NAVNIT L. KACHALIA AND OTHERS, MUMBAI V. INCOME TAX OFFICER, 17(2)(4), MUMBAI

ITA 4498/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7559 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 19-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Section: 154

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -BBENCH MUMBAI , , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND AMARJIT SINGH,JUDICIAL MEMBER ./I.T.A./4498/MUM/2017, / ASSESSMENT YEAR: 2013-14 M/S. NAVNIT L. KACHALIA AND OTHERS C-WING, UNIT NO.101, 1ST FLOOR WATERFORD BUILDING, JUHU LANE C.D. BURFIWALA LANE,AANDHERI (W) MUMBAI-400 058. PAN:AAABN 0124 E VS. INCOME TAX OFFICER 17(2)(4), MUMBAI. ( /APPELLANT ) ( / RESPONDENT) / REVENUE BY: SHRI SUMAN KUMAR -DR /ASSESSEE BY: MS. RUTUJA N. PAWAR / DATE OF HEARING: 28/03/2018 / DATE OF PRONOUNCEMENT: 04/04/2018 , - PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 14/03/2017 OF THE CIT( A)- 28,MUMBAI,THE ASSESSEE HAS FILED PRESENT APPEAL.THE ASSESSEE,AN ASSOCIATION OF PERSO NS(AOP),DERIVING INCOME FROM HOUSE PROPERTY AND OTHER SOURCES,FILED ITS RETURN OF INCO ME ON 26/09/2013,DECLARING NIL INCOME. THE ASSESSING OFFICER(AO)COMPLETED ASSESSMENT,U/S.1 43(3)OF THE ACT ON 22/02/2016, DETER - MINING ITS INCOME AT RS.1,02,33,770/-,. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT COMPUTING THE TOTAL INCOME OF THE ASSESSEE TO THE EXTENT OF RS.1.02 CRORES INSTEAD OF NIL INCOME AS DECLARED BY IT AND NOT CONSIDERING THE GROUNDS OF APPEAL AND THE RECTIFICATION APPLICATION FILED BY IT U/S. 154 OF THE ACT. 3. DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND THAT THE ASSESSEE HAD COMPUTED TOTAL INCOME AT RS.89.33 LAKHS CONSISTING OF INCOME FROM HOUSE PROPERTY, THAT IT HAD NOT OFFERED THE INCOME FOR TAXATION, THAT IT HAD CLAIMED THAT T HE INCOME UNDER QUESTION HAD BEEN DIVIDED AMONG ITS EIGHT CO-OWNERS/MEMBERS, THAT THE ASSESS EE HAD CLAIMED FULL CREDIT OF TDS IN ITS RETURN OF INCOME,THAT IT CLAIMED THAT IT WAS AN AOP INCLUDING ONE HUF.THE AO FURTHER OBSERVED THAT IT WAS ALSO CLAIMED BEFORE HIM THAT T HE SHARES OF MEMBERS WERE DETERMINATE, THAT THE SHARES HAD BEEN APPORTIONED AND INCLUDED I N THE COMPUTATION OF INDIVIDUAL CASES OF MEMBERS/CO-OWNERS.HOWEVER,THE AO DID NOT AGREE WITH THE EXPLANATION FILED BY THE ASSESSEE AND COMPUTED ITS INCOME AT RS.1,02,33,770/-. 4. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA) AND MADE SUBMISSIONS.AS P ER THE FAA, THE APPEAL WAS FIXED FOR HEARING ON 11/01/17 AND 10/03/17, THAT NONE APPEAR ED ON BOTH THE OCCASIONS.ACCORDINGLY,HE 4498/M/17- M/S. NAVNIT L. KACHALIA & ORTHERS 2 DECIDED THE APPEAL AS PER AVAILABLE MATERIAL.REPROD UCING THE ORDER OF THE AO HE HELD THAT IN THE ABSENCE OF ANY CONTROVERTING ARGUMENT,THERE WAS NO NEED TO INTERFERE WITH THE ORDER OF THE AO WITH REGARD TO ASSESSING THE RENTAL INCOME IN TH E HANDS OF AOP. 5. BEFORE US,THE AUTHORISED REPRESENTATIVE(AR) STATED IN THE YEAR 2005-06 THE INCOME WAS ASSESSED IN THE HANDS OF INDIVIDUAL CO-OWNERS/MEMBE RS OF THE AOP, THAT WHILE ADJUDICATING THE APPEAL FOR THE AY.2011-12 THE THEN FAA HAD CALL ED FOR A REMAND REPORT, THAT THE AO HAD, IN THE REMAND REPORT,ADMITTED THAT FOR THE YEAR 200 5-06 INCOME WAS TAXED IN THE HANDS OF CO- OWNERS,THAT HE HAD ALSO ADMITTED THAT PROPERTY WAS JOINTLY OWNED AND THAT TAX WAS NOT PAYABLE IN THE HANDS OF AOP. HE REFERRED TO THE JU DGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF MADHUKAR C. ASHAR (239TAXMAN367, DTD.13 /4/16)AND STATED THAT THE SAME WAS SQUARELY APPLICABLE TO THE FACTS OF THE CASE, THAT AFTER CONSIDERING THE REMAND REPORT OF THE AO,THE FAA HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE FOR THE AY.2011-12, THAT THE AO HAD NOT CHALLENGED THE ORDER OF THE FAA BEFORE THE TRIBUNAL, THAT THE APPLICATION FILED BY THE ASSESSEE U/S. 154 OF THE ACT WAS NOT ADJUDICATED UPON BY FAA.THE DR STATED THAT THE MATTER COULD BE DECIDED ON MERITS. 6. WE HAVE HEARD THE RIVAL SUBMISSION AS PERUSED THE M ATERIAL ON RECORD.WE FIND THAT THE DISPUTE OF TAXABILITY OF HOUSE PROPERTY INCOME IN T HE HANDS OF INDIVIDUAL MEMBERS OR IN THE HANDS OF AOP WAS DECIDED IN FAVOUR OF THE ASSESSEE IN THE YEAR 2005-06. IN THAT YEAR AO HAD PASSED ORDER U/S. 154 OF THE ACT.IN THE RECTIFICATI ON ORDER, THE THEN AO HAD MENTIONED THAT THE ASSESSEE HAD CONTENDED THAT NO TAX WAS PAYABLE BY A OP AS THE SHARES OF CO-OWNERS WAS DETERMINED.THE AO HAD FURTHER OBSERVED THAT THE CON TENTION OF THE ASSESSEE WAS FOUND TO BE CORRECT.IT IS ALSO FOUND THAT WHILE DECIDING THE AP PEAL FOR THE AY 2011-12 THE FAA HAD CALLED FOR A REMAND REPORT FROM AO, THAT THE FAA HAD OBSER VED THAT THE AO HAD FAIRLY CONCEDED THAT DISPUTED AMOUNT WAS TO BE TAXED IN THE INDIVID UAL HANDS OF THE CO-OWNERS/MEMBERS. WE ARE UNABLE TO UNDERSTAND AS TO WHY THE FAA DID NOT FOLLOW THE ORDER OF HIS PREDECESSOR FOR EARLIER YEAR AND PASSED A NON-SPEAKING ORDER FOR TH E YEAR UNDER CONSIDERATION. THE REASONS FOR NOT DECIDING RECTIFICATION APPLICATION ARE NOT KNOW N. IN OUR OPINION,ONCE THE INCOME IS ASSESSED IN THE HANDS OF THE CO-OWNERS/MEMBERS OF A LEGAL ENTITY THE SAME CANNOT BE TAXED IN THE HANDS OF THAT ENTITY ALSO. IT WILL LEAD TO TAXI NG THE SAME AMOUNT TWICE. THE PRINCIPLES OF TAXATION JURISPRUDENCE DO NOT ALLOW DOUBLE TAXATION . CONSIDERING THE ABOVE,WE ARE RESTORING BACK THE ISS UE TO THE FILE OF THE FAA FOR FRESH ADJUDICATION.HE IS DIRECTED TO PASS A SPEAKING ORDE R AND TO AFFORD A REASONABLE OPPORTUNITY TO OF HEARING TO THE ASSESSEE.HE IS ALSO DIRECTED TO C ONSIDER THE JUDGMENT OF HON'BLE BOMBAY 4498/M/17- M/S. NAVNIT L. KACHALIA & ORTHERS 3 HIGH COURT IN THE CASE OF MADHUKAR C. ASHA (SUPRA) AND ORDER OF HIS PREDECESSOR FOR AY 2011-12, THE ASSESSEE IS DIRECTED TO APPEAR BEFORE THE FAA AND EXTEND FULL CO-OPERATION TO HIM. EFFECTIVE GROUND OF APPEAL IS DECIDED IN FAVO UR OF THE ASSESSEE ,IN PART. AS A RESULT, APPEAL FIL ED BY ASSESSEE STANDS PARTLY ALLOWED ! ' #$% &'() . ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH APRIL, 2018. &* + ' 04 ) , 2018 SD/- SD/- ( / AMARJIT SINGH ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 04.04.2018. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.