THE CRICKET CLUB OF INDIA LTD, MUMBAI V. DCIT RG 1(1), MUMBAI

CO 119/MUM/2010

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 6889 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 5 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 30-11-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 20-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHANTAM BOSE
• Assessee Lawyers: K K VED
• Keywords: Difference of opinion; Assessment record; Condonation of delay; Reason to believe; Change of opinion
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO. 4885 AND 4886/MUM./2009 (ASSESSMENT YEAR : 2002-03 AND 2005-06 ) DY. COMMISSIONER OF INCOME TAX CIRCLE-1(1), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .. APPELLANT V/S CRICKET CLUB OF INDIA LTD. BRABOURNE STADIUM DINSHAW VACCHA ROAD MUMBAI 400 020 PAN AAATT4337R .... RESPONDENT C.O. NO.119/MUM./2010 (ARISING OUT OF ITA NO. 4885 /MUM./2009 ) (ASSESSMENT YEAR : 2002-03 ) CRICKET CLUB OF INDIA LTD. BRABOURNE STADIUM DINSHAW VACCHA ROAD MUMBAI 400 020 PAN AAATT4337R .. APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CIRCLE-1(1), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .... RESPONDENT REVENUE BY : MR. SHANTAM BOSE ASSESSEE BY : MR. K.K. VED DATE OF HEARING 30.11.2011 DATE OF ORDER 25.01.2012 CRICKET CLUB OF INDIA LTD. A.Y. 2002-03 AND 2005-06 2 O R D E R PER J. SUDHAKAR REDDY, A.M. APPEALS PREFERRED BY THE REVENUE, ARE DIRECTED AGA INST THE IMPUGNED SEPARATE BUT IDENTICAL ORDER DATED 15 TH JUNE 2009, PASSED BY THE COMMISSIONER (APPEALS)-I, MUMBAI, FOR ASSESSMENT YE AR 2002-03 AND 2005- 06 RESPECTIVELY AND WHEREAS THE CROSS OBJECTION PRE FERRED BY THE ASSESSEE, IS ARISING OUT OF THE APPEAL PREFERRED BY THE REVEN UE FOR ASSESSMENT YEAR 2002-03. FACTS IN BRIEF :- 2. THE ASSESSEE IS A DOMESTIC COMPANY INCORPORATED ON 9 TH NOVEMBER 1933, WITH AN OBJECT OF ENCOURAGING AND PROMOTING T HE GAME OF CRICKET IN INDIA AND ELSEWHERE. FOR THE ASSESSMENT YEAR 2002-0 3, THE ASSESSEE FILED ITS RETURN OF INCOME ON 30 TH OCTOBER 2002, DECLARING TOTAL INCOME OF ` 29,94,900. ASSESSMENT UNDER SECTION 143(3) OF THE I NCOME TAX ACT, 1961 (FOR SHORT THE ACT ) WAS COMPLETED ON 31 ST JANUARY 2005, DETERMINING TOTAL INCOME AT ` 1,63,06,610. FOR THE ASSESSMENT YEAR 2005-06, THE ASSESSEE FILED ITS RETURN OF INCOME ON 29 TH OCTOBER 2005, DECLARING TOTAL INCOME OF ` 56,05,143. THE ASSESSMENT WAS COMPLETED UNDER SECTI ON 143(3), DETERMINING THE TOTAL INCOME AT ` 2,25,52,810, ON 31 ST DECEMBER 2007. 3. THE ASSESSEE, IN ITS RETURN OF INCOME, SHOWED RENT RECEIVED FROM OFFICE AND SHOPS IN NORTH STAND AND USE OF STADIUM AT ` 8,24,958, FOR THE ASSESSMENT YEAR 2002-03. THE ASSESSING OFFICER ISSU ED NOTICE UNDER SECTION 148 OF THE ACT, DATED 30 TH MARCH 2007, RE-OPENING THE ASSESSMENTS ON THE BASIS THAT THE RENT OFFERED TO TAX IN RESPECT OF OF FICE AND SHOPS LOCATED IN THE NORTH STAND APPEARED TO BE MUCH LOWER THAN THE FAIR RENT RESULTING IN UNDERSTATEMENT OF INCOME. THE ASSESSING OFFICER REC ORDED THAT THE ASSESSEE PAID WATER CHARGES OF ` 2,66,120, AND ALSO PAID MUNICIPAL TAXES AS AGAINST RENT RECEIVED OF ` 2,15,910, RESULTING IN A LOSS OF ` 5,20,053, WHICH RESULTED IN INCOME ESCAPING ASSESSMENT. CRICKET CLUB OF INDIA LTD. A.Y. 2002-03 AND 2005-06 3 4. THE ASSESSING OFFICER REQUESTED THE ASSESSEE TO FIL E THE FOLLOWING DOCUMENTARY EVIDENCES:- A) THAT THE OFFICES AND SHOPS LOCATED IN NORTH STAN D (FROM WHICH THE ASSESSEE HAS RECEIVED THE RENTAL INCOME) HAVE BEEN LET OUT TO VARIOUS TENANTS PRIOR TO THE YEAR 1974 WHO HAVE CONTINUED T O OCCUPY THE COMMERCIAL PREMISES SINCE THEN. B) THAT IN THE CASE OF THE ASSESSEE, THE RENT RECEI VED! COLLECTED FROM THE TENANTS IS THE STANDARD RENT AS GOVERNED BY THE RENT CONTROL ACT AND THE TENANTS ARE PROTECTED I.E. THE CLUB CANNO T LEGALLY CHARGE THEM RENT IN EXCESS OF THAT FIXED BY THE PREVAILING MAH ARASHTRA RENT CONTROL ACT, 1999. C) THAT AS PER THE NEW MAHARASHTRA RENT CONTROL AC T, 1999 WHICH CAME INTO FORCE FROM 31 MARCH 2000 THE TERM STANDA RD RENT (SECTION 7(14)(A)) IS DEFINED TO MEAN WHERE THE RENT IS FIX ED BY THE COURT OR THE BOMBAY RENTS, HOTEL AND LODGING HOUSE RATES CON TROL ACT, 1947 , SUCH RENT PLUS AN INCREASE OF 5% IN THE RENT SO FIX ED. THE RENT COLLECTED BY THE ASSESSEE CLUB WAS THAT FIXED UNDER THE BOMBAY RENTS, HOTEL AND LODGING HOUSE RATES CONTROL ACT, 1947 . 5. THE ASSESSEE SOUGHT TIME TO OBTAIN ORIGINAL AGREEME NTS EXTRACT PARTICULARLY OF MAHARASHTRA RENT CONTROL ACT AND BO MBAY RENTS, HOTEL AND LODGING HOUSE RATES CONTROL ACT, 1947. AS THE EVIDE NCE, AS CALLED FOR, HAS NOT BEEN FILED, THE ASSESSING OFFICER HAS ESTIMATED THE ASSESSEES INCOME FROM HOUSE PROPERTY AT ` 50,00,000. 6. ON APPEAL, THE ASSESSEE CHALLENGED THE RE-OPENING O F THE ASSESSMENT AS WELL AS THE ASSESSMENT OF ANNUAL LETTING VALUE ( ALV) OF THE PROPERTY AT ` 50,00,000. THE COMMISSIONER (APPEALS) UPHELD THE RE -OPENING. ON THE ESTIMATION OF ALV, HE CAME TO A CONCLUSION THAT THE ASSESSING OFFICER HAS ESTIMATED THE ANNUAL RENT IN AN ARBITRARY MANNER. H E HELD THAT THE ASSESSING OFFICER DOES NOT HAVE EVIDENCE TO SUGGEST THAT THE ASSESSEE HAS ACTUALLY RECEIVED SOMETHING MORE THAN WHAT IT HAS DISCLOSED. HE GAVE A FINDING THAT THE PROPERTY CONCERNED IS GOVERNED BY MAHARASHTRA R ENT CONTROL ACT, AND THAT THE ASSESSEE CANNOT RAISE RENT OF ITS OWN. HE DELETED THE ADDITION FOR BOTH THE ASSESSMENT YEARS. AGGRIEVED, THE REVENUE I S IN APPEAL BEFORE THE TRIBUNAL. CRICKET CLUB OF INDIA LTD. A.Y. 2002-03 AND 2005-06 4 7. THE COMMON GROUND RAISED BY THE REVENUE, EXCEPT VAR IATION IN FIGURES, IS WHETHER OR NOT THE COMMISSIONER (APPEAL S) WAS JUSTIFIED IN DELETING THE ESTIMATION OF ALV AT ` 50,00,000 FOR ASSESSMENT YEAR 2002-03, AND ` 35,00,000, FOR ASSESSMENT YEAR 2005-06. 8. THE ASSESSEE PREFERRED CROSS OBJECTION FOR THE ASSE SSMENT YEAR 2002- 03, CHALLENGING THE RE-OPENING. 9. THERE IS A DELAY OF EIGHTY DAYS IN FILING OF THE CR OSS OBJECTION. A PETITION FOR CONDONATION OF DELAY HAS BEEN FILED. A N AFFIDAVIT FROM ONE MR. NAVNIT SHIVSHANKAR JAIN,, CHIEF ACCOUNTANT AND FINA NCIAL CONTROLLER OF THE ASSESSEE COMPANY IS ALSO FILED. AFTER GOING THROUGH THE SUBMISSIONS, WE CONDONE THE DELAY AND ADMIT THE CROSS OBJECTION. 10. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE, MR. SHANTAM BOSE, REPRESENTING THE REVENUE, SUBMITTED THAT THE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO LEAD EVIDENCE THAT THE RENT C ONTROL ACT IS APPLICABLE TO THE ASSESSEE. HE REFERRED TO THE ORDER OF THE AS SESSING OFFICER WHEREIN CERTAIN DOCUMENTARY EVIDENCES WERE SOUGHT AND SUBMI TTED THAT NONE OF THESE DOCUMENTS WERE FURNISHED BY THE ASSESSEE. HE, REFERRING TO THE ORDER PASSED BY THE ASSESSING OFFICER AND SUBMITTED THAT THE FIRST APPELLATE AUTHORITY HAS NOT LOOKED INTO ANY OF THESE DOCUMENT ARY EVIDENCES CALLED FOR BY THE A.O. AND HAS SIMPLY AGREED WITH THE SUBMISSI ONS OF THE ASSESSEE. HE PRAYED THAT THE ISSUE BE RESTORED TO THE FILE OF AS SESSING OFFICER AND THE ASSESSEE BE DIRECTED TO FURNISH EVIDENCE THAT RENT CONTROL ACT APPLIES TO THE ASSESSEE. 11. LEARNED COUNSEL, MR. K.K. VED, REPRESENTING THE ASS ESSEE, ON THE OTHER HAND, CHALLENGED THE RE-OPENING AS BAD-IN-LAW . HE SUBMITTED THAT THE RE-OPENING IS MADE ON MERE SUSPICION. ON MERIT, LEA RNED COUNSEL DEFENDED THE ORDER PASSED BY THE COMMISSIONER (APPEALS) AND SUBMITTED THAT RENT CONTROL ACT, APPLIES TO THE ASSESSEE COMPANY AND TH E TENANTS ARE PROTECTED TENANTS. HE SUBMITTED THAT THE ASSESSEE COMPANY HAS RECEIVED RENTAL INCOME OF ` 1,78,275, FROM LETTING OUT OF OFFICES AND SHOPS LO CATED IN NORTH STAND AND SUBSEQUENT TO THE ENACTMENT OF MAHARASHTR A RENT CONTROL ACT, CRICKET CLUB OF INDIA LTD. A.Y. 2002-03 AND 2005-06 5 1999, W.E.F. 31 ST MARCH 2000, THE RENT WAS INCREASED TO 5% AND OFFER ED TO TAX. HE SUBMITTED THAT FOR ALL THE ASSESSMENT YEARS , THE RENT WAS ACCEPTED AND NO ADDITION MADE. HE PRAYED FOR RELIEF. 12. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON A PERUSAL OF THE P APERS ON RECORD, WE HOLD AS FOLLOWS:- 13. THE REASONS FOR RE-OPENING ARE GIVEN AT PAGE-1 OF T HE ASSESSMENT ORDER, WHICH ARE EXTRACTED FOR READY REFERENCE:- IN THIS CASE THE RETURN OF INCOME WAS FILED ON 30.1 0.2002 DECLARING TOTAL INCOME OF RS.1,29,94,900/- AND THE ASSESSMENT WAS COMPLETED ON 31.01.2005 DETERMINING TOTAL INCOME AT RS.1,63,0 6,610/-. IT IS SEEN FROM THE ASSESSMENT RECORDS THAT THE ASS ESSEE HAS SHOWN RENT RECEIVED FROM OFFICES AND SHOP LOCATED IN NORT H STAND AT RS.2,15,910/-. THE ASSESSEE HAS PAID WATER CHARGES OF RS. 2,66,120/-. THE ASSESSEE HAS ALSO PAID MUNICIPAL TAXES. THUS TH E ASSESSEE SHOWN LOSS OF RS.5,22,053/-. IN FACT RENT INCOME SHOWN BY THE ASSESSEE IS MUCH BELOW THE FAIR RENT. THIS HAS RESULTED IN UNDE R ASSESSMENT OF INCOME TO THE TUNE OF RS.5,22,053/-. I HAVE, THEREFORE, REASON TO BELIEVE THAT THE INCOM E OF RS.5,22,053/- HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SEC. 1 47 OF THE IT ACT, 1961 . ISSUE NOTICE UNDER SECTION. 14. THE RE-OPENING WAS WITHIN A PERIOD OF FOUR YEARS AN D IT IS NOT THE CASE OF THE ASSESSEE THAT THERE WAS CHANGE OF OPINION. W HEN THE RENT RECEIVED FROM SHOPS LOCATED IN NORTH STAND, WAS ` 2,15,910, PER ANNUM AND WHEN THE ASSESSEE HAS SHOWN A LOSS OF ` 5,22,053, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS REASON TO BE LIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THUS, WE UPHOLD THE RE-OPENING OF ASSESSMENTS. COMING TO THE ASSESSMENT OF ALV, THE ASSESSEE, IN O UR OPINION, OUGHT TO HAVE FURNISHED THE INFORMATION SOUGHT BY THE ASSESS ING OFFICER, SO AS TO ENABLE HIM TO COME TO A CONCLUSION AS TO WHETHER TH E MAHARASHTRA RENT CONTROL ACT, 1999, APPLIES TO THE FACTS OF THE CASE . HAVING SAID SO, WE ALSO OBSERVE THAT THE ASSESSING OFFICER HAS NOT EXAMINE THE PREVIOUS RECORDS OF THE ASSESSEE TO DETERMINE AS TO WHETHER THE RENTAL PAYMENTS WERE, AS CLAIMED BY THE ASSESSEE, WAS OFFERED ON THE SAME BA SIS, AS WAS DONE THIS CRICKET CLUB OF INDIA LTD. A.Y. 2002-03 AND 2005-06 6 YEAR. WE ALSO FIND THAT THE ASSESSING OFFICER HAS N O BASIS FOR ESTIMATING THE ANNUAL RENT AT ` 35,00,000, FOR ASSESSMENT YEAR 2005-06 AND ` 50,00,000, FOR ASSESSMENT YEAR 2002-03. SINCE THE ASSESSEE HAS NOT FURNISHED THE INFORMATION SOUGHT BY THE ASSESSING OFFICER AND THE COMMISSIONER (APPEALS) HAS FAILED TO EXAMINE AS TO WHETHER THE MAHARASHTRA RENT CONTROL ACT APPLIES TO THE CASE OR NOT, WE ARE OF THE CONSIDERE D OPINION THAT THE ISSUE IS REQUIRED TO BE RESTORED TO THE FILE OF ASSESSING OF FICER FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. WE ORDER ACCORDINGLY. IN CA SE, THE ASSESSEE PROVES THAT THE TENANCY IN QUESTION ARE GOVERNED BY THE MA HARASHTRA RENT CONTROL ACT, THEN THE ASSESSING OFFICER CANNOT SUBSTITUTE T HE ALV FOR THE STANDARD RENT AS GOVERNED BY THE RENT CONTROL ACT, THE RENTA L INCOME OFFERED BY THE ASSESSEE HAS TO BE GOVERNED AS SUCH. THUS, THE GROU ND RAISED FOR BOTH THE YEARS UNDER ASSESSMENT ARE ALLOWED FOR STATISTICAL PURPOSES. 15. IN THE RESULT, APPEALS PREFERRED BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 16. INSOFAR AS CROSS OBJECTION IS CONCERNED, KEEPING IN VIEW OUR OBSERVATIONS MADE IN PARAS-12 TO 14 ABOVE, VIDE WHI CH WE HAVE ALLOWED THE APPEALS PREFERRED BY THE REVENUE FOR STATISTICAL PU RPOSES, WE DISMISS THE CROSS OBJECTION PREFERRED BY THE ASSESSEE. 17. IN THE RESULT, CROSS OBJECTION BY THE ASSESSEE IS D ISMISSED. 18. TO SUM UP, REVENUES APPEALS ARE ALLOWED FOR STATIS TICAL PURPOSES AND THE ASSESSEES CROSS OBJECTION IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JANUARY 2012 SD/- D. MANMOHAN VICE PRESIDENT SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 25 TH JANUARY 2012 CRICKET CLUB OF INDIA LTD. A.Y. 2002-03 AND 2005-06 7 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, E BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI DATE INITIAL 1. DRAFT DICTATED ON 9.1.2012 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 11.1.2012 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 19.1.2012 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 19.1.2012 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 19.1.2012 SR.PS 6. DATE OF PRONOUNCEMENT 25.1.2012 SR.PS 7. FILE SENT TO THE BENCH CLERK 25.1.2012 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER