TMI Blog2021 (9) TMI 1456X X X X Extracts X X X X X X X X Extracts X X X X ..... tandalone basis; as it is, without any scope of further improvement at a latter stage by way of addition, deletion or substitution therein. We thus quote that to conclude that the impugned reopening has been rightly quashed by the CIT(A) as a mere change of opinion only. Revenue s appeal is dismissed. - ITA No. 1021/Hyd/2019 - - - Dated:- 7-9-2021 - Shri S.S. Godara, Judicial Member And Shri L.P. Sahu, Accountant Member For the Appellant : Shri Ashok Kardam (D.R.). For the Respondent : Shri P. Murali Mohana Rao. ORDER Per Shri S.S. Godara, J.M. : This assessee s appeal for Asst. Year 2010-11 arises from the Commissioner of Income Tax (Appeals)-4, Hyderabad s order dt.30.03.2019 passed in case No.10169/17-18/ACIT, Cir. 16(1)/CIT(A)-4/Hyd/18-19 in proceedings under Section 143(3) r.w.s 147 of Income Tax Act, 1961 ( the Act ). Heard both the parties. Case file perused. 2. The Revenue raises the following twin substantive grounds in the instant appeal : 2. Ld. CIT(A) erred in allowing the ground of the assessee pertaining to reopening of the assessment stating that the same on account of change of opinion when the Assessing Officer has not fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed during the initial assessment proceedings is invalid and bad in law as there is no new tangible material on hand afresh with the AO. Precisely placing reliance on these basic facts of the case, AR has agitated during appellate proceedings. The AR placed reliance on the following decisions to support of its views: Sirpur Paper Mills Ltd. V. ITO (1978)114 ITR 404(AP) Silver Oak Realty, ITA No.679/Hyd/2017 With regard to re-opening of the assessment already completed u/s 143(3) dt:27.12.2012, it is observed that there is no new material seen to be brought on record by the A.O. excepting that what is already found in the Revised Returns of Income and is found it be verified by the AO while completing the assessment originally. Thus, the assessment already completed was revised u/s 147 of the Act on 27.11.2017 u/s 143(3) r.w.s.147 of the Act determining the net income at Rs. 83,95,14,724/-. 8.1 Further, the AR of the appellant has contended that on the maintainability of 148 proceedings with the following specific grounds: Assessee s objections has raised before AO during the pending of 148 proceedings was never answered by AO with a speaking order on the valid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al from ground nos. 9 to 12 as detailed in appellant submissions dated 18.12.2018. These detailed submissions are extracted as under as put-forth by the appellant. 8.5 On the incorrectness of disallowance made on reversal of revenue recognized in earlier years has brought out in the P L Account of this assessment year which reads as under along with the supporting Profit Loss Account. Profit Loss account for the year ended March 31, 2010. sch March 31,2010 March 31, 2009 II. Income 87,52,73,452 157,44,46,961 Less: Reversal on account of cancellation an price revision 113,19,93,808 - (25,67,20,356) 157,44,46,961 Other Income 13 7,65,78,820 69,36,618 TOTAL (18,01,41,536) 158,13,83,579 With rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (25,67,20,356) 157,44,46,961 Other Income 13 7,65,78,820 69,36,618 TOTAL (18,01,41,536) 158,13,83,579 With regard to the Reversal on account of cancellation and price revision the Company 69,36,618 has given a note vide Ref-Note II(3) of Sch. 18 the same is reproduced here for your kind perusal. The worldwide economic recession and an impact on the property industry in the country. Added to this, the local factors reduced the demand for the property. To overcome this, the company revised its marketing strategy which included reduction in the property prices, which was extended to its existing customers too, subject to some deliverables by the customers. For the current year the revenue shown is net of cancellations. Based on support of its Holding company, the company 1s confident of completing the project in due course for which necessary finances are being arranged, c) From the above clarification note of statutory auditor it is evident that Price calcula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As could be seen from the above, there is a fall in rate from Rs.4,289/- in 2007-08 to Rs.3,187/- in 2010-11. The average rate difference is about Rs.1,102/-. Since there is steep fall in the selling price the loss accrued. Because of recording revenues at higher rate the difference is reduced from the gross revenues as loss on review of the prices, in the P L A/c. 8.8 In view of the above recasting of P L Account by duly accounting the above effect and recognizing the revenue on 432 flats as per prudent accounting principles read with percentage completion method followed by the appellant. During the Financial year 2009-10, the company recognized revenue on 432 flats amounting to Rs. 87,52,/3,452/- and out of which Rs. 71,01,51,731 is due to increase in % of completion from 41.42% to 58.87% and Rs. 16,51,21,721/- is due to the current year additions. During the financial year s 2007-08 and 2008-09, the appellant has recognised revenue on 550 flats aggregating to Rs. 2,86,27,44,961/-. Party-wise breakup of the revenue was verified. Because of above economic recession, the appellant has reversed the revenue which is already recognized as revenue in the previous F.Y s i.e., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the appellant has reversed the revenue which is already recognized as revenue in the previous F.Y s i.e., 2007-08 2008-09 amounting to Rs. 113,19,93,808/-. The break-up of the same is as under: This proves that to this extent it was already recognized by adopting original value of contract as existing in the AY 2008-09 when the real estate market was in upward swing. Now, the price being revised during the pending of the project before final conclusion of the sale, the revised price needs to be adopted to arrive at relevant revenues recognition as applicable to relevant assessment years. Considering this fact the same amount as applicable for reversal on account of offering the same as income the same needs to be reversed to the extent to reflect the true incomes of the appellant as qualified in the auditor report of this assessment year 2010-11. Hence, the price revision effect stands duly corrected in this assessment year as applicable as prudent accounting norms for arriving at correct picture of income and expenditure of the appellant as per percentage completion method. Hence, the appellant claim on merits on this issue of price revision adjustments as made in P L Accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of reversal of revenue on account of price revision/cancellation is not correct and hence directed to be deleted. 4. We have heard rival pleadings and perused the case file. We note first of all that the Assessing Officer recorded the following reasons for forming his opinion that the assessee s taxable income had escaped assessment : it is gathered from the information available with this office that the assessee was debited an amount of Rs.113,19,93,808/- towards Reversal on account of cancellation and price revision; and finally reported a book loss of Rs.38,28,51,371/-. The reduction of Rs.113,19,93,828/- towards Reversal on account of cancellation and price revision from the Profit and Loss Account for the year ended 31.03.2010 is irregular, the same need to be brought to tax. In view of the above, I have reason to believe that income has escaped assessment as per the provisions of section 147 of the IT Act. 5. There is hardly any dispute that we are in Assessment Year 2010-11 wherein the Assessing Officer had framed his section 143(3) regular assessment on 27.12.2012 followed by recording of the foregoing reasons culminating in issuance of section 148 noti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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