TaxTMI 
TaxTMI 
2021 (11) TMI 713
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....f the Income Tax Act, 1961 (the Act) arising out of ITA No.60 (CTK) of 2001, disposed of by the Income Tax Appellate Tribunal, Cuttack Bench, Cuttack (ITAT) on 25th August, 2004 for the Assessment Year (AY) 1987-88. I.T.A. No.5 of 2005 is an appeal arising out of the same impugned order of the ITAT pertaining to AY 1988-89 and I.T.A. No.6 of 2005 is also an appeal arising out of the same impugned order of the ITAT pertaining to AY 1989- 90. 3. Admit. The following question of law is framed for consideration: "Whether the Department was correct in rejecting the method of accounting adopted by the Appellant-Assessee for the AYs in question while the Assessee's method of accounting for the immediate two succeeding AYs i.e. 1990-91 ....
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....e AY 1987-88. 8. The Assessee contended that the Contractor could not keep track of the supply, erection and profits because of the arrangements of payments by the Contractor either directly or through sub-contractors. To deduce profit, as per the accounting standard the Contractor had to follow either (a) completed contract method or (b) the percentage of completion method. 9. The Assessee adopted the "completed contract method" and the assessed the entire contract period of 5 years as one unit of assessment and apportioned them to 5 years. For 2 years i.e. 1987- 88 and 1988-89, the accounting years ended on 30th September, from 1989-90 onwards, ended on 31st March and for AY 1989-90, the period from 1st October, 1987 to 31st March, ....
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....s for the years 1987-88, 1988-89 and 1989-90 were set aside and remanded to the AO. 14. For the third time, the AO passed an assessment order on 22nd March, 1999. Again the net profit rate of 10% was applied and the taxable income was again worked out to Rs. 35,70,777/-. 15. For the second time, appeals were filed by the Assessee before the CIT (A). By an order dated 1st November, 2000, the CITA confirmed the assessment order and dismissed the appeals. 16. Thereafter, the Assessee went before the Income Tax Appellate Tribunal, Cuttack Bench, Cuttack (ITAT), which by the impugned order dated 25th August, 2004 dismissed the appeals. 17. The ITAT appears to have accepted the findings of the AO that the Assessee had been maintaining....
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....the plea of consistency in the approach to the acceptance of the Appellants-Assessee's accounts required to be followed. If the Assessee's accounts for AYs 1990- 91 and 1991-92 had in fact been accepted by the Department, there is reason why the accounts for the earlier AYs ought to have been rejected particularly since the Contract in question is spread over all 5 years and this pertain to the profit arising from such Contract. 21. The submission of the Assessee as regards the principle of consistency finds support in the decision of the Supreme Court in Commissioner of Income Tax v. Excel Wear (2013) 358 ITR 295 (SC) where the legal position in this regard was explained as under: "29. In Radhasoami Satsang Saomi Bagh v. Commis....
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....of the fact that strictly speaking res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. "On these reasonings in the absence of any material change justifying the Revenue to take a different view of the matter - and if there was no change it was in support of the assessee - we do not think the question should have been reopened....