TRILOKESHWAR LEAFIN & INVESTMENTS P.LTD, MUMBAI V. ITO WD 5(3)(3), MUMBAI

ITA 7040/MUM/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5644 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 03-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V N TALREJA
• Keywords: Business income; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'SMC' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA NO. 7040/MUM/2013 (ASSESSMENT YEAR: 2007-08) M/S. TRILOKESHWAR LEAFIN & INCOME TAX OFFICER - 5( 3)(3) INVESTMENT PVT. LTD. ROOM NO. 523, 5TH FLOOR 231, PANCHARATNA, OPERA HOUSE VS. AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400004 MUMBAI 400020 PAN - AAACT1917C APPELLANT RESPONDENT APPELLANT BY: NONE RESPONDENT BY: SMT. V.N. TALREJA DATE OF HEARING: 03.03.2014 DATE OF PRONOUNCEMENT: 03.03.2014 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE ASSESSEE COMPANY IS DIRECTED AGA INST THE ORDER DATED 13.09.2013 PASSED BY THE CIT(A)-9, MUMBAI AND IT PERTAINS TO A.Y. 2007-08. THOUGH NOTICE WAS SENT TO THE ASSESSEE BY RPAD, NONE APPEARED ON BEHALF OF THE ASSESSEE. I, THEREFORE, PROCEED TO DISPOSE OF THE APPEAL EXPARTE, QUA ASSESSEE. 2. FACTS IN SHORT ARE THAT THE ASSESSEE COMPANY DECLAR ED BUSINESS LOSS OF ` 25,110/- DURING THE YEAR, WHICH WAS PROCESSED ACCOR DINGLY BUT SUBSEQUENT THERETO IT WAS REOPENED BY ISSUING NOTIC E UNDER SECTION 148 OF THE ACT. IT WAS NOTICED THAT THOUGH THE ASSESSEE CL AIMED TO HAVE CARRIED ON FINANCE BUSINESS AS ITS MAIN ACTIVITY, THE DETAILS FURNISHED DOES NOT INDICATE ANY FINANCE ACTIVITY IN THIS YEAR AND ALSO DURING T HE LAST THREE YEARS. THE COMPANY LET OUT ITS OFFICE PREMISES WHICH WAS DECLA RED UNDER THE HEAD INCOME FROM BUSINESS. DURING THE REASSESSMENT PRO CEEDINGS THE AO CONSIDERED THE ISSUE IN DETAIL TO HOLD THAT THE ASS ESSEE HAS NOT CARRIED OUT ANY BUSINESS ACTIVITY EXCEPT EARNING RENTAL INCOME BY LETTING OUT ITS OFFICE PREMISES AND ACCORDINGLY REWORKED OUT THE TAXABLE I NCOME AT ` 78,110/-. ITA NO. 7040/MUM/2013 TRILOKESHWAR LEAFIN & INVESTMENT PVT. LD. 2 3. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A) THA T INITIATION OF REASSESSMENT PROCEEDINGS IS WITHOUT JURISDICTION SI NCE IT IS A CASE OF MERE CHANGE OF OPINION. IT WAS ALSO CONTENDED THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS, WHICH WERE NECESSARY FOR COMPLETING THE ASSESSMENT. THE AO HAV ING ACCEPTED THE RENTAL INCOME UNDER THE HEAD BUSINESS INCOME THERE IS NO NEW FACT WHICH CAN BE TAKEN INTO CONSIDERATION FOR REOPENING THE ASSESSME NT AND FOR TREATING THE SAID INCOME AS INCOME FROM HOUSE PROPERTY. ALTERNAT IVELY, HE CONTENDED THAT, IF THE IMPUGNED INCOME IS TREATED AS BUSINESS INCOME ASSESSEE IS ENTITLED TO DEDUCTION TOWARDS DIRECTOR REMUNERATIO N, OFFICE MAINTENANCE, ETC. 4. THE LEARNED CIT(A), HOWEVER, OBSERVED THAT DURING T HE ORIGINAL ASSESSMENT PROCEEDINGS THE ISSUE OF DEDUCTION OF EX PENDITURE ON OFFICE MAINTENANCE, DIRECTORS SALARY, ETC. WAS NEVER DISC USSED AND THERE WAS NO APPLICATION OF MIND BY THE AO AT THE INITIAL STAGE SO AS TO HOLD THAT REOPENING OF THE ASSESSMENT WAS ON THE BASIS OF CHA NGE OF OPINION. HE ALSO OBSERVED THAT THE REASSESSMENT WAS WITHIN FOUR YEAR S FROM THE END OF THE ASSESSMENT YEAR AND HENCE THE AO IS JUSTIFIED IN RE OPENING THE ASSESSMENT. ON MERITS ALSO HE NOTICED THAT THERE IS NO MATERIAL ON RECORD TO SUGGEST THAT THE ASSESSEE WAS CARRYING ON THE MAIN ACTIVITY, I.E . FINANCIAL BUSINESS. SINCE THE ONLY INCOME IS FROM LETTING OUT OF THE PREMISES , IT WAS TREATED AS INCOME FROM PROPERTY AGAINST WHICH ASSESSEE WAS NOT ENTITL ED TO DEDUCTION TOWARDS DIRECTORS REMUNERATION, ETC. HE, THEREFORE, UPHELD THE ACTION OF THE AO. 5. FURTHER AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. NONE APPEARED ON BEHALF OF THE ASSESSEE AND NO MATERIAL, WHATSOEVER, WAS PLACED BEFORE ME TO CONTRADICT THE FINDINGS OF THE AO AS W ELL AS THE CIT(A). IT IS NOT DISPUTED THAT THE ASSESSMENT WAS REOPENED WITHIN FO UR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS NOT CARRIED OUT ANY FINANCIAL ACTIVITY FOR THE PAST SEVERAL YEARS AND ITS ONLY INCOME IS FROM LETTING OUT OF THE PREMISES. SU CH BEING THE CASE I AM OF THE FIRM VIEW THAT THE ORDER PASSED BY THE LEARNED CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. ITA NO. 7040/MUM/2013 TRILOKESHWAR LEAFIN & INVESTMENT PVT. LD. 3 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD MARCH, 2014. SD/- (D. MANMOHAN) VICE PRESIDENT MUMBAI, DATED: 3 RD MARCH, 2014 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 9, MUMBAI 4. THE CIT 5, MUMBAI CITY 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.