CHEMITO CONSULTANTS SERVICES P.LTD, MUMBAI V. ITO 1(1)(2), MUMBAI

ITA 1052/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3892 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 15-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Assessee Lawyers: RUTURAJ GURJAR
• Keywords: Business income; Depreciation; Opportunity of being heard; Principle of natural justice; Period of limitation; Notional interest; Time period of passing order
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC , MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 1052 /MUM/201 7 : A.Y : 20 09 - 10 M/S. CHEMITO CONSULTANTS SERVICES P RIVATE L IMITED , 8, MOHATTA BHAVAN, OFF DR. E. MOSES ROAD, WORLI, MUMBAI 400 018. PAN : AABCC3458J (APPELLANT) VS. ITO - 1(1)(2), MUMBAI. (RESPONDENT) APPELLANT BY : SHRI RUTURAJ GURJAR RESPONDENT BY : SHRI S.K. BEPARI DATE OF HEARING : 09/08/2018 DATE OF PRONOUNCEMENT : 09 /08/2018 O R D E R PER G.S. PANNU , AM : THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAINING TO ASSESSMENT YEAR 2009 - 10 IS DIRECTED AGAINST AN ORDER PASSED BY CIT(A) - 2, MUMBAI DATED 30.11.2016, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCO ME TAX ACT, 1961 (IN SHORT THE ACT) DATED 20 . 12 .201 1 . 2. IN THIS APPEAL, ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 2 ITA NO. 1052/MUM/2017 M/S. CHEMITO CONSULTANTS SERVICES PVT. LTD. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS); CIT(A) - 2 ERRED IN TREATING THE DELAY IN RECEIPT OF THE NOTICE U/S 143(2) BY THE APPELLANT COMPANY AS INFRUCTUOUS REQUIRING NO DISCUSSION WITHOUT APPRECIATING THAT THE SCRUTINY NOTICE WAS RECEIVED THROUGH SPEED POST BY THE APPELLANT COMPANY ON 01.10.2010, BEYOND TH E LIMITATION PERIOD OF 30.09.2010. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) - 2 ERRED IN TREATING THE RENTAL INCOME RECEIVED BY THE APPELLANT COMPANY AS INCOME FROM HOUSE PROPERTY INSTEAD OF BUSINESS INCOME. THE L EARNED CIT(A) - 2 FAILED TO APPRECIATE THAT THE PREMISES RENTED WERE COMMERCIAL ONES AND RENTING OF PREMISES WAS ONE OF THE MAIN BUSINESS OF THE APPELLANT COMPANY. 3. THE LEARNED CIT(A) - 2 ERRED IN ADDING NOTIONAL INTEREST INCOME ON SECURITY DEPOSIT RECEIVED ON RENTED PREMISES TO THE ANNUAL VALUE OF THE PROPERTY WITHOUT APPRECIATING THE FACT THAT THE INTEREST ADMITTEDLY HAD NOT BEING RECEIVED OR RECEIVABLE, BUT ENTIRELY NOTIONAL. 4. THE LEARNED CIT(A) - 2 ERRED IN DISALLOWING THE ENTIRE DEPRECIATION CLAIMED ON PREMISES U/S 38(2) AS THE RENTAL INCOME WAS TREATED AS INCOME FROM HOUSE PROPERTY. HE FAILED TO APPRECIATE THAT THE RENTAL INCOME HAD ALL ALONG BEEN TREATED AS BUSINESS INCOME FOR SEVERAL YEARS AND DEPRECIATION HAS BEEN PROVIDED ALL ALONG ON THIS BLOCK OF ASSETS EVEN IN EARLIER AYS, WHEN THE SAME HAS BEEN ACCEPTED. 5. THE ORDER OF LEARNED CIT(A) - 2 IS AGAINST THE WEIGHT OF EVIDENCE, EQUITY AND NATURAL JUSTICE. 3 . IN THIS APPEAL, ALTHOUGH THE ASSESSEE HAS RAISED MULTIPLE GROUNDS OF APPEAL, BUT GROUND OF APPEAL NO. 1 RAISED BY THE ASSESSEE GOES TO THE ROOT OF JURISDICTION OF THE ASSESSING OFFICER TO MAKE THE IMPUGNED ASSESSMENT ORDER. THE PRECISE PLEA OF THE ASSESSEE BY WAY OF GROUND OF APPEAL NO. 1 IS TO THE EFFECT THAT THE MANDATORY NOTICE U/S 143(2) O F THE ACT, WHICH IS REQUIRED TO BE SERVED WITHIN THE SPECIFIED PERIOD, WAS NOT EFFECTUATED BY THE ASSESSING OFFICER AND, THEREFORE, THE ASSESSMENT PROCEEDINGS ARE LACKING IN 3 ITA NO. 1052/MUM/2017 M/S. CHEMITO CONSULTANTS SERVICES PVT. LTD. JURISDICTION. IT TRANSPIRED AT THE TIME OF HEARING THAT SIMILAR GROUND WAS ALSO R AISED BY THE ASSESSEE BEFORE THE CIT(A), WHO HAS DISMISSED THE SAME IN PARA 3 OF HIS ORDER BY TREATING IT AS INFRUCTUOUS. IN FACT, THE OBSERVATION OF THE CIT(A) IS THAT THE SAID GROUND IS GENERAL IN NATURE AND HENCE DOES NOT REQUIRE ANY SPECIFIC FINDINGS . 4 . IN OUR CONSIDERED OPINION, THE GROUND RAISED BY THE ASSESSEE IS ARISING FROM A STATUTORY PROVISION, WHICH REQUIRES THE ASSESSING OFFICER TO SERVE ON THE ASSESSEE THE MANDATED NOTICE U/S 143(2) OF THE ACT WITHIN THE STIPULATED PERIOD OF TIME. IF SUC H A MANDATED PROVISION IS FOUND TO BE VIOLATED, IT WOULD RESULT IN AN INVALID INVOKING OF JURISDICTION TO MAKE AN ASSESSMENT. THEREFORE, SUCH A PLEA CANNOT BE SHUT - OUT BY TREATING IT AS MERELY GENERAL IN NATURE , AS HAS BEEN DONE BY THE CIT(A) . 5 . BE TH AT AS IT MAY, AT THE TIME OF HEARING, BOTH THE PARTIES AGREED THAT THE DETERMINATION OF SUCH DISPUTE WAS REQUIRED TO BE MADE BY THE CIT(A). OSTENSIBLY, THE DETERMINATION OF SUCH A GROUND BY THE CIT(A) IS CONSPICUOUS BY ITS ABSENCE AND, THEREFORE, WE DEEM IT FIT AND PROPER THAT THE MATTER BE RESTORED TO HIS FILE FOR ADJUDICATION AFRESH. PERTINENTLY, EVEN THE OTHER GROUNDS DECIDED BY THE CIT(A) ARE RESTORED BACK TO HIS FILE TO BE ADJUDICATED AFRESH ALONGWITH THE PRELIMINARY GROUND RAISED BY THE ASSESSEE REG ARDING THE SERVICE OF NOTICE U/S 143(2) OF THE ACT IN ACCORDANCE WITH LAW. THUS, WITHOUT GOING INTO THE MERITS OF THE VARIOUS GROUNDS RAISED, ORDER OF THE CIT(A) IS SET - ASIDE IN ITS ENTIRETY AND APPEAL IS RESTORED BACK TO HIS FILE TO BE ADJUDICATED AFRESH IN ACCORDANCE WITH LAW, OF COURSE, AFTER ALLOWING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 4 ITA NO. 1052/MUM/2017 M/S. CHEMITO CONSULTANTS SERVICES PVT. LTD. 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED, AS ABOVE. THE ABOVE DECISION WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF BOTH THE PARTIES AT THE CONCLUSION OF HEARING ON 9 TH AUGUST, 2018. SD/ - SD/ - ( PAWAN SINGH ) JUDICIAL MEMBER ( G.S. PANNU ) ACCOUNTANT MEMBER MUMBAI, DATE : 9 T H AUGUST , 201 8 * SSL * COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, SMC BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI