TaxTMI 
TaxTMI 
TaxTMI 
2013 (11) TMI 809
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....,430/- as against the returned income of Rs.31,33,659/-. Consequently, the assessment was reopened by issue of notice u/s 148 on 5.2.2007, purportedly, in pursuant to the show cause notice issued u/s 263 by the CIT as well as the revision order passed u/s 263 on 19.2.2007 for the AY 2003-04 in the case of the assessee. In response to the notice u/s 148, the assessee filed return on 7.3.2007 showing the total income of Rs. 33,40,430/-. The Assessing Officer completed the assessment u/s 143(3) r.w.s 147 on 31.12.2007 determining the total income at Rs. 36,56,588/-. 3.1 The assessee challenged the action of the Assessing Officer including the validity of reassessment before the CIT(A). The CIT(A), though granted relief to the assessee with respect to the issue of addition on account of method of accounting and rental income which was the basis of reopening; however, the objection of the assessee against validity of the notice u/s 148 was rejected by the CIT(A). The assessee has filed this appeal raising the ground of validity of reopening u/s 148. 4. Before us, the ld AR has submitted that reasons recorded in the impugned order passed u/s. 143(3) r.w.s. 147 the Assessing Officer has....
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....n method of accounting and accordingly, certain percentage of profit is estimated in respect of direct expenditure incurred for various projects and the gross profit is offered for tax in the respective years. The said method of accounting which has been consistently followed by the assessee was accepted by the Assessing Officer in the original assessment as well as for the AY 2002-03 and 03-04. He has further submitted that only because of the order u/s 263, the Assessing Officer reopened the assessment on the ground of method of accounting and further on the ground of not showing the rental income from bungalows. 4.3 Further, it was submitted that the Bungalow at Vashi has been used for the purpose of the business as the same has been used as Guest House and office of the assessee firm. The first and second floor of the house is used as Guest House for the use of the partners and employees of the assessee company. The ground floor is used as office of the assesse company. Since the building is occupied by the assessee for the purpose of its business there is no annual value can be estimated u/s 22. 4.4 The ld AR has pointed that the assessee has declared the rental income in th....
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....sions of section 22 and 23 of the Act, the assessee was required to offer rental income for taxation on a notional basis. The reasonable rate of return on investment in these two Bungalows would be 12%. The Annual Rental Value @ 1% on the investment in these two Bungalows of Rs.92,57,293/- works out to Rs. 11,10,875/-. After allowing standard deduction u/s 24(a) of the Act 30% of the ALV of Rs. 11,10,875/- the income from House Property would work out to Rs. 7,77,613/- (11,10,875-3,33,262) Income of Rs. 7,77,613/- has, therefore, escaped assessment. Out of the seven projects in hand, two projects viz Sai Sagar at Plot No. 69, Sector 15, CBD Belapur and Sal Sangam at Plot No. 85, Sector 15, CBD Belapur, were completed during the year end the entire work in progress amounting to Rs,5,46,43,396L and Rs. 5,80,48,241/- respectively was debited to the P & L account. The assessee has declared total sale proceeds of Rs. 18,74,92,324/- in respect of the completed projects as under: a) Sai Sagar Rs. 9,05,33,165 b) Sal Sangam Rs. 8,75,53,013 c) Misc Charges Rs. 62,93,253 d) Extra Amenities Rs. 23, 14,943 e) Parking charges Rs. 7,97,950 Rs.18,74,92,324 The tota....
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....e Assessing Officer has duly recorded and acknowledged the facts that the assessee is declaring profit of work-in-progress method. Therefore, undoubtedly there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment on this issue. 5.3 Even other wise, the Assessing Officer has not whispered about the non disclosure of material facts by the assessee with respect to this issue. Further, the Commissioner of Income Tax(Appeals) has reversed the reassessment of the income on this issue in paras 3.1 & 3.2 as under: "3.2 In view of this, even though department has not accepted the decision of the Hon'ble Tribunal and has preferred an appeal before the Hon'ble High Court, till the time the decision of the Hon'ble Tribunal Mumbai is either set aside or cancelled by the Hon'ble High Court Mumbai, it is to be held that the order is final and is to be followed by the lower authorities. The judicial discipline does not permit a divergent view on the matter and keeping this in mind regarding the issue of method of accounting adopted by the appellant, the action of the Assessing Officer based on the findings of the Ld. C....
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.... been decided by this Tribunal in favour of the assessee, then, reopening on this issue is not sustainable as the same is on the basis of change of opinion and in contravention to the proviso to sec. 147. 5.5 As regards the non offering of rental income is concerned, the Assessing Officer has recorded in the reasons that the assessee has shown the bungalows in question in the balance sheet and no new material or information came to the knowledge of the Assessing Officer after the completion of the assessment u/s 143(3). The Assessing Officer accepted the fact that the assessee has already shown the rental income in the P&L account. Therefore, the reasons regarding reopening on this issue is vague so far as the rental income in respect of the bungalow at Belapur has been duly offered to tax by the assessee as the same was shown as income in the P&L account. Thus, the reasons for reopening on this issue is contrary to the fact that has already existed on record. 5.6 Further, the second bungalow at Vashi was claimed by the assessee used as Guest House was not found false by the Assessing Officer; but the Assessing Officer treated the said bungalow as self occupied and computed ALV u....
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....on order passed u/s 263 for the Assessment Year 2003-04, the Tribunal has adjudicated this issue in favour of the assessee. The CIT(A) has decided this issue by following the order of the Tribunal in paras 3.1 and 3.2 as under: 3.1 From the perusal of this order, it is seen that the Hon'ble ITAT, Mumbai has upheld the method of accounting followed by the appellant and cancelled the order u/s 263 of the I T Act for Assessment Year 2003-04. As The Hon'ble ITAT Mumbai is the jurisdictional Tribunal, I have no option, but to respectfully follow the directions and decisions of the Hon'ble ITAT on the basis of various decisions on judicial discipline as in the following cases: 1. Agrawal Warehousing & Leasing Ltd. vs. CIT, 257 ITR 235(MP) 2. Bank of Baroda vs. H. C. Shrivastava, 256 ITR 385 (Born) 3. Shri Govindram Seksaria Charitable Trust vs. ITO & Ors, 168 1TR 387 (MP) 3.2 In view of this, even though department has not accepted the decision of the Hon'ble Tribunal and has preferred an appeal before the Hon'ble High Court, till the time the decision of the Hon'ble Tribunal Mumbai is either set aside or cancelled by ....