SCAFFOLD PROPERTIES LTD, MUMBAI V. DCIT 5(3), MUMBAI

ITA 6748/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4331 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 22-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M M UTTURE
• Keywords: Reason to believe
• Section: 147; 148

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI E BENCH , ,, , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & SANDEE P GOSAIN,JUDICIAL MEMBER /.ITA NO.6748/MUM/2013, ! ' /ASSESSMENT YEAR-2006-07 SCAFFOLD PROPERTIES PRIVATE LIMITED C/62, VIBGYOR TOWER 9 TH FLOOR, BANDRA KURLA COMPLEX BANDRA (E),MUMBAI-400 051. PAN:AAGCS 1847 J VS DCIT- 5(3) AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. ( / APPELLANT) ( / RESPONDENT) !$% /ASSESSEE BY : SHRI NITESH JOSHI (AR) / REVENUE BY : SHRI M.M. UTTURE (DR) / DATE OF HEARING : 05-11 -2015 / DATE OF PRONOUNCEMENT : 01.01.2016 , 1961 1961 1961 1961 254 254 254 254( (( (1 11 1) )) ) '% ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DT. OF CIT(A)-9, MUMBAI THE ASSESSEE HAS FILED THE PRESENT APPEAL. 2. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF REAL ES TATE,FILED ITS RETURN OF INCOME ON 24. 11.2006,DISCLOSING INCOME OF 1.39 CRORES.THE ASSESS MENT WAS COMPLETED U/S.143(3 OF THE ACT ACCEPTING THE INCOME RETURNED BY THE ASSESSEE.LATER ON,A NOTICE U/S. 148 WAS ISSUED TO THE ASSESSEE,AS THE AO WAS OF THE OPINION THAT INCOME C HARGEABLE TO TAX HAD ESCAPED ASSESSMENT. THE REASONS RECORDED BY THE AO FOR REOPENING THE AS SESSMENT READ AS UNDER:- IN THIS CASE, IT IS SEEN FROM THE RECORD THAT DURI NG THE ASSESSMENT YEAR 2006-07, THE ASSESSEE COMPANY HAS SHOWN THE FOLLOWING INCOMES: I) INCOME FROM LEASE RENT AND COMPENSATION :RS.35037 500/- II) INCOME FROM LEAVE & LICENSE COMPENSATION :RS.1856 2163/- III) INCOME FROM OUT GOING CHARGES :RS.4447440/- OUT OF THESE, THE ASSESSEE COMPANY HAS OFFERED INCO ME FROM LEASE RENT AND COMPENSATION AND LEAVE & LICENSE FEE COMPENSATION UNDER THE HEAD INCOME FROM HOUSE PROPERTY.HOWEVER, OUTGOING CHARGES OF RS.44,47,440/- HAS BEEN OFFER ED UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION. THE OUTGOING CHARGES ARE NOTHING BUT PAYMENT FOR PR OVIDING SERVICES LIKE MAINTENANCE CHARGE, ELECTRICITY CHARGE, SECURITY CHARGE, WATER CHARGE E TC., WHICH ARE A PART OF RENTAL INCOME AND THEREFORE, THE SAME IS REQUIRED TO BE CHARGED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE INCORRECT COMPUTATION OF INCOME FROM HOUSE PROPERTY RESULTED IN UNDERASSESSMENT OF INCOME BY RS.31,13,208/-, AS DETAILED BELOW: COMPUTATION OF TOTAL INCOME AMOUNT(RS.) AMOUNT(RS.) LEASE RENT AND COMPENSATION 35037500 LEAVE AND LICENSE FEES & COMPENSATION 18562163 OUTGOING CHARGES 4447440 TOTAL 58047103 LESS: MUNICIPAL TAXES PAID (3997792) 54049311 LESS:30% U/S.24(A) ( 16244793 ) 37834518 6748/M/13-SCAFFOLD PROPERTIES 2 LESS : I)INTEREST PAID ( 19520101 ) 18314417 (II)PRE-CONSTRUCTION PERIOD INTEREST (3 RD YEAR) (1516655) 16797762 INCOME SHOWN BY ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY 13684554 UNDERASSESSMENT OF INCOME FROM HOUSE PROPERTY 3113208 THE OMISSION OF OUTGOING CHARGES OF RS.44,47,440/- TO COMPUTE UNDER THE HEAD INCOME FROM HOUSE PROPERTY, HAS RESULTED IN UNDERASSESSMENT OF RS.31,13,208/-. IN VIEW OF THE ABOVE, I HAVE REASON TO BELIEVE THAT INCOME OF RS.31,13,208/- CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR 2006-07 IN THE TERMS OF SECTION 147 OF INCOME-TAX ACT, 1961. THE ASSESSEE INFORMED THE AO TO TREAT THE ORIGINAL RETURN OF INCOME AS RETURN FILED IN RESPONSE TO NOTICE ISSUED U/S.148 OF THE ACT.THE ASSESSEE RA ISED OBJECTION AGAINST REOPENING OF THE ASSESSMENT.HOWEVER, THE AO REJECTED THE OBJECTIONS. VIDE HIS ASSESSMENT ORDER, DT.30.11. 