TMI Blog2022 (5) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... direction to Respondent No.1 to initiate reassessment proceedings by issuing notices under Section 148 of the Act. On the contrary, the Tribunal recorded specific findings that following the project completion method the assessee offered income in respect of these project in Assessment Year 2003-2004 which has been accepted by the Revenue. Once income is taxed in Assessment Year 2003-2004 on the completion of the project, there cannot be any question of taxing the same amount in the earlier years by applying a particular percentage on the amount of work in progress shown in the balance-sheet. Even for a moment we assume that the observations of the Tribunal could be stated to be a finding or a direction as contemplated by Section 150 of the Act, still in view of the proviso to Section 147 of the Act, the reopening cannot be stated to be valid. There is nothing in the reasons for reopening to indicate that there was any escapement of income due to failure on the part of the assessee to truly and fully disclose material fact. We would say that even in the reasons recorded, there is not even a finding that there was any such failure. Even otherwise after the order of the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Revenue against the Order of the Tribunal. 4. According to Petitioner, the said project could not be completed within the projected time. This resulted in escalation of the project costs. According to Petitioner as Mayuresh Builders was going through financial constraint which was further aggravated by the fact that there was fall in the real estate price, the said Mayuresh Builders, by a Deed of Assignment dated 15th July, 1997, assigned their interest in the Agreements with the said Societies to Petitioner. 5. According to Petitioner, on account of the delay in completion of the project, the said project could be completed only in the previous year relevant to Assessment Year 2003-04. The total cost of the project was Rs.78,38,80,297/- while the amounts received by Petitioner from the members of the said Societies was Rs.78,90,03,258/-, thereby, leaving a surplus of Rs.51,22,961/-. According to Petitioner, the said amount of Rs.51,22,961/- was offered to tax in the previous year relevant to Assessment Year 2003-04 as per the completed contract method of accounting followed by it. According to Petitioner, Respondent No.1 accepted this position in his intimation date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the work in progress for Assessment Year 2000-01 was completed in the Assessment Year 2003-04, then, no addition should be made in Assessment Year 2000-01 as the income was offered for taxation in a later year. However, it was clarified that in the otherwise situation, Respondent No.1 was free to decide as per law. 9. According to Petitioner, Respondent No.1 thereafter by an order dated 29th December, 2011 erroneously observed that in Assessment Year 2000-01, the work of the said project was almost complete. Respondent No.1 has thus observed that in Assessment Year 2003-04 Petitioner has not offered any income in respect of the said two projects to tax as in the profit and loss account for the said year there was no sales or opening and closing work in progress. According to Petitioner, Respondent No.1 has therefore estimated 8% of the capital work in progress as on 31st March, 2000 being Rs.1,86,61,354/- as Petitioner s income upto that year. Petitioner aggrieved by the aforesaid Order dated 29th December, 2011 filed an Appeal before the Commissioner of Income Tax. 10. According to Petitioner, during the pendency of the appeal, impugned notices under Section 148 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case, the assessments for the Assessment Years 2001-02, 2002-03 and 2003-04 have been re-opened by issue of notice dated 19th January, 2012 under Section 148 which is beyond a period of six years from the end of the relevant Assessment Year. These notices issued for all the Assessment Years are thus beyond period of limitation prescribed under Section 149 of the Act. According to Respondents, limitation prescribed under Section 149 of the Act has no application because the notices have been issued to give effect to the findings and directions by the Tribunal in its Order dated 24th November, 2010. It would be therefore appropriate to reproduce the findings of the Tribunal, which read thus : 3. We have heard the rival submissions and perused the relevant material on record. The case of the Assessing Officer is that the assessee completed the contract substantially in the year in question and hence income should have been offered. It is noted that the Assessing Officer took into consideration the fact that the assessee did not offer any income in assessment years 1998-99 and 1999-2000. The contract was taken by M/s. Mayuresh Builders, the partner in the assessee-firm an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, contended that there was a possibility of the contracts getting completed in the assessment year under consideration and in the next year some new projects being taken up by the assessee. In the light of these facts it was contended that the factual matrix requires consideration as the Assessing Officer s end. We are agreeable with the view point canvassed by the learned Departmental Representative on the ground that if in the assessment year 1997-98 work in progress is more than Rs.60 crore as taken note of by the Tribunal and the assessee-firm took over the project as such from M/s. Mayuresh Builders, the work in progress in the instant year should have been more than that. However it is noted that the assessee had shown work in progress in this year at Rs.23.32 crores. Further in assessment year 2001- 2002 the work in progress has been shown at Rs.19.59 crore. In view of these facts, it appears that there is some confusion regarding the figure of work in progress vis-a-vis the project undertaken, which needs to be set right. In such a situation we get aside the impugned order and restore the matter to the file of A.O. for deciding as to whether the two projects referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r can give under s. 31. Under that section he can give directions, inter alia, under s. 31(3) (b), (c) or (e) or s. 31(4). The expression directions in the proviso could only refer to the directions which the Appellate Assistant Commissioner or other tribunals can issue under the powers conferred on him or them under the respective sections. Therefore, the expression finding as well as the expression direction can be given full meaning, namely, that the finding is a finding necessary for giving relief in respect of the assessment of the year in question and the direction is a direction which the appellate or revisional authority, as the case may be, is, empowered to give under the sections mentioned therein. The words in consequence of or to give effect to do not create any difficulty, for they have to be collated with, and cannot enlarge, the scope of the finding or direction under the proviso. If the scope is limited as aforesaid, the said words also must be related to the scope of the findings and directions . (Emphasis supplied) 16. The observations of the Tribunal in its order dated 24th November, 2010 that there appears to be some confusion with respect to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 1997-98 was Rs.36.78 crores, upto A.Y. 2000-01 was Rs.63.67 crores and upto A.Y. 2001-02 was only Rs.19.59 crores. It was contended by the departmental representative that there was a possibility of contracts getting completed in the assessment year under consideration and in the next year some new projects might have been taken by the assessee. It was also observed that the WIP for A.Y. 2000-01 would have been more than prior years, however the WIP shown for A.Y. 2000-01 under consideration was Rs.23.32 crores and upto A.Y. 2001-02 was Rs.19.59 crores only. In view of the confusion about the figures of WIP, the Hon ble ITAT had restored the issue to the file of the AO for deciding as to whether the two projects, referred to in the assessment order for the year under consideration were part of the work completed in assessment year 2003-2004 on which income was offered for taxation. If the work in progress for the current year at Rs.23.32 crores was carried over to subsequent years and the projects were complete in the assessment year 2003-2004 then no addition should be made in assessment year 2000- 2001 as the income has been offered for taxation in this year. In the otherwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch, 2014, the Revenue had filed the Appeal before the Income Tax Appellate Tribunal. The Tribunal while dismissing the Appeal by Order dated 30th April, 2019 has held : 9.7.4 Thus, as could be seen above that Rs.60.25 crores was the combined WIP as is existing in the books of accounts of Mayuresh Builders and the assessee firm as at 31.03.2000. This also stood explained by the assessee and it could not be controverted by learned DR. Then, the tribunal recorded in its order dated 24.11.2010 that in AY 2001-02 the WIP was shown at Rs.19.59 crores, which as could be seen from the above charge is the incremental WIP including expenditure incurred in previous year relevant to AY 2000-01 by the assessee which is recorded in books of accounts of the assessee firm. The incremental WIP during previous year relevant to AY 2001-02 was Rs.18,44,80,805/- while expenditure incurred during the year was Rs.1,14,42,835/- leading to sum total of Rs.19,59,23,640/- as is recorded in books of accounts of the assessee for the financial year ended 31.03.2001. The said sum of Rs.18,44,80,805/- recorded as incremental WIP included WIP of Rs.9,04,99,982/- transferred from the books of accounts of May ..... X X X X Extracts X X X X X X X X Extracts X X X X
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