ITO, New Delhi V. M/s. M.M. Chhabra & Sons (HUF), New Delhi

ITA 1603/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58502 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 28-09-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 01-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Assessee Lawyers: ASHWANI TANEJA; DR RAKESH GUPTA
• Keywords: Business income; Business expenditure; Charitable institution; Rule of consistency; Cost of acquisition; Revised return; Reassessment proceedings
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI SHAMIM YAHYA ITA NO. 1603/DEL/2011 ASSTT. YR: 2007-08 INCOME-TAX OFFICER, VS. M/S M.M. CHHABRA & SONS ( HUF), WARD 23(1), NEW DELHI. B-19, PAMPOSH ENCLAVE, NEW DELHI. PAN/GIR NO. AAAHM8302D (APPELLANT) ( RESPONDENT ) APPELLANT BY : SHRI R.S. NEGI SR. DR RESPONDENT BY : DR. RAKESH GUPTA ADV. & SH. ASHWANI TANEJA ADV. O R D E R PER R.P. TOLANI, J.M : THIS IS REVENUES APPEAL AGAINST CIT(A)S ORDER DAT ED 24-1-2011, RELATING TO A.Y. 2007-08. FOLLOWING GROUNDS ARE RAI SED: 1. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN DELETIN G THE ADDITION OF RS. 4,29,098/- MADE BY THE AO ON ACCOUNT OF BUSI NESS EXPENSES CLAIMED. 2. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN DELETIN G THE ADDITION OF RS. 32,05,602/- MADE BY THE AO ON ACCOUNT OF INT EREST PAID TO CORPORATION BANK AS FINANCIAL CHARGES. 2. LEARNED DR RELIED ON THE ORDER OF AO. 3. LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, CONTENDS THAT ASSESSEE IS IN THE BUSINESS OF SALE OF HOSPITAL FUR NITURE UNDER THE NAME AND STYLE OF MOBI CARE. DURING THE YEAR IN QUESTION, ASSESSEE CLAIMED BUSINESS ITA 1603/DEL/11 ITO VS. M/S M.M.CHHABRA & SONS (HUF) 2 EXPENDITURE FROM THIS SUPPLY OF HOSPITAL EQUIPMENT. AO, THOUGH ASSESSED THE INCOME FROM BUSINESS, HOWEVER, DISALLOWED AN EXPEND ITURE OF RS. 4,29,098/- AS NOT INCURRED FOR THE PURPOSE OF BUSIN ESS ON A SUSPICION THAT THE VOLUME OF BUSINESS WAS LOW AND THE ASSESSEE WAS CLA IMING BOGUS EXPENDITURE IN THE GUISE OF BUSINESS EXPENDITURE. 3.1. AGGRIEVED ASSESSEE PREFERRED FIRST APPEAL, WHE RE IT WAS PLEADED THAT THE EXPENDITURE CLAIMED PERTAINED TO ELECTRICITY & WATER CHARGES, SALARY & WAGES, TELEPHONE EXPENSES, VAN CHARGES, CONVEYANCE EXPENSES AND PETTY EXPENSES. BESIDES, COMPARATIVE FIGURES FOR THE SALE , PURCHASE AND G.P. RATES WERE FILED, CLAIMING THAT IN PRECEDING YEAR, THE TU RN OVER WAS TO THE EXTENT OF RS. 18,96,809/-, THOUGH THE TURN OVER HAD REDUCED IN THIS YEAR, IT DOES NOT DETRACT THE FACT THAT THE BUSINESS WAS IN CONTINUAT ION. AO IN THE SUBSEQUENT YEARS I.E. A.Y. 2008-09 & 2-009-10 HAD ALLOWED SIMI LAR BUSINESS EXPENDITURE BY ASSESSMENTS U/S 143(3). CIT(A) ALLOW ED THE EXPENDITURE BY FOLLOWING OBSERVATIONS: 4. I HAVE CONSIDERED THE BASIS OF DISALLOWANCE MAD E BY THE ASSESSING OFFICER AS WELL AS SUBMISSIONS OF THE APP ELLANT IN THIS REGARD. IT IS APPARENT THAT THE ASSESSING OFFICER A HS A SUSPICION THAT THE ASSESSEE IS NOT ENGAGED IN ANY BUSINESS OF PURCHASE SALES OF HOSPITAL FURNITURE ITEMS AND THE EXPENSES DEBITED ARE ONLY MEANT TO CREATE LOSS IN THE BOOKS TO BE SET O FF AGAINST OTHER BUSINESS INCOME. APART FROM THIS, THE ASSESSI NG OFFICER AHS NOT BROUGHT ON RECORD ANY EVIDENCE EITHER TO SH OW THAT THE TRANSACTION OF PURCHASES/ SALES WERE BOGUS OR THE E XPENSES INCURRED HAD NOT BEEN ACTUALLY INCURRED OR THERE WA S NO RELATIONSHIP OR BUSINESS CONNECTION BETWEEN THE EXP ENSES INCURRED AND THE PURCHASES/ SALES. MERE SUSPICION I N THIS REGARD IS NOT ENOUGH TO CHALLENGE THE VERSION OF THE ASSES SEE, WHICH IS BACKED BY DOCUMENTARY EVIDENCE. AS SUCH, THE DISALL OWANCE OF EXPENSES BY THE ASSESSING OFFICER IS INCO0RRECT, TH EREFORE, DELETED. ITA 1603/DEL/11 ITO VS. M/S M.M.CHHABRA & SONS (HUF) 3 3.2. APROPOS GROUND NO. 2, IT IS CONTENDED THAT ASS ESSEE PREPARES A CONSOLIDATED BALANCE SHEET AND P&L ACCOUNT IN RESPE CT OF ITS ALL ACTIVITIES. THE ASSESSEE HAS SHOWN HOUSE PROPERTY INCOME IN THE P&L A/C AND AN AMOUNT OF RS. 32,05,602/- WAS DEBITED AS INTEREST P AID TO CORPORATION BANK, WHICH WAS IN RELATION TO THE ACQUISITION OF THE PRO PERTY QUA WHICH THE RENTAL INCOME WAS EARNED AND TAXED UNDER THE HEAD HOUSE P ROPERTY INCOME.DISCLOSED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS REALIZED BY THE ASSESSEE THAT THE SAID AMOUNT OF IN TEREST WAS TO BE CLAIMED AGAINST THE HOUSE PROPERTY INCOME AND NOT FROM THE BUSINESS INCOME, WHERE IT WAS DEBITED. THEREFORE, AS A MATTER OF ABUNDANT CAUTION A REVISED RETURN WAS FILED, MAKING A PROPER CLAIM OF DEDUCTION OF TH IS INTEREST AGAINST THE HOUSE PROPERTY INCOME, BEING THE INTEREST PAID FOR ACQUISITION OF THE PROPERTY. AO DISALLOWED THIS CLAIM ON THE GROUND TH AT THIS COULD NOT BE ALLOWED IN REVISED RETURN, RELYING ON HONBLE SUPRE ME COURT JUDGMENT IN THE CASE OF GOETZE INDIA LTD. 283 ITR 284 ITR 323. AO FURTHER OBSERVED THAT THE ASSESSEES CLAIM WAS MALA FIDE TO REDUCE T HE INCOME. 3.3. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL, WH ERE IT WAS PLEADED THAT- THE IMMOVABLE PROPERTY AT SHOP NO.14-E (G.F.), CONNAUGHT PLACE, NEW DELHI (CARPERT AREA 1721 SQ.FT .; BUILT-UP AREA 1918 SQ.FT.)-- VIZ. RS.75,60,000 (INC LUDING STAMP DUTY OF RS.5,60,000) TOWARDS PURCHASE OF THE PROPERTY FROM RAGHUBIR SARAN CHARITABLE TRUST VIDE SALE DEED DATED 19 TH AUGUST, 2004 AND RS.5,63,89,741 UNDER THE FOLLOWING HEADS [AS PER MOU DATED 16 TH SEPTEMBER, 2004 WITH THE EXISTING TENANT, M/S. UBEROI LIMITED] FOR ACQUIRING VACANT POSSESSION:- (I) ADVANCE AGAINST PROPERTY (A) UBEROI LTD. RS. 3,81,48,000 (B) AGGARWAL PROPERTIES RS. 2,00,000 RS. 3,83,48, 000 (II) INVESTMENT RS. 1,51,96,000 ITA 1603/DEL/11 ITO VS. M/S M.M.CHHABRA & SONS (HUF) 4 (III) LOANS & ADVANCES RS. 28,45,741 RS.5,63,89,741 SINCE THE AMOUNT OF RS.32,05,602 DEPICTED UNDER 'FI NANCE CHARGES' PRIMARILY REPRESENTED THE INTEREST PAID TO CORPORATION BANK FOR THE LOANS RAISED FOR ACQUIRING VACANT POSSESSION OF THE IMMOVABLE. PROPERTY AT SHOP NO.14 -E (G. F.), CONNAUQHT PLACE, NEW DELHI THE APPELLANT HUF W AS ADVISED THAT DEDUCTION FOR THE AMOUNT OF RS.32,05,6 02 IS CORRECTLY CLAIMABLE UNDER THE HEAD 'INCOME FROM HOU SE PROPERTY'. CONSEQUENTLY WITH THE VERY SAME LETTER DATED 6 TH AUGUST, 2009 THE APPELLANT HUF SUBMITTED A NOTE STYLED 'NOTE ON CORRECTION OF THE GROSS TOTAL INCOME'. IN THE CALCULATIONS SUBMITTED WITH THE SAI D NOTE THE LOSS UNDER THE HEAD 'BUSINESS INCOME' WAS REDUC ED BY RS.32,05,602 WHILE THE INCOME UNDER THE HEAD 'INCOM E FROM HOUSE PROPERTY WAS CORRESPONDINGLY REDUCED BY THE S AME AMOUNT - LEAVING THE TOTAL INCOME UNCHANGED. MOREOV ER, IT WAS ALSO REALISED THAT EXPENSES AGGREGATING TO RS. 1,30,976/- DEPICTED UNDER 'OFFICE; ADMINISTRATION & OTHER EXPENSES' WERE NOT ALLOWABLE AS 'BUSINESS EXPENDITU RE' AS THEY RELATED TO THE SHOP AT 14-E, CONNAUGHT PLACE, NEW DELHI AND AS SUCH THE TOTAL INCOME WAS SOUGHT TO BE ENHANCED BY THE' SAID AMOUNT. SINCE THE TIME FOR FILING' A REVISED RETURN HAD E LAPSED, THERE WAS NO OTHER RECOURSE AVAILABLE WITH THE APPELLANT HUF FOR A CORRECT AND COMPLETE DISCLOSURE OF THE FACTS PERTAINING TO ITS SOURCES O F INCOME - EXCEPT BY FILING THE SAID 'NOTE ON CORRECTION OF THE GROSS TOTAL INCOME'. SUPPORTING DOCUMENTS FOR RAISING THE BANK LOANS AS ALSO THE INTEREST CERTIFICATES FROM THE BANK WERE SUBMITTED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS TO ESTABLISH T HE DIRECT NEXUS BETWEEN THE BANK LOANS AND THEIR UTILISATION FOR THE IMMOVABLE PROPERTY AT 14E, CONNAUGHT PLACE, NEW DEL HI. IN THE ANNEXURE TO THE SANCTION DOCUMENT THE BANK H AS INDICATED THE 'PURPOSE' AS 'TO MEET DOMESTIC / PERSONAL/ OTHER COMMITMENTS AND TOWARDS CONTINGENCIES' AND THE ITA 1603/DEL/11 ITO VS. M/S M.M.CHHABRA & SONS (HUF) 5 'SECURITY' IS STATED AS 'HYPOTHECATION OF RENT RECEIVABLES FROM M/S COLORPLUS LTD.' . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS NO FURTHER QUESTIONS WERE RA ISED ON THIS ISSUE. HOWEVER, IN THE ASSESSMENT ORDER THE LE ARNED ASSESSING OFFICER HAS ARRIVED AT AN UNEXPLAINABLE CONCLUSION THAT THE 'PURPOSE' AS STATED IN THE BANK 'S SANCTION LETTER DOES NOT INDICATE THAT IT WAS FOR ACQUIRING A PROPERTY. THE LEARNED ASSESSING OFFICER HAS OBVIOUSLY MISREAD THE FACTS OF THE CASE AND LED HIMSELF TO INCORRECT CONC LUSIONS WHICH ARE FACTUALLY AND LEGALLY UNJUSTIFIED. BESIDES THE ABOVE EXPLAINED LOANS FROM CORPORATION BANK THE APPELLANT HUF HAD ALSO RAISED LOANS FROM FRIEND S AND RELATIVES- - ALMOST ALL OF WHICH WERE INTEREST FREE . THE AGGREGATE UNSECURED LOANS (AS PER THE CONSOLIDATED FINANCIAL STATEMENTS) AS AT 31 ST MARCH, 2007 AMOUNTED TO RS.3,39,70,335 WHICH INCLUDED INTEREST BEARING LOAN FROM ONLY ONE PARTY VIZ. FROM SUMAN PRINTS PVT. LTD. AND THE AMOUNT OF THE SAME AS AT 31 ST MARCH, 2007 WAS RS.25 LAKHS. AS AT 31 ST MARCH, 2007 THE APPELLANT HUF HAD GIVEN LOANS & ADVANCES OF RS.6,29,11,818.61 (AS PER THE CONSOLIDATED FINANCIAL STATEMENTS). IT WAS EXPLAINE D THAT A MAJOR PORTION OF THE SAME (VIZ. RSA,11,93,741 - AS PER DETAILS BELOW) PERTAINED TO THE INVESTMENT IN THE IMMOVABLE PROPERTY ACQUIRED AT 14E (GROUND FLOOR), CONNAUGHT PLACE, NEW DELHI:- (A) ADVANCE AGAINST PROPERTY UBEROI LTD. RS. 3, 81,48,000 (B) ADVANCE AGAINST PROPERTY- AGGARWAL PROPERTIES R S. 2,00,000 (C) NEERU JAGGI RS. 18,01,207 (D) RAJESH JAGGI RS. 10,44,534 TOTAL RS.4,11,93,741 AFTER DEDUCTING THE ABOVE AMOUNT OF RSA.12 CRORES F ROM THE AGGREGATE FIGURE OF RS.6.29 CRORES THE BALANCE AMOUNT OF LOANS & ADVANCES WORKED CUT TO RS.2.17 CRORES, AS S TATED IN THE ASSESSMENT ORDER AN AMOUNT OF RS.1.08 CRORES (ANSA] BUILDWELL RS.12,10,OOO, BALA CHHABRA RS.S2,33 I 800, ITA 1603/DEL/11 ITO VS. M/S M.M.CHHABRA & SONS (HUF) 6 ANISHA CHATURVEDI RS.35,OO,OOO AND AMIT CHHABRA RS,30,OO,OOO) RELATED TO THE BUSINESS OF THE APPELL ANT HUF THEREBY LEAVING A BALANCE OF RS.0.88 CRORES -- OF WHICH THE BREAK-UP IS AS UNDER:- SECURITY DEPOSIT RS. 1,80,900 TDS RS. 16,15,680 PREPAID EXPENSES RS. 6,372 RS. 18,02,952 I.E. 0.18 CRORES. INTEREST BEARING ADVANCE MM CHHABRA RS. 16,95,000 I.E. 0.17 CRORES INTEREST FREE ADVANCES TO DIFFERENT PARTIES 0.53 CRORES TOTAL: 0.88 CRORES IT WAS THUS EVIDENT THAT THE APPELLANT HUF HAD GIVE N INTEREST FREE ADVANCES OF ONLY RS.53 LAKHS AS AGAIN ST THE AGGREGATE INTEREST FREE UNSECURED LOANS RAISED OF R S.3.14 CRORES (RS.3.39 CRORES - RS.25 LAKHS FROM SUMAN PRI NTS PVT LTD. AS EXPLAINED ABOVE). 3.4. AO HIMSELF HAD ACCEPTED THE FACT THAT THIS AMO UNT WAS SHOWN IN THE P&L A/C AND BALANCE-SHEET OF THE ASSESSEE, THEREFOR E, IT WAS NEITHER A NEW ITEM NOR A NEW FACT. ONLY FROM THE ACCOUNT, ENCLOS ED WITH RETURN, THE ASSESSEE HAD MADE THIS LEGAL CLAIM UNDER PROPER HEA D. BESIDES, THERE IS NO DISPUTE ABOUT THE COST OF ACQUISITION OF THE PROPER TY AND THE EARNING OF LEASE RENT WHICH IS TAXED IN THE ASSESSEES HANDS, THEREF ORE, ASSESSEE HAS A LEGAL CLAIM OF ALLOWABILITY OF INTEREST ON THE BORROWED C APITAL UTILIZED FOR THE ACQUISITION OF THE PROPERTY. CIT(A) CONSIDERING ALL THESE FACTS, DELETED THIS DISALLOWANCE ONLY ON SUSPICION BY FOLLOWING OBSERVA TIONS: {9} I HAVE CONSIDERED THE FACTS OF THE CASE AND SUB MISSIONS OF THE APPELLANT IN THIS REGARD. THE ASSESSING OFFI CER HAS' NOT ENTERTAINED THE REVISED COMPUTATION FILED DURIN G THE ITA 1603/DEL/11 ITO VS. M/S M.M.CHHABRA & SONS (HUF) 7 COURSE OF ASSESSMENT PROCEEDINGS BY PLACING RELIANC E ON THE DECISION OF APEX COURT IN THE CASE OF GOETZE IN DIA. I HAVE CONSIDERED THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT ESPECIALLY IN THE CASE OF ACWT VS. KUM. RAGINI SANG HVI 120 TTJ 116 (INDORE BENCH) AND EMERSON NETWORK POWER INDIA PVT. LTD. VS. ACIT 122 TTJ 67 (MUMBAI BENCH). FURTHER, THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS BHARAT ALUMINUM CO. LTD. 163 TAXMAN 430 HAS CLEARLY PERMITTED MAKING REVISED CLAIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS IN ACCORDANCE WITH LAW AN D WHICH SHOULD BE ENTERTAINED BY THE ASSESSING OFFICE R TO DETERMINE THE CORRECT INCOME. THEREFORE, THE ACTION OF THE ASSESSING OFFICER IN REJECTING THE REVISED COMPUTAT ION IS NOT AS PER LAW. FURTHER, THE ASSESSING OFFICER HAS ATTEMPTED TO MAKE OUT A CASE THAT FUNDS BORROWED ON INTEREST HAVE BEEN USED FOR NON- BUSINESS PURPOSES AND THEREFORE, PROCEEDED TO DISALLOW THE CORRESPONDING INTEREST DEBITED IN THE PROFIT & LOSS ACCOUNT. HOWEVER, THE FACTS OF THE CASE AS DETAILED IN THE REVISED COMPUT ATION ARE QUITE CONTRARY TO WHAT HAS BEEN PROJECTED BY THE AS SESSING OFFICER SO MUCH SO THAT THERE IS CLEAR EVIDENCE AVA ILABLE ON THE RECORD THAT FUNDS BORROWED FROM THE BANK HAVE B EEN DIRECTLY USED TO PURCHASE THE PROPERTY AT CONNAUGHT PLACE, FOR WHICH RENT IS BEING RECEIVED TO THE TUNE OF RS. 8 LACS PER MONTH. THE CLAIM OF THE ASSESSEE THAT INTEREST EXPENSES HAVE TO BE CONSIDERED UNDER THE HEAD INCOME FROM HO USE PROPERTY IS THE CORRECT COURSE OF ACTION TO BE TAKE N IN THIS REGARD. IT IS FURTHER RELEVANT TO NOTE THAT ON THE SAME FACTS, FOR ASSESSMENT YEAR 2008- 09, THE ASSESSING OFFICER HAS ALLOWED THE CLAIM OF 'FINANCE CHARGES' UNDER THE HE AD 'INCOME FROM HOUSE PROPERTY' TO THE TUNE OF RS. 47,89,062/-. THEREFORE, IT BECOMES ABUNDANTLY CLEAR THAT THE COMPUTATION GIVEN BY THE ASSESSEE IN THE ORIGINAL R ETURN OF INCOME, WHEREIN THE INTEREST HAS BEEN CLAIMED AS A BUSINESS EXPENSE, WAS INCORRECT AS THE INTEREST HAD BEEN PAID FOR ACQUIRING THE HOUSE PROPERTY, FROM WHICH RENT WAS B EING RECEIVED AND THEREFORE, THE REVISED COMPUTATION FIL ED DURING THE COURSE OF ASSESSMENT PROCEEDINGS CLAIMIN G THIS INTEREST EXPENSE UNDER. THE HEAD 'INCOME FROM HOUSE ITA 1603/DEL/11 ITO VS. M/S M.M.CHHABRA & SONS (HUF) 8 PROPERTY' HAD TO BE ALLOWED ACCORDINGLY .. AS SUCH, ADDITION MADE BY THE ASSESSING OFFICER TO THE TUNE OF RS. 32,05,602/- IS DELETED. 3.5. LEARNED COUNSEL THUS CONTENDS THAT IN SUBSEQUE NT TWO YEARS I.E. A.Y. 2008-09 AND 2009-10, THE AO HIMSELF IN ORDERS U/S 1 43(3) HAS ALLOWED THE CLAIM OF INTEREST AGAINST THE HOUSE PROPERTY INCOME . COPIES OF ORDERS ARE PLACED ON RECORD. 3.6. LEARNED COUNSEL RELIED ON FOLLOWING CASE LAWS: - ACIT VS. NIKO RESOURCES ITD 123 ITD 310 (AHD.) - EMERSON NETWORK POWER INDIA (P) LTD. VS. ACIT 122 T TJ 67 (MUM.) - ITO VS. HEARTLAND K.G. INFORMATION LTD. 131 TTJ 210 (CHENNAI) - CIT VS. JAI PARABOLIC SPRINGS LTD. 306 ITR 42 (DEL. ) - CIT VS. RAMCO INTERNATIONAL 221 CTR 491 (P&H) - ACWT VS. KU. RAGINI SANGHI 123 ITD 384 (IND.) - KISAN DISCRETIONERY FAMILY TRUST VS. ACIT 113 TTJ 9 18 (AHD.) - CIT VS BHARAT ALUMINUM CO. LTD. 303 ITR 256 (DEL.) - ACIT VS. SYED MAQBUL HUSSAIN 4 ITR (TRIB) 44 (CHENN AI) - FRANCO-INDIA PHARMACEUTICALS (P) LTD. VS. ITO 3 ITR (TRIB) 754 (MUM). 3.7. FURTHER RELIANCE IS MADE ON HONBLE SUPREME CO URT JUDGMENT IN THE CASE OF RADHA SWAMI SATSANG 193 ITR 321 FOR THE PRI NCIPLE OF CONSISTENCY, WHICH HAS BEEN APTLY RELIED ON BY THE ITAT IN ITS O RDER DATED 22-7-2011 IN ITA NO. 3399.DEL/2010 IN THE CASE OF SPECTRIS TECH NOLOGIES (P) LTD. VS. ACIT BY FOLLOWING OBSERVATIONS: 16. FROM THE ABOVE OBSERVATIONS OF HONBLE SUPREME COURT, IT IS CLEAR THAT THOUGH PRINCIPLE OF RES JUDICATA ARE NOT APPLICABLE TO INCOME TAX PROCEEDINGS, AND EACH ASSESSMENT YEAR IS A UNIT AND WHAT IS DECIDED IN ONE YEAR MAY NOT APPLY IN TH E FOLLOWING ITA 1603/DEL/11 ITO VS. M/S M.M.CHHABRA & SONS (HUF) 9 YEAR BUT WHERE A FUNDAMENTAL ASPECT PRE-MEETING THR OUGH 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 AL L APPROPRIATE TO ALLOW THE DECISION TO BE CHANGED IN A SUBSEQUENT YEAR PARTICULARLY IN ABSENCE OF ANY MATERIAL CHANGE JUST IFYING THE REVENUE TO TAKE A DIFFERENT VIEW OF THE MATTER AND IF THERE IS NO CHANGE, AND IT WAS IN SUPPORT OF THE ASSESSEE, IT W ILL NOT BE APPROPRIATE TO RE-OPEN THE ISSUE AND TO DECIDE IT C ONTRARY. THEREFORE, FINDINGS SUBSTANCE IN THE ARGUMENT OF LD . AR THAT IN VIEW OF PRINCIPLE OF CONSISTENCY THE REASSESSMENT P ROCEEDINGS FOR THE YEAR UNDER CONSIDERATION SHOULD HAVE ALSO B EEN DROPPED. THEREFORE, ON THE SHORT GROUND, WE SEE NO JUSTIFICA TION IN UPHOLDING THE VALIDITY OF REASSESSMENT PROCEEDINGS. THEREFORE, NOT GOING INTO THE OTHER ASPECTS OF THE MATTER, WHI CH WILL BE OF ACADEMIC IN NATURE, WE DECIDE THE APPEAL FILED BY T HE ASSESSEE IN FAVOUR OF ASSESSEE. 4. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. APROPOS GROUND NO. 1, AO RAISE D SUSPICION ABOUT THE EXPENDITURE INCURRED FOR ASSESSEES BUSINESS INCOME FROM MOBI CARE. IN PRECEDING YEAR THE VOLUME WAS MORE, THE EXPENDITURE WAS ALLOWED IN SUBSEQUENT TWO YEARS I.E. A.Y. 2008-09 AND 2009-10, AO HAS ALLOWED THE ASSESSEES SIMILAR CLAIMS OF EXPENDITURE AND NO SU CH DISALLOWANCES HAVE BEEN MADE. IN OUR VIEW THE EXPENDITURE HAS BEEN DIS ALLOWED ON SURMISES AND SUSPICION. IN PRECEDING AND SUBSEQUENT YEARS SIMILA R EXPENDITURE HAS BEEN ALLOWED BY AO IN ASSESSMENTS U/S 143(3) ON SAME BU SINESS. IN VIEW OF THESE WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) AL LOWING THIS EXPENDITURE. 4.1. COMING TO THE SECOND ISSUE ABOUT ASSESSEES CL AIM OF FINANCE CHARGES ON THE LEASED PROPERTY, THE FACT ABOUT INCURRING OF FINANCE CHARGES WAS MENTIONED IN ASSESSEES BOOKS OF ACCOUNTS. REVISED RETURN FILED BY THE ASSESSEE WAS NOT TO MAKE A FRESH CLAIM BUT WAS CORR ECTING ITS CLAIM IN ITA 1603/DEL/11 ITO VS. M/S M.M.CHHABRA & SONS (HUF) 10 RESPECT OF BUSINESS INCOME AND HOUSE PROPERTY INCOM E. THE EARNING OF LEASE RENT IS NOT DISPUTED WHICH IS TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. SIMILARLY, THE INTEREST HAS BEEN PAID IN RELATION TO ACQUISITION OF LEASE PROPERTY. THE ISSUE ABOUT SURPLUS FUND HAS BE EN EXPLAINED BY THE ASSESSEE BEFORE LOWER AUTHORITIES. IN OUR VIEW NO I NTERFERENCE IS CALLED FOR IN CIT(A)S ORDER ALLOWING THIS CLAIM. AO HIMSELF IN A .Y. 2008-09 AND 2009- 10 HAS ALLOWED THIS CLAIM OF THE ASSESSEE AGAINST T HE HOUSE PROPERTY INCOME. IN OUR VIEW THE CIT(A) ON BOTH THE ISSUES HAS PASSE D A PROPER ORDER. HONBLE SUPREME COURT IN THE CASE OF RADHA SWAMI S ATSANG HAS LAID DOWN THAT UNLESS THERE IS MATERIAL CHANGE IN THE FACTS AND CIRCUMSTANCES OF A CASE, THE PRINCIPLE OF CONSISTENCY SHOULD ORDINARILY BE F OLLOWED. NO EXTRA ORDINARY REASON HAS BEEN PUT FORTH BY THE DEPARTMENT TO DEVI ATE FROM THE PRINCIPLE OF CONSISTENCY. IN VIEW THEREOF WE UPHOLD THE ORDER OF CIT(A) ON BOTH THE COUNTS. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 13-01-2012. SD/- SD/- ( SHAMIM YAHYA) ( R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13-01-2012. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR ITA 1603/DEL/11 ITO VS. M/S M.M.CHHABRA & SONS (HUF) 11