SUKHSAGAR TRADERS P.LTD, MUMBAI V. DCIT 8(3), MUMBAI

ITA 6291/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3988 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 10-07-2013
• Assessment Year: 2000-2001
• Appeal Filed On: 12-09-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: RAKESH K MILWANI
• Keywords: Business income; Tangible material; Difference of opinion; Change of opinion
• Section: 147; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . . , !'# , $ % BEFORE SHRI I.P. BANSAL, JM AND SHRI N.K. BILLA IYA, AM ./I.T.A. NO. 6291/MUM/2011 ( & & & & / ASSESSMENT YEAR :2000-01 M/S. SUKHSAGAR TRADERS PVT. LTD., 301A, SOLARIS-1, 72 SAKI VIHAR ROAD, ANDHERI EAST, MUMBAI-400 072 THE ITO 8(3), AAYAKAR BHAVAN, MUMBAI-400 020 ' $ ./ () ./PAN/GIR NO. : AAACS 6165P ( '* /APPELLANT ) .. ( +,'* / RESPONDENT ) '* - / APPELLANT BY : ` SHRI RAKESH K. MILWANI +,'* . - /RESPONDENT BY : SHRI RAJENDRA KUMAR . /0$ / DATE OF HEARING :10.07.2013 12& . /0$ / DATE OF PRONOUNCEMENT : 24.07.2013 3 / O R D E R PER N.K. BILLAIYA, AM: THE ASSESSEE HAS CHALLENGED THE CORRECTNESS OF THE ORDER OF THE LD. CIT(A)-18, MUMBAI DT.26.7.2011 PERTAINING TO A.Y. 2000-01. 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE L D. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN REOPENING THE ASS ESSMENT U/S. 147 OF THE ACT WHICH ACCORDING TO THE ASSESSEE IS ILLEGAL AND BAD IN LAW. ITA NO. 6291/M/2011 2 3. FACTS OF THE CASE SHOW THAT THE ORIGINAL RETURN OF INCOME DECLARING LOSS AT RS. 19,28,799/- WAS PROCESSED AND ACCEPTED U/S. 143(1) OF THE ACT. THEREAFTER THE ASSESSMENT WAS REOPENED BY ISSUE OF NOTICE U/S. 148 OF THE ACT. THE REASONS FOR REOPENING OF THE ASSESSMENT W AS FURNISHED TO THE ASSESSEE. THE ASSESSEE FILED A LETTER DT. 14.6.20 07 ASKING THE ASSESSING OFFICER TO ACCEPT THE RETURN FILED ON 21.10.2002 AS RETURN OF INCOME FILED PURSUANT TO NOTICE U/S. 148 OF THE ACT. SUBSEQUENT LY, THE ASSESSEE OBJECTED TO THE REOPENING OF THE ASSESSMENT STATING THAT IT HAS SHOWN RENT RECEIVED UNDER THE HEAD PROFITS AND GAINS OF BUSINE SS OR PROFESSION, RELYING UPON THE DECISION OF THE TRIBUNAL MUMBAI B ENCH IN ITA NO. 1376/MUM/2002 AND WTA NOS. 29 & 39A/MUM/2003. THE OBJECTIONS RAISED BY THE ASSESSEE WERE CONSIDERED BY THE AO , BUT DID NOT FIND IT ACCEPTABLE. THE AO WAS OF THE FIRM BELIEF THAT PR OVISIONS OF SEC. 147 WERE CLEARLY APPLICABLE ON THE FACTS OF THE CASE AN D THEREFORE HE HAS REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HA S ESCAPED ASSESSMENT AND ACCORDINGLY REJECTED THE OBJECTIONS RAISED BY T HE ASSESSEE FOR REOPENING OF THE ASSESSMENT U/S. 147 OF THE ACT. TH E ASSESSEE FURTHER PLEADED THAT RENT RECEIPTS SHOULD BE TREATED AS BU SINESS RECEIPTS WHICH PLEA WAS ALSO REJECTED BY THE AO WHO RELIED UPON TH E DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SHAMBHU INVEST MENTS PVT. LTD. VS CIT 263 ITR143. THE AO WENT ON TO DISCUSS ANOTHER DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF EAST INDIA HOU SING AND LAND DEVELOPMENT TRUST LTD. VS CIT 42 ITR 49. THE AO FI NALLY CONCLUDED THAT THE RENT RECEIPT SHOULD HAVE BEEN TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND ACCORDINGLY COMPUTED THE ASSESS ED INCOME BY TAKING RENT RECEIPTS UNDER THE HEAD INCOME FROM HOUSE PRO PERTY. 4. AGGRIEVED BY THIS FINDING OF THE AO, ASSESSEE CA RRIED THE MATTER BEFORE THE LD. CIT(A). THE ASSESSEE CHALLENGED THE REOPENING OF THE ITA NO. 6291/M/2011 3 ASSESSMENT. IT IS THE SAY OF THE ASSESSEE THAT IN THE REASONS RECORDED FOR REOPENING, NOWHERE IT HAS ALLEGED THAT THERE HAS BE EN ANY OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TR ULY AND FULLY ALL MATERIAL FACTS. THE ASSESSEE ALSO RELIED UPON CERTAIN DECIS IONS WHICH HAVE BEEN CONSIDERED BY THE LD. CIT(A) IN HIS APPELLATE ORDE R. THE LD. CIT(A) OBSERVED THAT ALL THE CASE LAWS CITED AND RELIED UP ON BY THE ASSESSEE ARE ON DIFFERENT FACTS DISTINGUISHABLE FROM THE FACTS O F THE ASSESSEE INASMUCH AS IN THE INSTANT CASE THERE WAS NO ASSESSMENT AT A LL. IT WAS ONLY A PROCESSING OF RETURN U/S. 143(1) OF THE ACT. THE L D. CIT(A) THEREAFTER RELIED UPON THE DECISION OF THE HONBLE SUPREME COU RT IN THE CASE OF ACIT VS RAJESH JHAVERI STOCK BROKERS PVT. LTD. 291 ITR 500. THE LD. CIT(A) FURTHER CONSIDERED THE DECISION OF THE HONB LE JURISDICTIONAL HIGH COURT IN THE CASE OF DR. AMINS PATHOLOGY LABORATOR Y VS JCIT & ORS 252 ITR 683. THE LD. CIT(A) WAS CONVINCED THAT THE ASSESSEE HAS WRONGLY SHOWN THE RENTAL INCOME UNDER THE HEAD BUSI NESS INCOME WHEREAS IT SHOULD HAVE BEEN PROPERLY ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THUS BY HAVING SHOWN IT UNDER DIFFERENT HEAD, THE ASSESSEE CLAIMED EXCESSIVE DEDUCTION WHICH IT WAS N OT ENTITLED TO AND THE AO HAD PRIMA FACIE BELIEF THAT ON THIS BASIS INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT WITHIN THE MEANING OF SEC. 14 7 OF THE ACT. THE LD. CIT(A) WAS OF THE FIRM BELIEF THAT THE INCOME HAS T O BE ASSESSED UNDER THE PROPER HEAD AND IF IT IS NOT ASSESSED UNDER THE PROPER HEAD THAT ITSELF CONSTITUTES ESCAPEMENT OF INCOME BECAUSE IN SUCH CA SES, THE INCOME BECOMES THE SUBJECT MATTER OF RELIEF/DEDUCTION WHIC H IS NOT DUE TO THE ASSESSEE OR EXCESSIVE RELIEF/DEDUCTION WHICH ARE CA SES COVERED U/S. 147 FOR REOPENING. ON MERITS, THE LD. CIT(A) RELIED UPON THE DECISION OF HIS PREDECESSOR IN ASSESSEES OWN CASE IN A.Y 1999-2000 AND 2003-04 AN D CONFIRMED THE ITA NO. 6291/M/2011 4 ACTION OF THE AO. THE LD. CIT(A) DISMISSED THE APP EAL ON POINT OF LAW AS WELL AS ON MERITS OF THE CASE. 5. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. T HE ASSESSEE HAS CHALLENGED THE VALIDITY OF THE ORDER OF THE LD. CIT (A) ONLY ON THE POINT OF LAW. THEREFORE, WE RESTRICT OURSELVES ONLY TO THE APPLICABILITY OF PROVISIONS OF SEC. 147 VIS--VIS FACTS OF THE CASE. 6. THE LD. COUNSEL FOR THE ASSESSEE FILED A PAPER B OOK CONTAINING 15 DECISIONS OF VARIOUS JUDICIAL FORUMS. IT IS THE SA Y OF THE LD. COUNSEL THAT THE AO HAS NOT GIVEN ANY FINDING IN THE REASONS REC ORDED THAT THERE IS ANY ESCAPEMENT OF INCOME THEREFORE, THE REOPENING IS BAD IN LAW AND IS AGAINST THE PROVISIONS OF SEC. 147 OF THE ACT. 7. BEFORE PROCEEDING FURTHER, LET US CONSIDER THE R EASONS RECORDED BY THE AO. THE RETURN OF INCOME FOR A.Y. 2000-01 WAS FILED ON 30.11.2000 DECLARING A LOSS OF RS. 19,28,800/-. TH E SAME WAS ACCEPTED U/S. 143(1)(A). IT IS SEEN FROM THE PROFI T & LOSS ACCOUNT THAT THE ASSESSEE HAD EARNED THE INCOME ON ACCOUNT OF BUSINESS CENTRE CHARGES OF RS. 8,62,800/-. THE SAME HAS BEE N TREATED AS BUSINESS RECEIPTS AND OFFERED UNDER THE HEAD INCOM E FROM BUSINESS & PROFESSION IN THE COMPUTATION OF INCOME . IT IS SEEN FROM THE TDS CERTIFICATE FILED THAT WHAT ASSESSEE H AD RECEIVED IS RENT FROM LETTING OUT OF THE PREMISES. IT IS SETTL ED PRINCIPAL OF THE LAW THAT THE INCOME ATTRIBUTABLE TO LETTING OF THE PREMISES OUGHT TO HAVE BEEN OFFERED BY THE ASSESSEE UNDER THE HEAD IN COME FROM HOUSE PROPERTY AND ONLY THE DEDUCTION U/S. 24 SHOUL D HAVE BEEN CLAIMED. THE SAME HAS NOT BEEN DONE BY THE ASSESSE E. ASSESSING THE RECEIPT ON ACCOUNT OF RENT, UNDER THE HEAD INCO ME FROM HOUSE PROPERTY BY THE AO IN THE EARLIER YEAR, HAS BEEN CO NFIRMED BY THE CIT(A). THEREFORE, I HAVE REASON TO BELIEF THAT TH E INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SEC. 147 OF THE I.T. ACT, 1961. ITA NO. 6291/M/2011 5 8. A PERUSAL OF THE REASONS RECORDED CLEARLY SHOW T HAT THE ASSESSEE HAS SHOWN RECEIPTS FROM BUSINESS CENTRE UNDER THE H EAD BUSINESS INCOME AND HAS CLAIMED EXPENSES UNDER VARIOUS HEADS. IT C AN BE FURTHER SEEN THAT IN THE EARLIER YEAR, THE INCOME OF THE ASSESSEE HAS BEEN TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THIS BY ITSELF IS A SUFFICIENT MATERIAL FOR THE REOPENING OF THE ASSESSMENT. IT I S ALSO SEEN THAT IN SUBSEQUENT ASSESSMENT YEAR I.E. 2003-04, THE SAME T REATMENT HAS BEEN GIVEN TO THE RECEIPTS FROM BUSINESS CENTRE I.E. IT HAS BEEN TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THUS, PREVIOUS Y EARS FINDINGS AND SUBSEQUENT YEARS FINDINGS ARE SUFFICIENT FOR REOPE NING OF THE ASSESSMENT. THEREFORE, THE PLEA OF THE LD. COUNSEL THAT NO TANG IBLE MATERIAL WAS AVAILABLE IS CONTRARY TO THE FACTS OF THE CASE. TH EREFORE, THE CASES RELIED UPON BY THE ASSESSEE ARE CLEARLY DISTINGUISHABLE ON FACTS. IT CANNOT ALSO BE SAID THAT IT IS A CASE OF CHANGE OF OPINION AS THE ORIGINAL RETURN HAS BEEN ACCEPTED U/S. 143(1) OF THE ACT THEREFORE, IT CANNO T BE SAID THAT THE AO HAS FORMED ANY OPINION. FOR THIS PROPOSITION, WE DRAW SUPPORT FROM THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF DR. AMINS PATHOLOGY (SUPRA). FURTHER, FACTS ON RECORD SHOW THAT NOTICE U/S. 148 IS DT. 23.3.2007 AND IN A.Y. 2003-04 THE LD. C IT(A) HAS CONFIRMED THE ORDER OF THE AO TAXING INCOME UNDER THE HEAD I NCOME FROM HOUSE PROPERTY. THE ORDER OF THE LD. CIT(A) DT. 24.1.20 07 IS IN APPEAL NO. CIT(A)XXIX/ITO-8(3)(2)/IT.193/2005-06. THUS, THE O RDER OF THE LD. CIT(A) FOR SUBSEQUENT ASSESSMENT YEAR IN ITSELF WAS A TANGIBLE MATERIAL BEFORE THE AO FOR REOPENING THE ASSESSMENT. THEREF ORE, RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F KELVINATOR OF INDIA LTD. 320 ITR 561 IS MISPLACED. 9. CONSIDERING ALL THE FACTS ON RECORD, IN THE LIGH T OF THE PROVISIONS OF SEC. 147 OF THE ACT, WE HAVE NO HESITATION TO HOLD THAT THE REOPENING IS ITA NO. 6291/M/2011 6 VALID AS THERE IS NEITHER A CHANGE OF OPINION NOR I T IS A CASE OF ABSENCE OF ANY TANGIBLE MATERIAL. THEREFORE, WE DO NOT FIND A NY REASON TO INTERFERE OR TAMPER WITH THE FINDINGS OF THE LD. CIT(A). 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JULY, 2013 . 3 . 2& $ 4 56 24.7.2013 2 . 7 SD/- SD/- (I.P. BANSAL ) (N. K. BILLAIYA ) /JUDICIAL MEMBER $ / ACCOUNTANT MEMBER MUMBAI; 5 DATED 24.7.2013 . . ./ RJ , SR. PS 3 3 3 3 . .. . +/ +/ +/ +/ 8 &/ 8 &/ 8 &/ 8 &/ / COPY OF THE ORDER FORWARDED TO : 1. '* / THE APPELLANT 2. +,'* / THE RESPONDENT. 3. 9 ( ) / THE CIT(A)- 4. 9 / CIT 5. :7 +/ , , / DR, ITAT, MUMBAI 6. 7; < / GUARD FILE. 3 3 3 3 / BY ORDER, , / +/ //TRUE COPY// = == = / > > > > ( ( ( ( (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI