TMI Blog2021 (7) TMI 1032X X X X Extracts X X X X X X X X Extracts X X X X ..... hen the adjudicated issues are sought to be reopened, then alone the Court can form an opinion that the case would fall under change of opinion and not otherwise. Sufficiency of the reasons cannot be gone into by the High Court in writ proceedings. Once the High Court is able to form an opinion that the issues raised in the reopening proceedings are not adjudicated in the original assessment order, then it is sufficient to confer power on the Assessing Officer to reopen the assessment and the Department must be allowed to proceed with further action as contemplated under the statute. These being the principles to be followed in the present case, the non-adjudication of retention money is unable to be disputed by the petitioner/assessee in the present case. Petitioner could not be able to establish that the retention money stated above was adjudicated by the Assessing Officer during the original assessment. This being the factum established, there is no reason to consider the case of the writ petitioner - Decided against assessee. - W.P.No.34632 of 2018 And W.M.P.Nos.40151 & 40153 of 2018 - - - Dated:- 26-4-2021 - Honourable Mr.Justice S.M. Subramaniam For the Peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to the said clarification by letter dated 12.02.2018 stating that the petitioner had incomplete projects worth ₹ 2,92,00,91,516/-, out of which, the total expected retention money at the end of the project is ₹ 11,14,43,711/-. These projects were completed on percentage completion method and a sum of ₹ 5,87,61,167/- was deducted by the customer as retention money. This money would be paid by the customer only after the project is completed and defect curing period is completed. In other words, the amount will become due to the petitioner only after completion of warranty period. The amount of retention money has been accrued at the completion of project in the subsequent years. Moreover, the retention money has already been offered to tax in the subsequent period thereby vitiating the taxation of the same income during the impugned assessment year 2011-12. 4.After a period of four years, the respondent by notice dated 29.03.2018 issued under Section 148 of the IT Act, sought to reopen the concluded assessment under Section 143(3), without any tangible materials and without giving a finding that there is a failure on the part of the petitioner to disclose f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd truly all material facts necessary for the assessment. The respondent herein without dealing with the jurisdiction issue and without even dealing with the case laws, which are binding upon him, by impugned proceedings dated 18.12.2018, had held that the proceedings under Section 147 of the IT Act have been initiated correctly and rejected the objections of the petitioner. The proceeding passed by the respondent dated 18.12.2018 is devoid of merit and is not a speaking order as stipulated under law. 8.The learned counsel for the petitioner solicited the attention of this Court with reference to the Significant Accounting Policies, that is, Basis of Accounting. It is contended that as per Schedule XIIIA1(c) of the Significant Accounting Policies, the company, during the year, has changed the Accounting Policy on recognition of retention money on completed projects. It has accounted retention money on completed projects on accrual basis, where the company is confident of receiving the retention money in full as compared to cash basis followed in preceding years. This apart, the Chartered Accountants, of the petitioner in letter dated 25.02.2014, categorically stated with referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s admitted in the P L account. In respect of retention money, the petitioner is not following a consistent policy in accounting the retention money, the assessee is offering retention money on some completed projects and has not offered retention money on on-going projects. The Assessing Officer has worked out the gross profit at ₹ 1,15,65,348/- as against which, it was observed that the petitioner has admitted loss of ₹ 29,66,403/- in the P L account. Thus, the Assessing Officer found that income of ₹ 1,45,31,751/- (11565348 + 2966403) is required to be brought to tax. Though the petitioner was given an opportunity to reconcile the difference in profit by letter dated 17.01.2018, the petitioner has not reconciled the profit admitted in the P L account. Thus, there is failure on the part of the assessee in disclosing the full facts. The Assessing Officer has applied his mind, drawn reasons to form an inference and recorded the reasons. The Assessing Officer was in possession of tangible material in the form of audited balance sheet, computation of total income etc. The Assessing Officer has verified the information available on record, analysed the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 147. The Assessing Officer has applied his mind, drawn reasons to form an inference and recorded the reasons. The said assessment has been reopened, as there is an escapement of income. A letter dated 14.12.2018 was issued by the respondent communicating the reasons for reopening the assessment informing how the Assessing Officer has jurisdiction over the case. Since in this case, excess deduction of retention money on work in progress has been claimed and allowed, this case falls within the ambit of Explanation 2(c) to Section 147 of the IT Act. The Assessing Officer has issued the notice after recording the reasons and taking necessary statutory approvals from the higher authorities concerned. The Assessing Officer has jurisdiction to issue the notice under Section 148 of the IT Act. The objections raised by the petitioner were duly considered and the letter dated 18.12.2018 was issued rejecting the objections raised by the petitioner. 16.The petitioner do have other alternatives such as appeals before the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal. This Court in the case of JCIT Ors. vs. Kalanithi Maran Ors. reported in (2014) 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material in the form of financial documents, replies of the petitioner etc., on record to come to a conclusion that there is escapement of income. The objections filed for reasons were disposed by way of a speaking order. After considering all the submissions of the petitioner, the objections were rejected. The petitioner is not following a consistent policy in accounting the retention money. Hence, the ratio of case laws relied on by the petitioner were not applicable to the facts of the present case. Hence, the respondent after considering all these facts and circumstances rejected the objections raised by the petitioner. There is a clear finding that there is failure on the part of the petitioner to disclose all material facts. There is no change of opinion in the instant case. The petitioner has not furnished all the material facts necessary for assessment. 20.The primary facts of reconciliation of difference in gross profit and the reason for not following a consistent policy in accounting the retention money were not available before the Assessing Officer. 21.In the original assessment, there is no opinion formed on the issues raised recorded in the reasons for reopeni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer has not formed any opinion on the issue of retention money of ₹ 5,87,61,168/-. Hence there is no change of opinion by the Assessing Officer. 23.This Court is of the considered opinion that the reasons furnished for reopening of the assessment dated 18.12.2018 would clearly reveal that incorrect claim and reduced income were identified. Further, it is stated that the issue of retention money of ₹ 5,87,61,168/- was not considered by the Assessing Officer in the original assessment order. Thus, the reopening of assessment cannot be construed as change of opinion. 24.This Court is of the considered opinion that once the Department could able to establish that reopening of assessment is made based on the new materials or with reference to the informations which were not truly and correctly provided by the assessee at the time of original assessment, then power under Section 147 of the IT Act can be invoked. Amended provision of Section 147 of the IT Act provides wider power to the Assessing Officer to reopen the assessment. Only when the adjudicated issues are sought to be reopened, then alone the Court can form an opinion that the case would fall under change ..... X X X X Extracts X X X X X X X X Extracts X X X X
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