IN INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI Before Shri Sanjay Garg, Judicial Member, and Shri Ashwani Taneja, Accountant Member ITA NO.3110/Mum/2016 Assessment Year: 2011-12 Shri Rajendra Ghag, Pr. CIT -20, 105, B-Win, Sea Flama, Piramal Chambers, Dosti Flamingo, T.J. Road, Lalbaugh Vs. Sewree(W) Mumbai Mumbai-400015 (Appellant) (Revenue) P.A. No. AEUPG9093B Appellant by Shri Girish Dave & Smt. Makhija, (AR) Revenue by Shri Sunil K. Jha (CIT-DR) Date of Hearing : 06/10/2016 Date of Order: 06/10/2016 ORDER Per Ashwani Taneja (Accountant Member): This appeal has been filed by Assessee against order of Ld. Commissioner of Income Tax, Mumbai-20,{(in short CIT}, dated 28.03.2016 u/s 263 for Assessment Year 2011-12 on following grounds: 2 Rajendra Ghag 1.The Learned Pr. CIT has erred in holding that order passed by Assessing Officer u/s. 143(3) was erroneous & prejudicial to interest of revenue. Without prejudice to above, 2. appellant submits that Learned Pr. CIT has erred in not appreciating that Assessing Officer while completing assessment has taken one of possible views which is duly supported by higher judicial Forums including jurisdictional High Court & therefore order passed by assessing Officer can neither be held as erroneous nor as prejudicial to interest of revenue. appellant craves leave to add, amend, alter and /or vary any of grounds 3.at time or before hearing of this appeal. 4. appellant therefore prays that order passed by Pr. CIT may please be set aside. 2. During course of hearing, arguments were made by Shri Girish Dave & Smt. Makhija, Authorised Representative (AR) on behalf of Assessee and by Shri Sunil K. Jha, Departmental Representative (CIT-DR) on behalf of Revenue. 3. During course of hearing Ld. Senior Counsel vehemently argued case on behalf of assessee and brought to our notice that in this case AO had examined all aspects during course of original assessment proceedings and thereafter original assessment order u/s 143(3) dated 18.03.2014 was passed by AO. Ld. CIT has indeed over looked fact that all details and evidences in regard to issue raised by him have already been considered by AO. Further, order passed by Ld. CIT may create confusion in mind of AO and it may lead to assessment of same income twice i.e. in impugned year as well as in subsequent year. Under these circumstances, it was 3 Rajendra Ghag requested that impugned order of Ld. CIT passed u/s 263 should be quashed. It was alternatively prayed that to render justice to both parties, directions given by Ld CIT should be suitably modified so as to avoid double taxation. 3.1. Per contra, Ld. DR relied upon orders of lower authorities. It was fairly submitted by Ld. DR that it is not intention of Revenue to make double taxation of same income. 3.2. We have gone through orders passed by lower authorities and also heard submissions made by Ld. Senior Counsel of assessee as well as Ld. CIT-DR appearing on behalf of Revenue. 3.3. brief background of this issue is that assessee is individual and engaged in business of running event management company in name and style of M/s. Royal Services. During course of original assessment proceedings carried out u/s 143(3), AO noted that as per TDS details assessee had contract receipts of Rs.1,73,38,399/- whereas assessee had accounted same to extent of Rs.1,07,56,680/- only and therefore, he asked assessee that why not difference of Rs.65,81,719/- should be brought to tax. In response, assessee submitted to AO that full amount was not accounted for during year as total project was not completed and amount of difference represented amount of advance receipts towards total project which was completed in subsequent years. But, with view to avoid litigation, assessee offered AO to bring to tax net profit @ of 15% of Rs.65,81,719/- i.e. Rs. 9,87,258/- to 4 Rajendra Ghag tax as additional income for impugned year. AO accepted offer of assessee and made addition of Rs.9,87,258/- and completed assessment accordingly. 3.4. Subsequently, Ld. CIT issued notice u/s 263 on ground that whole amount of difference of Rs.65,81,519/- should have been added to total income of assessee for reason that project was completed and all expenses have been debited during year under consideration and he directed AO to bring to tax entire amount of Rs.65,81,519/- on account of suppression of receipts, instead of restricting same to 15% of receipts. Ld. senior counsel objected to direction of Ld. CIT mainly on ground that project was not completed in year under consideration and therefore total expenses relating to project were not booked during year under consideration and that remaining amount has already been included in its income by assessee in subsequent years. 3.5. We have carefully considered submissions of Ld. Senior Counsel as well as facts of this case brought before us. It is noted that crucial facts in this case are that whether project was completed in year under consideration or not and whether entire expenses related to project were debited in year under consideration or not. It appears that AO ought to have made this inquiry so as to bring complete facts on record. Thus, to this extent we find that Ld. CIT is justified in making revision of order. But, Ld. CIT has also not done complete justice to this case. He has also not taken any pain to verify whether project was completed in this 5 Rajendra Ghag year or not and without verifying this crucial fact he has asked AO to bring to tax entire amount during year under consideration. If contention of Ld. Senior Counsel that remaining amount has already been brought to tax in next year is correct, then it shall lead to double taxation of same income, which is not permitted under income tax law. Therefore, while partly sustaining order of Ld. CIT we modify his directions. AO is directed to verify correct facts in this regard while making assessment u/s 143(3) in pursuance to order u/s 263. In case, project is not completed in this year for which impugned advance of Rs. 65,81,719/- has been received during year under consideration and if this amount has been included in income by assessee in next year, then it shall not be included in income of impugned year. Primary burden is upon shoulders of assessee to show that impugned amount of advance has already been included in income of subsequent years. AO shall give adequate opportunity of hearing to assessee and assessee shall extend requisite cooperation to AO by filing details and evidences as may be required by AO as per law and facts of this case. Our view is supported by judgment of Hon ble Supreme Court in case of CIT v. Excel Industries Ltd. 358 ITR 295. relevant portion of same is reproduced hereunder: 32. Thirdly, real question concerning us is year in which assessee is required to pay tax. There is no dispute that in subsequent accounting year, assessee did make imports and did derive benefits under advance licence and duty entitlement pass book 6 Rajendra Ghag and paid tax thereon. Therefore, it is not as if Revenue has been deprived of any tax. We are told that rate of tax remained same in present assessment year as well as in subsequent assessment year. Therefore, dispute raised by Revenue is entirely academic or at best may have minor tax effect. There was, therefore, no need for Revenue to continue with this litigation when it was quite clear that not only was it fruitless (on merits) but also that it may not have added anything much to public coffers. 3.6. Thus, keeping in view, facts of case and legal position as discussed above we sustain order of Ld. CIT subject to modifications given above. AO is directed to follow our aforesaid directions while passing fresh assessment order and shall also keep in view judgment of Honb le Supreme Court as mentioned above. Thus, with these directions appeal of assessee is partly allowed. 4. In result, appeal of Assessee is partly allowed. Order was pronounced in open court at conclusion of hearing. Sd/- Sd/- (Sanjay Garg ) (Ashwani Taneja) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated : 06 /10/2016 Copy of Order forwarded to : 1. Appellant 2. Respondent. 3. CIT, Mumbai. 4. / CIT(A)- , Mumbai 5.DR, 7 Rajendra Ghag ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) , ITAT, Mumbai Rajendra Ghag v. Pr. CIT-20, Mumbai