NARANDAS RAJARAM & CO., MUMBAI V. ACIT CIR 2(2), MUMBAI

ITA 3272/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55261 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 12-09-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 27-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Assessee Lawyers: MAHESH SAHAI
• Keywords: Reopening of assessment; Business income; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIB UNAL MUMBAI BENCHES H, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI V.DURGA RAO, JM ITA NOS.3271 & 3272/MUM/2010 : ASST.YEARS 2000-2001 & 2002-2003 M/S.NARANDAS RAJARAM & CO.LIMITED (NOW JCT LIMITED) K.K.CHAMBERS, SIR P.T.MARG MUMBAI - 400 001. PAN :AAACN3476C. VS. THE ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE 2(2) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MAHESH SAHAI RESPONDENT BY : SHRI V.V.SHASTRI DATE OF HEARING : 12.09.2011 DATE OF PRONOUNCEMENT :16.09.2011 O R D E R PER R.S.SYAL, AM : THESE TWO APPEALS BY THE ASSESSEE RELATE TO ASSESSM ENT YEARS 2000-2001 AND 2002-2003. SINCE COMMON ISSUES ARISE IN THESE APPEA LS, WE ARE, THEREFORE, DISPOSING THEM OFF BY THIS CONSOLIDATED ORDER FOR T HE SAKE OF CONVENIENCE. 2. THE FACTS FOR ASSESSMENT YEAR 2000-2001 ARE THAT THE ORIGINAL RETURN WAS FILED DECLARING NIL INCOME AFTER SETTING OFF THE BR OUGHT FORWARD BUSINESS LOSS FROM ASSESSMENT YEAR 1992-93 AGAINST THE COMPENSATION AN D SERVICE CHARGES RECEIVED FROM MTNL AMOUNTING TO RS.64,33,968 DURING THE CUR RENT YEAR, WHICH AMOUNT WAS CLAIMED BY THE ASSESSEE AS BUSINESS INCOME. THE ASSESSING OFFICER OBSERVED THAT IN ASSESSMENT YEARS 1999-2000 AND 2001-2002 SU CH INCOME WAS HELD TO BE CHARGEABLE UNDER THE HEAD `INCOME FROM HOUSE PROPER TY. IT WAS STILL FURTHER NOTED THAT THE VIEW TAKEN BY THE A.O. WAS UPHELD IN THE F IRST APPEAL. ON THIS BASIS, NOTICE U/S 148 WAS ISSUED ON 28.03.2005. DUE TO CERTAIN CO MMUNICATION WITH THE ASSESSEE DURING THE COURSE OF PROCEEDINGS U/S 143(3) R.W.S. 147, THE ASSESSING OFFICER ISSUED A LETTER DATED 10.01.2006 PROPOSING TO TREAT THE INCOME FROM COMPENSATION AS CHARGEABLE UNDER THE HEAD `INCOME FROM OTHER SOU RCES. AFTER CONSIDERING THE ITA NO.3271/MUM/2010 M/S.NARANDAS RAJARAM & CO. LTD.(NOW JCT LTD.). 2 ASSESSEES OBJECTIONS, THE AO EVENTUALLY HELD SUCH AMOUNT OF COMPENSATION FALLING UNDER THE HEAD `INCOME FROM OTHER SOURCES. IN THE FIRST APPEAL THE ASSESSEE WAS UNSUCCESSFUL ABOUT CHALLENGE TO THE INITIATION OF R EASSESSMENT PROCEEDINGS. ON MERITS THE LEARNED CIT(A) NOTED THAT THE TRIBUNAL I N ASSESSMENT YEAR 2003-2004 HAD REMITTED THE MATTER TO HIS FILE FOR A FRESH DE CISION AND PURSUANT TO THAT, HE PASSED THE ORDER FOR THE SAID ASSESSMENT YEAR 2003- 2004 ASSESSING THE INCOME UNDER THE HEAD `INCOME FROM HOUSE PROPERTY. SAME VIEW WAS TAKEN IN THIS YEAR AS WELL. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. AFTER SEEING THE EVIDENCE OF SERVICE OF TH E NOTICE ISSUED BY THE ASSESSING OFFICER, THE LD. AR DID NOT PRESS THE GROUND IN THI S REGARD. THE SAME IS, THEREFORE, DISMISSED. 4. INSOFAR AS THE OBJECTION OF THE ASSESSEE A GAINST THE INITIATION OF REASSESSMENT PROCEEDINGS IS CONCERNED WE FIND THAT THERE IS NO M ERIT INASMUCH AS THE ASSESSEE SHOWED SUCH INCOME AS BUSINESS INCOME. IN THE IMMED IATELY PRECEDING AS WELL AS SUCCEEDING YEAR THE A.O. ASSESSED SUCH INCOME UNDER THE HEAD `INCOME FROM HOUSE PROPERTY. IT IS ON THE BASIS OF SUCH DECISI ON TAKEN BY HIM AND DULY APPROVED IN THE FIRST APPEAL AND FURTHER THE ASSESS EE NOT FILING ANY SECOND APPEAL, THAT THE ASSESSING OFFICER HELD THAT THERE WAS ESCA PEMENT OF INCOME. IT IS NOTICED THAT THE ASSESSEE CLAIMED THE AMOUNT IN QUESTION AS BUSINESS INCOME AND FILED RETURN WITH THE TOTAL INCOME AT NIL AFTER SETTING O FF THE BROUGHT FORWARD BUSINESS LOSS AGAINST THIS INCOME. NOW WHETHER SUCH INCOME IS HELD TO BE FALLING UNDER THE HEAD `INCOME FROM HOUSE PROPERTY OR `INCOME FROM OTHER SOURCES, ONE THING IS SURE THAT THE BENEFIT OF SET OFF OF BROUGHT FORWARD BUSINESS LOSS WILL NOT BE AVAILABLE. THE NATURAL CONSEQUENCE OF THE AOS ACTI ON IN REOPENING REASSESSMENT IS THAT THE TOTAL INCOME WHICH THE ASSESSEE HAD SHOWN AS NIL WOULD BE OBLITERATED AND THE INCOME EARNED IN THIS YEAR WOULD BE CHARGEABLE TO TAX. BUT FOR THE ACTION OF THE AO, THE TOTAL INCOME FOR THE YEAR WOULD HAVE ESCAPE D ASSESSMENT. AS SUCH, WE DO ITA NO.3271/MUM/2010 M/S.NARANDAS RAJARAM & CO. LTD.(NOW JCT LTD.). 3 NOT FIND ANY REASON TO HOLD THAT THE AO WAS NOT JUS TIFIED IN INITIATING THE REASSESSMENT PROCEEDINGS. 5. THE OBJECTION OF THE LD. AR THAT THERE W AS NO MATERIAL WITH THE AO TO FORM AN OPINION THAT THERE WAS AN ESCAPEMENT OF INCOME, IS SANS MERITS. IN THE PRECEDING AS WELL AS THE SUCCEEDING YEAR, THE AO HELD SUCH IN COME TO BE FALLING UNDER THE HEAD `INCOME FROM HOUSE PROPERTY. IN OUR CONSIDERE D OPINION THE VIEW TAKEN BY THE ASSESSING OFFICER IN SUBSEQUENT YEAR WHICH HAS THE EFFECT OF INCREASING THE INCOME CHARGEABLE TO TAX IS A GOOD GROUND FOR INITI ATION OF REASSESSMENT PROCEEDINGS. THE HONBLE SUPREME COURT IN THE CASE OF ESS ESS KAY ENGINEERING CO. P.LTD. VS. CIT [(2001) 247 ITR 818 (SC)] HAS HELD THAT MERELY BECAUSE THE CASE OF THE ASSESSEE WAS ACCEPTED AS CORRECT IN THE ORIGINAL ASSESSMENT FOR AN ASSESSMENT YEAR, DOES NOT PRECLUDE THE ITO FROM REO PENING THAT ASSESSMENT U/S 147(A) OF THE INCOME-TAX ACT, 1961, ON THE BASIS OF HIS FINDINGS OF FACT MADE ON THE BASIS OF FRESH MATERIALS OBTAINED IN THE COURSE OF ASSESSMENT FOR THE NEXT ASSESSMENT YEAR. WE, THEREFORE, DO NOT FIND ANY INF IRMITY IN INITIATING THE REASSESSMENT ON THIS ISSUE. 6. THE FURTHER CONTENTION RAISED ON BEHALF OF THE ASSESSEE THAT THERE WAS CHANGE IN OPINION BY THE ASSESSING OFFICER IN ISSUI NG NOTICE U/S.148 ALSO HAS NO MERIT IN THE VIEW OF THE FACT THAT THE RETURN FILED BY THE ASSESSEE WAS SIMPLY PROCESSED AND NO VIEW WAS CANVASSED BY THE ASSESSIN G OFFICER. POSSIBILITY OF FORMING A PARTICULAR VIEW CAN ARISE ONLY WHEN THE A SSESSMENT IS MADE AND THE AO, AFTER CONSIDERING THE MATERIAL BEFORE HIM, COMES TO CONCLUSION THAT A PARTICULAR TREATMENT SHOULD BE GIVEN TO THE ITEM UNDER CONSIDE RATION. IF THERE IS NO ASSESSMENT, THE POSSIBILITY OF FORMING AN OPINION A ND THE SUBSEQUENT CHANGE OF OPINION ON ISSUING NOTICE U/S 148 IS RULED OUT. THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD. [(2007) 291 ITR 500 (SC)] SUPPORTS THIS VIEW UPHOLDING THE VALIDITY OF REASSESSMENT. IN THE LIGHT OF THE FOREGOING DISCUSS ION WE DO NOT FIND ANY INFIRMITY ITA NO.3271/MUM/2010 M/S.NARANDAS RAJARAM & CO. LTD.(NOW JCT LTD.). 4 IN THE REOPENING OF ASSESSMENT BY A.O. THE GROUNDS CHALLENGING THE REASSESSMENT ARE REJECTED. 7. COMING TO THE MERITS OF THE CASE IT IS SEEN THAT IN ASSESSMENT YEAR 1999-2000 THE ASSESSING OFFICER ASSESSED COMPENSATION AND SER VICE CHARGES RECEIVED FROM MTNL AS INCOME FROM HOUSE PROPERTY, WHICH VIEW CAM E TO BE UPHELD IN THE FIRST APPEAL. THE LEARNED A.R. FAIRLY ADMITTED THAT NO SE COND APPEAL WAS FILED ON BEHALF OF THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) FOR THAT YEAR. SIMILAR IS THE POSITION FOR ASSESSMENT YEAR 2001-2002 IN WHICH THE CIT(A) U PHELD THE ASSESSMENT ORDER ASSESSING SUCH INCOME AS INCOME FROM HOUSE PROPERTY , WHICH AGAIN WAS DULY ACCEPTED BY THE ASSESSEE. WE HAVE ASSESSMENT YEARS 2000-2001 AND 2002-2003 UNDER CONSIDERATION. IN ASSESSMENT YEAR 2003-2004, THE TRIBUNAL RESTORED THE MATTER TO THE FILE OF THE LEARNED FIRST APPELLATE A UTHORITY WHO VIDE HIS LATTER ORDER DATED 25.02.2010 HAS ASSESSED SUCH INCOME UNDER THE HEAD `INCOME FROM HOUSE PROPERTY. ON A SPECIFIC QUERY, THE LEARNED A.R. A DMITTED THAT THE VIEW TAKEN BY THE LEARNED CIT(A) PURSUANT TO RESTORATION BY THE T RIBUNAL HAS BEEN FINALLY ACCEPTED BY THE ASSESSEE AND NO SECOND APPEAL IS FI LED. THESE FACTS INDICATE THAT APART FROM THE TWO ASSESSMENT YEARS UNDER CONSIDERA TION, RIGHT FROM ASSESSMENT YEAR 1999-2000 UP TO 2003-2004 SUCH INCOME HAS BEEN FINALLY HELD TO BE TAXABLE UNDER THE HEAD `INCOME FROM HOUSE PROPERTY. THE V IEW TAKEN BY THE LEARNED CIT(A) HOLDING SUCH INCOME TO BE TAXABLE UNDER THE HEAD `INCOME FROM HOUSE PROPERTY IN THE CURRENT YEAR IS INESCAPABLE. WE, THEREFORE, UPHOLD THE IMPUGNED ORDER. 8. BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS A ND CIRCUMSTANCES OF ASSESSMENT YEAR 2003-2003 ARE MUTATIS MUTANDIS SIMILAR TO THOSE OF ASSESSMENT YEAR 2000-2001. FOLLOWING THE VIEW TAKEN HEREINABOV E WE UPHOLD THE IMPUGNED ORDER. ITA NO.3271/MUM/2010 M/S.NARANDAS RAJARAM & CO. LTD.(NOW JCT LTD.). 5 9. IN THE RESULT, BOTH THE APPEALS STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF SEPTEMBER, 2011. SD/- SD/- (V.DURGA RAO) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 16 TH SEPTEMBER, 2011. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - V, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.