M/s. N.R. Narayanan, CHENNAI V. DCIT, CHENNAI

ITA 2872/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7498 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 04-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Keywords: Reopening of assessment; Salary income; Tangible material; Difference of opinion; Condonation of delay; Change of opinion
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 143(1); 201; 72

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 28 72 /MDS/2016 / ASSESSMENT YEAR :20 08 - 09 M/S. M.R. NARAYANAN, B - 11, SRESHTA, 473, KILPAUK GARDEN ROAD, KILPAUK, CHENNAI 600 010. [PAN: A A BPN8001H ] VS. THE DEPUTY COMMISSIONER OF INCOME TAX , SALARY C IRCLE III [PRESENTLY NON - CORPORATE CIRCLE 21] , CHENNAI 600 034 . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI D. ANAND , ADVOCATE / RESPONDENT BY : S HRI S HIVA SRINIVAS , J CIT / DATE OF HEARING : 2 6 . 12 .201 6 / DATE OF P RONOUNCEMENT : 17 . 0 3 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : TH I S APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMIS SIONER OF IN COME TAX (APPEALS) 9 , C HENNAI DATED 04 . 0 4 .201 6 RELEVANT TO THE ASSESSMENT YEAR 20 08 - 09 . THE ASSESSEE HAS RAISED THE FOLLOWING TWO EFFECTIVE GROUNDS: (I) THE LD. CIT(A) HAS ERRED IN CONFIRMING THE REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] . I.T.A. NO . 2872 / M/ 1 6 2 (II) THE LD. CIT(A) HAS ERRED IN SUSTAINING THE NOTIONAL RENTAL INCOME DETERMINED BY THE ASSESSING OFFICER. 2. THE APPEAL OF THE ASSESSEE IS FOUND TO HAVE BEEN FILED LATE BY NINETY FOUR DAYS BEFORE THE TRIBUNAL . THE ASSESSEE FILED PETITION FOR CONDONATION OF DELAY IN FILING THE APPEAL IN SUPPORT OF AN AFFIDAVIT. BY REFERRING TO THE AFFIDAVIT AND THE PETITION, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS BEEN EMPLOYED AT MUMBAI AND COMMUTING TO CHENNAI FREQUENTLY TO VISIT HIS PARENTS AND RELATIVES. THE APPELLATE ORDER RECEIVED BY HIM ON 03.05.2016 WAS MISPLACED AND FINALLY GOT FOUND IN CHENNAI ON 01.10.2016. THEREAFTER, THE APPEAL PAPERS WERE GOT READY AND FILED THE APPEAL BEFORE THE TRIBUNAL ON 04.10. 2016, THEREBY THERE WAS DELAY IN FILING THE APPEAL AND THEREFORE, HE PLEADED THAT THERE WAS NO WILLFUL DELAY IN FILING THE APPEAL AND PRAYED FOR CONDONATION OF DELAY IN FILING THE APPEAL. WE HAVE PERUSED THE RECORDS AND FOUND THAT THERE IS SUFFICIENT CAUSE FOR DELAY IN FILING THE APPEAL. THE LD. DR DID NOT OBJECT TO THE PLEA OF THE LD. COUNSEL FOR THE ASSESSEE. ACCORDINGLY, WE CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING AND ADJUDICATION. 3 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVI DUAL AND DERIVING INCOME FROM SALARY AND RENTAL INCOME. HE FILED HIS RETURN ADMITTING TOTAL INCOME OF .59,42,110/ - . THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT ON 29.03.2010. SUBSEQUENTLY, T HE I.T.A. NO . 2872 / M/ 1 6 3 CASE OF THE ASSESSEE WAS SE LECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED UNDER SECTION 143( 3 ) OF THE ACT ON 20.12.2010. SUBSEQUENTLY, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE WAS ALLOWED EXCESS RELIEF BY WAY OF DEDUCTION OF INTEREST ON HOUSING LOAN AND THEREFORE, THE ASSESSM ENT WAS REOPENED BY ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT ON 08.03.2013. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT BY HOLDING THAT THE PROPERTY AT BOMBAY WAS SELF - OCCUPIED BY THE ASSESSEE AND THEREFORE, THE INTEREST TO BE ALLOWED HAS TO BE RESTRICTED TO .1,50,000/ - AGAINST .8,51,524/ - CLAIMED IN THE RETURN OF INCOME. IN RESPECT OF THE PROPERTY AT CHENNAI, THE ASSESSING OFFICER HAS ESTIMATED THE ANNUAL LETTING VALUE AT .1,20,000/ - AND BR OUGHT A SUM OF .84,000/ - AS INCOME FROM HOUSE PROPERTY. THE ASSESSING OFFICER FURTHER REWORKED THE DEDUCTION ALLOWABLE UNDER SECTION 10(13A) AND RESTRICTED THE DEDUCTION AT .30,000/ - AND ACCORDINGLY, DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT .67,17 ,630/ - . 4 . THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESSEE. 5 . ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIB UNAL AND FIRSTLY CHALLENGED REOPENING OF ASSESSMENT UNDER SECTION 148 OF THE ACT. IT WAS THE SUBMISSION OF THE ASSESSEE THAT THE ASSESSEE HAS FURNISHED FULL AND I.T.A. NO . 2872 / M/ 1 6 4 TRUE PARTICULARS OF ITS INCOME AT THE TIME OF ORIGINAL ASSESSMENT WITH REFERENCE TO THE INCOME ALLEGED TO HAVE ESCAPED ASSESSMENT AND THAT THE ASSESSMENT CANNOT BE VALIDLY REOPENED UNDER SECTION 147 OF THE ACT EVEN WITHIN FOUR YEAR, MERELY ON THE BASIS OF CHANGE OF OPINION , WHICH CANNOT BE SUSTAINED UNDER THE LAW. THEREFORE, HE PLEADED THAT THE REAS SESSMENT ORDER PASSED UNDER SECTION 147 OF THE ACT IS BAD IN LAW AND SHOULD BE QUASHED ON THE RATIO LAID DOWN BY THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT V. USHA INTERNATIONAL LTD. 348 ITR 485 . MOREOVER, THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED O N THE DECISION IN THE CASE OF CIT V. KELVINATOR OF INDIA LTD. 320 ITR 561 (SC). ON THE OTHER HAND, THE LD. DR STRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 6 . WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH T HE ORDERS OF AUTHORITIES BELOW. A PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE ORIGINAL ASSESSMENT HAD BEEN COMPLETED UNDER SECTION 143(3) OF THE ON 20.12.2010 . IT IS ALSO NOTICED THAT THE ASSESSEE HAS CHALLENGED THE REOPENING. IT IS FURTHER NOTIC ED THAT THE A SSESSING O FFICER HAS OVERRULED THE ASSESSEE S OBJECTION REGARDING THE VALIDITY OF THE REOPENING MERELY BASED ON CHANGE OF OPINION AND ALSO IT WAS SUBMITTED BEFORE THE ASSESSING OFFICER ON MERITS THERE WAS NO ANOMALY IN THE ASSESSEE S CLAIM MAD E IN ITS RETURN OF INCOME. THE ASSESSING OFFICER IS MANDATED TO DECIDE THE OBJECTION TO THE NOTICE UNDER SECTION 148 AND SUPPLY I.T.A. NO . 2872 / M/ 1 6 5 OR COMMUNICATE IT TO THE ASSESSEE. THE ASSESSING OFFICER WAS REQUIRED TO, FIRST DECIDE THE OBJECTION OF THE ASSESSEE FILED UNDER SECTION 148 AND SERVE D COPY OF THE ORDER ON ASSESSEE. AND AFTER GIVING SOME REASONABLE TIME TO THE ASSESSEE FOR CHALLENGING HIS ORDER, THE ASSESSING OFFICER MAY PASS THE REASSESSMENT ORDER. I T WAS OPEN TO HIM TO PASS AN ASSESSMENT ORDER. THIS WAS NOT DONE BY THE ASSESSING OFFICER . I T WAS NOT OPEN TO THE ASSESSING OFFICER TO DECIDE THE OBJECTION TO NOTICE UNDER SECTION 148 OF THE ACT BY A COMPOSITE ASSESSMENT ORDER AS HELD BY THE HON BLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA (P.) LTD. V. DC IT [2012] 25 TAXMANN.COM 364 . 6.1 AS PER ORIGINAL ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT DATED 20.12.2010, IT IS A FACT THAT THE ASSESSEE HAS ADMITTED TOTAL INCOME AT .59,42,110/ - . IN THE ORIGINAL RETURN, THE ASSESSEE HAS DECLARED THAT HE OWNS TWO RESIDENTIAL PROPERTY ONE AT CHENNAI AND ANOTHER AT MUMBAI. AFTER EXERCISING HIS OPTION UNDER SECTION 23(4)(A) OF THE ACT, THE ASSESSEE CLAIM ED OWNERSHIP OF THE PROPERTY LOCATED AT CHENNAI AND DECLAR ED THE ANNUAL LETTING OUT VALUE OF THE AFORESAID PROPE RTY AS NIL . WITH REGARD TO THE PROPERTY LOCATED AT MUMBAI , AS PER SECTION 23(4)(B) OF THE ACT , THE ASSESSEE HAS DECLARED THE ANNUAL LETTING OUT VALUE AT .2,40,000/ - AND CLAIMED A SUM OF .8,51,524/ - BEING THE INTEREST ON HOUSING LOAN , WHICH WAS ACCEPTED BY THE ASSESSING OFFICER AND ALLOWED THE CLAIM OF THE ASSESSEE IN THE ASSESSMENT ORDER I.T.A. NO . 2872 / M/ 1 6 6 PASSED UNDER SECTION 143(3) OF THE ACT. THEREAFTER, THE ASSESSING O FFICER WAS OF THE OPINION THAT THE MUMBAI PROPERTY HAS TO BE CONSIDERED AS SELF OCCUPIED PROPERTY AND INTEREST UNDER SECTION 24(B) OF THE ACT HAS TO BE RESTRICTED TO .1,50,000/ - BY TREATING THE CHENNAI PROPERTY AS LET OUT PROPERTY KEPT VACANT AND NOTIONAL INCOME FROM THE CHENNAI PROPERTY HAS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY, THE ASSESSING OFFICER REOPENED THE ASSESSMENT WITHIN FOUR YEARS AND CONSEQUENTLY THE PROVISO TO SECTION 147 WAS NOT APPLICABLE. THE FACT THAT THE A SSESSING O FFICER IN THE C OURSE OF THE ORIGINAL ASSESSMENT HAS CALLED FOR THE DETAILS AND HAS EXAMINED THEM AND HAS ACCEPTED THE CLAIM OF THE ASSESSEE IN THE COURSE OF THE ORIGINAL ASSESSMENT SHOWS THAT THERE IS NO DEFAULT ON THE PART OF THE ASSESSEE. OBVIOUSLY, THE ASSESSEE IS NOT EXPECTED TO ADVISE THE A SSESSING O FFICER AS TO THE COURSE OF ACTION HE HAS TAKE IN THE ASSESSMENT. THE A SSESSING O FFICER CALLS FOR THE DETAILS AND EXPLANATIONS FROM THE ASSESSEE. THE ASSESSEE IS EXPECTED TO GIVE THE DETAILS AND THE EXPLANATION CALLED FOR . THE A SSESSING O FFICER HAS TO CONSIDER THE EXPLANATION AND THEN MAKE THE ASSESSMENT. JUST BECAUSE HE HAS NOT DISCUSSED ANYTHING WHETHER THE ASSESSEE HAS STAYED IN RENTAL PROPERTY IN MUMBAI FROM 01.04.2007 TO 14.09.2007 AND THEREAFTER, HE MOVED TO HIS OWN PROPERTY SITUATED AT MUMBAI THEREBY TREATING AS THE ASSESSEE STAYED IN HIS OWN PROPERTY ONLY DURING THE COURSE OF ORIGINAL ASSESSMENT THAT DOES NOT MEAN THAT THE ISSUE HAS NOT BEEN CONSIDERED BY THE A SSESSING O FFICER OR THAT HE HAS NOT FORMED AN I.T.A. NO . 2872 / M/ 1 6 7 OPINION O N THE ISSUE. OBVIOUSLY, THE A SSESSING O FFICER WOULD DISCUSS ISSUES IN THE ASSESSMENT ORDER ON WHICH THERE ARE DISPUTES BETWEEN THE A SSESSING O FFICER AND THE ASSESSEE. WHERE THE A SSESSING O FFICER ACCEPTS THE EXPLANATION OF THE ASSESSEE NORMALLY SUCH ISSUE S WOULD NOT BE DISCUSSED IN THE ASSESSMENT ORDER. THE FACT THAT THE A SSESSING O FFICER HAS CALLED FOR THE DETAILS IN THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS IS NOT DISPUTED. ONCE THE DETAILS ARE CALLED FOR AND THEY ARE SUBMITTED IT IS PRESUMED THAT THE A SSESSING O FFICER HAS APPLIED HIS MIND TO THE ISSUES FOR WHICH THE DETAILS HAVE BEEN CALLED FOR. THE FACT THAT NO DISCUSSIONS OR ADDITIONS OR DISALLOWANCES HAVE BEEN MADE IN THE COURSE OF THE ASSESSMENT ORDER PASSED ORIGINALLY WOULD SHOW THAT THE A SSES SING O FFICER HAS FOUND THE CLAIM OF THE ASSESSEE TO BE REASONABLE AND ACCEPTABLE. THUS THE A SSESSING O FFICER HAS ALREADY FORMED AN OPINION ON THE BASIS OF THE EVIDENCES FILED IN THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS. BY RE - EXAMINING THE SAME AND DRAWING A DIFFERENT INFERENCE IT WOULD ONLY MEAN THAT THERE IS A CHANGE OF OPINION. THIS IS NOT PERMISSIBLE FOR REOPENING. THIS VIEW IS SUPPORTED BY THE DECISION OF THE HON'BLE SUPREME COURT IN CIT V. KELVINATOR OF INDIA LTD. REPORTED IN 320 ITR 561. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE REOPENING OF THE ASSESSMENT AS DONE BY THE A SSESSING O FFICER IS BAD IN LAW. THEREFORE, WE ARE OF THE CONSIDERED UPON THAT THE REOPENING DONE IN THE PRESENT CASE IS ONLY ON A CHANGE OF OPINION. I.T.A. NO . 2872 / M/ 1 6 8 6.2 ADMIT TEDLY, IN THIS CASE, THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT ON 29.03.2010. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 20.1 2.2010. THEREAFTER, THE ASSESSMENT PASSED UNDER SECTION 143(3) OF THE ACT WAS REOPENED BY ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT. IT IS A FACT THAT THERE WAS ANY SEARCH O R SURVEY IN ASSESSEE S CASE AND THE DEPARTMENT FOUND ANY TANGIBLE MATERIAL TO FO RM A OPINION AS THERE WAS ESCAPEMENT OF INCOME AND THE ASSESSMENT WAS REOPENED UNDER SECTION 147 OF THE ACT EVEN WITHIN FOUR YEARS. THE ASSESSEE HAS FURNISHED ALL PARTICULARS AT THE TIME OF FILING OF RETURN OF INCOME AND AFTER EXAMINING THE DETAILS, THE RE TURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT, WHICH IS SUBJECTED TO 143(3) SCRUTINY ASSESSMENT AND THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED. WITH REGARD TO VALIDITY OF REOPENING OF ASSESSMENT, THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE DECISION IN THE CASE OF CIT V. USHA INTERNATIONAL LTD. (SUPRA) WHEREIN, THE HON BLE DELHI HIGH COURT HAS HELD AS UNDER: (I) ASSESSMENTS CANNOT BE VALIDLY REOPENED UNDER SECTION 147 OF THE ACT EVEN WITHIN FOUR YEARS, IF AN ASSESSEE HAD FURNISHED FULL AND TRUE PARTICULARS AT THE TIME OF ORIGINAL ASSESSMENT WITH REFERENCE TO THE INCOME ALLEGED TO HAVE ESCAPED ASSESSMENT, IF THE ORIGINAL ASSESSMENT WAS MADE UNDER SECTION 143(3). SO LONG AS THE ASSESSEE HAS FURNISHED FULL AN D TRUE PARTICULARS AT THAT TIME OF ORIGINAL ASSESSMENT AND SO LONG AS THE ASSESSMENT ORDER IS FRAMED UNDER SECTION 143(3) OF THE ACT, IT MATTERS LITTLE THAT THE ASSESSING OFFICER DID NOT ASK ANY QUESTION OR I.T.A. NO . 2872 / M/ 1 6 9 QUERY WITH RESPECT TO ONE ENTRY OR NOTE BUT HAD R AISED QUERIES AND QUESTIONS ON OTHER ASPECTS. 6.3 IN VIEW OF THE DECISIONS AS REFERRED HEREINABOVE, WE OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS NOT VALIDLY INITIATED THE PROCEEDINGS UNDER SECTION 147 OF THE ACT AND THEREFORE, THE ASSESSM ENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT ON 24.03.2014 IS QUASHED. ONCE THE REASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS QUASHED, THERE IS NO NEED TO ADJUDICATE THE ISSUE ON MERITS. THUS, THE APPEAL FILED BY THE ASSESSEE IS ALLO WED IN PRO TANTO . 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 17 TH MARCH , 201 7 AT CHENNAI. SD/ - SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 17 . 0 3 .201 7 V M/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.