TRADE WINGS LTD, MUMBAI V. ITO WD 2(3)(3), MUMBAI

ITA 3417/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3322 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 02-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RITESH MISRADR
• Assessee Lawyers: S C TIWARI; RUTIYA PAWAR
• Keywords: Reopening of assessment; Business income; Depreciation; Rectification of order; Opportunity of being heard; Principle of natural justice; Deemed to accrue or arise in india; Onus to prove; Reason to believe
• Section: 143(3); 115JB; 147; 148; 154

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 3416 /MUM/2013 ( / ASSESSMENT YEAR : 2006-07) ./ I.T.A. NO. 3417 /MUM/2013 ( / ASSESSMENT YEAR : 2007-08) ./ I.T.A. NO. 3418 /MUM/2013 ( / ASSESSMENT YEAR : 2008-09) ./ I.T.A. NO. 3419 /MUM/2013 ( / ASSESSMENT YEAR : 2009-10) TRADE WINGS LIMITED, 18/20-K, DUBASH MARG, FORT,MUMBAI 400 023. / V. INCOME TAX OFFICER WARD 2(3)(3), AAYAKAR BHAVAN, M.K. MARG, MUMBAI 400 020. ./ PAN : AAACT4639F ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI S.C. TIWARI & MS. RUTIYA PAWAR REVENUE BY : SHRI RITESH MISRA,DR / DATE OF HEARING : 02-03-2016 / DATE OF PRONOUNCEMENT : 30-05-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER ALL THE FOUR APPEALS ARE FILED BY THE ASSESSEE COM PANY AGAINST FOUR SEPARATE ORDERS PASSED BY LEARNED COMMISSIONER OF I NCOME TAX (APPEALS) FOR THE ASSESSMENT YEARS 2006-07 TO 2009-10. THESE APPE ALS WERE HEARD TOGETHER AND WE DECIDE THEM BY THIS COMBINED ORDER FOR THE S AKE OF CONVENIENCE. ITA 3416 TO 3419 /MUM/2013 2 FIRST WE SHALL TAKE UP ASSESSEE COMPANY APPEAL IN I TA NO 3416/MUM/2013 FOR THE ASSESSMENT YEAR 2006-07. 3. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE COM PANY IN THE MEMO OF APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL , MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. LEARNED COMMISSIONER OF INCOME TAX - APPEAL {CI T-(A)} HAS ERRED IN CONFIRMING LEVY OF PENALTY OF RS. 1,27,660/- U/S 271(1)(C) OF THE ACT. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW , THE PENALTY LEVIED OUGHT TO BE DELETED. 2. WITHOUT PREJUDICE TO THE ABOVE, THE LD CIT-(A) HAS F URTHER ERRED IN CONFIRMING THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT, ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION OF RS. 1,67,426/- ON AC COUNT OF RENT FROM RUNNING BUSINESS CENTERS WAS ASSESSED AS 'INCOME FR OM HOUSE PROPERTY' AS AGAINST BUSINESS INCOME COMPUTED BY THE A PPELLANT. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, TH E PENALTY LEVIED ON DISALLOWANCE OF DEPRECIATION TO THE EXTENT OF RS. 1 ,67,426/- OUGHT TO BE DELETED. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF MONEY CHANGING, TRAVEL ARRANGEMENT, FREIGHT FORWARDING, BUSINESS CENTRE AND INSURANCE AGENT. 5. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 143(2) OF THE ACT , THE A.O. NOTICED THAT T HE ASSESSEE COMPANY HAD CLAIMED DEPRECIATION ON FIXED ASSET AMOUNTING TO RS . 18,05,436/- WHICH INCLUDED DEPRECIATION ON ADDITIONS TO FIXED ASSETS AT DIFFERENT BRANCHES. THE A.O. ASKED THE ASSESSEE COMPANY TO FURNISH NECESSAR Y DOCUMENTARY EVIDENCES REGARDING THE FIXED ASSETS, BUT THE ASSES SEE COMPANY FAILED TO FURNISH NECESSARY DOCUMENTARY EVIDENCES. THE A.O. DISALLOWED THE CLAIM OF THE DEPRECIATION OF THE ASSESSEE COMPANY TO THE EXT ENT OF RS. 2,79,591/- IN ITA 3416 TO 3419 /MUM/2013 3 RESPECT TO ADDITIONS TO THE FIXED ASSETS, VIDE ASSE SSMENT ORDERS DATED 23.12.2008 PASSED BY THE AO U/S 143(3) OF THE ACT. SIMILAR , DISALLOWANCE OF DEPRECIATION ON ADDITIONS TO FIXED ASSETS WERE ALSO MADE FOR THE ASSESSMENT YEAR 2005-06, HOWEVER, SINC E THE ASSESSEE COMPANY HAS NOT ADJUSTED THE OPENING BALANCE OF THE WRITTEN DOWN VALUE OF THE FIXED ASSETS. HENCE, THE A.O. MADE FURTHER DISALLOWANCE OF RS. 62,439/- ON ACCOUNT OF DEPRECIATION , WITH RESPECT TO FIXED PUR CHASED IN THE ASSESSMENT YEAR 2005-06 FOR WHICH EVIDENCES WERE NOT SUBMITTED BY THE ASSESSEE COMPANY FOR PURCHASE OF FIXED ASSETS IN THE ASSESSM ENT YEAR 2005-06 AND DISALLOWANCE OF DEPRECIATION WAS MADE BY THE AO IN THE ASSESSMENT YEAR 2005-06 , WAS ADDED BACK THE SAME TO THE INCOME OF THE ASSESSEE COMPANY IN THIS ASSESSMENT YEAR, VIDE ASSESSMENT ORDERS DATED 23.12.2008 PASSED BY THE AO U/S 143(3) OF THE ACT. THE A.O. FURTHER OBSERVED THAT THE ASSESSEE COMPANY HAD DECLARED RS. 36,81,539/- UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION AS BUSINESS INCOME WHICH IS IN THE NATURE OF THE RENT FROM LETT ING OUT OF THE RESIDENTIAL PREMISES, THEREFORE, THE A.O. TREATED THE RENTAL RE CEIPTS AS INCOME FROM HOUSE PROPERTY BY FOLLOWING THE STAND TAKEN BY THE REVEN UE FOR THE ASSESSMENT YEAR 2005-06. THE A.O. FURTHER OBSERVED THAT THE R ESIDENTIAL PREMISES WERE USED FOR ACCOMMODATION AND NOT FOR THE BUSINESS PUR POSE. THE A.O. ACCORDINGLY DISALLOWED THE CLAIM OF DEPRECIATION AM OUNTING TO RS. 1,67,426/- ON THESE RENTED ACCOMMODATIONS AS NOW THESE RENTAL INCOME ARE ASSESSED TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY INS TEAD OF UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE COMPANY AND THE TOTAL ADDITION ON ACCOUNT OF DEPRECIATION WAS MADE TO THE INCOME OF THE ASSESSEE TO THE TUNE OF RS. 5,09,456/- , VIDE ASSESSMENT ORDERS DATED 23.12.2008 PASSED BY THE AO U/S 143(3) OF THE ACT. THE A.O. NOTED THAT THE ASSESSEE COMPANY HAS CONCEA LED ITS INCOME BY ITA 3416 TO 3419 /MUM/2013 4 FURNISHING INACCURATE PARTICULARS OF TAXABLE INCOME AND THEREBY INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. THE ASSESSEE COMPANY FILED FIRST APPEAL BEFORE THE LEARNED CIT(A) IN QUANTUM ASSESSMENT ADDITIONS MADE BY THE AO AS STATED ABOV E WHICH APPEAL WAS DISMISSED BY LEARNED CIT(A) VIDE ORDERS DATED 16.02 .2010. DURING THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT, THE ASSESSEE COMPANY SUBMITTED THAT THE DOCUMENTARY EVIDENCES IN RESPECT OF THE ADDITION TO THE FIXED ASSETS COULD NOT BE PRODUCED FROM ITS VARIOUS BRANCHES SPREAD ALL OVER THE COUNTRY. THE ASSESSEE COMPANY SUBMITTED TH AT THE STATUTORY AUDITORS IN THEIR REPORT U/S 44AB OF THE ACT DID NO T MAKE ANY ADVERSE COMMENTS REGARDING THE DETAILS OF ADDITIONS TO THE FIXED ASSETS AND PENALTY U/S 271(1)(C) OF THE ACT CANNOT BE LEVIED MERELY ON THE REASON THAT THERE WERE NON-PRODUCTION OF DOCUMENTARY EVIDENCES. THE ASSES SEE COMPANY RELIED ON THE DECISION OF CHENNAI TRIBUNAL REPORTED IN GEM GR ANITES (KARNATKA) V. DCIT (2009)120 TTJ 992(CHENNAI. TRIB.). THE ASSESSEE COM PANY SUBMITTED THAT MERELY BECAUSE THE LEARNED CIT(A) HAS CONFIRMED THE QUANTUM ASSESSMENT ADDITIONS, PENALTY CANNOT BE LEVIED AS THE REVENUE HAS TO PROVE THE ONUS THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR FURNISHED IN-ACCURATE PARTICULARS OF INCOME. THE ASSESSEE COMPANY SUBMIT TED THAT THE ASSESSEE COMPANY HAS BROUGHT FORWARD LOSSES, HENCE, THE INCO ME IS ASSESSABLE U/S 115JB OF THE ACT AND UNDER THESE CIRCUMSTANCES NO P ENALTY U/S 271(1)(C) OF THE ACT IS LEVIABLE. THE ASSESSEE COMPANY RELIED O N THE DECISION OF HONBLE DELHI HIGH COURT REPORTED IN CIT V. NALWA SONS INVE STMENT LIMITED (2010) 327 ITR 543(DEL. HC) WHEREIN IT WAS HELD THAT WHERE THE TOTAL INCOME COMPUTED UNDER REGULAR PROVISIONS IS LESS THAN BOOK PROFIT AND ASSESSMENT IS MADE U/S 115JB OF THE ACT, NO PENALTY IS EXIGIBLE. THE ASSESSEE COMPANY FURTHER SUBMITTED THAT THE AO STATED IN ITS ASSESSM ENT ORDERS U/S 143(3) OF ITA 3416 TO 3419 /MUM/2013 5 THE ACT THAT DEPRECIATION WILL BE ALLOWED IN RESPEC T OF ADDITIONS TO THE FIXED ASSETS ON PRODUCTION OF DOCUMENTARY EVIDENCES. THE A.O. AFTER CONSIDERING THE SUBMISSIONS OF THE A SSESSEE COMPANY, REJECTED THE CONTENTIONS OF THE ASSESSEE COMPANY AND HELD TH AT THE ONUS WAS ON THE ASSESSEE COMPANY TO PROVE THAT THE DEPRECIATION CLA IMED WAS CORRECT BY FILING RELEVANT DOCUMENTS IN THE FORM OF BILLS AND VOUCHER S, BUT THE ASSESSEE COMPANY FAILED TO DO THE SAME. THE AO OBSERVED THA T EVEN DURING THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT, THE A SSESSEE COMPANY FAILED TO PRODUCE THE BILLS/VOUCHERS IN SUPPORT OF HIS CLAIM OF DEPRECIATION ON THE FIXED ASSETS. THE A.O. RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF UOI V. DHARMENDRA TEXTILES PROCESSORS AND OTHER S V. UOI , (2008) 306 ITR 277 (SC). THE AO FURTHER OBSERVED THAT THE LEARNED CIT(A) ALSO CONFIRMED THE ADDITION MADE BY THE A.O. IN THE QUANTUM ASSESSMENT AS THE ASSESSEE COMPANY COULD NOT PRODUCE THE DETAILS/EVIDENCES OF ADDITIONS TO THE FIXED ASSET. THE A.O. OBSERVED THAT THE ASSESSEE COMPANY IS IN THE HABIT OF NOT PRODUCING THE DETAILS OF ADDITIONS IN RESPECT OF FI XED ASSETS AND THE ASSESSEE COMPANY HAS FILED INACCURATE PARTICULARS OF INCOME WHICH RESULTED INTO EVADING OF TAX LIABILITY. THE A.O. RELIED ON THE DE CISION OF HONBLE KERALA HIGH COURT IN THE CASE OF CIT V. INDIA SEA FOOD, (1976) 105 ITR 708(KER.) AND IN THE CASE OF GATES FOAM & RUBBER COMPANY, (1973)91 I TR 467 (KER.HC). THE A.O. ACCORDINGLY LEVIED PENALTY U/S 271(1)(C) OF TH E ACT AMOUNTING TO RS. 1,71,482/- , VIDE PENALTY ORDERS DATED 31-03-2011. 6. AGGRIEVED BY THE PENALTY ORDERS DATED 31-03-2011 PASSED BY THE A.O. U/S 271(1)(C) OF THE ACT, THE ASSESSEE COMPANY FILED FI RST APPEAL BEFORE THE LEARNED CIT(A). 7. BEFORE THE LEARNED CIT(A), THE ASSESSEE COMPANY SUBMITTED THAT THE TAX AUDITORS HAVE VERIFIED AND CERTIFIED THE ADDITIONS TO THE FIXED ASSETS U/S 44AB ITA 3416 TO 3419 /MUM/2013 6 OF THE ACT AND IT CANNOT BE SAID THAT THE ASSESSEE COMPANY HAS PRODUCED INACCURATE PARTICULARS OF INCOME. THE ASSESSEE COMP ANY SUBMITTED THAT AFTER THE COMPLETION OF THE ASSESSMENT PROCEEDINGS U/S 14 3(3) READ WITH SECTION 143(2) OF THE ACT, THE ASSESSEE COMPANY SUBMITTED T HE EVIDENCES FOR PURCHASE OF FIXED ASSETS AND THE DISALLOWANCE HAS BEEN REDUC ED BY THE AO BY PASSING RECTIFICATION ORDERS U/S 154 OF THE ACT. THE LEAR NED CIT(A) OBSERVED THAT THE ASSESSEE COMPANY HAS FAILED TO PRODUCE THE DOCUMENT S WITH RESPECT TO THE ADDITION ON FIXED ASSETS. THE AUDITORS CERTIFICATE IS NOT A CONCLUSIVE FACTOR AS OTHERWISE THERE WAS NO REQUIREMENT FOR LEGISLATURE TO GIVE POWERS AND DUTIES TO THE A.O. TO MAKE SCRUTINY AND ASSESS THE INCOME OF THE ASSESSEE COMPANY. THE LEARNED CIT(A) OBSERVED THAT THE ADDITION TO TH E INCOME ON ACCOUNT OF DEPRECIATION HAS BEEN MADE DUE TO NON PRODUCTION OF EVIDENCES WITH RESPECT TO ADDITIONS TO THE FIXED ASSET. WITH RESPECT TO THE INCOME DECLARED FROM THE RENT R ECEIVED FROM LETTING OUT OF RESIDENTIAL PREMISES WHICH WAS GIVEN ON RENT FOR RE SIDENTIAL PURPOSES AND THE ASSESSEE COMPANY DECLARED THE SAID RENTAL INCOME AS BUSINESS INCOME AND CLAIMED DEPRECIATION IS WITHOUT ANY BASIS AND HENCE THE LEARNED CIT(A) CONFIRMED THE PENALTY ORDER PASSED BY THE A.O. U/S 271(1)(C) OF THE ACT, VIDE APPELLATE ORDERS DATED 15-03-2013 PASSED BY THE LEA RNED CIT(A) 8. AGGRIEVED BY THE APPELLATE ORDERS DATED 15-03-20 13 PASSED BY THE LEARNED CIT(A), THE ASSESSEE COMPANY IS IN APPEAL BEFORE TH E TRIBUNAL. 9. THE LEARNED COUNSEL FOR THE ASSESSEE COMPANY SUB MITTED THAT THE DEPRECIATION CLAIMED OF RS. 2,79,591/- HAS BEEN DI SALLOWED BY THE A.O. FOR WANT OF PRODUCTION OF BILLS/VOUCHERS . THE LEARNED COUNSEL SUBMITTED THAT THE ASSESSEE COMPANY HAS GOT RELIEF WITH RESPECT TO THE ASSESSMENT FRAMED U/S 143(3) OF THE ACT , VIDE RECTIFICATION ORDER PA SSED BY THE AO U/S 154 OF THE ACT BY PRODUCING EVIDENCES WITH RESPECT TO ADDI TIONS OF FIXED ASSETS BEFORE ITA 3416 TO 3419 /MUM/2013 7 THE A.O. , WHEREBY RELIEF WAS GRANTED BY THE AO OF RS. 1,30,191/- VIDE ORDERS U/S 154 OF THE ACT DATED 27 TH AUGUST, 2012 AND TO THAT EXTENT THE ASSESSEE COMPANY IS ENTITLED FOR RELIEF FOR PENALTY U/S 271( 1)(C) OF THE ACT. IT WAS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE C OMPANY THAT THE ASSESSEE COMPANY IS A LEADING TRAVEL AGENCY HAVING BRANCHES ALL OVER THE COUNTRY. THE ASSESSEE COMPANYS BUSINESS HAS BEEN NOT DOING WELL AND THERE WERE LOSSES SUFFERED BY THE ASSESSEE COMPANY AND HENCE THE ASSE SSEE COMPANY WAS NOT ABLE TO PRODUCE THE BILLS/VOUCHERS WITH RESPECT TO THE FIXED ASSETS PURCHASED DURING THE YEAR. THE DEPRECIATION WITH RESPECT TO THE FIXED ASSETS PURCHASED IN THE EARLIER YEAR HAS BEEN DISALLOWED TO THE EXTE NT OF RS. 62,439/-. THE LEARNED COUNSEL SUBMITTED THAT THE ASSESSEE COM PANY HAS DECLARED THE RENTAL INCOME AS BUSINESS INCOME UNDER THE HEAD IN COME FROM BUSINESS OR PROFESSION AND CLAIMED DEPRECIATION, WHICH RENTAL INCOME HAS BEEN BROUGHT TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND HENCE CLAIM OF DEPRECIATION WAS NOT ALLOWED. THE LD. COUNSEL SUBM ITTED THAT THE LEARNED CIT(A) HAS CONFIRMED THE ORDERS OF THE A.O. IN QUAN TUM ASSESSMENT PROCEEDINGS AND INCOME HAS BEEN ASSESSED TO TAX UND ER THE HEAD INCOME FROM HOUSE PROPERTY. THE LD. COUNSEL SUBMITTED TH AT THE A.O. HAS RELIED ON THE DECISION OF ZOOM COMMUNICATIONS LIMITED(2010) 1 91 TAXMAN 179(DEL) AND DHARMENDRA TEXTILES PROCESSORS(SUPRA). THE LD. COUNSEL RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CI T V. RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 158 (SC) AND SUBMITTED THAT ALL PARTICULARS HAVE BEEN SUBMITTED AND THERE IS NO CON CEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY T HE ASSESSEE COMPANY. THE LD. COUNSEL ALSO RELIED ON THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF UOI V. RAJASTHAN SPINNING & WEAVING MILLS [ 2009] 23 DTR 158 (SC) AND OTHER DECISIONS OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. M/S S.M. CONSTRUCTION , ITXA NO. 412 OF 2013 BOM. HC AN D CIT V. DALMIA DYCHEM INDUSTRIES LTD.[2015] 279 CTR 0133 (BOM. HC) AND THE DECISION OF ITA 3416 TO 3419 /MUM/2013 8 HONBLE RAJASTHAN HIGH COURT IN THE CASE OF ANOOPGA RH KRAYA VIKRAYA SAHAKARI SAMITI LTD. V. ACIT, [2015] 374 ITR 0558 ( RAJ. HC). 10. THE LD. D.R., ON THE OTHER HAND, SUBMITTED THAT THE PRIMARY ONUS IS ON THE ASSESSEE COMPANY TO PRODUCE THE EVIDENCES WITH RESPECT TO THE PURCHASE OF FIXED ASSETS. THE ONUS HAS NOT BEEN DISCHARGED BY THE ASSESSEE COMPANY. HE FURTHER RELIED UPON THE ORDERS OF AUTHORITIES BE LOW AND THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S TIMES GUARANTY LTD. V. ACIT IN ITA NO. 1681/MUM/2007 FOR THE ASSESSMENT YEAR 1993-94 DATED 10 TH OCTOBER, 2014. 11. WE HAVE CONSIDERED THE RIVALS CONTENTIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD AND THE CASE LAWS RELIED UPON B Y BOTH THE SIDES. WE HAVE OBSERVED THAT THE ASSESSEE COMPANY IS IN THE BUSINE SS OF TRAVEL AGENCY HAVING BRANCHES ALL OVER THE COUNTRY. THE ASSESSEE COMPAN Y WAS INCURRING LOSSES IN ITS BUSINESS AND INCOME HAS BEEN STATED TO BE BROUG HT TO TAX UNDER THE PROVISIONS OF MINIMUM ALTERNATE TAX U/S 115JB OF TH E ACT. THE ASSESSEE COMPANY HAD MADE CLAIM FOR THE PURCHASE OF FIXED AS SETS AND ASSESSEE COMPANY HAS CLAIMED DEPRECIATION ON THE SAID FIXED ASSETS. THE QUANTUM ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT WHICH H AS BEEN CONFIRMED BY THE LEARNED CIT(A). THE ASSESSEE COMPANY HAS ACCEP TED THE QUANTUM ADDITIONS MADE IN SCRUTINY ASSESSMENT WHICH WAS CON FIRMED BY LEARNED CIT(A). THE ASSESSMENT ORDER U/S 143(3) OF THE ACT WAS ALSO AMENDED U/S 154 OF THE ACT VIDE ORDERS 12 TH AUGUST, 2012, WHEREBY RELIEF OF RS.1,30,191/- WAS GRANTED BY THE AO VIDE ORDERS U/S 154 OF THE AC T DATED 27 TH AUGUST, 2012. IT IS OBSERVED THAT THE ASSESSEE COMPANY HAS NOT PRODUCED DOCUMENTARY EVIDENCE IN SUPPORT OF ITS CLAIM SINCE EARLIER YEARS WHEREBY SIMILAR ADDITION WAS MADE TO THE FIXED ASSETS. SIM ILARLY, IT IS OBSERVED THAT THE ASSESSEE COMPANY HAS DECLARED RENTAL INCOME AS BUSINESS INCOME WHICH IS NOT ACCEPTED BY THE REVENUE AND BROUGHT TO TAX U NDER THE HEAD INCOME FROM HOUSE PROPERTY. THE PROPERTIES WERE GIVEN ON RENT FOR RESIDENTIAL ITA 3416 TO 3419 /MUM/2013 9 PURPOSES AND GODOWN. THE ASSESSEE COMPANY HAS EXPRE SSED ITS INABILITY TO PRODUCE THE INVOICES WITH RESPECT TO THE PURCHASE O F NEW FIXED ASSETS DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT AND H AS CLAIMED THAT IT IS DUE TO LOSSES INCURRED IN THE BUSINESS OF THE ASSESSEE COMPANY WHICH IS SPREAD ACROSS THE COUNTRY , IT WAS NOT POSSIBLE TO COLLECT THE EVIDENCES FROM ALL THE BRANCHES DUE TO ADMINISTRATIVE REASONS. IN OUR CON SIDERED VIEW, IT IS INCUMBENT ON THE ASSESSEE COMPANY TO DISCHARGE THE PRIMARY ONUS CAST UPON IT BY BRINGING ON RECORD THE NECESSARY EVIDENCES TO SUSTAIN THE CLAIM WHICH THE ASSESSEE COMPANY HAS MADE BY CLAIMING DEDUCTION FROM INCOME IN THE RETURN OF INCOME FILED WITH THE REVENUE WHICH THE A SSESSEE COMPANY WAS NOT BEEN ABLE TO PRODUCE BEFORE THE AUTHORITIES AND HEN CE THE ADDITIONS WERE RIGHTLY MADE BY THE AO IN QUANTUM ASSESSMENT PROCEE DINGS. THE QUESTION BEFORE US IS WITH RESPECT TO THE LEVIABILITY OF THE PENALTY U/S 271(1)(C) OF THE ACT FOR FURNISHING OF IN-ACCURATE PARTICULARS OF IN COME AND WHETHER THE EXPLANATION OFFERED BY THE ASSESSEE IS BONA-FIDE OR NOT TO TAKE IT OUT OF CLUTCHES OF PENALTY PROVISIONS U/S. 271(1)(C) OF TH E ACT. THE ASSESSEE COMPANY EXPLAINED THAT THERE IS HEAVY LOSS INCURRED BY THE ASSESSEE IN ITS BUSINESS AND EVEN THE TAX IS COMPUTED TO BE PAYABLE UNDER TH E PROVISIONS OF 115JB OF THE ACT AS AGAINST UNDER THE NORMAL PROVISIONS OF T HE ACT. WE HAVE OBSERVED THAT THE CBDT HAS COME OUT WITH CIRCULAR NO 25/201 5 DATED 31-12-2015 , WHEREBY THE CBDT STATED THAT IT IS IT IS NOW A SETT LED POSITION THAT PRIOR TO 1- 4-2016, WHERE THE INCOME TAX PAYABLE ON THE TOTAL I NCOME AS COMPUTED UNDER THE NORMAL PROVISIONS OF THE ACT IS LESS THAN THE T AX PAYABLE ON THE BOOK PROFITS U/S 115JB OF THE ACT, THEN PENALTY UNDER SE CTION 271(1)(C) OF THE ACT, IS NOT ATTRACTED WITH REFERENCE TO ADDITIONS /DISAL LOWANCES MADE UNDER NORMAL PROVISIONS. IT IS FURTHER CLARIFIED THAT IN CASES PRIOR TO 1-4-2016, IF ANY ADJUSTMENT IS MADE IN THE INCOME COMPUTED FOR THE P URPOSE OF MAT, THEN THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT, WILL DEPE ND ON THE NATURE OF ADJUSTMENT. THE AFORE-STATED CIRCULAR IS REPRODUCED BELOW: ITA 3416 TO 3419 /MUM/2013 10 SECTION 115JB, READ WITH SECTIONS 115JA AND 271(1)( C), OF THE INCOME-TAX ACT, 1961 - MINIMUM ALTERNATE TAX - PENALTY UNDER SECTION 271(1)(C) WHEREIN ADDITIONS/DISALLOWANCES MADE UNDER NORMAL PROVISION S OF THE SAID ACT BUT TAX LEVIED UNDER MAT PROVISIONS UNDER SECTIONS 115JB/115JC, FOR CASES PRIOR TO ASSESSMENT YEAR 2016-17 CIRCULAR NO.25/2015 [F.NO.279/MISC./140/2015/ITJ], DATED 31-12-2015 SECTION 115JB OF THE ACT IS A SPECIAL PROVISION FOR LEVY OF MINIMUM ALTERNATE TAX ON COMPANIES, INSERTED BY FINANCE ACT , 2000 WITH EFFECT FROM 1-4-2001. 2. UNDER CLAUSE (III) OF SUB-SECTION (1) OF SECTION 27 1 OF THE ACT, PENALTY FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME IS DETERMINED BASED ON THE 'AMOUNT OF TAX SOUGHT TO BE EVADED' WHICH HAS BEEN DEFINED INTER-ALIA, AS THE DIFFERENCE BETWEEN THE TAX DUE ON THE INCOME ASSESSED AND THE TAX WHICH WOULD HAVE BEEN C HARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF CON CEALED INCOME OR INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS H AD BEEN FILED. 3. IN THIS CONTEXT, HON'BLE DELHI HIGH COURT IN ITS JU DGMENT DATED 26-8- 2010 IN ITA NO.1420 OF 2009 [2010] 194 TAXMAN 387 ( DELHI) IN THE CASE OF NALWA SONS INVESTMENT LTD. (AVAILABLE IN NJRS AS 2010-LL-0826-2), HELD THAT WHEN THE TAX PAYABLE ON INCOME COMPUTED U NDER NORMAL PROCEDURE IS LESS THAN THE TAX PAYABLE UNDER THE DE EMING PROVISIONS OF SECTION 115JB OF THE ACT, THEN PENALTY UNDER SECTIO N 271(1)(C) OF THE ACT ITA 3416 TO 3419 /MUM/2013 11 COULD NOT BE IMPOSED WITH REFERENCE TO ADDITIONS /D ISALLOWANCES MADE UNDER NORMAL PROVISIONS. THE JUDGMENT HAS ATTAINED FINALITY. 4. SUBSEQUENTLY, THE PROVISIONS OF EXPLANATION 4 TO SU B-SECTION (1) OF SECTION 271 OF THE ACT HAVE BEEN SUBSTITUTED BY FIN ANCE ACT, 2015, WHICH PROVIDE FOR THE METHOD OF CALCULATING THE AMOUNT OF TAX SOUGHT TO BE EVADED FOR SITUATIONS EVEN WHERE THE INCOME DETERMI NED UNDER THE GENERAL PROVISIONS IS LESS THAN THE INCOME DECLARED FOR THE PURPOSE OF MAT U/S 115JB OF THE ACT. THE SUBSTITUTED EXPLANATI ON 4 IS APPLICABLE PROSPECTIVELY W.E.F. 1-4-2016. 5. ACCORDINGLY, IN VIEW OF THE DELHI HIGH COURT JUDGME NT AND SUBSTITUTION OF EXPLANATION 4 OF SECTION 271 OF THE ACT WITH PRO SPECTIVE EFFECT, IT IS NOW A SETTLED POSITION THAT PRIOR TO 1-4-2016, WHERE TH E INCOME TAX PAYABLE ON THE TOTAL INCOME AS COMPUTED UNDER THE NORMAL PROVI SIONS OF THE ACT IS LESS THAN THE TAX PAYABLE ON THE BOOK PROFITS U/S 1 15JB OF THE ACT, THEN PENALTY UNDER SECTION 271(1)(C) OF THE ACT, IS NOT ATTRACTED WITH REFERENCE TO ADDITIONS /DISALLOWANCES MADE UNDER NORMAL PROVI SIONS. IT IS FURTHER CLARIFIED THAT IN CASES PRIOR TO 1-4-2016, IF ANY A DJUSTMENT IS MADE IN THE INCOME COMPUTED FOR THE PURPOSE OF MAT, THEN THE LE VY OF PENALTY U/S 271(1)(C) OF THE ACT, WILL DEPEND ON THE NATURE OF ADJUSTMENT. 6. THE ABOVE SETTLED POSITION IS TO BE FOLLOWED IN RES PECT OF SECTION 115JC OF THE ACT ALSO. WE HAVE OBSERVED THAT THE ASSESSEE COMPANY DID RAIS ED THIS CONTENTION BEFORE THE AO THAT IN VIEW OF DECISION OF HONBLE D ELHI HIGH COURT IN THE CASE OF NALWA SONS INVESTMENTS LIMITED(SUPRA) , THE TAX- PAYER IS NOT LIABLE TO PENALTY U/S 271(1)(C) OF THE ACT AS THE TAX IS PAYA BLE ON THE INCOME COMPUTED ITA 3416 TO 3419 /MUM/2013 12 U/S 115JB OF THE ACT AND NOT UNDER THE NORMAL PROVI SIONS OF THE ACT AS THERE ARE LOSSES INCLUDING CARRIED FORWARD OF ACCUMULATED LOSSES . THE SIMILAR PLEA OF NON-LEVIABILITY OF PENALTY U/S 271(1)(C) OF THE ACT ON THE GROUNDS THAT THE ASSESSEE COMPANY WAS CHARGED TO TAX U/S 115JB OF TH E ACT OWING TO LOSSES UNDER THE NORMAL PROVISIONS OF THE ACT WAS RAISED B Y THE ASSESSEE COMPANY BASED ON THE DECISION OF HONBLE DELHI HIGH COURT I N THE CASE OF NALWA SONS INVESTMENTS LIMITED(SUPRA) BEFORE THE AO, WHICH CON TENTION WAS REJECTED BY THE AO AT THRESHOLD IN LIMINE WITHOUT ANY DISCUSSIO N AND NOTHING IS COMING FROM THE ORDERS OF THE AO AND RECORDS PRODUCED BEFO RE US ABOUT THE SUBSTANTIATION OF THE CLAIM OF THE ASSESSEE. THE AS SESSEE COMPANY ABANDONED THIS PLEA AND DID NOT RAISED THIS PLEA BEFORE THE L EARNED CIT(A) OR IN THE GROUNDS OF APPEAL RAISED BEFORE THE LEARNED CIT(A) . THE AFORE-SAID PLEA OF NON-LEVIABILITY OF PENALTY U/S 271(1)(C) OF THE ACT AS THE ASSESSEE COMPANY WAS CHARGED TO TAX U/S 115JB OF THE ACT OWING TO LO SSES UNDER THE NORMAL PROVISIONS OF THE ACT IS RAISED BY THE ASSESSEE COM PANY BEFORE US BASED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CAS E OF NALWA SONS INVESTMENTS LIMITED(SUPRA) AND IN OUR CONSIDERED VI EW KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE AS EMERGING FRO M THE RECORDS BEFORE US , IN THE INTEREST OF JUSTICE THIS MATTER IS TO BE SET ASIDE AND RESTORED TO THE FILE OF THE AO FOR DE-NOVO DETERMINATION OF THE ISSUE AF TER CONSIDERING THE REPLIES OF THE ASSESSEE COMPANY AND THE EVIDENCES ON MERITS REGARDING SUBSTANTIATION OF THE CLAIM OF THE ASSESSEE COMPANY IN THE LIGHT OF CIRCULAR NO 25/2015 DATED 31.12.2015 ISSUED BY THE CBDT . NEEDL ESS TO SAY THAT PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD WILL BE PRO VIDED TO THE ASSESSEE COMPANY BY THE AO IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LAW. IN ANY CASE , WE ALSO HOLD THA T THE ASSESSEE COMPANY WILL BE ENTITLED FOR GETTING RELIEF ON ACCOUNT OF P ENALTY LEVIED U/S 271(1)(C) OF THE ACT TO THE EXTENT ASSESSMENT ORDER U/S. 143(3) OF THE ACT STOOD MODIFIED BY THE ORDERS U/S. 154 OF THE ACT DATED 27.08.2012 WHEREBY THE ASSESSEE ITA 3416 TO 3419 /MUM/2013 13 COMPANY GOT RELIEF OF RS.1,30,191/- IN QUANTUM ADDI TIONS IN SCRUTINY ASSESSMENTS U/S 143(3) OF THE ACT. WE ORDER ACCORDI NGLY. THE ASSESSEE COMPANY HAD PROPERTIES WHICH WERE RENT ED OUT FOR RESIDENTIAL PURPOSES. THE ASSESSEE COMPANY HAS CLAIMED THE SAM E AS BUSINESS INCOME UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION WHILE THE AO HAS ASSESSED THE SAME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE ASSESSEE COMPANY HAS COME FORWARD AND RELIED UPON T HE OBJECT CLAUSE IN THE MEMORANDUM OF ASSOCIATION OF THE ASSESSEE COMPANY T O CONTEND THAT THE BUSINESS OF THE ASSESSEE COMPANY WAS TO LET OUT AND RENT PROPERTIES OF THE ASSESSEE COMPANY WHICH IS PLACED AT PAGE 16 OF THE PAPER BOOK FILED BY THE ASSESSEE COMPANY WITH RESPECT TO APPEAL FOR THE AS SESSMENT YEAR 2008-09. THE ASSESSEE COMPANY HAD SUBMITTED THAT THE CLAIM M ADE BY THE ASSESSEE COMPANY WAS A RIGHT AND BONA-FIDE CLAIM RELYING UPO N RECENT DECISION OF HONBLE SUPREME COURT IN THE CASE OF CHENNAI PROPER TIES & INVESTMENTS LTD. V. CIT, [2015] 373 ITR 0673 (SC). THE ASSESSEE COMP ANY SUBMITTED THAT THE ASSESSEE COMPANY MADE A BONA FIDE CLAIM BY CLAIMIN G OF RENTAL INCOME AS BUSINESS INCOME. THE ASSESSEE COMPANY HAD SUBMITTED THAT THE DEPRECIATION HAS BEEN RIGHTLY CLAIMED ON THESE RESIDENTIAL PROPE RTIES ALTHOUGH THE SAID CLAIM HAS NOT BEEN ALLOWED BY THE REVENUE AUTHORITI ES , WHICH HAS ALSO BEEN ACCEPTED BY THE ASSESSEE COMPANY BUT THAT WILL NOT MAKE THE ASSESSEE COMPANY EXIGIBLE TO PENALTY U/S 271(1)(C) OF THE AC T. THE COMPLETE PARTICULARS OF INCOME WERE FURNISHED WAS THE CONTENTION OF THE ASSESSEE COMPANY. IN OUR CONSIDERED VIEW AND BASED ON FACTS AND CIRCUMSTANCE S OF THE CASE , THE ASSESSEE COMPANY HAD GIVEN A BONA-FIDE EXPLANATION TO SUBSTANTIATE THE CLAIM OF DEPRECIATION MADE BY THE ASSESSEE COMPANY WITH RESPECT TO THE RENTED PROPERTIES ALTHOUGH THE REVENUE HAS NOT ACCE PTED THE EXPLANATION OF THE ASSESSEE COMPANY . IN OUR CONSIDERED VIEW KEEP ING IN VIEW FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE COMPANYS C ASE IS SQUARELY COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CAS E OF RELIANCE ITA 3416 TO 3419 /MUM/2013 14 PETROPRODUCTS PRIVATE LIMITED(SUPRA) . IN OUR CONS IDERED VIEW, THE ASSESSEE COMPANY HAS NOT FURNISHED INACCURATE PARTICULARS OF INCOME MAKING IT LIABLE FOR PENALTY U/S 271(1)(C) OF THE ACT AS THE ASSESSE E COMPANY DULY DECLARED ALL THE INCOME EARNED ON RENTAL INCOME ALBEIT UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION ALTHOUGH THE CLAIM OF THE A SSESSEE COMPANY DID NOT FOUND FAVOUR WITH THE REVENUE , WILL NOT MAKE THE A SSESSEE COMPANY EXIGIBLE TO PENALTY U/S 271(1)(C) OF THE ACT AS THE EXPLANAT ION OFFERED BY THE ASSESSEE COMPANY IS BONAFIDE AND A PLAUSIBLE EXPLANATION ALB EIT NOT ACCEPTED BY THE REVENUE , KEEPING IN VIEW THE DECISION OF HONBLE S UPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PRIVATE LIMITED(SUPRA) AN D MORE SO WITH THE RECENT DECISION OF HONBLE SUPREME COURT IN THE CASE OF CH ENNAI PROPERTIES & INVESTMENTS LTD. V. CIT, [2015] 373 ITR 0673 (SC) , IT COULD NOT BE SAID THAT THIS CLAIM OF THE ASSESSEE COMPANY TO BRING RENTAL INCOME AS INCOME FROM BUSINESS AS AGAINST INCOME FROM HOUSE PROPERTY WAS EX-FACIE WRONG AND UNSUSTAINABLE . THUS IN VIEW OF OUR ABOVE STATED D ISCUSSIONS AND REASONING AS SET-OUT ABOVE, WE ORDER DELETION OF PENALTY LEVI ED BY THE AO AND CONFIRMED BY THE LEARNED CIT(A) ON THIS GROUND. WE ORDER ACCO RDINGLY. 12. IN THE RESULT APPEAL OF THE ASSESSEE COMPANY IN ITA NO. 3416/MUM/2013 FOR THE ASSESSMENT YEAR 2006-07 IS PARTLY ALLOWED A S INDICATED ABOVE. NOW WE SHALL TAKE UP ASSESSEE COMPANYS APPEAL IN I TA NO 3417/MUM/2013 FOR THE ASSESSMENT YEAR 2007-08. 13. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE CO MPANY IN THIS APPEAL READ AS UNDER:- 1. LEARNED COMMISSIONER OF INCOME TAX - APPEAL {CI T -(A)} HAS ERRED IN CONFIRMING LEVY OF PENALTY OF RS. 2,24,468 /- U/S 271(1)(C) OF THE ACT. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE PENALTY LEVIED OUGHT TO BE DELETED. ITA 3416 TO 3419 /MUM/2013 15 2. WITHOUT PREJUDICE TO THE ABOVE, THE LD CIT-(A) HAS FURTHER ERRED IN CONFIRMING THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT, ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION OF RS. 3,24,092/- ON AC COUNT OF RENT FROM RUNNING BUSINESS CENTERS WAS ASSESSED AS 'INCOME FR OM HOUSE PROPERTY' AS AGAINST BUSINESS INCOME COMPUTED BY THE A PPELLANT. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, T HE PENALTY LEVIED ON DISALLOWANCE OF DEPRECIATION TO THE EXTENT OF RS. 1 ,67,426/- OUGHT TO BE DELETED. 3. WITHOUT PREJUDICE TO THE GROUND NO. 1 & 2 ABOVE, NO PENALTY U/S 271(1)(C) OF THE ACT, CAN BE LEVIED IN RESPECT OF THE DISALLOWANCE MADE BY THE ASSESSING OFFICER, AS THE APPELLANT HAD PAID TH E TAX ON DEEMED INCOME UNDER THE PROVISION OF SECTION 115JB OF THE A CT. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE PENALTY LEVIED OUGHT TO BE DELETED. 14. OUR DECISION IN ITA NO. 3416/MUM/2013 FOR THE A SSESSMENT YEAR 2006-07 SHALL APPLY MUTATIS-MUTANDIS TO THIS APPEAL NAMELY ITA NO. 3417/MUM/2013 AS THE ISSUE INVOLVED IN BOTH THESE A PPEALS ARE IDENTICAL. WE ORDER ACCORDINGLY. 15. IN THE RESULT APPEAL OF THE ASSESSEE COMPANY I N ITA NO. 3417/MUM/2013 FOR THE ASSESSMENT YEAR 2007-08 IS PA RTLY ALLOWED AS INDICATED ABOVE. NOW WE SHALL TAKE UP ASSESSEE COMPANYS APPEAL IN I TA NO 3418/MUM/2013 FOR THE ASSESSMENT YEAR 2008-09. 16. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE CO MPANY IN THIS APPEAL READ AS UNDER:- 1. LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) (CIT-(A)) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER (AO) IN REOPENING THE ASSESSMENT U/S 147 OF THE INCOME TAX ACT, 1961 (ACT) BY HOLDING THAT INCOME HAS ESCAPED ASSESSMENT . THERE BEING NO ESCAPEMENT OF INCOME AND THE ASSESSMENT NO T HAVING ITA 3416 TO 3419 /MUM/2013 16 BEEN VALIDLY REOPENED, ORDER PASSED U/S 143(3) READ WITH SECTION 147 OF THE ACT OUGHT TO BE QUASHED. 2. LEARNED CIT -(A) HAS ERRED IN CONFIRMING THE ACT ION OF THE AO IN ASSESSING INCOME FROM RENTING OFFICE BUILDING S OF RS.31,18,399/- AS 'INCOME FROM HOUSE PROPERTY' INST EAD OF 'INCOME FROM BUSINESS OR PROFESSION' ON THE GROUND THAT RESIDENTIAL PREMISES/GODOWNS WERE LET OUT FOR PUREL Y ACCOMMODATION PURPOSE AND NOT FOR THE PURPOSE OF RU NNING BUSINESS CENTRES. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE SAID RENTAL INCOME OUGHT TO BE ASSESSED UNDER THE H EAD 'INCOME FROM BUSINESS AND PROFESSION'. 3. THE LD CIT-(A) HAS ERRED IN CONFIRMING THE ACTIO N OF AO IN DISALLOWING DEPRECIATION AMOUNTING TO RS.42,014/-CL AIMED BY THE APPELLANT ON CERTAIN ADDITIONS MADE TO FIXED ASSETS ON THE BASIS THAT PROOF OF PURCHASE WAS NOT SUBMITTED. ON THE FA CTS AND IN THE CIRCUMSTANCES OF THE CASE, THE DISALLOWANCE MADE OU GHT TO BE DELETED. 4. THE LD CIT-(A) HAS ERRED IN CONFIRMING THE ACTI ON OF AO IN MAKING AN AD-HOC DISALLOWANCE OF RS.9,14,877/- BEIN G 10% OF THE GENERAL EXPENSES OF RS.91,48,771/- ON THE GROUN D OF NON PRODUCTION OF SUPPORTING BILLS/ VOUCHERS / LEDGER A /C. ETC. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE DISALLOWANCE MADE OUGHT TO BE DELETED. 17. THE BRIEF FACTS INVOLVED IN THIS APPEAL ARE TH AT THE RETURN OF INCOME WAS FILED BY THE ASSESSEE COMPANY ON 3 RD OCTOBER, 2008 WITH THE REVENUE DECLARING LOSS OF RS. 75,70,438/-. THE RETURN OF I NCOME WAS PROCESSED BY THE REVENUE U/S 143(1) OF THE ACT ON 25 TH JUNE, 2009 ACCEPTING THE RETURNED INCOME. SUBSEQUENTLY, THE CASE OF THE ASSESSEE COM PANY WAS REOPENED AND NOTICE ISSUED U/S 148 OF THE ACT TO THE ASSESSEE CO MPANY ON 25 TH OCTOBER, 2010 WHICH WAS DULY SERVED ON THE ASSESSEE COMPANY AFTER RECORDING THE FOLLOWING REASONS:- ITA 3416 TO 3419 /MUM/2013 17 RETURN OF INCOME FOR A. Y.200809 HAS BEEN FILED O N 03.10.2008 SHOWING NIL INCOME AND CLAIMING REFUND OF RS.20,51, 024/-. THE COMPUTATION OF INCOME ENCLOSED WITH RETURN OF INCOM E SHOWS INCOME FORM HOUSE PROPERTY AT NIL AND INCOME FROM B USINESS ALSO AT NIL. CURRENT YEAR'S BUSINESS LOSS OF RS.75,70,43 8/- HAS BEEN CLAIMED. THE FINAL ACCOUNTS ENCLOSED WITH THE RETUR N OF INCOME SHOWS THAT THE ASSESSEE IS IN RECEIPT OF RENT INCOM E OF RS.30,03,068/- (SCHEDULE K OF P&L ACCOUNT). IN THIS CASE IN A. Y. 2007-08 THE ASSESSEE HAD SHOWN SIMILAR RENTAL INCOM E OF RS.46,80,864/- UNDER THE HEAD, 'MISC. INCOME WHICH WAS OFFERED TO TAX 'UNDER THE HEAD, 'BUSINESS' AND WHILE COMPUT ING THE ORDER U/S 143(3) THIS RENTAL INCOME WAS ASSESSED AS 'INCO ME FROM HOUSE PROPERTY', WHICH WAS CLAIMED UNDER THE HEAD B USINESS LEADING TO THE ASSESSEE DISCLOSING A SUBSTANTIALLY LOWER INCOME AT RS.NIL AS AGAINST INCOME ASSESSED AT RS.13,30,275/- . THE ASSESSEE FILED AN APPEAL AGAINST THE ASSESSMENT WHI CH WAS DISMISSED BY THE THEN CIT(A). A SIMILAR SITUATION EXISTED IN AY 2006-07 WHEREIN T HE ASSESSEE HAD SHOWN RENTAL INCOME OF RS.29,52,451/- UNDER THE HEAD BUSINESS INCOME AND DEPRECIATION WAS CLAIMED ON THI S PROPERTY. THE CLAIM OF INCOME UNDER THE HEAD BUSINESS INCOME WAS DISALLOWED WHILE ASSESSING THE INCOME U/S 143(3) OF THE IT ACT AND THE SAME WAS ASSESSED UNDER THE HEAD, HOUSE PRO PERTY AT RS.5,79,244/-. IN VIEW OF THE ABOVE FACTS, I AM OF THE OPINION THA T INCOME HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 14 7 OF THE ACT FOR WHICH NOTICE U/S 148 IS BEING ISSUED.' 18. THE ASSESSEE COMPANY VIDE LETTER DATED 8 TH NOVEMBER, 2010 REQUESTED TO CONSIDER THE RETURN OF INCOME FILED WITH THE REV ENUE ON 3 RD OCTOBER, 2008 TO BE TREATED AS A RETURN OF INCOME FILED IN RESPON SE TO THE NOTICE ISSUED U/S 148 OF THE ACT . THE ASSESSEE COMPANY ALSO REQUESTE D THE AO TO PROVIDE THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT WH ICH WAS DULY PROVIDED TO THE ASSESSEE COMPANY BY THE AO VIDE LETTER DATED 3 0 TH NOVEMBER, 2010. ON PERUSAL OF THE P&L ACCOUNT OF THE ASSESSEE COMPANY , IT WAS NOTICED BY THE AO THAT THE ASSESSEE COMPANY HAS CREDITED AN AMOUNT OF RS. 30,03,068/- AS RENTAL INCOME FOR RESIDENTIAL PREMISES. FOR THE AS SESSMENT YEARS 2005-06 TO ITA 3416 TO 3419 /MUM/2013 18 2007-08 SIMILAR RECEIPTS WERE TREATED BY THE REVENU E AS INCOME FROM HOUSE PROPERTY , AND THE SAME WERE CONFIRMED BY THE LEAR NED CIT(A) IN THE FIRST APPEAL FILED BY THE ASSESSEE COMPANY. THE ASSESSEE COMPANY WAS CONFRONTED AS TO WHY THE SAME SHOULD NOT BE DISALLOWED AS BUSI NESS RECEIPTS AND BE BROUGHT TO TAX UNDER THE HEAD INCOME FROM HOUSE PR OPERTY. DETAILED BREAK- UP WAS GIVEN BY THE ASSESSEE COMPANY FROM WHERE IT WAS CLEAR THAT THE RESIDENTIAL PREMISES/GODOWN WERE LET OUT FOR PURELY ACCOMMODATION PURPOSES AND NOT FOR THE PURPOSE OF RUNNING BUSINESS CENTERS , THUS AS PER THE AO , THE INCOME FROM THIS ACTIVITY FALLS UNDER THE HEAD INC OME FROM HOUSE PROPERTY. THE DEPRECIATION CLAIMED BY THE ASSESSEE ON SUCH PR OPERTY WAS DISALLOWED BY THE AO AND ADDED BACK TO THE BUSINESS INCOME OF THE ASSESSEE COMPANY. ACCORDINGLY, MAINTENANCE CHARGES OF RS. 5,43,797/- WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE COMPANY AND A S UM OF RS. 37,06,221/- WAS ASSESSED TO TAX AS INCOME FROM HOUSE PROPERTY AND BROUGHT TO TAX ACCORDINGLY BY THE AO. HOWEVER, STANDARD DEDUCTION U/S 24 OF THE ACT WAS ALLOWED BY THE REVENUE. A SUM OF RS. 54,667/- INCU RRED TOWARDS PROPERTY TAX DEBITED TO THE P&L ACCOUNT WAS ADDED TO THE BUS INESS INCOME OF THE ASSESSEE COMPANY AND ALLOWED AS DEDUCTION UNDER TH E HEAD INCOME FROM HOUSE PROPERTY BY THE AO VIDE ASSESSMENT ORDERS DA TED 16.12.2011 PASSED BY THE AO U/S. 143(3) READ WITH SECTION 147 OF THE ACT. SIMILARLY, IT WAS OBSERVED BY THE A.O. THAT THE ASS ESSEE COMPANY HAS CLAIMED DEPRECIATION ON FIXED ASSETS OF A SUM OF RS. 26,91, 259/- WHICH INCLUDED DEPRECIATION ON ADDITION TO FIXED ASSETS AT VARIOUS BRANCHES. THE ASSESSEE COMPANY WAS ASKED TO FURNISH THE EVIDENCES OF ADDIT IONS TO FIXED ASSETS . THE ASSESSEE COMPANY FURNISHED THE EVIDENCES, HOWEVER, SOME OF THE BILLS WERE NOT PRODUCED AND A TOTAL AMOUNT OF DEPRECIATION OF RS. 42,014/- WAS DISALLOWED BY THE AO AND ADDED BACK TO THE INCOME O F THE ASSESSEE COMPANY WHICH WAS AGREED UPON BY THE ASSESSEE COMPANY, VIDE ASSESSMENT ORDERS ITA 3416 TO 3419 /MUM/2013 19 DATED 16.12.2011 PASSED BY THE AO U/S. 143(3) READ WITH SECTION 147 OF THE ACT. IT WAS FURTHER OBSERVED BY THE A.O. FROM THE P&L AC COUNT FOR YEAR ENDED ON 31 ST MARCH, 2008 THAT THE ASSESSEE COMPANY HAS DEBITED AN AMOUNT OF RS. 91,48,771/- UNDER THE HEAD GENERAL EXPENSES. THE A SSESSEE COMPANY WAS ASKED TO PROVIDE THE DOCUMENTARY EVIDENCE TO PROVE THE GENUINENESS OF THE GENERAL EXPENDITURE OF RS.91,48,771/- .THE ASSESSEE COMPANY COULD NOT PRODUCED THE DETAILS CALLED FOR BY THE AO W.R.T. TO CLAIM OF GENERAL EXPENDITURE OF RS.91,48,771/- . THE ASSESSEE COMPANY SUBMITTED THAT THE ASSESSEE COMPANYS BUSINESS HAVE MANY BRANCHES ALL OVER THE COUNTRY AND THERE WAS AN ADMINISTRATIVE INCONVENIENCE TO COLLECT THE DETA ILS FROM ALL THE BRANCHES. THE A.O., HOWEVER, ALLOWED TO PRODUCE THE DOCUMENTA RY EVIDENCE AS AND WHEN THEY ARE AVAILABLE BEFORE THE EXPIRY OF THE ST ATUTORY TIME LIMIT TO RECTIFY THE ASSESSMENT AND 10% OF THE CLAIM OF THE GENERAL EXPENSES OF RS.91,48,771/- , AMOUNTING TO RS. 9,14,877/- WAS D ISALLOWED BY THE AO AND ADDED BACK TO THE INCOME OF THE ASSESSEE COMPANY, V IDE ASSESSMENT ORDERS DATED 16.12.2011 PASSED BY THE AO U/S. 143(3) READ WITH SECTION 147 OF THE ACT. 19. AGGRIEVED BY THE ASSESSMENT ORDERS DATED 16.12 .2011 OF THE A.O. PASSED U/S. 143(3) READ WITH SECTION 147 OF THE ACT. , TH E ASSESSEE COMPANY HAS FILED ITS FIRST APPEAL BEFORE THE LEARNED CIT(A). 20. THE LEARNED CIT(A) HELD THAT RE-OPENING OF THE ASSESSMENT WAS DONE WITHIN FOUR YEARS FROM THE END OF ASSESSMENT YEAR. NO ASSESSMENT HAS BEEN MADE U/S 143(3) OF THE ACT AND AN INTIMATION U/S 14 3(1) OF THE ACT IS NOT AN ASSESSMENT ORDER AS HAS BEEN HELD BY HONBLE SUPREM E COURT IN THE CASE OF ACIT V. RAJESH JHAVERI STOCK BROKERS (P) LTD., (200 7) 291 ITR 500(SC) . INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT AS PE R EXPLANATION 2, CLAUSE ITA 3416 TO 3419 /MUM/2013 20 (C) (II) OF SECTION 147 OF THE ACT , AS BY SHOWING RENTAL INCOME AS BUSINESS INCOME, THE INCOME OF THE ASSESSEE COMPANY WAS MADE THE SUBJECT OF EXCESSIVE RELIEF UNDER THE ACT . THE A.O. HAS RECO RDED THE REASONS AND THE SAME WERE PROVIDED TO THE ASSESSEE COMPANY. THE A. O. HAS FOLLOWED ALL THE PROCEDURES FOR REOPENING OF THE ASSESSMENT, HENCE, THE ACTION OF THE A.O. WITH RESPECT TO THE REOPENING OF ASSESSMENT U/S 148 OF T HE ACT WAS HELD TO BE VALID BY THE LEARNED CIT(A) VIDE APPELLATE ORDERS DATED 2 7.02.2013. WITH RESPECT TO THE TREATING RENTAL INCOME BY THE A O AS INCOME FROM HOUSE PROPERTY AGAINST THE INCOME FROM BUSINESS AS SHO WN BY THE ASSESSEE COMPANY, IT WAS OBSERVED BY THE LEARNED CIT(A) THAT FOR THE ASSESSMENT YEARS 2005-06 TO 2007-08 , SIMILAR RECEIPTS WERE TREATED AS INCOME FROM HOUSE PROPERTY AND THE SAME WERE CONFIRMED BY THE LEARNE D CIT(A) FOR THE ASSESSMENT YEAR 2007-08. THE LEARNED CIT(A) HELD THAT LETTING OUT HOUSE PROPERTY AND GODOWN CANNOT BE TREATED AS BUSINESS INCOME AND THE ACTION OF THE A.O. TO TREAT THE RENTAL INCOME CHARGEABLE TO T AX UNDER THE HEAD INCOME FROM HOUSE PROPERTY WAS HELD TO BE VALID BY THE LE ARNED CIT(A) VIDE APPELLATE ORDERS DATED 27.02.2013. WITH RESPECT TO THE DISALLOWANCE OF DEPRECIATION OF RS. 42,014/-, THE ASSESSEE COMPANY COULD NOT PRODUCE BILLS/INVOICES TO ESTABLI SH THE PURCHASE OF ASSETS, ON WHICH DEPRECIATION WAS CLAIMED. THE ASSESSEE C OMPANY SUBMITTED THAT IT HAS GIVEN 97% OF BILLS AND VOUCHERS WHICH WERE PROD UCED AND ONLY SMALL PORTION WERE NOT PRODUCED FOR WHICH THE A.O. CANNOT DENY THE ASSESSEE COMPANYS CLAIM. THE FIXED ASSETS HAVE BEEN VERIFI ED BY THE AUDITORS. THE LEARNED CIT(A) REJECTED THE CONTENTION OF THE ASSES SEE COMPANY AND HELD THAT IT WAS INCUMBENT ON THE ASSESSEE COMPANY TO PRODUCE THE DOCUMENTS/EVIDENCES WHICH THE ASSESSEE COMPANY FAI LED TO DO SO AND HENCE THE A.O. HAS RIGHTLY MADE THE ADDITIONS, AS HELD BY THE LEARNED CIT(A) VIDE APPELLATE ORDERS DATED 27.02.2013. ITA 3416 TO 3419 /MUM/2013 21 WITH RESPECT TO THE ADDITION OF RS. 9,14,877/- BEIN G 10% OUT OF GENERAL EXPENSES OF RS.91,48,771/- , THE ASSESSEE COMPANY S UBMITTED THAT THE ACCOUNTS WERE AUDITED AND THE AUDITORS HAVE NOT MAD E ANY OBJECTION. TO SUPPORT THIS CONTENTION, THE ASSESSEE COMPANY RELIE D UPON THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. SSP PVT. LTD. THE LEARNED CIT (A), HOWEVER, HELD THAT THE AUDITORS CE RTIFICATE CANNOT BE ACCEPTED AS THE A.O. HAS BEEN GIVEN STATUTORY DUTIES AND POW ERS TO SCRUTINIZE AND MAKE THE ASSESSMENT. THE LEARNED CIT(A) RELIED UPON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF JAIPUR ELECTRO PRIVATE LIMIRED V. CIT 134 CTR 237(RAJ.) THE LEARNED CIT(A) HELD THAT THE A.O. HAS THE RIGHT AND DUTY TO ENQUIRE ABOUT THE EXPENDITURE. THE LEARNED CIT(A) ACCORDINGLY UPHELD THE ORDER OF THE A.O. VIDE APPELLATE ORDERS DATED 27.02 .2013. 21. AGGRIEVED BY THE APPELLATE ORDERS DATED 27.02. 2013 OF THE LEARNED CIT(A), THE ASSESSEE COMPANY IS IN APPEAL BEFORE THE TRIBUN AL. 22. THE LEARNED COUNSEL FOR THE ASSESSEE COMPANY SU BMITTED THAT THE CASE WAS REOPENED U/S 147/148 OF THE ACT. THE RETURN OF INCOME WAS PROCESSED BY THE REVENUE U/S 143(1) OF THE ACT. THE LEARNED COUNSEL FOR THE ASSESSEE COMPANY SUBMITTED THAT THE ASSESSEE COMPANY HAS GIV EN WRITTEN SUBMISSION BEFORE THE LEARNED CIT(A) WHICH MAY BE TAKEN ON REC ORD VIDE PAPER BOOK PAGE NO. 113 TO 115 WITH RESPECT TO RE-OPENING OF THE AS SESSMENT U/S 147/148 OF THE ACT. WITH RESPECT TO THE SECOND GROUND, THE LEA RNED COUNSEL FOR THE ASSESSEE COMPANY SUBMITTED THAT THE ASSESSEE COMPAN YS RENTAL INCOME FROM LETTING OUT RESIDENTIAL PREMISES AND GODOWN HA S BEEN ASSESSED TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY INSTEAD OF INCOME FROM BUSINESS . THE LEARNED COUNSEL FOR THE ASSESSEE C OMPANY SUBMITTED THAT THE ASSESSEE COMPANY IS RUNNING A TRAVEL AGENCY AND THE PROPERTIES OWNED AND HELD BY THE ASSESSEE ARE LET OUT FOR RESIDENTIAL A ND GODOWN PURPOSES. THE ITA 3416 TO 3419 /MUM/2013 22 A.O. ERRED IN BRINGING TO TAX THE RENTAL INCOME UND ER THE HEAD INCOME FROM HOUSE PROPERTY , WHILE THE SAME IS CHARGEABLE TO T AX UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION. THE ASSESSEE COMPANY IS A PART OF MITTAL BUILDERS GROUP. THE ASSESSEE COMPANY BOUGHT THESE PROPERTIES AS INVESTMENT PENDING REALIZATION OF THE PROPERTY ON S ALE. THE ASSESSEE COMPANY HAS GIVEN THE PROPERTY ON RENT ALTHOUGH THE ASSESSE E COMPANYS MAIN BUSINESS IS TRAVEL AGENCY. THE LEARNED COUNSEL DRE W OUR ATTENTION TO THE MEMORANDUM OF THE ASSOCIATION OF THE COMPANY WHEREI N THE OBJECT CLAUSE WHICH IS PLACED IN PAPER BOOK PAGE 16 , THE ACTIVIT Y OF LETTING OUT OF PROPERTY IS LISTED AS ONE OF THE OBJECTS OF THE ASSESSEE COM PANY AND THE LEARNED COUNSEL FOR THE ASSESSEE COMPANY CONTENDED THAT THE ASSESSEE COMPANY IS IN THE BUSINESS OF GIVING PROPERTIES ON RENT. THE LEA RNED COUNSEL FOR THE ASSESSEE COMPANY RELIED UPON THE DECISION OF HONBL E SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES & INVESTMENTS LTD. V. CI T, [2015] 373 ITR 0673 (SC). SIMILAR PLEA WAS RAISED BEFORE THE LEARNED C IT(A) THAT THE ASSESSEE COMPANY IS DOING THE BUSINESS OF RENTING PROPERTIES . THE LEARNED COUNSEL SUBMITTED THAT THE ASSESSEE COMPANY IS A VERY OLD C OMPANY INCORPORATED IN THE YEAR 1949 AND THE OBJECTS ARE PLACED IN PAPER B OOK PAGE 16, WHEREBY LETTING OUT OF PROPERTIES IS LISTED AS ONE OF THE O BJECTS FOR WHICH COMPANY WAS FORMED AND ENTITLED TO CARRY OUT BUSINESS . THE LEA RNED CIT (A) JUST FOLLOWED THE EARLIER YEAR ORDERS AND REJECTED THE CLAIM OF T HE ASSESSEE COMPANY WITH RESPECT TO GROUND NO. 3, THE LD. COUNSEL FOR T HE ASSESSEE COMPANY SUBMITTED THAT THE DEPRECIATION HAS BEEN DISALLOWED AMOUNTING TO RS. 42,014/-. THE ASSESSEE COMPANY HAS PRODUCED 97% OF THE BILLS AND VOUCHERS AND ONLY 3% OF THE VOUCHERS COULD NOT BE PRODUCED. THE LEARNED COUNSEL FOR THE ASSESSEE COMPANY SUBMITTED THAT THE ASSESSEE C OMPANYS BUSINESS IS NOT DOING WELL AND INCURRING LOSSES , HENCE THE VOU CHERS COULD NOT BE COLLECTED FROM ALL THE BRANCHES DUE TO ADMINISTRATI VE DIFFICULTIES. ITA 3416 TO 3419 /MUM/2013 23 WITH RESPECT TO THE GROUND NO. 4 REGARDING ADDITION OF RS. 9,14,877/-,IT WAS SUBMITTED THAT THE LD. CIT(A) CONFIRMED DISALLOWAN CE OF 10% OF THE EXPENSES AS MADE BY THE AO, WHICH DISALLOWANCE IS ON VERY H IGHER SIDE AND THE ASSESSEE COMPANY REQUESTED FOR REDUCTION/DELETION O F THE ADDITIONS SO MADE BY THE REVENUE. 23. THE LEARNED D.R. SUBMITTED THAT THE ASSESSEE CO MPANY HAS NOW CLAIMED THAT IT IS LETTING OUT THE PROPERTIES AS PE R THE OBJECT CLAUSE INCORPORATED IN THE MEMORANDUM, AS CLAIMED BY THE L EARNED COUNSEL FOR THE ASSESSEE COMPANY AND HENCE, THE MATTER CAN BE SET A SIDE TO THE FILE OF THE A.O. FOR EXAMINATION AND VERIFICATION OF THIS CLAIM OF THE ASSESSEE COMPANY.THE LEARNED DR RELIED UPON THE ORDERS OF TH E AUTHORITIES BELOW. 24. WE HAVE HEARD THE RIVAL CONTENTIONS AND ALSO PE RUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING CASE LAWS. WE HAVE O BSERVED THAT THE ASSESSEE COMPANY IS A TRAVEL AGENT HAVING BUSINESS ALL OVER THE COUNTRY. THE ASSESSEE COMPANY IS IN LOSSES AS PER THE RETURN OF INCOME FI LED WITH THE REVENUE. THE ASSESSEE COMPANY HAS GIVEN EIGHT PROPERTIES ON RENT MAINLY FOR RESIDENTIAL AND GODOWN PURPOSES. THE ASSESSEE COMPANY DURING T HE PROCEEDINGS BEFORE US CLAIMED THAT THE DECISION OF HONBLE SUPREME COU RT IN THE CASE OF CHENNAI PROPERTIES & INVESTMENTS LTD.(SUPRA) IS SQUARELY AP PLICABLE IN ITS CASE. THE ASSESSEES COMPANYS CONTENTION IS THAT ITS MAIN BU SINESS AS REFLECTED IN THE OBJECT CLAUSE OF MEMORANDUM OF ASSOCIATION IS LETTI NG OUT OF THE PROPERTIES , WHICH OBJECT CLAUSE IN MEMORANDUM OF ASSOCIATION OF THE COMPANY IS PLACED IN PAPER BOOK PAGE NO. 16 FILED WITH THE TRIBUNAL. IN VIEW OF AND IN LIGHT OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F CHENNAI PROPERTIES & INVESTMENTS LTD. (SUPRA) , THE CLAIM AND CONTENTION S OF THE ASSESSEE COMPANY NEEDS EXAMINATION AND VERIFICATION BY THE AUTHORITI ES BELOW WHETHER THE ASSESSEE COMPANY IS ACTUALLY ENGAGED IN THE BUSINES S OF LETTING OUT OF PROPERTIES OR NOT ?. IN THIS REGARD BASED ON THE F ACTS AND CIRCUMSTANCES OF ITA 3416 TO 3419 /MUM/2013 24 THE CASE AND IN THE INTEREST OF JUSTICE, WE DEEM IT FIT TO SET ASIDE AND RESTORE THE ISSUE TO THE FILE OF THE A.O. FOR DE-NOVO DETER MINATION OF THE ISSUE ON MERITS AFTER EXAMINATION AND VERIFICATION OF THE C LAIMS AND CONTENTIONS OF THE ASSESSEE COMPANY THAT WHETHER THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF LETTING OUT PROPERTIES OR NOT, IN THE L IGHT OF DECISION OF HONBLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES AND INVESTMENTS LIMITED(SUPRA). NEEDLESS TO SAY THAT THE ASSESSEE COMPANY BE GIVEN SUFFICIENT AND PROPER OPPORTUNITY OF BEING HEARD IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE AND IN ACCORDANCE WITH LAW.WE ORDER ACCORDINGLY. WITH RESPECT TO THE CLAIM OF THE ASSESSEE REGARDING DISALLOWANCE OF DEPRECIATION AMOUNTING TO RS. 42,014/- ON PURCHASE OF NEW FIXED ASSETS WHEREBY THE ASSESSEE COMPANY FAILED TO PRODUCE EVID ENCES TO SUBSTANTIATE ITS CLAIM OF PURCHASE OF NEW FIXED ASSETS, WE FIND THAT NO DOCUMENTARY EVIDENCE HAS BEEN PRODUCED BY THE ASSESSEE COMPANY TO PROVE THE GENUINENESS OF THE PURCHASES OF NEW FIXED ASSETS. IT IS INCUMBENT UPO N THE ASSESSEE COMPANY TO HAVE PRODUCED THE EVIDENCES TO THE SATISFACTION OF THE REVENUE AS THE CLAIM OF DEDUCTION OF THE EXPENSES IN THE RETURN OF INCOME H AS BEEN MADE BY THE ASSESSEE COMPANY AND PRIMARY ONUS TO PROVE ITS CLAI M IN RETURN OF INCOME LAY ON THE ASSESSEE COMPANY , WHICH THE ASSESSEE COMPA NY FAILED TO DO SO. IN EARLIER YEARS ALSO, SIMILAR ADDITION HAS BEEN MADE AND THE ASSESSEE COMPANY HAS ACCEPTED THESE ADDITIONS ON CONFIRMATION OF THE ADDITIONS BY THE LEARNED CIT(A) AFTER THE FIRST APPEAL STOOD DISMISSED BY TH E LEARNED CIT(A) AGAINST THE QUANTUM ADDITIONS. IN VIEW OF OUR ABOVE DISCUSSION S AND REASONING, ADDITION OF RS.42,014/- TOWARDS DISALLOWANCE OF DEP RECIATION ON PURCHASE OF NEW FIXED ASSETS , TO THE INCOME OF THE ASSESSEE CO MPANY NEEDS TO BE CONFIRMED/ SUSTAINED. WE FIND NO INFIRMITY IN THE O RDERS OF THE LEARNED CIT(A WHICH WE CONFIRM/SUSTAIN. WE ORDER ACCORDINGLY. ITA 3416 TO 3419 /MUM/2013 25 WITH RESPECT TO THE ADDITION OF RS. 9,14,877/- OUT OF GENERAL EXPENSES BEING 10% OF THE GENERAL EXPENSES OF RS.91,48,771/- ON AC COUNT OF FAILURE OF THE ASSESSEE COMPANY TO PRODUCE THE DOCUMENTARY EVIDENC ES, BILLS ETC, WE FIND THAT THE ASSESSEE COMPANY IS NOT ABLE TO PRODUCE T HE DOCUMENTARY EVIDENCES I.E. INVOICES AND VOUCHERS FOR SUCH GENERAL EXPENDI TURE INCURRED BY THE ASSESSEE COMPANY ON THE PRETEXT THAT THE ASSESSEE C OMPANYS BUSINESS IS AT MANY BRANCHES ALL OVER THE COUNTRY AND THERE WAS AN ADMINISTRATIVE INCONVENIENCE TO PRODUCE THESE EVIDENCES AND ALSO O WING TO LOSSES INCURRED BY THE ASSESSEE COMPANY. SINCE, THE ASSESSEE COMPA NY IS NOT ABLE TO PRODUCE ANY DETAIL WITH RESPECT TO THE AMOUNT OF GE NERAL EXPENSES OF RS. 91,48,771/- CLAIMED BY THE ASSESSEE COMPANY IN THE RETURN OF INCOME FILED WITH THE REVENUE, THE DISALLOWANCE OF 10% OF THE GE NERAL EXPENSES WAS MADE BY THE AO WHICH WAS CONFIRMED BY THE LEARNED CIT(A) IN THE FIRST APPEAL. IT IS INCUMBENT UPON THE ASSESSEE COMPANY TO HAVE PRODUCE D THE EVIDENCE TO THE SATISFACTION OF THE AO , AS THE CLAIM OF DEDUCTION OF THE GENERAL EXPENSES OF RS.91,48,771/- FROM THE INCOME OF THE ASSESSEE COMP ANY IN THE RETURN OF INCOME HAS BEEN MADE BY THE ASSESSEE COMPANY AND TH E PRIMARY ONUS TO PROVE ITS CLAIM IN RETURN OF INCOME LAY ON THE ASSE SSEE COMPANY , WHICH THE ASSESSEE COMPANY FAILED TO DO SO IN THE INSTANT CAS E. IN OUR CONSIDERED VIEW BASED ON FACTS AND CIRCUMSTANCES OF THE CASE, THE D ISALLOWANCE OF 10% OF GENERAL EXPENSES IS QUITE REASONABLE KEEPING IN VI EW PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE AND WE CONFIRM THE AFORE- STATED DISALLOWANCE. WE FIND NO INFIRMITY IN THE ORDERS OF THE LEARNED CIT( A) WHICH WE CONFIRM/SUSTAIN. WE ORDER ACCORDINGLY. WITH RESPECT TO THE CONTENTIONS OF THE ASSESSEE COM PANY REGARDING RE-OPENING OF THE ASSESSMENT, WE HAVE OBSERVED THAT THE ASSES SEE COMPANY FILED ITS RETURN OF INCOME WHICH WAS PROCESSED U/S 143(1) OF THE ACT. NO SCRUTINY ASSESSMENT WAS FRAMED BY THE REVENUE U/S 143(3) OF THE ACT. THE REVENUE HAS REOPENED THE ASSESSMENT WITHIN FOUR YEARS FROM THE END OF THE ITA 3416 TO 3419 /MUM/2013 26 ASSESSMENT YEAR. THE REOPENING HAS BEEN DONE BASED UPON THE RENTAL INCOME OFFERED TO TAX AS BUSINESS INCOME WAS BROUGHT TO TA X BY THE REVENUE UNDER THE HEAD INCOME FROM HOUSE PROPERTY IN THE PRECED ING YEAR I.E. ASSESSMENT YEAR 2007-08 LEADING TO INCOME ASSESSED AT RS.13,30 ,275/- AS AGAINST THE DISCLOSURE OF SUBSTANTIALLY LOWER INCOME AT NIL . T HE ASSESSEE COMPANY FILED APPEAL FOR THE ASSESSMENT YEAR 2007-08 WITH THE LEA RNED CIT(A) WHICH WAS DISMISSED BY THE LEARNED CIT(A). SIMILAR AND IDENTI CAL WAS THE POSITION FOR THE ASSESSMENT YEAR 2006-07 WITH RESPECT TO THE TREATME NT OF RENTAL INCOME AND CONSEQUENTIALLY ESCAPEMENT OF INCOME . IN OUR CONS IDERED VIEW, THERE IS A TANGIBLE INFORMATION/MATERIAL WHICH HAS COME TO TH E POSSESSION OF A.O. HAVING CLOSE NEXUS AND LIVE LINK WITH THE FORMATION OF BELIEF BY THE AO THAT INCOME HAS ESCAPED ASSESSMENT BASED ON WHICH HE HAS FORMED REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. EARLIE R, THE REVENUE HAS PROCESSED THE RETURN U/S 143(1) OF THE ACT. NO SCR UTINY ASSESSMENT HAS BEEN MADE U/S 143(3) OF THE ACT. THERE IS NO OPINION WH ICH WAS FORMED BY THE A.O. EARLIER AND THUS THERE IS NO QUESTION OF ANY C HANGE OF OPINION. THE REASONS RECORDED WERE DULY FURNISHED TO THE ASSESSE E COMPANY BY THE REVENUE. IN OUR CONSIDERED VIEW, WE DO NOT FIND ANY IRREGULARITY OR INFIRMITY IN THE RE-OPENING OF THE ASSESSMENT BY THE REVENUE IN THE INSTANT CASE U/S 147/148 OF THE ACT BASED ON OUR DISCUSSIONS AND REA SONING ABOVE, HENCE, WE UPHOLD THE DECISION OF LD. CIT(A) IN WHICH WE HAVE FOUND NO INFIRMITY.WE ORDER ACCORDINGLY. 25. IN THE RESULT , APPEAL OF THE ASSESSEE COMPANY IN ITA NO. 3418/MUM/2013 FOR THE ASSESSMENT YEAR 2008-09 IS PA RTLY ALLOWED AS INDICATED ABOVE. NOW WE SHALL TAKE UP ASSESSEE COMPANYS APPEAL IN I TA NO 3419/MUM/2013 FOR THE ASSESSMENT YEAR 2009-10. ITA 3416 TO 3419 /MUM/2013 27 26. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE CO MPANY IN THIS APPEAL READ AS UNDER:- 1. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEA LS) (CIT-(A)) HAS ERRED IN CONFIRMING THE ACTION OF AO IN ASSESSING INC OME FROM RENTING OFFICE BUILDINGS OF RS.44,03,310/- AS 'INCOME FROM HOUSE PROPERTY' INSTEAD OF 'INCOME FROM BUSINESS OR PROFESSION' ON TH E GROUND THAT RESIDENTIAL PREMISES /GODOWNS WERE LET OUT FOR PURELY ACCOMMODATION PURPOSE AND NOT FOR THE PURPOSE OF RUNNING BUSINESS CENTRES. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE SAID RENTAL INC OME OUGHT TO BE ASSESSED UNDER THE HEAD 'INCOME FROM BUSINESS OR PRO FESSION . 2. THE LD CIT -(A) HAS ERRED IN CONFIRMING THE ACTI ON OF AO IN DISALLOWING DEPRECIATION AMOUNTING TO RS.43,628/-CLAIM ED BY THE APPELLANT ON CERTAIN ADDITIONS MADE TO FIXED ASSETS ON TH E BASIS THAT PROOF OF PURCHASE WAS NOT SUBMITTED. ON THE FACTS AND I N THE CIRCUMSTANCES OF THE CASE, THE DISALLOWANCE MADE OUGHT TO BE DELETED. 3. THE LD CIT-(A) HAS ERRED IN CONFIRMING THE ACTION OF AO IN DISALLOWING DEPRECIATION OF RS.25,668/- ON CERTAIN A SSETS PURCHASED IN THE PREVIOUS YEAR RELEVANT TO A. Y. 2008-09 ON THE GROU ND THAT THOSE ADDITIONS WERE NOT VERIFIED FOR WANT OF PROOF OF ACQ UISITION; CONSEQUENTLY, DEPRECIATION ON THE SAID ASSETS IS NOT ALL OWABLE IN THE YEAR UNDER CONSIDERATION. ON THE FACTS AND IN THE CIRC UMSTANCES OF THE CASE THE DISALLOWANCE MADE OUGHT TO BE DELETED. 4. THE LD CIT -(A) HAS ERRED IN CONFIRMING THE ACTION OF AO IN MAKING ADHOC DISALLOWANCE OF RS.18,73,118/- BEING 10% OF TH E GENERAL EXPENSES OF RS.1,87,31,181/- ON THE GROUND OF NON PR ODUCTION OF SUPPORTING BILLS/ VOUCHERS/LEDGER ETC. ON THE BASIS O F FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE DISALLOWANCE MADE OUGHT TO BE DELETED. 27. OUR DECISION IN ITA NO. 3418/MUM/2013 FOR THE A SSESSMENT YEAR 2008-09 ON MERITS SHALL APPLY MUTATIS-MUTANDIS TO T HIS APPEAL NAMELY ITA NO. 3419/MUM/2013 FILED BY THE ASSESSEE AS THE ISSU E INVOLVED IN BOTH THESE APPEALS ON MERITS ARE IDENTICAL. WE ORDER ACCORDIN GLY. 28 IN THE RESULT , APPEAL OF THE ASSESSEE COMPANY I N ITA NO. 3419/MUM/2013 FOR THE ASSESSMENT YEAR 2009-10 IS PA RTLY ALLOWED AS INDICATED ABOVE. ITA 3416 TO 3419 /MUM/2013 28 29. IN THE RESULT, FOUR APPEALS OF THE ASSESSEE COM PANY IN ITA NO. 3416- 3419/MUM/2013 FOR ASSESSMENT YEARS 2006-07 TO 2009- 10 ARE PARTLY ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MAY , 2016. # $% &' 30-05-2016 ( ) SD/- SD/- (SAKTIJIT DEY) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 30-05-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI E BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI