TaxTMI 
TaxTMI 
TaxTMI 
2021 (7) TMI 1032
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....he IT Act. Subsequently, the case was selected for scrutiny under Computer Aided Scrutiny Selection (CASS) and notice under Section 143(3) of the IT Act was issued on 10.08.2012. In response to the same, the authorized representative of the petitioner had duly provided all the details called for by the Deputy Commissioner of Income Tax, Company Circle-VI(1), the predecessor of the respondent. The petitioner, vide letter dated 22.05.2014, had duly submitted the details pertaining to retention money more specifically, with respect to the change in Accounting Policy, which was further substantiated by Schedule XIII to the Notes of Account forming part of the computation of total income for the assessment year 2011-12. The petitioner had filed all the details called for by the respondent from time to time. It is only after considering the submissions along with the evidences placed on record, the respondent passed the scrutiny assessment order under Section 143(3) of the IT Act dated 30.03.2014. 3.The Assistant Commissioner of Income Tax, Corporate Circle 6(1), Chennai (for brevity "the ACIT") vide letter dated 17.01.2018, had requested certain clarification pertaining to the retentio....
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....ns dated 17.12.2018 before the respondent stating their objections for reopening the assessment proceedings under Section 147 of the IT Act. With respect to the reasons for reopening, the petitioner had duly submitted and provided their detailed explanations during the course of the scrutiny assessment proceedings. The petitioner submitted that the retention money amounting to Rs. 5,87,61,168/-was not in the nature of income till such time the contractual obligations are fully performed to the satisfaction of the customer by the petitioner. Therefore, charging the same to tax as work in progress is not correct as per law. These facts were duly discussed and explained during the course of the original scrutiny assessment under Section 143(3) of the IT Act by the petitioner and subsequently, accepted by the respondent. Additionally, the petitioner objected that they had provided all the documents and evidences during the course of the scrutiny assessment proceedings as well as while filing their response to the clarifications to the ACIT. 7.On going through the aforesaid objections, it is crystal clear that there is neither any jurisdiction of the authority, nor there are any merit....
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....r during the original assessment and the clarifications as well as the letter of the Chartered Accountants dated 25.02.2014 and the details given by the petitioner regarding change in Accounting Policy relating to retention money were all provided before the Assessing Officer at the time of original assessment and the Assessing Officer passed an assessment order under Section 143(3) of the IT Act on 31.03.2014. Thus, there is no other reason whatsoever to reopen the assessment, which is perverse and without jurisdiction. 10.The learned counsel for the petitioner is of an opinion that once the change in Accounting Policy relating to retention money has been placed before the Assessing Officer, who in turn, considered the same and passed assessment order, the reopening based on the same informations or materials, is nothing but change of opinion and cannot be construed as reason to believe. Thus, the respondent has no jurisdiction to invoke Section 147 of the IT Act and the writ petition is to be allowed. 11.The respondent filed a counter affidavit by stating that there was a scrutiny of the assessment order issued under Section 143(3) of the IT Act dated 31.03.2014 and certain cla....
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....er dated 13.05.2013, has stated that the company continues to follow percentage completion methods during the previous year. There is no change in the method of accounting during the assessment year 2011-12. However, as per Schedule-XIIIA1(c) of the Significant Accounting Policies in the Basis of Accounting, it is mentioned that 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 previous year. Thus, there is failure on the part of the assessee in disclosing full facts. There has been recording of reasons for reopening based on tangible material to come to the conclusion that there is escapement of income. 14.As per explanation 2(c) to Section 147 of the IT Act, the following shall also be deemed to be the case where income chargeable to tax has escaped assessment, viz., "where an assessment has been made, but - (i) income chargeable to tax has been under assessed; or (ii) such income has been assessed at too low a rate; or (ii....
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....s mind and taken a conscious decision on a particular matter. In this case, the Assessing Officer has recorded reasons for reopening on two issues one in respect of retention money and the other in respect of difference in profits 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 ongoing projects. In respect of difference in the profit admitted, the petitioner could not reconcile the loss worked out as per the profit and loss account and the revenue recognised on completed projects and ongoing projects as per percentage completion method. 18.In the reasons recorded by the Assessing Officer, it is clearly brought on record that there is failure on the part of the petitioner to disclose fully and truly all material facts necessary for assessment. While recording reasons, all the replies of petitioner in response to various notices were considered and it was noted that the petitioner has failed to disclose material facts necessary for assessment. As there is finding of failure on t....
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....unter affidavit filed by the respondent, the learned Senior Standing Counsel reiterated that the clarifications sought for from the assessee in proceedings dated 17.01.2018 itself would reveal that in view of the discrepancies and the new materials found by the authorities competent, they have instituted action under Section 147 of the IT Act. The reasons for reopening of the case of the writ petitioner were communicated in proceedings dated 14.12.2018 wherein, it is categorically stated that "there are new materials made available, which were not adjudicated by the Assessing Officer during the course of assessment and at the time of passing the assessment order under Section 143(3) of the IT Act". The informations collected by the Income Tax Department were analysed and based on the analysis, the reasons are furnished to the petitioner/assessee. The reasons communicated in the impugned proceedings dated 18.12.2018 would reveal that "the Assessing Officer was in possession of material in the form of audited balance sheet, computation of total income etc.," but the Assessing Officer has verified the information available on record, analysed the provision of the IT Act and arrived at....