EASTERN OVERSEAS CORPORATION, MUMBAI v. DCIT RG 17()2), MUMBAI

ITA 5752/MUM/2012 | 2005-2006
Pronouncement Date: 19-11-2014

Appeal Details

RSA Number 575219914 RSA 2012
Assessee PAN AAAFE0602J
Bench Mumbai
Appeal Number ITA 5752/MUM/2012
Duration Of Justice 2 year(s) 2 month(s) 4 day(s)
Appellant EASTERN OVERSEAS CORPORATION, MUMBAI
Respondent DCIT RG 17()2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 19-11-2014
Appeal Filed By Assessee
Bench Allotted H
Tribunal Order Date 19-11-2014
Date Of Final Hearing 28-08-2014
Next Hearing Date 28-08-2014
Assessment Year 2005-2006
Appeal Filed On 14-09-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH MUMBAI JH FOT; IKY JKO] U;KF;D LNL; JH FOT; IKY JKO] U;KF;D LNL; JH FOT; IKY JKO] U;KF;D LNL; JH FOT; IKY JKO] U;KF;D LNL; OA OA OA OA JH JH JH JH MH D:.KKDJ JKO MH D:.KKDJ JKO MH D:.KKDJ JKO MH D:.KKDJ JKO] YS[KK LNL; ] YS[KK LNL; ] YS[KK LNL; ] YS[KK LNL; DS LE{K DS LE{K DS LE{K DS LE{K BEFORE SHRI VIJAY PAL RAO JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO ACCOUNTANT MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 4976/MUM/2010 2007-08 M/S EASTERN OVERSEAS CORPORATION PO BOX 6666 JOSEPHINE GR. FLOOR 44 ST ANDREWS RD. BANDRA (WEST) MUMBAI 400 050. ADDL CIT RANGE 17(2) MUMBAI. 5752/MUM/2012 2005-06 M/S EASTERN OVERSEAS CORPORATION PO BOX 6666 JOSEPHINE GR. FLOOR 44 ST ANDREWS RD. BANDRA (WEST) MUMBAI 400 050 PAN :- AAAFE0602J . DEPUTY COMMISSIONER OF INCOME TAX 17(2) 4 TH FLOOR PIRAMAL CHAMBERS MUMBAI - 400 012. ORDER PER VIJAY PAL RAO JM THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAIN ST THE ORDERS OF CIT(APPEALS) DATED 30.03.2010 AND 19.07.2012 FOR THE A .Y. 2007-08 AND 2005-06 RESPECTIVELY. ASSESSEE BY SHRI MILIND SAHASRABUDH REVENUE BY SHRI. K. C. PATNAIK DATE OF HEARING 20.10.2014 DATE OF PRONOUNCEMENT 19-11-2014 M/S EASTERN OVERSEAS CORPORATION 2 | P A G E 2. BRIEF FACTS EMERGING FROM THE RECORD ARE THAT TH E ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF HYDRO ELECTRIC POWER PROJECT. THE ACTIVITY OF THE ASSESSEE ALSO INCLUDES SUPPLY OF EQUIPMENTS THEIR E RECTION TESTING AND COMMISSIONING OF HYDRO ELECTRIC POWER PROJECT. IN S OME OF THE CASES THE CONTRACT ALSO INCLUDES THE 12 MONTHS MAINTENANCE AND OPERATION AFTER COMMISSIONING AND FINAL TESTING AND APPROVAL THEREOF BY THE GOVERNMENT AGENCIES. THE ASSESSEE HAS BEEN FOLLOWING THE COMP LETED CONTRACT METHOD OF ACCOUNTING FOR THE INCOME FROM SUCH HYDRO ELECTRIC POWER PROJECTS SINCE 1989 AND THIS METHOD HAS BEEN ACCEPTED BY THE DEPARTMENT WH ILE COMPLETING THE ASSESSMENT. DURING THE ASSESSMENT PROCEEDINGS FOR T HE A.Y. 2007-08 THE ASSESSING OFFICER HELD THAT THE TWO PROJECTS NAMELY KAU TLABUNG (KP) AND TUI-PUNGLUI (TP) PROJECTS UNDERTAKEN BY THE ASSESSEE FOR GOVERNMENT OF MIZORAM WERE COMPLETED DURING THE F.Y. 2004-05 AND THEREFORE THE INCOME RELATING TO THESE TWO PROJECTS HAS TO BE TAXED IN THE A.Y. 2005- 06. THE ASSESSING OFFICER CONCLUDED THAT THERE IS A POSTPONEMENT OF OFFERING OF TAXABLE INCOME TO TAX BY THE ASSESSEE AND THE INCOME RELATING TO THE F.Y. 2005-0 6 HAS BEEN BROUGHT TO A.Y. 2007-08. ACCORDINGLY THE ASSESSING OFFICER FRAMED TH E ASSESSMENT U/S 143(3) FOR THE A.Y. 2007-08 AND ASSESSED THE TOTAL INCOME OF THE ASSESSEE FROM THESE TWO PROJECTS AND TAXED ON PROTECTIVE BASIS. CONSEQUENTLY THE ASSESSING OFFICER RE- OPENED THE ASSESSMENT FOR THE A.Y. 2005-06 AND ASSESS ED THE INCOME FROM THESE TWO PROJECTS TO TAX ON SUBSTANTIVE BASIS. 3. THE ASSESSEE CHALLENGED THE ACTION OF ASSESSING O FFICER IN SHIFTING THE INCOME OFFERED FOR THE 2007-08 TO 2005-06 AS WELL AS VALIDITY OF REOPENING OF ASSESSMENT FOR A.Y. 2005-06. THE CIT(A) DID NOT ACCE PT THE CONTENTION OF THE ASSESSEE AND UPHELD THE ACTION OF ASSESSING OFFICER W ITH THE DIRECTION THAT WHEN THE RELEVANT INCOME IS ASSESSED FOR THE A.Y. 2005-0 6 THE SAME AMOUNT SHOULD BE M/S EASTERN OVERSEAS CORPORATION 3 | P A G E DELETED FROM THE ASSESSED INCOME FOR THE A.Y. 2007-08 . THUS THE ASSESSEE RAISED FOLLOWING GROUNDS FOR THESE TO ASSESSMENT YEARS.:- GROUNDS RAISED FOR A.Y. 2007-08:- 1. THE LEARNED CIT (A) ERRED IN HOLDING THAT THE HYDRO ELECTRICITY PROJECTS AT KAU TLABUNG AND TUI-PUNGLUI ARE COMPLETE IN THE AY 2005 -06 AND IN CONSIDERING THE INCOME OF RS 10 62 19 524/- ACCRUING FROM THESE PROJECTS AS TAXABLE IN A Y 2005 -06 . HE OUGHT TO HAVE APPRECIATED THAT YOUR APPELLANT HA D BEEN CONSISTENTLY FOLLOWING THE COMPLETION OF PROJECT ME THOD FOR ACCOUNTING FOR INCOME FOR THE HYDRO-ELECTRIC PROJEC TS UNDERTAKEN BY THEM AND HENCE THE INCOME HAD ACCRUED IN THE FINANC IAL YEAR 2006- 07 RELEVANT TO A.Y. 2007-08 DURING WHICH THESE PROJ ECTS WERE COMPLETED AND SUCH INCOME WAS OFFERED FOR TAX BY YO UR APPELLANT IN THE SAID YEAR ACCORDINGLY. FURTHER HE OUGHT TO HAVE APPRECIATED THAT MERELY BE CAUSE THERE ARE NO SUBSTANTIAL RECEIPTS FROM THE SAID PROJECTS FOR PAST COUPLE OF YEARS DOES NOT NECESSARILY MEAN THAT THE PROJECTS W ERE COMPLETE IN THE A.Y.2005-06 ONLY. NEVERTHELESS FOLLOWING PAYMEN TS HAVE BEEN RECEIVED BY THE APPELLANT FROM GOVERNMENT OF MIZORAM FOR TUI-PUNGLU I PROJECT FOR ERECTION TESTING COMMISSIONING DURING THE YEAR OF COMPLETION LE.FINANCIAL YEAR 2006-07 ON 06-06-2006 RS 393029.00 ON 25-08-2006 RS. 946009.00 YOUR APPELLANT HUMBLY PRAYS THAT THE TREATMENT GIVE N BY YOUR APPELLANT FOR THE INCOME FROM THE SAID PROJECTS AS PER THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY YOUR APPELLANT BE ACCEPTED. 2 WITHOUT PREJUDICE IT IS HUMBLY SUBMITTED THAT THE LE ARNED CIT (A) ERRED IN DIRECTING THAT THE SAID INCOME FROM HYDROE LECTRIC PROJECTS BE ASSESSED PROTECTIVELY TILL THE PROCEEDINGS UNDER SECTION 147 ARE CONCLUDED FOR A Y 2005-06. HE OUGHT TO HAVE APPRECIATED THAT THE REOPENING OF A SSESSMENT U/S 147 OF THE I.T.ACT CANNOT BE DIRECTED IN THE APPELLATE PROCEEDINGS OF SOME OTHER ASSESSMENT YEAR. 3. WITHOUT PREJUDICE IT IS HUMBLY SUBMITTED THAT IF THE LEARNED CIT (A) M/S EASTERN OVERSEAS CORPORATION 4 | P A G E CAME TO THE CONCLUSION THAT THE HYDRO ELECTRICITY PROJE CTS AT KAU TLABUNG AND TUI- PUNGLUI ARE COMPLETE IN THE A Y 20 05-06 AND THAT THE INCOME OF RS 10 62 19 524/- ACCRUING FROM THESE P ROJECTS AS TAXABLE IN AY 2005-06 THEN AS A LOGICAL END TO THIS CONCLUSION HE OUGHT TO HAVE DELETED THE SAID INCOME FROM THE TAXAB LE INCOME OF AY 2007-08. HE OUGHT TO HAVE APPRECIATED THAT ONLY THE INCOME ACCRU ING IN THE RELEVANT PREVIOUS YEAR CAN BE TAXED IN ANY ASSESSMEN T YEAR ACCORDING TO THE PROVISIONS OF THE IT ACT 1961. 4. THE LEARNED CIT (A) ERRED IN HOLDING THAT THE INCOM E FROM LIKIMRO REVIVAL PROJECT ACCRUED IN THE A Y 2007-08 . HE OUGHT TO HAVE APPRECIATED THAT THE SAID INCOME OF RS 3 08 35 439/- IS ALREADY SHOWN BY YOUR APPELLANT AS INCOME OF A Y 2008-09 AND PREPONING THE ACCRUAL OF INCOME FROM A Y 2008-09 TO A Y 2007-08 WOULD AMOUNT TO DOUBLE TAXATION OF INCOME RESULTING IN GRA VE INJUSTICE AND FINANCIAL LOSS TO YOUR APPELLANT. GROUNDS RAISED FOR A.Y. 2005-06:- 1 THE REOPENING OF THE ASSESSMENT FOR THE ASSESSME NT YEAR 2005-06 BE KINDLY DECLARED TO BE BAD AT LAW AND ASSESSMENT ORDER PASS ED ON THE BASIS OF SUCH ILLEGAL REOPENING BE KINDLY SET ASIDE AS NON-EST. 2. IN ADDITION/ ALTERNATE; THE ACTION OF APPELLANTS IN OFFERING THE INCOME OF THE KT AND TP PROJECTS TO TAX IN THE ASSESSMENT YEAR 20 07-08 MAY KINDLY BE UPHELD AND THE ACTION OF ASSESSING OFFICER IN CHARG ING THE SAID INCOME TO TAX IN THE ASSESSMENT YEAR 2005-06 BE KINDLY TREATED AS ERRONEOUS AND BE KINDLY DECLARED TO BE INCORRECT 4. FIRST WE TAKEN UP THE ISSUE OF VALIDITY OF RE-OP ENING OF ASSESSMENT FOR A.Y. 2005-06. THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMIT TED THAT THE ORIGINAL ASSESSMENT FOR A.Y. 2005-06 WAS COMPLETED U/S 143(3) WHEREIN THE ASSESSING OFFICER ACCEPTED THE FACT THAT THESE TWO PROJECTS WE RE NOT COMPLETED DURING THE SAID YEAR. THE LD. AUTHORIZED REPRESENTATIVE HAS POI NTED OUT THAT WHILE COMPLETING THE ASSESSMENT U/S 143(3) FOR THE A.Y. 2 005-06 THE ASSESSING OFFICER DISALLOWED THE TRAVELLING EXPENSES ON THE GROUND THAT THESE PROJECTS WERE NOT COMPLETED DURING THE SAID YEAR AND THEREFORE THE EXP ENSES NEEDS TO BE M/S EASTERN OVERSEAS CORPORATION 5 | P A G E CAPITALIZED. THUS THE LD. AUTHORIZED REPRESENTATIVE HA S SUBMITTED THAT THE ASSESSING OFFICER HAS CONSIDERED AND EXAMINED THE ISSUE OF NON COMPLETION OF THE PROJECT DURING THE FINANCIAL YEAR RELEVANT TO THE A. Y. 2005-06 AND ACCORDINGLY DISALLOWED THE CLAIM OF TRAVELLING EXPENSES RELATING TO THESE TWO PROJECTS. THE LD. AUTHORIZED REPRESENTATIVE HAS CONTENDED THAT WHEN THE ASSESSING OFFICER HAS VERIFIED THE ASPECT OF PROJECT COMPLETION DURING THE ORIGINAL SCRUTINY ASSESSMENT AND SPECIFICALLY GIVEN A FINDING THAT THE PROJECTS WE RE NOT COMPLETED DURING THE A.Y. 2005-06 AND ACCORDINGLY DISALLOWED THE CLAIM OF EX PENDITURE WHICH NEEDED TO BE CAPITALIZED THEN SUBSEQUENT RE-OPENING IS BAS ED ON CHANGE OF OPINION WITHOUT ANY NEW FACTS OR EVIDENCE CAME TO THE KNOWLE DGE OF THE ASSESSING OFFICER THEREFORE THE RE-ASSESSMENT IS MERELY BASED ON SURM ISES AND PRESUMPTIONS. HE HAS FURTHER CONTENDED THAT DURING THE ASSESSMENT PROC EEDINGS FOR THE A.Y. 2007- 08 THE ASSESSEE PRODUCED THE RECORD INCLUDING THE MIN UTES OF MEETING HELD ON 14.4.2006 BETWEEN THE P&E DEPARTMENT OF GOVT. OF MI ZORAM AND THE ASSESSEE. HE HAS SUBMITTED THAT IN THE MINUTES OF MEETING IT HAS BEEN RECORDED THAT CERTAIN WORKS IN THE PROJECTS WERE YET TO BE COMPLETED. HE H AS FURTHER SUBMITTED THAT THE TRIAL RUN OF UNIT ONE WAS DONE ON 12.04.2006. THEREF ORE BEFORE THE TRIAL RUN THE PROJECT CANNOT BE CONSIDERED AS COMPLETED . THE LD. AU THORIZED REPRESENTATIVE HAS FURTHER POINTED OUT THAT THE SCRUTINY ASSESSMEN T FOR THE A.Y. 2005-06 WAS COMPLETED EVEN AFTER A SURVEY CONDUCTED AT THE PREMISE S OF THE ASSESSEE ON 9.03.2006 WHEREIN ALL THE FILES AND RECORDS OF THE ASSESSEE WERE VERIFIED. THEREFORE THE ASSESSING OFFICER AFTER EXAMINATION OF THE RECORD CONCLUDED WHILE FRAMING THE ORIGINAL ASSESSMENT U/S 143(3) THAT TH E WORK RELATING TO THE PROJECTS WAS IN PROGRESS AND CONSEQUENTLY THE CLAIM OF TRAVE LLING EXPENDITURE WAS DISALLOWED ON THE GROUND THAT THE SAME NEEDS TO BE CAP ITALIZED. THUS THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED THAT THE RE-O PENING OF THE ASSESSMENT FOR THE A.Y. 2005-06 IS NOT VALID AS THE SAME IS B ASED ON CHANGE OF OPINION AND ALSO BEYOND FOUR YEARS FROM THE DATE OF A.Y. UNDER CON SIDERATION. IN SUPPORT OF M/S EASTERN OVERSEAS CORPORATION 6 | P A G E HIS CONTENTION HE HAS RELIED UPON THE DECISION OF HON 'BLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX. VS. KELVINATOR OF INDIA LIMITED (320 ITR 561). 5. ON THE OTHER HAND THE LD. DR HAS SUBMITTED THAT DUR ING THE ASSESSMENT PROCEEDINGS FOR THE A.Y. 2007-08 THE ASSESSING OF FICER MADE AN ENQUIRY AND DETECTED THE FACT THAT THERE IS NO CHANGE IN THE PROJ ECT FIGURE AND IT WAS FOUND FROM THE DETAILS SUBMITTED BY THE ASSESSEE THAT THESE TWO PROJECTS IN QUESTION WERE COMPLETED DURING THE F.Y. 2004-05. THEREFORE T HE ENQUIRY MADE DURING THE ASSESSMENT PROCEEDINGS FOR THE A.Y. 2007-08 BROUGHT NEW FACTS ON RECORD WHICH IS SUFFICIENT FOR RE-OPENING THE ASSESSMENT FOR A.Y . 2005-06. THE NEW FACTS CAME INTO THE KNOWLEDGE OF ASSESSING OFFICER DURING THE A SSESSMENT PROCEEDINGS FOR THE A.Y. 2007-08 ARE SUFFICIENT TO BELIEVE THAT TH E INCOME CHARGEABLE TO TAX FOR THE A.Y. 2005-06 HAS ESCAPED ASSESSMENT. SINCE THE MATERIAL EVIDENCE OBTAINED BY THE ASSESSING OFFICER DURING THE A.Y. 2007-08 WAS NOT AVAILABLE BEFORE THE ASSESSING OFFICER FOR THE A.Y. 2005-06 THEREFORE THE NECESSARY PARTICULARS WERE NOT TRULY AND FULLY DISCLOSED BY THE ASSESSEE AND ACC ORDINGLY THE REOPENING AFTER FOUR YEARS IS JUSTIFIED. HE HAS RELIED UPON THE ORDERS OF AUTHORITIES BELOW. HE HAS ALSO RELIED UPON THE DECISION OF DELHI BENCHES OF THI S TRIBUNAL IN THE CASE OF INSPECTING ASSISTANT COMMISSIONER VS. PUNJ & SONS 56 ITD (DEL) 281 AND SUBMITTED THAT UNDER THE COMPLETED CONTRACT METHOD RE VENUE IS RECOGNIZED ONLY WHEN THE CONTRACT IS COMPLETED OR SUBSTANTIALLY COMP LETED THEREFORE IF THE CONTRACT IS SUBSTANTIALLY COMPLETED IT WOULD BE ENO UGH THAT SUCH CONTRACT WOULD YIELD INCOME IN THE YEAR IN WHICH SUBSTANTIAL EXECUT ION OF THE CONTRACT IS MADE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS CHALLENGED THE VALIDITY OF RE-OPENING OF ASSESSMENT FOR THE A.Y. 2005-06 ON THE GROUND THAT THE ASSESSMENT H AS BEEN RE-OPENED AFTER A M/S EASTERN OVERSEAS CORPORATION 7 | P A G E PERIOD OF FOUR YEARS AND THEREFORE IT IS HIT BY TH E PROVISO TO SECTION 147 OF THE INCOME TAX ACT. THERE IS NO DISPUTE THAT THE ASSESSM ENT WAS RE-OPENED VIDE NOTICE U/S 148 DATED 4.10.2010 WHICH IS BEYOND FOUR YEARS FROM THE ASSESSMENT YEAR IN QUESTION THEREFORE THE PROVISO TO SECTION 147 BECOMES RELEVANT AND THE ASSESSING OFFICER CAN RE-OPEN THE ASSESSMENT COMPLE TED U/S 143(3) AFTER EXPIRY OF FOUR YEARS ONLY WHEN ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT BY THE REASON OF FAILURE ON THE PART OF THE ASSESSEE INTER ALIA TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE ASSESSEE IS FOLLOWING THE PROJECT COMPLETION METHOD OF ACCOUNTING FOR THE PURP OSE OF OFFERING THE INCOME FROM THE PROJECTS UNDERTAKEN BY THE ASSESSEE. THERE IS NO DISPUTE THAT THE DEPARTMENT HAS ACCEPTED THE METHOD OF ACCOUNTING FOL LOWED BY THE ASSESSEE BEING PROJECT COMPLETION METHOD. IN THE ORIGINAL SCR UTINY ASSESSMENT THE ASSESSING OFFICER HAS TAKEN NOTE OF THE FACT THAT T HE PROJECTS IN QUESTION WERE NOT COMPLETED DURING THE YEAR AND NO INCOME WAS DECLARED BY THE ASSESSEE THEREFORE THE CLAIM OF TRAVELLING EXPENSES WERE DIS ALLOWED BY THE ASSESSING OFFICER IN PARA 4.1 AS UNDER:- 4.1 ASSESSEE HAD CLAIMED TRAVELLING EXPENDITURE O F RS. 3 77 000/-. THIS INCLUDES RS. 1 29 790/- FOR A TOUR UNDERTAKEN BY MR . JOGINDER KUMAR PARTNER AND MS. PAM SUARES EMPLOYEE OF THE FIRM. A SSESSEE COULD NOT JUSTIFY THE BUSINESS PURPOSE OF TRAVEL ESPECIALLY WHEN THERE IS NO BUSINESS PURPOSE IN DUBAI. HENCE THE SAME IS DISALL OWED. IT IS NOTABLE THAT THE OTHER TRAVELING EXPENSES ARE RELATED TO PR OJECT IN PROGRESS IN MIZORAM. ASSESSEE HAS FOLLOWED PROJECT COMPLETION ME THOD AND NO INCOME AHS BEEN DECLARED DURING THE YEAR FRO THE S AID PROJECT. HENCE THE EXPENSES AMOUNTING TO RS. 2 47 210/- ARE NOT TR EATED AS REVENUE EXPENSES AND ARE CAPITALIZED. HENCE THE SUM OF RS. 3 77 000/- IS DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSES SEE. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME TAX ACT 19 61 ARE INITIATED SEPARATELY FOR CONCEALING THE PARTICULARS AND FURNI SHING INACCURATE PARTICULARS OF INCOME. M/S EASTERN OVERSEAS CORPORATION 8 | P A G E 7. THUS IT IS CLEAR THAT THE ASSESSING OFFICER WHILE C OMPLETING THE ORIGINAL ASSESSMENT U/S 143(3) TAKEN A VIEW THAT THE PROJECT IN QUESTION WERE NOT COMPLETED DURING THE YEAR UNDER CONSIDERATION. SUBSE QUENTLY DURING THE ASSESSMENT PROCEEDINGS FOR THE A.Y. 2007-08 THE A SSESSING OFFICER NOTED THAT THERE IS NO SUBSTANTIAL CHANGE IN THE CONTRACT RECE IPT AND EXPENSES IN RESPECT OF THESE TWO PROJECTS NAMELY KT AND TP PROJECT OF MIZOR AM GOVERNMENT. ON THE BASIS OF THE DETAILS OF THE CONTRACT RECEIPT AND EXPE NSES RIGHT FROM THE A.Y. 1997- 98 TO 2006-07 THE ASSESSING OFFICER CONCLUDED THAT THESE TWO PROJECTS NAMELY K.T. HYDRO PROJECT AND T.P HYDRO ELECTRIC PROJECTS W ERE COMPLETED FOR THE A.Y. 2005-06 AND NOT IN THE A.Y. 2007-08 AS CLAIMED BY THE ASSESSEE. THE VIEW TAKEN BY THE ASSESSING OFFICER FOR A.Y. 2007-08 THAT THES E TWO PROJECTS WERE COMPLETED IN THE A.Y. 2005-06 IS BASED ON THE PRINCIPLE THAT T HE PROJECTS WERE SUBSTANTIALLY COMPLETED IN THE SAID YEAR. IT WAS NOT A CASE OF THE ASSESSING OFFICER THAT THE PROJECTS WERE FINALLY COMPLETED IN ALL RESPECT BUT B ECAUSE THE ASSESSING OFFICER CONSIDERED THESE PROJECTS SUBSTANTIALLY COMPLETED TH EREFORE THESE WERE TREATED AS COMPLETED IN THE A.Y. 2005-06. THE QUESTION OF CO NSIDERING THE PROJECT AS COMPLETED DEPENDS ON THE VIEW THAT AT WHAT STAGE THE P ROJECT IS CONSIDERED TO BE SUBSTANTIALLY COMPLETED. THEREFORE THIS ISSUE IS A DEBATABLE ONE HAVING TWO POSSIBLE VIEWS. THOUGH THE MATERIAL GATHERED DURING THE ASSESSMENT PROCEEDINGS OF THE SUBSEQUENT YEARS IS A TANGIBLE EVIDENCE FOR REOPENING OF THE ASSESSMENT OF AN EARLIER YEAR HOWEVER WHEN THE ASSESSMENT IS SO UGHT TO BE RE-OPENED AFTER EXPIRY OF FOUR YEARS THEN CONDITION MANDATED BY THE PROVISO TO SECTION 147 OF THE INCOME TAX ACT HAS TO BE FULFILLED. IT IS PERTINENT TO NOTE THAT THE DETAILS OF CONTRACTUAL RECEIPT AND EXPENDITURE ON THE BASIS OF WHICH THE ASSESSING OFFICER HAS ARRIVED AT A CONCLUSION THAT THE PROJECT IN QUES TION WAS COMPLETED DURING THE A.Y. 2005-06 WERE NOT FIRST TIME DISCLOSED BY THE AS SESSEE BUT THESE WERE ALREADY AVAILABLE ON THE RECORD FOR EACH ASSESSMENT YEAR. TH EREFORE IT IS NOT THE CASE THAT SOME NEW FACT HAS COME TO THE KNOWLEDGE OF THE ASSES SING OFFICER DURING THE M/S EASTERN OVERSEAS CORPORATION 9 | P A G E ASSESSMENT PROCEEDINGS FOR THE A.Y. 2007-08 BUT IN THIS CASE THE ASSESSING OFFICER HAS FORMED AN OPINION BY ANALYZING THE DETAILS ALREADY AVAILABLE ON RECORD. WHEN THE ASSESSING OFFICER HAS ALREADY TAKEN A VIEW WHILE FRAMING THE ORIGINAL ASSESSMENT U/S 143(3) THEN ON THE BASIS OF SAME REC ORD IF THE ASSESSING OFFICER IN THE SUBSEQUENT A.Y. HAS TAKEN A DIFFERENT VIEW THE SAME IS NOTHING BUT A MERE CHANGE OF OPINION BASED ON THE MATERIAL ALREADY AVAIL ABLE ON RECORD. IT IS ONLY A DIFFERENT VIEW TAKEN BY THE ASSESSING OFFICER FROM T HE MATERIAL ALREADY AVAILABLE ON RECORD. FURTHER IN THE MINUTES OF THE MEETING HE LD ON 14.04.2006 BETWEEN THE ASSESSEE AND P&E DEPARTMENT OF GOVERNMENT OF MIZORAM IT IS RECORDED THAT THE TRIAL RUN DONE MECHANICALLY AND ELECTRICALLY ON 12.04 .2006. THUS THE RECORD WHICH IS PART OF THE MINUTES OF THE MEETING BETWEEN THE ASSESSEE AND DEPARTMENT OF MIZORAM MANIFESTS THAT THE PROJECT TRIAL RUN WA S CONDUCTED ON 12.04.2006 AND THEREFORE BEFORE THE TRIAL RUN THE PROJECT CANNOT BE CONSIDERED AS COMPLETED. THE RECORDS PRODUCED BY THE ASSESSEE PERTA INING TO THE MINUTES OF MEETING WITH THE GOVERNMENT DEPARTMENT AND AS SUCH TH ERE IS NO SCOPE OF ANY MANIPULATION OR PROCUREMENT OF THE EVIDENCE. ACCORDIN GLY IN THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE VIEW THAT THE RE-OPENING OF ASSESSMENT AFTER A PERIOD OF FOUR YEARS IS NOT VALID WHEN THE AS SESSING OFFICER HAS FAILED TO BRING ON RECORD THAT THE INCOME ASSESSABLE TO TAX HA S ESCAPED ASSESSMENT DUE TO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRUL Y AND FULLY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THEREFORE THE DECISION IN THE CASE OF COMMISSIONER OF INCOME-TAX. VS. KELVINATOR OF INDIA LIMITED (SUPRA) IS APPLICABLE IN THE FACTS OF THIS CASE. ACCORDINGLY THE REASSESSMENT FOR THE A.Y. 2005-06 I S SET ASIDE. 8. THE INCOME FROM THESE PROJECTS WAS OFFERED BY THE ASSESSEE FOR THE A.Y. 2007-08 AND WAS ASSESSED ON PROTECTIVE BASIS. IN VIE W OF OUR FINDING ON THE ISSUE OF RE-OPENING OF ASSESSMENT FOR THE A.Y. 2005-06 T HE APPEAL FOR THE A.Y. 2007-08 M/S EASTERN OVERSEAS CORPORATION 10 | P A G E BECOMES INFRUCTUOUS. HOWEVER THE INCOME OFFERED BY THE ASSESSEE HAS TO BE ASSESSED ON SUBSTANTIVE BASIS FOR THE A.Y. 2007-08. WE ORDER ACCORDINGLY. 9. IN THE RESULT APPEALS OF THE ASSESSEE ARE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH DAY OF NOVEMBER 2014 SD/- SD/- (D. KARUNAKARA RAO) (VIJAY PAL RAO) (ACCOUNTANT MEMBER/ YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; ) (JUDICIAL MEMBER/ U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; ) MUMBAI DATED 19-11 -2014 SKS SR. P.S COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR H BENCH ITAT MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES MUMBAI