2012,PASSED U/S.143(3) R.W.S 147 OF THE ACT,THE AO DETERMINED THE INCOME OF THE ASSESSEE AT RS.1.69 CRORES.WHILE COMPLETING THE ASSESSMENT,HE H ELD THAT THE OUTGOING CHARGES RECEIVED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AM OUNTING TO 44.48 LACS WAS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY. 3 .AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE FILE D AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).BEFORE HIM,THE ASSESSEE ARGUED THAT THE RE-OPENING WAS BAD IN LAW.IT ALSO RAISED OTHER GROUNDS OF APPEAL.THE FAA AFTER CONSID ERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER HELD THAT THE AO HAD VALIDLY R E-OPENED THE ASSESSMENT.APPEAL FILED BY THE ASSESSEE WAS REJECTED ON MERITS ALSO.THE FAA HE LD THAT THE OUTGOING CHARGES RECEIVED BY THE ASSESSEE WERE RIGHTLY ASSESSED BY THE AO UNDER THE HEAD HOUSE PROPERTY INCOME. 4. BEFORE US,THE AUHTORISED REPRESENTATIVE(AR)SUBMITTE D THAT THE ASSESSEE HAD SUBMITTED BEFORE THE FAA THAT THE AO HAD RE-OPENED THE ASSESS MENT AFTER FOUR YEARS,THAT IN THE REASONS RECORDED HE HAD NOT MENTIONED THAT THE INCOME HAD E SCAPED ASSESSMENT BECAUSE OF THE FAILURE OF THE ASSESSEE TO DISCLOSE THE MATERIAL FACTS TRUL Y AND FULLY,THAT WHILE COMPLETING THE ORIGINAL ASSESSMENT U/S.143(3)OF THE ACT THE AO HAD ACCEPTED THE CONTENTION OF THE ASSESSEE WITH REGARD TO OUTGOING CHARGES,THAT THE FAA DID NOT ADD RESS THE ABOVE SUBMISSIONS, THAT THE ORDER OF THE AO WAS AB INTION VOID.THE DEPARTMENTAL REPRE SENTATIVE(DR)SUPPORTED THE ORDER OF THE FAA. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT IN THE MATTER BEFORE US THE RETURN WAS FILED ON 24.11.2006 ,THAT THE ORIGINAL ASSESSMENT WAS COMPLETED ON 12.12.2008,THAT THE PERIOD OF FOUR YEA RS LAPSED ON 31.03.2011,THAT THE NOTICE U/S.148 WAS ISSUED IN THE YEAR 2012.AS THE RE-ASSES SMENT NOTICE WAS ISSUED AFTER FOUR YEARS , SO,THE PROVISIONS OF PROVISO TO SECTION 147 WERE AP PLICABLE.THE PROVISO STIPULATES THAT IN SUCH CASES MATTER CAN BE RE-OPENED,IF THE ASSESSEE FAILS TO DISCLOSE THE MATERIAL FACTS TRULY AND FULLY.THE FAILURE OF THE ASSESSEE IS NOT ONLY TO BE ALLEGED IT HAS TO BE PROVED.WE FIND THAT THE AO HAD NOT DISCUSSED AS TO HOW THE ASSESSEE HAD FAI LED TO DISCLOSE THE PARTICULAR MATERIAL FACT FULLY AND TRULY.WE DO NOT FIND ANY MENTION ABOUT TH E FAILURE OF THE ASSESSEE IN THE REASONS RECORDED BY THE AO.AS THE BASIC PRE-CONDITION FOR I NVOKING THE PROVISIONS OF SECTION 147 ARE MISSING,SO,IN OUR OPINION THE ORDER OF THE IS INVAL ID.HERE WE WOULD LIKE TO REFER TO THE MATTER OF UNITED SHIPPERS(371 ITR 441)OF HONBLE BOMBAY H IGH COURT WHEREIN THE COURT HAS HELD AS UNDER : 6748/M/13-SCAFFOLD PROPERTIES 3 WHEN AN ASSESSMENT IS SOUGHT TO BE REOPENED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THE PROVISO TO SECTIO N 147 OF THE INCOME-TAX ACT, 1961, STIPULATES A REQUIREMENT THAT THERE MUST A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSE SSMENT OF INCOME FOR THAT YEAR. THIS IS THE PRIMARY AND THE JURISDICTIONAL REQUIREMENT BEING TH E MANDATE OF THE PROVISO TO THE PROVISIONS OF SECTION 147. RESPECTFULLY,FOLLOWING THE ABOVE AND CONSIDERING TH E FACT THAT THE AO HAD NOT ALLEGED OR PROVED THE FAILURE OF THE ASSESSEE TO DISCLOSE THE MATERIAL FACTS FULLY AND TRULY WE ARE OF THE OPINION THAT ORDER OF THE FAA CANNOT BE ENDORSED.TH EREFORE, REVERSING HIS ORDER WE DECIDE THE JURISDICTIONAL GROUND (GOA1) IN FAVOUR OF THE A SSESSEE.AS WE HAVE ALREADY HELD THAT THE ORDER OF THE AO WAS INVALID THEREFORE, WE ARE NOT A DJUDICATING THE REMAINING GROUNDS OF THE APPEAL. AS A RESULT,APPEAL FIL ED BY THE ASSESSEE STANDS ALLOWED. . ORDER PRONOUNCED IN THE OPEN COU RT ON 1 ST JANUARY, 2016. 1 , 2016 SD/- SD/- ( /SANDEEP GOSAIN ) ( / RAJENDRA ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER MUMBAI, DATE: 01.01.2016 . . . JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.