DCIT 9(2), MUMBAI V. POPLEY DIAMOND & GOLD PLAZA P.LTD, MUMBAI

ITA 3584/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100585 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 27-01-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 18-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SOLI E DASTUR
• Assessee Lawyers: AMRITA MISRA
• Keywords: Reopening of assessment; Business income; Depreciation; Tangible material; Difference of opinion; Tax effect; Reason to believe; Change of opinion
• Section: 143(3); 234B; 32; 148; 2

Judgement Text

POPLEY DIAMOND AND GOLD PLAZA PVT LTD (FORMERLY KNOWN AS SEARS SUPE R MARKET LTD) ITA 5053 /M/20 03 & 14 OTHER GROUP APPEALS 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C , MUMBAI . , , BEFORE SHRI D KARUNAKARA RAO , ACCOUNTANT MEMBER AND SHRI AMIT SHUK LA , JUDICIAL MEMBER ITA NO. : 5053 /MUM/20 0 9 (ASSESSMENT YEAR S : 200 2 - 0 3 ) ITA NO. : 5054/MUM/200 9 (ASSESSMENT YEAR: 2003 - 04) ITA NO. : 505 5 /MUM/200 9 (ASSESSMENT YEAR: 200 4 - 0 5 ) ITA NO. : 505 6 /MUM/200 9 (ASSESSMENT YEAR: 200 5 - 0 6 ) ITA NO. : 505 7 /MUM/200 9 (ASSE SSMENT YEAR: 200 6 - 0 7 ) POPLEY DIAMOND AND GOLD PLAZA PVT LTD , (FORMERLY KNOWN AS SEARS SUPER MARKET LTD) 188 - A, TURNER ROAD, BANDRA (WEST), MUMBAI - 400 050 .: PAN : A A ACS 5 1 5 4 L VS D C IT CC - 9(3) , MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : MR SOLI E. DASTUR RESPONDENT BY : MS AMRITA MISRA ITA NO. : 4895 /MUM/20 09 (ASSESSMENT YEAR S : 2002 - 03 ) ITA NO. : 4896 /MUM/200 9 (ASSESSMENT YEAR: 2003 - 04) ITA NO. : 4897 /MUM/200 9 (ASSESSMENT YEAR: 2004 - 05) ITA NO. : 4898 /MUM/200 9 (ASSESSMENT YEAR: 2005 - 06) ITA NO. : 4899 /MUM/200 9 (ASSESSMENT YEAR: 2006 - 07) AC IT CC - 38 , MUMBAI VS POPLEY DIAMON D AND GOLD PLAZA PVT LTD , (FORMERLY KNOWN AS SEARS SUPER MARKET LTD) MUMBAI - 400 050 .: PAN : A AACS 5154 L (APPELLANT) (RESPONDENT) APPELLANT BY : MS AMRITA MISRA RESPONDENT BY : MR SOLI E DASTUR POPLEY DIAMOND AND GOLD PLAZA PVT LTD (FORMERLY KNOWN AS SEARS SUPE R MARKET LTD) ITA 5053 /M/20 03 & 14 OTHER GROUP APPEALS 2 ITA NO. : 3581 /MUM/20 12 (ASSESSMENT YEAR: 2002 - 03) ITA NO. : 358 2 /MUM/20 12 (ASSESSMENT YEAR: 2003 - 04) ITA NO. : 3583 /MUM/20 12 (ASSESSMENT YEAR: 200 4 - 0 5 ) ITA NO. : 358 4 /MUM/20 12 (ASSESSMENT YEAR: 200 5 - 0 6 ) ITA NO. : 358 5 /MUM/20 12 (ASSESSMENT YEAR: 200 6 - 0 7 ) DCIT (2) , MUMBAI VS POPLEY DIAMOND AND GOLD PLAZA PVT LTD , (FOR MERLY KNOWN AS SEARS SUPER MARKET LTD) MUMBAI - 400 050 .: PAN : A AACS 5154 L (APPELLANT) (RESPONDENT) APPELLANT BY : MS AMRITA MISRA RESPONDENT BY : MR SOLI E DASTUR /DATE OF HEARING : 05 - 0 8 - 2015 / DATE OF PRONOUNCEMENT : 12 - 0 8 - 2015 ORDER PER BENCH : THE AFORESAID BUNCH OF APPEALS HAVE BEEN FILED BY THE ASSESSEE AS WELL AS BY THE REVENUE AGAINST SEPARATE IMPUGNED ORDERS PASSED BY CIT(A) - 9, MUMBAI FOR THE QUANTUM OF ASSESSMENTS PASSED U/S 143(3) R.W.S. 147 FOR THE ASSESSMENT YEARS 2002 - 03 TO 2006 - 07. BESIDES THIS, THE REVENUE HAS ALSO FILED APPEALS AGAINST DELETION OF PENALTY LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) IN RELATION TO THE ADDITIONS MADE IN AFORESAID ASSESSMENT YEARS. S INCE THE ISSUES INVOLVED IN ALL THE APPEALS ARE COMMON ARISING OUT OF IDENTICAL SET OF FACTS, THEREFORE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF BREVITY. 2. TO UNDERSTAND THE IMPLICATION OF THE FACTS AND ISSUES INVOLVED, WE SHALL TAKE - UP THE CROSS APPEALS FOR THE ASSESSMENT POPLEY DIAMOND AND GOLD PLAZA PVT LTD (FORMERLY KNOWN AS SEARS SUPE R MARKET LTD) ITA 5053 /M/20 03 & 14 OTHER GROUP APPEALS 3 YEAR 2002 - 03 BEING ITA 5053/MUM/2009 AND 4895/MUM/200 9 . IN THE ASSESSEES APPEAL FOLLOWING GROUNDS HAVE BEEN RAISED: 1. THE COMMISSIONER OF INCOME - TAX (APPEALS) - IX, MUMBAI [THE C IT(A)] ERRED IN UPHOLDING THE VALIDITY OF THE ASSESSMENT PROCEEDINGS INITIATED UNDER SECTION 147 OF THE INCOME - TAX ACT, 1961 (THE ACT) BY THE DY. COMMISSIONER OF INCOME - TAX, 9(3) MUMBAI (THE AO). 2. THE CIT(A) ERRED IN UPHOLDING THE AOS DECISION TO TREAT THE COMPENSATION FROM M/S POPLEY GOLD PLAZ A AS INCOME FROM HOUSE PROPERTY AND NOT AS PROFITS AND GAINS OF BUSINESS AS RETURNED BY THE APPELLANT. 3. THE CIT(A) ERRED IN COMPUTING THE ANNUAL VALUE OF THE PROPERTY AT 8.5% OF RS. 15,48,76,529/ - INST EAD OF COMPUTING IT AT THE MUNICIPAL RATEABLE VALUE OF THE PROPERTY . 4. IF THE MUNICIPAL RATEABLE VALUE WAS NOT TO BE ADOPTED, THE CIT(A) OUGHT TO HAVE COMPUTED THE ANNUAL VALUE AT THE RATE OF 7% OF RS. 9,04,63,112/ - , BEING THE COST OF INVESTMENT IN THE B UILDING. 5. THE CIT(A) ERRED IN UPHOLDING LEVY OF INTEREST UNDER SECTION 234B OF THE ACT. 3. BESIDES THIS, THE ASSESSEE HAS ALSO RAISED FOLLOWING AS ADDITIONAL GROUND, WHICH READS AS UNDER: IN THE EVENT IT IS HELD THAT INCOME OF THE APPELLANT IS NOT C HARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS, THE CIT(A) OUGHT TO HAVE HELD THAT THE INCOME IS CHARGEABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. 4. IN THE REVENUES APPEAL, FOLLOWING GROUND HA S BEEN RAISED: 1. ON THE FACTS AND IN THE C IRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN REDUCING THE ANNUAL LETTING VALUE (ALV) OF THE HOUSE PROPERTY LET OUT BY THE ASSESSEE FROM RS. 3,09,75,305/ - BEING 20% OF THE COST OF INVESTMENT OF RS. 15,48,76,529/ - (AS PER BALANCE SHEET AS ON 31.03.2002) TO 8.5% OF THE COST OF INVESTMENT U/S 23(1)(A) OF THE INCOME - TAX ACT, 1961 WITHOUT APPRECIATING THE FACT THAT ANNUAL LETTING VALUE @ 20% OF THE COST OF INVESTMENT WAS ARRIVED AT BY POPLEY DIAMOND AND GOLD PLAZA PVT LTD (FORMERLY KNOWN AS SEARS SUPE R MARKET LTD) ITA 5053 /M/20 03 & 14 OTHER GROUP APPEALS 4 THE ASSESSING OFFICER AFTER CONFRONTING THE ASSESSEE THROUGH SH OW CAUSE NOTICE DATED 14.11.2008, WITH COMPARABLE CASES OF SMT. ASHA HAMPANWAR AND M/S. SAHAJWANI ESTATE WHO HAD SHOWN THE ANNUAL RENT @ 29.52% AND 20.49% OF THE VALUE OF PROPERTIES. 5. BEFORE US, LD. SENIOR COUNSEL , MR . SOLI DASTUR , SUBMITTED THAT IN AL L THE APPEALS FILED BY THE ASSESSEE, THE MAIN LEGAL ISSUE, WHICH GOES TO THE ROOT OF ALL THE ASSESSMENTS IS THE VALIDITY OF REOPENING OF THE ASSESSMENT U/S 147, WHICH HAS BEEN RAISED VIDE GROUND NO. 1 IN ALL THE YEARS IN DISPUTE . EXPLAINING THE RELEVANT FA CTS QUA THE VALIDITY OF REOPENING U/S 147, MR . DASTUR SUBMITTED THAT IN THIS YEAR, THE ASSESSEE HAS FILED ITS RETURN OF INCOME U/S 139(1) ON 30.09.2002 DECLARING TOTAL LOSS OF ( - ) RS. 13,03,330/ - . THE SAID RETURN OF INCOME WAS DULY PROCESS ED VIDE INTIMATIO N U/S 143(1) AND WAS ACCEPTED AS SUCH AS NO NOTICE U/S 143(2) WAS ISSUED. THE ASSESSMENT SO COMPLETED HAD BEEN SOUGHT TO BE REOPENED BY ISSUANCE OF NOTICE U/S 148 DATED 18.11.2007 ON THE FOLLOWING REASONS RECORDED : IN THIS CASE, THE RETURN OF INCOME WAS FURNISHED ON 30.09.2012 DECLARING A LOSS OF RS. 13,03,330/ - . THE SAME WAS PROCESSED U/S.143(1) ON 24.01.2003 ADOPTING THE TOTAL LOSS AS DECLARED AND NO SCRUTINY U / S.143(2) WAS MADE SUBSEQUENTLY. IT IS SEEN FROM THE RECORDS THAT THE ASSESSEE HAS SHOWN A N AMOUNT OF RS. 3 LACS AS COMPENSATION RECEIVED IN RESPECT OF ITS BUSINESS PREMISES FROM M/S. POPLEY GOLD PLAZA AS PER AN AGREEMENT DATED 01.04.1999. IT IS ALSO SEEN THAT THE ASSESSEE RECEIVED UNSECURED LOAN OF RS. 16.07 CRORES FROM SHRI RAMCHANDRA K. POPL EY, DIRECTOR OF ASSESSEE - COMPANY. AS THE RECORDS INDICATE, SHRI SURAJ RAMCHANDRA POPLEY, SON OF THE SAID DIRECTOR IS ONE OF THE PARTNERS OF M/S. POPLEY GOLD PLAZA, THE LESSEE FIRM. THE ASSESSEE HAS TREATED THE LETTING OUT OF THE PROPERTY AS A BUSINESS THER EBY CLAIMING DEPRECIATION ETC. THIS CLAIM MAY NOT BE ACCEPTABLE. IT IS FURTHER SEEN THAT THE SO CALLED COMPENSATION PER ANNUM OF RS.3 LAC IS BEING RECEIVED AT THIS RATE RIGHT FROM ASSESSMENT YEAR 2001 - 02 OR SO. THE LOAN ADVANCED BY THE DIRECTOR IS ALSO CO NTINUING FROM A.Y. 2001 - 02 FOR WHICH NO INTEREST IS CLAIMED NOR PAID ALL THESE YEARS. OBVIOUSLY, THE AMOUNT OF COMPENSATION RECEIVED BY THE ASSESSEE IS AN INSIGNIFICANT SUM AS COMPARED WITH THE TOTAL BOOK VALUE OF THE LEASED PREMISES WHICH IS MORE THAN RS. 10 CRORES. IT IS OBVIOUS FROM THE DETAILS ON RECORD THAT BECAUSE OF THE CLOSE NEXUS BETWEEN THE LESSOR - ASSESSEE AND THE LESSEE - PARTNERSHIP FIRM, NO POPLEY DIAMOND AND GOLD PLAZA PVT LTD (FORMERLY KNOWN AS SEARS SUPE R MARKET LTD) ITA 5053 /M/20 03 & 14 OTHER GROUP APPEALS 5 INTEREST IS CHARGED ON THE WHOPPING AMOUNT OF RS . 16. 07 CRORES. IF INTEREST IS CHARGED SAY AT THE RATE OF 12 %, THE INTEREST AMOUNT WILL BE ABOUT RS.1.93 CRORES WHICH WOULD HAVE BEEN PAYABLE BY THE ASSESSEE PER ANNUM, WHEREAS THE ASSESSEE RECEIVED ONLY A VERY MEAGER AMOUNT OF RS. 3 LAC STATED TO BE COMPENSATION, OBVIOUSLY FOR THE REASON THAT INTEREST (OTHERWISE) PAYABLE BY THE ASSESSEE IS FORGONE BY THE RELATIVE OF PARTNER(S) OF THE LESSEE - FIRM. IN OTHER WORDS, THE USUFRUCTUS OF THE LOAN RECEIVED REQUIRES TO BE TREATED AS CONSIDERATION FOR THE USER OF THE LEASED PROPERTY AND ACCORDINGLY ANNUAL VALUE OF THE LEASED PROPERTY NEEDS TO BE RE - WORKED OUT. REFERENCE IN THIS REGARD MAY ALSO BE MADE TO THE DECISION OF HON'BLE ITAT, MUMBAI IN THE CASE OF TRIVOLI INVESTMENT & TRADING CO. PVT LTD (ITA NO.3269/BOM/93 AND 3009/BOM/94) WHICH HAS BEEN CIRCULATED VIDE CIT(JUDICIAL), MUMBAIS LETTER NO. ADDL. CIT(J,C & L) /2003 - 04 DATED 29.01.2004 AND THE FACTS OF THE PRESENT CASE ARE ALMOST IDENTICAL WITH THOSE OF THE DECIDED CASE. IN VIEW OF THE ABOVE, I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX AS ESCAPED ASSESSMENT WIT HIN THE MEANING OF PROVISIONS OF SECTION 147 OF THE I.T. ACT, INASMUCH AS THE INCOME CHARGEABLE TO TAX HAS NOT BEEN CORRECTLY SHOWN NOR ASSESSED CORRECTLY. ACCORDINGLY, THE PROPOSALS ARE SUBMITTED REQUESTING APPROVAL OF THE ADDL.CIT, RG.9(3) UNDER SECTION 151(2) OF THE J. ACT. TO REOPEN THE ASSESSMENT U/S.147 OF THE I.T. ACT FOR AY. 2002 - 03. 6. FROM THE PERUSAL OF THE REASONS RECORDED , MR . DASTUR SUBMITTED THAT IT CAN BE VERY WELL SEEN THAT THERE IS NO TANGIBLE MATERIAL COMING INTO POSSESSION OF THE ASS ESSING OFFICER SO AS TO ENTERTAIN REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT WITHIN THE SCOPE AND MEANING OF SECTION 147. GIVING BACKGROUND OF THE CASE, HE SUBMITTED THAT ASSESSEE OWNED A BUILDING WHICH WAS SHOWN AS BUSINESS A SSETS IN THE SCHEDULE OF FIXED ASSETS IN THE BALANCE SHEET ALONG WITH FIXTURES , FITTINGS AND PLANTS. IN THE YEAR 1999 - 2000 I.E. ON 01.04.1999 , ASSESSEE ENTERED INTO LEASE AGREEMENT FOR LETTING OUT THE BUSINESS PREMISES. SINCE THEN THE ASSESSEE HAS BEEN SHO WING LEASE INCOME FROM LETTING OUT OF ITS BUSINESS PREMISES ( ALONG WITH FURNITURES , FIXTURES ETC.) AS BUSINESS INCOME. THE SAID RECEIPTS HAS BEEN ACCEPTED BY THE DEPARTMENT AS BUSINESS INCOME EVEN UNDER THE SCRUTINY PROCEEDINGS U/S 143(3). HE POINTED O UT THAT IN ASSESSMENT YEAR 2001 - 02, DURING THE COURSE OF SCRUTINY PROCEEDINGS, ASSESSING OFFICER HAD RAISED SPECIFIC QUERY NOT ONLY WITH REGARD TO THE UNSECURED LOAN RECEIVED FROM DIRECTOR OF THE ASSESSEE COMPANY POPLEY DIAMOND AND GOLD PLAZA PVT LTD (FORMERLY KNOWN AS SEARS SUPE R MARKET LTD) ITA 5053 /M/20 03 & 14 OTHER GROUP APPEALS 6 BUT ALSO ABOUT THE LEASE RENTAL INCOME DERI VED FROM THE LETTING OUT OF THE PROPERTY. IN RESPONSE, THE ASSESSEE HAD FILED A L L THE DETAILS OF UNSECURED LOANS AND ALSO REGARDING THE INCOME SHOWN BY THE ASSESSEE FROM THE BUSINESS ASSETS. THE RELEVANT QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS HAS BEEN PLACED IN THE PAPER BOOK AT PAGE 40 AND THE REPLY OF THE ASSESSEE AT PAGES 41 & 42. THEREAFTER, THE ASSESSMENT WAS COMPLETED U/S 143(3) ACCEPTING THE ASSESSEES COMPUTATION OF BUSINESS INCOME. HE FURTHER P OINTED OUT THAT IN THE AY 2001 - 02, THE ASSESSMENT SO COMPLETED AS ABOVE WAS REOPENED PRECISELY ON SAME REASONS , HOWEVER, FROM THE STAGE OF THE TRIBUNAL, THE ACTION TAKEN U/S 147 VIDE NOTICE ISSUE D U/S 148 HAS BEEN STRUCK DOWN ON THE GROUND , THAT SUCH A R EOPENING IS BAD IN LAW IN VIEW OF THE PROVISO TO SECTION 147 [ I.E. REOPENED BEYOND THE PERIOD OF 4 YEARS WITHOUT THERE BEING ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT] AND ALSO ON THE G ROUND THAT THERE WAS NO NEW INFORMATION OR MATERIAL COMING TO THE POSSESSION OF THE ASSESSING OFFICER TO REOPEN THE COMPLETED ASSESSMENT. EVEN PRIOR TO THE ASSESSMENT YEAR 2001 - 02, THE ASSESSEE HAS BEEN SHOWING THE INCOME FROM LETTING OUT THE BUSINESS PREM ISES AS BUSINESS INCOME , WHICH STOOD ACCEPTED BY THE DEPARTMENT . IN THIS BACKGROUND, HE SUBMITTED THAT , ONCE THE ASSESSEE HAD BEEN SHOWING THE INCOME UNDER THE HEAD BUSINESS INCOME AND ALSO ACCEPTED BY THE DEPARTMENT OR SUCH ASSESSMENTS HAD ATTAINED FI NALITY, THEN WITHOUT THERE BEING ANY FRESH MATERIAL COMING INTO RECORD OR POSSESSION OF THE ASSESSING OFFICER SO AS TO SUGGEST THAT INCOME SHOWN BY THE ASSESSEE HAS TO BE TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY OR THAT IT REQUIRES FRESH DETERMIN A TION OF THE ALV AFTER TAKING INTO CONSIDERATION THE AMOUNT OF THE LOANS RECEIVED BY THE ASSESSEE , REOPENING OF THE ASSESSMENT IS BAD IN LAW. THERE COULD NOT BE ANY REASON TO POPLEY DIAMOND AND GOLD PLAZA PVT LTD (FORMERLY KNOWN AS SEARS SUPE R MARKET LTD) ITA 5053 /M/20 03 & 14 OTHER GROUP APPEALS 7 BELIEVE ON ALREADY SETTLED FACTS AND ISSUE IN THE CASE OF THE ASSESSE E. THE REOPENING IS ONLY A PRETENCE TO CHANGE THE HEAD OF INCOME AND TAKE A DIFFERENT VIEW ON S A ME SET OF FACTS. SUCH A REOPENING SANS ANY TANGIBLE MATERIAL COMING ON RECORD IS INVALID AND THEREFORE , THE ASSESSMENT ORDER PASSED IN PURSUANCE OF IMPUGNED NOTICE U/S 148 DESERVES TO BE QUASHED. IN SUPPORT OF HIS CONTENTION, HE RELIED UPON CATENA OF CASE LAWS ON THE POINT THAT EVEN I N THE CASE WHERE THE ASSESSMENTS HAVE BEEN COMPLETED U/S143(1), THE REOPENING U/S 147 CANNOT BE DONE UNLESS THERE IS S OME TANGIBLE MATERIAL COMING ON RECORD OR ANY INFORMATION COMING INTO POSSESSION OF THE ASSESSING OFFICER TO ENTERTAIN , R EASON TO BELIEVE FOR REOPENING THE ASSESSMENT U/S 147. THE LIST OF SUCH DECISION RELIED UPON BY HIM ARE AS UNDER: (I) GUJARAT HIGH COURT IN THE CASE OF INDUCTOTHERM ( INDIA ) PVT. LTD VS CIT , CIVIL APPLICATION NO. 858 OF 2006 ORDER DATED 06. 08 .2012 . T HE HONBLE HIGH COURT AFTER TAKING NOTE OF VARIOUS DECISIONS OF THE HIGH COURTS AND ALSO THE SUPREME COURT DECISION IN THE CASE OF ACIT VS. RAJ ESH JH AVERI STOCK BROKERS P LTD. REPORTED IN [2007] 291 ITR 500 HELD THAT IN THE CASE OF REOPENING OF AN ASSESSMENT, WHICH HAS BEEN PREVIOUSLY ACCEPTED U/S 143(1) WITHOUT SCRUTINY, THE ASSESSING OFFICER WOULD HAVE POWER TO REOPEN THE ASSESSMENT ONLY IF HE HAD SOME TANGIBLE MATERIAL ON THE BASIS OF WHICH HE COULD FORM REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX H AS ESCAPED ASSESSMENT , OTHERWISE CAN NOT. (II) DELHI HI GH COURT DECISION IN THE CASE O F CIT VS ORIENT CRAFT LTD REPORTED IN [2007] 215 TAXMAN 28 WHE REIN, THE HONBLE HIGH COURT CONCLUDED THAT EVEN IF THE RETURN HAS BEEN ACCEPTED U/S 143(1), THE ASSESSING OFFICER CANNOT REOPEN THE CASE U/S 147 UNLESS SOME TANGIBLE MATERIAL COMES INTO POSSESSION OF THE ASSESSING OFFICER SUBSEQUENT TO T HE ISSUE POPLEY DIAMOND AND GOLD PLAZA PVT LTD (FORMERLY KNOWN AS SEARS SUPE R MARKET LTD) ITA 5053 /M/20 03 & 14 OTHER GROUP APPEALS 8 OF INTIMA TION U/S 143(1). IN ABSENCE OF ANY SUCH MATERIAL AVAILABLE WITH THE ASSESSING OFFICER, REQUISITE REASON TO BELIEVE OF ESCAPEMENT OF INCOME CANNOT BE FO RMED . IN THIS CASE ALSO HONBLE HIGH COURT HAVE TAKEN NOTE OF DECISION OF HONBLE APEX COURT IN THE CASE OF ACIT VS. RAJESH JH AVERI STOCK BROKERS P LTD. ( SUPRA ). (III) DELTA AIR LINES, INC. VS ITO, ITAT MUMBAI BENCH REPORTED IN [2013] 153 TTJ 506. (IV) BAP A LAL & CO. EXPORTS VS JCIT REPORTED IN [2007] 289 ITR 37 (MAD). 7. THUS, HE CONCLUDED THAT IN THE PRESENT CASE A LSO THERE IS NO REQUISITE TANGIBLE MATERIAL COMING ON RECORD TO SUGGEST THAT THE INCOME SHOWN BY THE ASSESSEE IS TO BE ASSESSED AS INCOME FROM HOUSE PROPERT Y SO AS TO DEVIATE FROM THE PAST HISTORY OF THE ASSESSEES CASE AND ACCORDINGLY , THERE COULD NOT BE ANY REASON TO BELIEVE FOR REOPENING THE CASE U/S 143(1). 8. ON THE OTHER HAND, THE LD. DR ON BEHALF OF THE REVENUE, SUBMITTED THAT ONCE THE ASSESSMENT HAS NOT BEEN COMPLETED U NDER SCRUTINY U/S 143(3) AND MERELY RETURN HAS BEEN PROCESSED U/S 143(1), THE N ASSESSING OFFICER HAS A VAST POWER TO REOPEN THE CASE U/S 147. THERE CANNOT BE A CASE OF CHANGE OF OPINION, T HE REASON BEING THAT THE ASSESSEES RETURN OF INCOME HAS NOT BEEN SCRUTINIZED . IN SUPPORT SHE STRONGLY RELIED UPON THE DECISION OF HONBLE SUPREM E COURT IN THE CASE OF ACIT VS. RAJESH JH AVERI STOCK BROKERS P LTD. REPORTED IN [2007] 291 ITR 500 (SC). AFTER REFERRING TO THE REASONS RECORDED , SHE SUBMITTED THAT THE ASSESSING OFFICER HAS TAKEN NOTE OF THE FACT THAT ASSESSEE HAS RECEIVED UNSECURED LOA N OF RS. 16,07,00,000/ - , FROM ONE OF THE DIRECTOR , WHOSE CLOSELY RELATED CONCERN HAD TAKEN THE PROPERTY ON LEASE AND, THEREFORE, THE COMPENSATION RECEIVED AT R S. 3 LAKHS PER POPLEY DIAMOND AND GOLD PLAZA PVT LTD (FORMERLY KNOWN AS SEARS SUPE R MARKET LTD) ITA 5053 /M/20 03 & 14 OTHER GROUP APPEALS 9 AN N UM WAS FAR LESS THAN THE MARKET VALUE . NOT ONLY THAT, THE ASSESSEE HAD ALSO CLA IMED DEPRECIATION ON THE PROPERTY WHICH WAS LET OUT. THUS, THE COMPENSATION OF RS. 3 LAKHS RECEIVED PER AN N UM CANNOT BE HELD TO BE REASONABLE COMPENSATION AT ALL AND THIS FACT ITSELF IS SUFFICIENT THAT IT REQUIRES PROPER SCRUTINY OF THE CASE. THE ASSESSING OFFICER HAS RECORDED THE DETAILED REASONS FOR ENTERTAINING HIS REASON TO BELIEVE FOR REOPENING THE CASE AND SUCH A REASON TO BELIEVE ENTERTAINED BY H IM CANNOT BE QUESTIONED HERE IN THIS CASE, THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY ACQUIRED THE JUR ISDICTION FOR REOPENING THE CASE AND THEREBY ISSUING THE NOTICE U/S 148. SHE ALSO STRONGLY RELIED UPON THE ORDER OF THE CIT(A) SPECIFICALLY THE FINDING GIVEN IN PARA 2.4. 9. WE HA VE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. BEFORE ADJUDICATING THE LEGAL ISSUE RAISED BEFORE US, THE BRIEF BACKGROUND AND FACTS OF THE CASE ARE BEING REITERATED. T HE ASSESSE E COMPANY OWNS A PREMISE (BUILDING) ALONG WITH FURNITURE S FIXTURES , EQUIPMENTS AND PLANTS . SAID BUILDING ALONG WITH ITS FIXTUR E S AND FURNITURE S AND PLANTS I S APPEARING IN THE BALANCE SHEET UNDER THE SCHEDULE OF FIXED ASSETS . IT HA D ENTERED INTO A LEASE AGREEMENT DATED 01.04.1999 WITH ITS SISTER CONCERN M/S POPLEY GOLD PLAZA FOR LETTING OUT THE SAID BUSINESS PREMISES /BUILDING AL ONG WITH THE FURNITURE S, FIXTURES AND EQUIPMENTS FOR A COMPENSATION OF RS. 3 LAKHS PER ANNUM. SUCH A RECEIPT FROM LETTING OUT OF THE BUSINESS PREMISES HAS BEEN SHOWN AS BUSINESS INCOME SINCE ASSESSMENT YEAR 2000 - 01. IN THE ASSESSMENT YEAR 2000 - 01, THE SA ID BUSINESS INCOME STOOD ASSESSED AND ACCEPTED BY THE DEPARTMENT. IN THE ASSESSMENT YEAR 2001 - 02, AGAIN THE ASSESSEE HA D OFFERED THE RECEIPTS FROM LETTING OUT OF THE BUSINESS PREMISES AS BUSINESS INCOME , WHICH TOO WAS ACCEPTED UNDER SCRUTINY ASSESSMENT COM PLETED U/S 143(3). LATER ON , SUCH AN ASSESSMENT WAS REOPENED U/S 148 ON THE REASON THAT THE COMPENSATION OF RS. 3 LAKHS RECEIVED BY THE ASSESSEE FROM POPLEY DIAMOND AND GOLD PLAZA PVT LTD (FORMERLY KNOWN AS SEARS SUPE R MARKET LTD) ITA 5053 /M/20 03 & 14 OTHER GROUP APPEALS 10 LETTING OUT OF THE BUSINESS PREMISES SHOULD BE TAXED/ASSESSED AS INCOME FROM HOUSE PROPERTY AND SUCH REASONS WERE IDENTICALLY WORDED WITH THE REASONS RECORDED FOR THE IMPUGNED ASSESSMENT YEAR. HOWEVER, THE TRIBUNAL VIDE ORDER DATED 28.05.2014 HAD QUASHED THE PROCEEDINGS U/S 148 AS INVALID F IRSTLY, ON THE GROUND THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT; AND SECONDLY, NO NEW INFORMATION OR MATERIAL HAS COME INTO THE POSSESSION OF THE ASSESSING OFFICER AFTER THE COMPLETION OF THE SAID ASSESSMENT. THUS, IN THIS MANN ER, UP TILL A.Y. 2001 - 02, THE RECEIPTS/COMPENSATION SHOW N BY THE ASSESSEE STOOD ASSESSED AS BUSINESS INCOME. NOW, FOR THE IMPUGNED ASSESSMENT YEAR I.E. A.Y. 2002 - 03, THE ASSESSEES CASE HAS BEEN REOPENED VIDE NOTICE U/S 148 DATED 28.11.2007 , MAINLY ON TH E GROUND THAT THE INCOME CHARGEABLE TO TAX HAS NOT BEEN CORRECTLY SHOWN NOR HAS BEEN ASSESSED CORRECTLY . I N THE REASONS RECORDED , THE ASSESSING OFFICER OBSERVES THAT THE ASSESSEE HAS RECEIVED UNSECURED LOAN OF RS. 16.07 CRORES FROM SHRI RAMCHANDRA K POPLEY , DIRECTOR OF THE ASSESSEE COMPANY AND HIS SON , SHRI S R POPLEY IS ONE OF THE PARTNERS OF THE LESSEE FIRM I.E. M/S POPLEY GOLD PLAZA (WHO HAS TAKEN THE PREMISES ON LEASE) . FURTHER T HE ASSESSEE HAS ALSO CLAIMED DEPRECIATION ON THE SAID PROPERTY AND, THEREFO RE, SUCH A CLAIM OF THE ASSESSEE MAY NOT BE ACCEPTABLE. FURTHER, HE HAS OBSERVED THAT COMPENSATION AMOUNT OF RS. 3 LAKHS PER ANNUM IS INSIGNIFICANT AS COMPARED TO THE BOOK VALUE OF THE LEASE D PREMISES, WHICH IS MORE THAN RS. 10 CRORES. NO INTEREST HAS BE EN CHARGED ON THE LOAN AMOUNT RECEIVED BY THE ASSESSEE , THEREFORE THE ANNUAL LETTING VALUE OF THE LEASE PROPERTY NEEDS TO BE WORKED OUT. HE HAS ALSO REFERRED TO A ONE TRIBUNAL DECISION IN THE CASE OF TRIULI INVESTMENT AND TRADING CO P LTD. 10. FROM THE P ERUSAL OF THE REASONS RECORDED , IT IS SEEN THAT , FIRSTLY, THE ASSESSING OFFICER HIMSELF HAS NOTED THE FACT THAT THE FACT POPLEY DIAMOND AND GOLD PLAZA PVT LTD (FORMERLY KNOWN AS SEARS SUPE R MARKET LTD) ITA 5053 /M/20 03 & 14 OTHER GROUP APPEALS 11 OF COMPENSATION AMOUNT OF RS. 3,00,000/ - FROM LET OUT OF THE PREMISE IS COMING FROM THE EARLIER ASSESSMENT YEARS. SECONDLY, T HERE IS NO WHISPER ABOUT ANY FRESH MATERIAL OR INFORMATION COMING ON RECORD TO SU G GES T EVEN REMOTELY THAT THIS COMPENSATION RECEIVED IS NOT CORRECT OR THAT INCOME SHOWN SHOULD BE ASSESSED AS INCOME FROM HOUSE PROPERTY . THE FACTUM OF THE AMOUNT OF COMPENSATION, BOO K VALUE OF THE PROPERTY SHOWN IN THE FIXED ASSET S , AMOUNT OF UNSECURED LOAN RECEIVED ETC . ARE ALL COMING FROM THE EARLIER YEARS. NO NEW FACT EVEN WITH REGARD TO LOAN HAS BEEN FOUND FOR THIS YEAR AND SO MUCH SO, THEY HAVE BEEN SPECIFICALLY EXAMINED IN THE C OURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) IN THE A.Y. 2001 - 02. SO THE FACTOR OF LOAN IS ALSO NOT NEW. ONCE THESE FACTS AS RECORDED IN THE REASONS ARE PERMEATING FROM THE EARLIER YEARS , THEN CAN IT BE HELD THAT ASSESSING OFFICER CAN ENTERTAIN TO REASON TO BELIEVE FOR REOPENING THE CASE U/S 147 IN THIS YEAR . THE MAIN PLANK OF THE ARGUMENT OF LD. DR IS THAT THE RETURN OF INCOME FILED BY THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR WAS ACCEPTED U/S 143(1) , WITHOUT ANY SCRUTINY AND, THEREFORE, THE ASSESSIN G OFFICER WAS JUSTIFIED IN ENTERTAINING REASON TO BELIEVE FOR REOPENING THE CASE U/S 147. 11. THE STATUTE HAS GIVEN SUFFICIENT POWER TO THE ASSESSING OFFICER FOR REOPENING THE ASSESSMENT EITHER IN THE CASES WHERE RET URN OF INCOME HAS BEEN ACCEPTED U/S 143(1) OR HAS BEEN SUBJECTED TO SCRUTINY ASSESSMENT U/S 143(3). HOWEVER, THE COMMON REQUIREMENT IN BOTH THE CASES IS THAT THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE WORDS REASON TO BELIEVE IS THE KEY ELEMENT AND ARE STRONGER THAN THE WORD SATISFIED AND WHETHER THE ASSESSING OFFICER HAD REASON TO BELIEVE OR NOT IS ALWAYS A QUESTION OF JURISDICTION WHICH NEEDS TO BE EXAMINED WHENEVER THE REOPENING U/S 147 IS CHALLENGED . IT IS A TRIT E LAW THAT THE REASON TO BELIEVE POPLEY DIAMOND AND GOLD PLAZA PVT LTD (FORMERLY KNOWN AS SEARS SUPE R MARKET LTD) ITA 5053 /M/20 03 & 14 OTHER GROUP APPEALS 12 ENTERTAINED BY THE ASSESSING OFFICER SHOULD HAVE A RATIONAL CONNECTION AND REL EV A NT BEARING ON THE FORMATION OF BELIEF WITH THE TANGIBLE MATERIAL COMING ON RECORD HAVING LIVE LINK NEXUS WITH THE INCOME CHARGEABLE TO TAX ESCAPING THE ASSESSMENT. THE BELIEF ENTERTAINED BY THE ASSESSING OFFICER MUST BE HELD IN GOOD FAITH AND NOT MERELY A PRETENCE FOR REVIEW AND ROVING AND FISHING ENQUIRY . HERE IN THIS CASE, NO TANGIBLE MATERIAL OR INFORMATION HAS COME ON RECORD WHICH CAN BE REMOTELY SUGGEST THAT ASSESSING OFFICER HAS REASON TO BELIEVE THAT THE INCOME SHOWN BY THE ASSESSEE EITHER SHOULD BE TAXED AS INCOME FROM HOUSE PROPERTY OR IT IS INADEQUATE. THE ENTIRE REASONS RECORDED ARE PURELY IN THE REALM OF SURMISES WHICH IS EVIDE NT FROM THE WORDS LIKE TH IS CLAIM MA Y NOT BE ACCEPTABLE AND CONSIDERATION RECE I VED FOR THE USER OF LEASE PROPERTY IS INADEQUATE WHICH NEEDS TO BE WORKED OUT. THERE IS NO REFERENCE TO ANY CONCRETE MATERIAL TO SHOW THAT EITHER THE COMPENSATION RECEIVED IS INADEQUATE OR IT SHOULD BE NECESSARILY BE TAXED AS INCOME FROM HOUSE PROPERTY. THERE IS NO SETTLED LAW OR LEGAL PROPOSITION THAT WHENEVER THE BUSINESS PREMISES ARE LET OUT , THEN LEASE INCOME HAS TO BE NECESSARILY TAXED AS INCOME FROM HOUSE PROPERTY . SUCH INCOME CAN BE TAXED EITHER AS INCOME FROM OTHER SOURCES; OR AS BUSINESS INCOME; OR AS INCOME FROM HOUSE PROPERTY, DEPENDING UPON THE FACTS AND CIRCUMSTANCE S OF THE CASE, WHICH HAS NOT BEEN SPELT OUT BY THE ASSESSING OFFICER IN THE REASONS . THUS, IN OUR OPINION, THE REASONS RECORDED BY THE ASSESSING OFFICER DO NOT CLOTH E THE ASSESSING OFFICER WITH THE JURISDICTION TO REOPEN THE ASSESSMENT U/S 147. OUR DECISION IS ALSO FORTIFIED BY VARIOUS JUDICIAL DECISIONS, AS REFERRED AND RELIED UPON BY THE LD. SENIOR COUNSEL. AS REGARDS THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RAJESH JH AVERI STOCK BROKERS P LTD. ( SUPRA ) RELIED UPON BY THE LD. DR, WE FIND THAT THE RAT I O OF THE HONBLE SUPREME COURT HAS BEEN EXPLAINED BY VARIOUS HIGH COURTS INCLUDING THAT OF THE GUJARAT HIGH COURT IN THE CASE OF POPLEY DIAMOND AND GOLD PLAZA PVT LTD (FORMERLY KNOWN AS SEARS SUPE R MARKET LTD) ITA 5053 /M/20 03 & 14 OTHER GROUP APPEALS 13 INDUCTOTHERM (INDIA) PVT. LTD ( SUPRA ) AND DELHI HIGH COURT DECISION IN THE CASE OF CIT VS ORIENT CRAFT LTD ( SUPRA ). THE HONBLE SUPREME COURT DOES NOT ENVISAGE THAT THE REASON TO BELIEVE ENTERTAINE D BY THE ASSESSING OFFICER CANNOT BE EXAMINED OR CAN BE EXAMINED SANS ANY MATERIAL COMING ON RECORD. THUS , THE DECISION OF THE HONBLE SUPREME COURT WILL NOT APPLY ON THE FACTS OF THE PRESENT CASE. ACCORDINGLY, ON THIS GROUND ALONE WE HOLD THAT THE INITIA TION OF REOPENING OF ASSESSMENT U/S 147 AND ISSUANCE OF NOTICE U/S 148 IS WITHOUT JURISDICTION AND VOID AB INITIO AND CONSEQUENTLY THE ASSESSMENT ORDER DATED 24.12.2008 PASSED ON THE BASIS SUCH NOTICE U/S 148 IS QUASHED. 1 2 . IN VIEW OF OUR FINDING GIVEN ABOVE , ALL OTHER GROUNDS RAISED ON MERITS IN ALL IN THE ASSESSEE S APPEALS BECOMES ACADEMIC AND ACCORDINGLY , THE SAME ARE TREATED AS INFRUCTUOUS AND DISMISSED AS SUCH. 1 3 . AS REGARDS THE ISSUE RAISED IN THE ADDITIONAL GROUND, THE SAME ARE THOUGH ADMITTED, HOWEVER, ARE NOT ADJUDICATED SEPARATELY IN VIEW OF OUR CONCLUSION THAT ENTIRE ASSESSMENT ORDER ITS E LF IS BAD IN LAW AND HAS BEEN QUASHED . 14 . SIMILARLY, THE ISSUES RAISED IN THE DEPARTMENTAL APPEAL ALSO HAVE BECOME PURELY ACADEMIC IN VIEW OF THE ABOVE FI NDING AND SAME ARE TREATED AS DISMISSED AS INFRUCTUOUS. 1 5 . AS ADMITTED BY BOTH THE PARTIES, SIMILAR REASONS HAVE BEEN RECORDED BY THE ASSESSING OFFICER IN THE ASSESSMENT YEAR S 2003 - 04 AND 2004 - 05 WHICH ARE IDENTICALLY WORDED AND THE FACTS ARE ALSO COMP LETELY SAME . ACCORDINGLY, THE FINDING GIVEN IN THE APPEAL FOR THE ASSESSMENT YEAR 200 2 - 0 3 WILL APPLY MUTATIS MUTANDIS IN TH E S E YEAR S ALSO AND CONSEQUENTIALLY THE REOPENING OF ASSESSMENT U/S 147 FOR BOTH THE YEARS THAT IS AYS. 2003 - 04 AND 2004 - 05 ARE HELD T O BE BAD IN LAW AND ARE HEREBY QUASHED. THUS, APPEAL OF THE POPLEY DIAMOND AND GOLD PLAZA PVT LTD (FORMERLY KNOWN AS SEARS SUPE R MARKET LTD) ITA 5053 /M/20 03 & 14 OTHER GROUP APPEALS 14 ASSESSEE FOR THE ASSESSMENT YEAR 2003 - 04 AND 2004 - 05 ARE TREATED AS ALLOWED , WHEREAS THE APPEALS OF THE REVENUE ARE TREATED AS DISMISSED , BECAUSE THEY HAVE BEEN RENDERED ACADEMIC. 1 6 . IN THE ASSE SSMENT YEAR 2005 - 06, THE LD. SENIOR COUNSEL, M R DASTUR, SUBMITTED THAT THOUGH THE FACTS ARE IDENTICAL AND EVEN THE REASONS ARE BY AND LARGE SAME , EXCEPT FOR MINOR DIFFERENCE IN THE WORDINGS RECORDED BY THE ASSESSING OFFICER. REASONS RECORDED FOR THE ASSE SSMENT YEAR 2005 - 06 , WHICH IS EXACTLY SIMILAR FOR AY 2006 - 07, READS AS UNDER: THE RETURN OF INCOME WAS FILED ON 23.01.06 DECLARING TOTAL INCOME OF RS. NIL. THE RETURN WAS DULY PROCESSED U/S 143(1) OF THE I.T. ACT. THE ASSESSEE IS GETTING COMPENSATION ON LETTING OF PROPERTY HAVING NET WORTH RS. 13.69 CRORE (DEPRECIATED VALUE) TO ITS GROUP CONCERN AND THE SAME IS OFFERED FOR TAX UNDER THE HEAD BUSINESS INCOME. IT IS SEEN FROM THE COMPUTATION OF INCOME THAT THE ASSESSEE HAS NOT CLAIMED DEPRECIATION DURIN G THE YEAR. AS PER EXPL. 5 TO SEC. 32 OF THE I.T. ACT, THE SAME IS TO BE ALLOWED, WHETHER THE ASSESSEE CLAIM IT OR NOT. WITHOUT PREJUDICE TO THE ABOVE, AS PER SEC. 22 OF THE I.T. ACT, THE INCOME DERIVED FROM THE ABOVE SAID PROPERTY IS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND NOT BUSINESS INCOME, AS CLAIMED BY THE ASSESSEE. FURTHER , THE COMPENSATION RECEIVED BY THE ASSESSEE FOR LETTING AN ENTIRE BUILDING WITH FURNITURE AND FIXTURE WORTH RS. 13.69 CRORES, IS MERELY RS. 3 LAKHS PER ANNUM, WHICH IS WHEN COMPARED WITH OTHER CASES FOUND TO BE VERY LOW. THUS, THE PROVISIONS OF SEC. 23(1)(A) OF THE I.T. ACT, SHOULD BE INVOKED IN THIS CASE. AS A COMPARABLE EXAMPLE TO SUPPORT THE ABOVE OBSERVATION, MS. ASHA HAMPANWAR, WHO IS ASSESSED IN THIS CHAR GE, IS OFFERING A RENT OF RS. 50,000/ - PER MONTH FOR A PROPERTY (411.462 SQ. FT.) WORTH RS. 20 LAKHS IN THE SAME LOCALITY, FOR THE AY 2005 - 06. THIS WORKS OUT TO 30% OF THE COST OF ASSET. THEREFORE, IN THE ASSESSEES CASE THE RENT POPLEY DIAMOND AND GOLD PLAZA PVT LTD (FORMERLY KNOWN AS SEARS SUPE R MARKET LTD) ITA 5053 /M/20 03 & 14 OTHER GROUP APPEALS 15 SHOULD HAVE BEEN RS. 3.91 CRORE PER ANNUM (APPROX.). OF COURSE, CONSIDERING THE MARKET TREND, THERE CAN BE AN INCREASE &/OR DECREASE OF SOME PERCENTAGE OF RENT, WHICH SHOULD BE TAKEN INTO ACCOUNT. HOWEVER, THE ASSESSEE HAS OFFERED MERELY RS. 3 LAKHS. BESIDES THE ABOVE, IT IS SEEN FROM THE DEPRECIATION CHART, THE ASSESSEE HAS SOLD FOR A SUM OF RS. 50.75 LAKHS, OUT OF THE BLOCK OF BUILDING (BUILDING - 2) AND INCURRED LOSS OF RS. 18.04 LAKHS. THE WDV AS ON 31.3.2004 COMES TO RS. 68.79 LAKHS. NO SUPPORTING ENCLOSED WITH THE RETURN, WHICH IS ALSO REQUIRES VERIFICATION. I HAVE THEREFORE, REASON TO BELIEVE THAT THE INCOME HAS ESCAPED TO THE TUNE OF RS. 4.10 CRORE (APPROX) WITH THE MEANING OF SEC. 147 OF THE I.T. ACT, 1961. TAX EFFECT INVOLVED RS. 1.44 CRORE (APPROX.). 1 7 . FROM THE READING OF ABOVE REASONS, MR. DASTUR SUBMITTED THAT IN SUBSTANCE THERE IS NO CHANGE IN THE GROUNDS FOR REOPENING THE CASE A S THE BASIC FACT S REMAINS THE SAME . T HERE IS NO FRESH MATERIAL OR ANY TANGIBLE MATERIAL FOR THESE YEARS ALSO SO AS TO HOLD THAT ASSESSING OF FICER HAS REASON TO BELIEVE FOR REOPENING THE ASSESSMENT U/S 147. ALL H IS ARGUMENTS AND THE ARGUMENTS OF THE LD. DR FOR THIS YEAR ALSO ARE THE SAME. 1 8 . AFTER CONSIDERING THE AFORESAID REASONS RECORDED , WE FIND THAT THERE IS NO MATERIAL CHANGE IN THE REASONS AND GROUNDS TAKEN FOR REOPENING THE CASE AS HAS BEEN RECORDED IN THE EARLIER YEARS , INASMUCH AS IN THIS YEAR ALSO THE ASSESSING OFFICER HAS SOUGHT TO REOPEN THE CASE ON THE GROUND THAT THE COMPENSATION RECEIVED BY THE ASSESSEE OF RS. 3 L AKHS IS INA DEQUATE AND THE PROVISIONS OF SECTION 23(1)(A) SHOULD BE INVOKED AND THE INCOME RECEIVED BY THE ASSESSEE SHOULD BE ASSESSED AS INCOME FR O M HOUSE PROPERTY INSTEAD OF BUSINESS INCOME . THE SAID REASONS A G A IN ARE IN THE REALM OF SURMISES SANS ANY TANGIBLE MATE RIAL AND INFORMATION COMING TO THE POSSESSION OF THE ASSESSING OFFICER SO AS TO ENTERTAIN TO R EASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HA S ESCAPED ASSESSMENT. THE SO CALLED INFORMATION IN THE FORM OF POPLEY DIAMOND AND GOLD PLAZA PVT LTD (FORMERLY KNOWN AS SEARS SUPE R MARKET LTD) ITA 5053 /M/20 03 & 14 OTHER GROUP APPEALS 16 COMPARABLE EXAMPLE AS REFERRED BY THE ASSESS ING OFFICER IN REASONS LACKS CREDIBILITY BECAUSE NOTHING HAS BEEN BROUGHT OUT REGARDING ITS COMPARABILITY WITH THE ASSESSEE. IN ANY CASE THE CORE ISSUE AND DECIDING FACTOR HERE IN THE CASE OF THE ASSESSEE IS THAT, WHETHER THE HEAD OF THE INCOME IN WHICH IS TO BE ASSESSED CAN BE CHANGED SANS ANY TANGIBLE MATERIAL. AS DISCUSSED IN EARLIER PART THAT IT IS NOT TRITE THAT INCOME FROM LEASED OF BUSINESS A SSETS IS TO BE TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY ONLY AND NOT UNDER ANY OTHER HEADS OF INCOME . NO FACTS AND CIRCUMSTANCES OR MATERIAL HAS BEEN BROUGHT BY THE ASSESSING OFFICER THAT THE INCOME SHOWN BY THE ASSESSEE NOW IN THESE YEARS HAS TO BE TAXED AS INCOME FROM HOUSE PROPERTY IN CONTRADISTINCTION AND COMPLETE DEPARTURE FROM THE PAST H ISTORY, WHE RE INCOME STOOD ASSESSED AND ACCEPTED AS BUSINESS INCOME. I N THESE YEARS ALSO THE ASSESSING OFFICER HA S NO CONCRETE REASON TO BELIEVE EXCEPT FOR REOPENING THE CASE FOR MAKING THE VERIFICATION OF THE PAST RECORDS AND FACTS. THIS CANNOT BE THE GROUND FOR R EOPENING THE ASSESSMENT EVEN THOUGH RETURN OF INCOME FILED BY THE ASSESSEE HAS BEEN ACCEPTED U/S 143(1). OUR FINDING AND REASON S GIVEN IN THE APPEAL IN ASSESSMENT YEAR 2002 - 03 WILL APPLY HERE ALSO IN THESE YEARS . ACCORDINGLY, THE REOPENING OF THE ASSESSMEN T BASED ON THE AFORESAID REASONS RECORDED IS BAD IN LAW AND CONSEQUENTIALLY THE PROCEEDINGS INITIATED VIDE NOTICES U/S 148 ARE QUASHED. THUS, THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2005 - 06 IS TREATED AS ALLOWED , WHEREAS THE REVENUES APPEAL F OR THE SAME YEAR IS TREATED AS DISMISSED AS THE SAME HAS BECOME PURELY ACADEMIC IN VIEW OF OUR AFORESAID FINDING. 19 . SIMILARLY, IN THE ASSESSMENT YEAR 2006 - 07 AS DISCUSSED ABOVE THE SAME REASONS HAVE BEEN RECORDED AS IN AY 2005 - 06 , THEREFORE, THE FINDING GIVEN ABOVE WILL APPLY MUTATIS MUTANDIS FOR AY 2006 - 07 ALSO. CONSEQUENTLY, THE REOPENING U/S 147 FOR AY 2006 - 07 ARE HEREBY QUASHED. POPLEY DIAMOND AND GOLD PLAZA PVT LTD (FORMERLY KNOWN AS SEARS SUPE R MARKET LTD) ITA 5053 /M/20 03 & 14 OTHER GROUP APPEALS 17 20 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED WHEREAS THE REVENUES APPEAL IS DISMISSED. 2 1 . THE REVENUE HAS PREF ERRED APPEAL AGAINST DELETION OF PENALTY U/S 271(1)(C) BY THE CIT(A) IN RESPECT OF THE ADDITIONS MADE IN THE AFORESAID ASSESSMENT YEARS. SINCE WE HAVE ALREADY QUASHED THE ASSESSMENT ORDERS FOR THE ALL THE IMPUGNED ASSESSMENT YEARS 2002 - 03 TO 2006 - 07 AND CO NSEQUENTLY ADDITIONS ALSO GET DELETED, THEREFORE, THE PENALTY LEVIED U/S 271(1)(C) DOES NOT HAVE ANY LEGS TO STAND. 22. ACCORDINGLY, ALL THE REVENUES APPEALS IN THE PENALTY PROCEEDINGS ARE DISMISSED. 23. IN THE RESULT, APPEAL OF THE ASSESSEE FOR THE A.Y S. 2002 - 03, 2003 - 04, 2004 - 05, 2005 - 06 & 2006 - 07 ARE ALLOWED, WHEREAS THE DEPARTMENTAL APPEAL FOR THE ABOVE ASSESSMENT YEARS FOR THE QUANTUM AS WELL AS PENALTY STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH AUGUST , 2015. SD/ - SD/ - ( . ) ( ) ( D KARUNAKARA RAO ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 12 TH AUGUST , 2015 / COPY TO: - 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) THE CIT (A) - 41 , MUMBAI 4) THE CIT CENTRAL I I I, MUMBAI . 5) , , / THE D.R. C BENCH, MUMBAI. POPLEY DIAMOND AND GOLD PLAZA PVT LTD (FORMERLY KNOWN AS SEARS SUPE R MARKET LTD) ITA 5053 /M/20 03 & 14 OTHER GROUP APPEALS 18 6) COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS