TaxTMI 
TaxTMI 
2021 (10) TMI 238
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....lf of the respondent. 4. The first aspect to be seen, in a case where there is a challenge to a reopening of an assessment, is to ascertain as to whether there was an allegation that the assessee failed to fully and truly disclose all material facts and particulars at the first instance, when the assessment was completed. This is more so only in the case where the reopening is done beyond the period of four years as in the instant case. The assessee has filed the return of income on 27.09.2011 for the assessment year 2011-12 and thereafter, the case was selected for scrutiny and the scrutiny assessment was completed by order dated 31.03.2014. Thereafter, the Assessing Officer by letter dated 17.01.2018, sought for certain clarification. It is not clear under which provisions of law certain clarification was called for by the Assessing Officer after he has completed the scrutiny assessment under Section 143(3) by order dated 31.03.2014. 5. Be that as it may, the assessee through their Authorised Representative submitted a reply dated 12.02.2018, thereafter, nothing happened, and notice under Section 148 dated 29.03.2018 was issued to the assessee. The assessee sought for the reaso....
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....hat the assessee completes the job and if there are any defects. The right to receive the Retention money, accrues only after the defect liability period is over which generally 1 year after the execution of the work contract. Until the period is not completed, there is no right to receive the money. When there is no right to receive the money, the income does not accrue or arise to the assessee. Supreme Court has also recognized this principle and charges the Retention money to tax at the time of receipt only. If this has to be offered at the time of running job, it is not possible, since the quantum of how much amount will be known only after the defect liability period. The assessee has been consistently following the same method of accounting from the last 25 years. Hence, no change in the method of accounting is warranted as running job. The Retention money has already been offered to tax in the subsequent period. Hence, charging this to tax will not be in compliance with the Accounting Standard and Income-tax Act. The same income cannot be charged to tax, twice." 8. As mentioned above, after the above clarifications, the Assessing Officer did nothing further and the asse....
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....ssessee to make a full disclosure at the time of original assessment, nor there is any specific finding tangible material available with the Assessing Officer to reopen the assessment. 12. In the preceding paragraphs, we have noted that after completion of the assessment under Section 143(3) of the Act, the Assessing Officer has issued notice seeking certain clarifications. However, there appears to be no power vested with the Assessing Officer to seek such clarifications, as the Assessing Officer does not possess power under Section 154 of the Act. Nevertheless, the assessee has furnished the reply and the reply specifically stated that the retention money has already been offered to tax in the subsequent period. Hence, charging to tax will not be in compliance of the Accounting Standards and the provisions of the Act and the same income cannot be taxed twice. Further, the concept as to why the retention money is retained by the assessee was explained by stating that the retention money accrues only after the defect liability period is over, which is generally one year after the execution of works contract and until the project is not completed, there is no right to receive the m....
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....ention money retained by the principal contractor accrued to the assessee during the relevant assessment year for consideration. Accordingly, the order passed by the Tribunal was affirmed and the operative portion of the judgment reads as follows :- " The facts are not disputed 10 per cent of the retention money has not been received in respect of the relevant assessment year though the work has been completed. The assessee is entitled to receive the amount only after successful completion of work. In such circumstances, it cannot be said that 10 per cent retention money retained by the principal contractor accrued to the assessee during the relevant assessment year for consideration? Under the Income-tax Act, the income accrued or received by The assessee alone is taxable. This position is fortified by/the decision of the Supreme Court in the case of CIT v. Shoorji Vallabhdas and Co. [1962] 46 ITR 144 wherein it has been held as follows (page 148): "Income-tax is a levy on income. No doubt, the Income-tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the....