s. 154 of the Act dated 3.5.2013 in which he took the view that retention money which was claimed as a deduction in the computation of total income ought to have been offered to tax, because the assessee was following mercantile system of accounting and the retention money was income that accrued to the assessee. The AO passed an order dated 19.7.2013 u/s. 154 of the Act adding the retention money to the total income determined in the order u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction from the net profit. In the Mercantile system of accounting, with regard to the retention money, one basic situation may arise: Whether the assessee had offered the retention money as Gross Contract Receipts as a result of which he had made an entry under sundry debtors for the amount receivable. It is seen that the assessee had not made any entries for the retention money receivable as sundry debtors. It is not possible to claim a deduction from the net profit. 6. Mercantile System of accounting includes all transactions recorded irrespective of period of amount received or paid. Accordingly, the retention money is a part of sale and is accrued recognized as revenue to the assessee as soon the entries are posted rh the boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s initiated. It is amply clear in the present case that, the Assessee's excess claim of deduction of retention money from the Net-profit, (even though recorded in the assessed computation) did infact result in excess claim, would be evident in the ensuing discussion on merits of the case. In these facts and circumstances, I do not find any serious legal aberrations in the impugned order of re-assessment and the grounds raised by the Assessee in this regard are therefore disallowed. 7. We have heard the rival submissions on the validity of initiation of reassessment proceedings. Admittedly, the proviso to section 147 of the Act will apply to the present case because the reassessment proceedings have been initiated after the end of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uded in the total turnover declared by the Assessee. The same is given as Annexure-2 to this order. The Assessee has also given a breakup of the sales/turnover declared in the profit and loss account and the relevant break up of the turnover like Labour charges, Sales, Works Contract etc. The same is at pages -12 to 17 of the Assessee s paper book. Perusal of the same together with Annexure-2 shows that the Assessee has declared in the gross receipts of his business the sums which were claimed as retention money and income which did not accrue to the Assessee. Therefore, the contention of the revenue which is based on observations in the order of the AO that the Assessee did not include the retention money in the gross receipts and therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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