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TMI Blog2021 (9) TMI 1456X X X X Extracts X X X X X X X X Extracts X X X X ..... he reopening is bad in law without appreciating the fact that there is failure on the part of the assessee to disclose fully and truly, the material facts necessary for the assessment done originally u/s. 143(3) of the Act. 4. Ld. CIT(A) erred in admitting the additional evidences / submissions without remanding to the Assessing Officer which is in contravention to the provisions of Rule 46A." 3. We next note that the CIT(A)'s detailed discussion quashing the impugned reopening as well as granting relief to the assessee on merits allowed as under: 8. I have considered the assessment order, grounds of appeal, AR's submissions and AO's submissions in this regard, The issue of re-opening of assessment in legal front of the case is concerned, it is observed from the Returns of Income filed initially admitting loss of Rs.29,24,79,054/- and in the two Revised Returns of Income were filed on 27.09.2011 declaring loss of for the year under appeal. Subsequently, assessment was found to be made u/s 143(3) on 27.11.2012. While making the assessment, it is observed that the AO has already examined the issue for reversal on account of can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arly arrived at valid: conclusion in volving that the Proceedings are valid as it immence from the fresh information/findings. * In the absence of AO's specific rebuttal to the assessee's objection reassessment proceedings are clearly change of opinion and the same information which is submitted during the original assessment after examining of the relevant information. In the light of the above, the AR contends that as AO has no valid reasoning to form a reasoned opinion, which is essential ingredient of 148 proceedings, clearly proves that the proceedings are invalid and bad in law. The AR also contends that the issue having been thoroughly examined during original assessment with specific querry on the same and the reply was accepted and hence no interference in the original assessment is called for in the guise of re-assessment proceedings by wrong invocation of 148 proceedings in the name of pending audit objection. 8.2 On perusal of above contentions of AR and verification of facts on record no apparent deviation is noticed on the AR contentions. It is a fact on record that the appellant objected the re-assessment proceedings during pendency of re-assessment by complyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es by the customers. For the current year the revenue shown is net of cancellations. Based on support of its Holding company, the company is confident of completing the project in due course for which necessary finances are being arranged." 8.6 After careful examination of appellant grounds vis-a-vis facts on record on merits the following legible and logical deductions are noticeable: (a) It is a fact on record that assessee following percentage completion method regularly and as admitted income in earlier years on such method by duly recognizing the revenue on contract sales and relevant advances as per progress of the construction work of the project. This proves that the assessee has income on proportionate basis of percentage completion as applicable to the project as a going concern of AY 2008-09 and 2009- 10. (b) During the AY 2010-11 as per the books of account/ Auditor Report, the appellant has substantiated the contention that the reversal on account of cancellation price revision from the revenue has been undertaken as evidenced from the P&L Account of AY 2010-11 with Supporting clarification note on the reversal of revenue on account of cancellation and price rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpletion method regularly followed by the appellant for arriving true revenue generated for the year under appeal. Accordingly, the appellant strongly contended that the changed estimates are used in determination of the amount of revenue and expenses recognized in the Statement of Profit and loss account in the period in which the change is made and in subsequent period. During the F.Y 2009-10, the cancellations amounting to Rs.72,43,48,737/- happened due to unexpected economical condition as well as the case filed by Wakf Board against the appellant. Whereas the price revision i.e., decrease in the price was made by the appellant in order to retain the customers, which resulted in revenue reduction amounting to Rs.40,76,45,071/-. Loss is occurred because of the decrease in the selling price of Flats. The position of the selling price for the 4 years period is as follows: Sl. No. Financial year Selling Price & range Rs. Average Price 1 2007-08 3,900 to 4,500 4,289 2 2008-09 2,900 to 4,750 4,272 3 2009-10 3,000 to 3,200 3,102 4 2010-11 3,000 to 3,500 3,187 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 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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., 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were made by the AO. Hence, on the similar analysis of accounting as above as in the Issue of price revision, the effect of cancellation needs to be reversed in this assessment year to that extent to reflect true income and expenditure of appellant for the year under appeal as a going concern following percentage completion method. Accordingly, appellant succeeds on these grounds for revenue reversal involving cancellation adjustments to the extent of Rs.72.43 crores. Asa result, the appellant grounds of appeal on this issue are allowed on merits notwithstanding technical grounds on which appeal was allowed above. To sumup, the AO's action in reopening of assessment was bad in law and also the addition of Rs.113,19,93,808/- made on account 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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