ASSTT.COMMISSIONER OF INCOME TAX -1(2), RAIGARH(CG) V. RISHABH MINING & TRANSPORT CO .PVT.LTD, RAIGARH(CG)

ITA 99/BIL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 85383 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 23-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K JAIN
• Assessee Lawyers: N C BEGANI
• Keywords: Reopening of assessment; Business income; Depreciation; Difference of opinion; Change of opinion
• Section: 143(3); 148

Judgement Text

INCOME TAX APPELLATE TRIBUNAL,BENCH -RAIPUR . .. . . .. . , ,, , ! ! ! !, ,, , . .. . . .. . BEFORE S/SH.H.L.KARWA,PRESIDENT AN D RAJENDRA,ACCOUNTANT MEMBER ./ ITA NOS.97 TO 100/BLPR/2011- # / // / AY.S.- 2003-04 TO 2006-07 ASSTT. COMMISSIONER OF INCOME-TAX-1(2), RAIPUR. V/S. RISHABH MINING & TRANSPORT CO. PVT. LTD., VANIJYA BHAWAN, SAI NAGAR, JAIL ROAD, RAIPUR. PAN: AABCR 1759 H ( ) / // / APPELLANT ) ( *+) / RESPONDENT ) REVENUE BY : SH.D.K. JAIN, SR. DR ASSESSEE BY : SH. NIKHILESH BEGANI & N.C. BEGANI, CA - /DATE OF HEARING : 23-12-2014 - /DATE OF PRONOUNCEMENT : 23-12-2014 # # # # , 1961 1961 1961 1961- - - - 254 254254 254( (( (1 11 1) )) ) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM < << < = = = =, ,, , ! ! ! ! : CHALLENGING THE ORDERS DT.21.01.2011 OF THE CIT(A), RAIPUR,THE ASSESSING OFFICER (AO) HAS RAISED FOLLOWING GROUNDS OF APPEAL IN THE ABOVE MENTIONED FOUR APPEALS: GROUNDS OF APPEAL IN ITA NO. 97/BLPR/11: 1. WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS JUSTIFIED IN TREATING THE INCOME FROM HOUSE PROPERTY AS INCOME FROM BUSINESS. 2. THE ORDER OF LD. CIT(A) IS ERRONEOUS BOTH IN LAW AN D ON FACTS. GROUNDS OF APPEAL IN ITA NO. 98/BLPR/11: 1. WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS JUSTIFIED IN TREATING THE INCOME FROM HOUSE PROPERTY AS INCOME FROM BUSINESS. 2. THE ORDER OF LD. CIT(A) IS ERRONEOUS BOTH IN LAW AN D ON FACTS. GROUNDS OF APPEAL IN ITA NO. 99/BLPR/11: 1. WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS JUSTIFIED IN TREATING THE INCOME FROM HOUSE PROPERTY AS INCOME FROM BUSINESS. 2. THE ORDER OF LD. CIT(A) IS ERRONEOUS BOTH IN LAW AN D ON FACTS. GROUNDS OF APPEAL IN ITA NO. 100/BLPR/11: 1. WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS JUSTIFIED IN TREATING THE INCOME FROM HOUSE PROPERTY AS INCOME FROM BUSINESS. 2. THE ORDER OF LD. CIT(A) IS ERRONEOUS BOTH IN LAW AN D ON FACTS. AS THE ISSUE INVOLVED IN ABOVE FOUR APPEALS IS COMM ON, SO FOR THE SAKE OF CONVENIENCE, WE ARE ADJUDICATING SAID APPEALS BY A SINGLE ORDER. 2.BRIEF FACTS (A.Y. 2003-04): THE ASSESSEE DERIVES INCOME FROM RENTING OUT OF PRO PERTY.RETURN OF INCOME WAS FILED ON 21.11. 2003 DECLARING TOTAL INCOME AT RS.9.58 LACS.SUBSEQU ENTLY, ASSESSMENT U/S. 143(3) WAS COMPLETED ON 28.12.2005,DETERMINING TOTAL INCOME AT RS.10.21 LACS.THE ASSESSMENT FOR THE A.Y. 2007-08 WAS COMPLETED U/S.143(3) ON 18.11.2009 AND ON THE B ASIS OF THE FACTS AND LEGAL PROVISIONS EXTENSIVELY DISCUSSED IN THE ASSESSMENT ORDER, INCO ME FROM RENTING OUT OF PROPERTY WAS ASSESSED AS INCOME FROM HOUSE PROPERTY AS AGAINST INCOME FRO M BUSINESS CLAIMED BY THE ASSESSEE.A NOTICE U/S. 148 OF THE ACT WAS ISSUED BY THE AO FOR THE AS SESSMENT YEAR 2003-04.THE ASSESSEE STATED THAT THE RETURN ALREADY FILED SHOULD BE TREATED AS THE R ETURN FILED IN RESPONSE TO NOTICE U/S. 148. ON 16.12.2010,AN ORDER U/S. 143(3) R.W.S. 147 WAS PASS ED DETERMINING THE INCOME OF THE ASSESSEE AT RS.29.94 LACS. 2 ITA NOS. 97 TO 100/BLPR/2011-RISHABH MINDING & TPT. CO. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2007-08, THE AO NOTICED THAT THE ASSESSEE HAD SHOWN INCOME AMOUNTING TO RS. 32.90 LACS AS OTHER INCOME AND NOT AS INCOME FROM HOUSE PROPERTY,THAT DEPRECIATION PERTAI NING TO BUILDING AND FURNITURE WAS CLAIMED, THAT IT ALSO CLAIMED EXPENSES ON REPAIR AND MAINTEN ANCE OF BUILDING AS WELL AS EXPENSES INCURRED UNDER THE HEAD PROPERTY TAX PAID.THE AO ASKED THE A SSESSEE WHY THE RENT RECEIVED BY IT SHOULD NOT BE COMPUTED UNDER THE HEAD INCOME FROM HOUSE PR OPERTY.THE ASSESSEE STATED THAT IT HAD ALWAYS TREATED INCOME FROM RENT OF COMMERCIAL SPACE AS PART OF BUSINESS INCOME, THAT IN VARIOUS SCRUTINY ASSESSMENTS FOR A.YS. 2003-04 AND 2004-05, THE AO HAS ACCEPTED THIS VIEW. THE AO WAS OF THE OPINION THAT THE INCOME RECEIVED BY THE ASSE SSEE WAS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY. HE ALLOWED PROPERTY TAX PAID BY THE ASSES SEE BESIDES ALLOWING DEDUCTION @ 30% AS PER PROVISIONS OF SECTION 24(A) OF THE ACT.ACCORDINGLY, THE AO ADOPTED THE FINDING CONTAINED IN ASSESSMENT ORDER FOR AY.S.2007-08 AND RE-COMPUTED T HE ASSESSEES INCOME AT RS.29.94 LACS. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILE D APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).IT WAS CONTENDED BEFORE HIM THAT NOTICE ISSUE D U/S. 148 OF THE ACT WAS HIGHLY ILLEGAL, VOID AB INITIO VOID AND UNJUSTIFIED,THAT IT HAD FILED CO MPUTATION OF TOTAL INCOME,FINANCIAL STATEMENT DULY AUDITED UNDER THE PROVISIONS OF THE ACT, THAT ORIGI NAL TDS CERTIFICATE, DETAILS OF RENTAL INCOME AND OTHER SUPPORTING DOCUMENTS ALONG WITH ORIGINAL RETU RN OF INCOME WAS FILED, THAT THE THEN AO HAD APPLIED HIS MIND AND AGREED WITH THE CLAIM OF THE A SSESSEE,THAT THE INCOME RECEIVED FROM LETTING OUT VACANT PORTION OF COMMERCIAL COMPLEX WAS BUSINE SS INCOME, THAT THE CLAIM MADE BY THE ASSESSEE WAS ACCEPTED BY THE AO WHILE PASSING THE O RDER U/S. 143(3) OF THE ACT IN THE ORIGINAL ASSESSMENT PROCEEDINGS,THAT THE AO HAD CONSCIOUSLY APPLIED HIS MIND TO THE MATERIAL ON RECORD DURING THE ORIGINAL ASSESSMENT PROCEEDINGS,THAT THE REASONS RECORDED FOR REOPENING THE MATER WERE VAGUE AND CONTRADICTORY TO THE FACTS ON RECORD,THAT THE REASONS DID NOT INDICATE ANY NEW MATERIAL OR INFORMATION IN POSSESSION OF THE AO,THAT THE AO REOPENED THE ASSESSMENT ON CHANGE OF OPINION,THAT THE NOTICE U/S. 148 WAS ISSUED MUCH AF TER EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR,THAT THERE IS NO ALLEGATION OR FIND ING TO THE EFFECT THAT THERE HAD BEEN ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY OR TR ULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT . AFTER GOING THROUGH THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER,THE FAA HELD THAT THE FIRST AND FOREMOST CHALLENGE OF THE ASSESSEE WA S AS REGARDS THE VALIDITY OF RE-ASSESSMENT PROCEEDINGS,THAT THE PREDECESSOR AO HAD APPLIED HIS MIND TO THE FACTS OF THE CASE AND HAD ALLOWED THE CLAIM OF THE ASSESSEE,THAT THE THEN AO HAD REAC HED TO THE CONCLUSION THAT INCOME FROM LETTING OUT THE VACANT PORTION OF SOLE COMMERCIAL BUILDING WAS INCOME FROM BUSINESS, THAT IN THE ORIGINAL ASSESSMENT THE AO HAD RECORDED FINDING,THAT PRE-REQ UISITE OF PROVISO TO SECTION 147 OF THE ACT WAS NOT SATISFIED, THAT NO FAILURE COULD BE ATTRIBU TED TO THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT,THAT NO SUC H AVERMENT HAS BEEN MADE IN THE REASONS RECORDED FOR REOPENING OF ASSESSMENT,THAT THE OBSER VATIONS RECORDED IN THE ASSESSMENT ORDER FOR AY. 2007-08 HAD MERELY BEEN ADOPTED FOR REOPENING T HE SAID CASE WITHOUT ANY INDEPENDENT APPLICATION OF MIND,THAT NO NEW MATERIAL OR INFORMA TION HAD BEEN BROUGHT ON RECORD TO SHOW THAT THERE HAD BEEN ANY CHANGE IN THE MATERIAL FACTS OF THE CASE, THAT THE PRESENT PROCEEDINGS WERE MERELY BASED ON CHANGE OF OPINION SO AS TO REVIEW A LREADY COMPLETED ASSESSMENT IN THE GARB OF RE-ASSESSMENT.HE REFERRED TO THE CASE OF CIT VS. KE LVINATOR OF INDIA LTD. (320 ITR 561).FINALLY,HE ALLOWED THE APPEAL FILED BY THE ASSESSEE. 5. BEFORE US,THE DEPARTMENTAL REPRESENTATIVE (DR) SUPP ORTED THE ORDER OF THE AO. THE AUTHORISED REPRESENTATIVE(AR)STATED THAT INCOME FROM PREMISES IN QUESTION WAS ASSESSED AS BUSINESS INCOME IN EARLIER YEARS, THAT THERE WAS VIOLATION OF PROVI SO TO SECTION 147 OF THE ACT, THAT THE TRIBUNAL HAD ,WHILE DECIDING THE APPEAL FOR THE ASSESSMENT YEAR 2007-08,HELD THAT THE AO SHOULD TREAT THE INCOME FROM HOUSE PROPERTY AS BUSINESS INCOME. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE ASSESSMENT WAS REOPENED BEYOND THE PERIOD OF FOUR Y EARS AND THEREFORE PROVISIONS OF PROVISO TO 3 ITA NOS. 97 TO 100/BLPR/2011-RISHABH MINDING & TPT. CO. SECTION 147 WERE APPLICABLE.AS PER THE SAID PROVISO , THE AO HAS TO RECORD A CLEAR FINDING OF FAILURE ON THE PART OF THE ASSESSEE FOR NOT DISCLOSING FULL Y AND TRULY THE RELEVANT MATERIAL. AS THE AO HAS NOT MENTIONED ANYTHING ABOUT FAILURE OF THE ASSESSE E, THE NOTICE ISSUED BY HIM U/S. 148 IS NOT VALID.SECONDLY,THE ASSESSMENT WAS REOPENED ON THE B ASIS OF FINDINGS GIVEN FOR THE ASSESSMENT YEAR 2007-08. BUT,WHILE COMPLETING ORIGINAL ASSESSM ENT FOR THE YEAR UNDER CONSIDERATION, THE AO HAD ACCEPTED THE CLAIM THAT THE INCOME RECEIVED BY THE ASSESSEE FROM COMMERCIAL PREMISES WAS BUSINESS INCOME AND THE ORDER WAS PASSED U/S. 143(3 ) OF THE ACT. THERE WAS NO CHANGE IN THE FACTS AND CIRCUMSTANCES.THEREFORE, WITHOUT GIVING ANY REA SONABLE BASIS, THE AO WAS NOT JUSTIFIED IN CHANGING THE HEAD OF INCOME DURING THE RE-ASSESSMEN T PROCEEDINGS.WE FURTHER FIND THAT THE TRIBUNAL,WHILE DECIDING THE APPEAL FOR THE ASSESSME NT YEAR 2007-08 (ITA NO. 54/BLPR/2010 DATED 19.10.2011),HAD HELD THAT THE FAA WAS JUSTIFI ED IN DIRECTING THE AO TO TREAT THE INCOME FROM THE COMPLEX AS BUSINESS INCOME.THE ASSESSMENT IN THE YEAR UNDER APPEAL IS BASED ON THE ASSESSMENT ORDER FOR A.Y. 2007-08. AS STATED EARLIE R, THE TRIBUNAL HAS ALREADY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE.CONSIDERING ALL THE THREE FA CTORS-VIOLATION OF PROVISIONS OF PROVISO TO SECTION 147,CHANGE OF OPINION AND THE ORDER OF THE TRIBUNAL FOR A.Y. 2007-08 - WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. 6. A.Y. 2004-05: THE FACTS AND CIRCUMSTANCES OF THE CASE ARE IDENTIC AL TO THE FACTS OF THE EARLIER ASSESSMENT YEAR. FOLLOWING THE SAME, WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. 7. A.Y. 2005-06: THE GROUNDS OF APPEAL AND THE FACTS OF THE CASE ARE SIMILAR TO THE FACTS OF EARLIER TWO ASSESSMENT YEARS.THE ONLY DIFFERENCE IS THAT TH E PROVISO TO SECTION 147 WOULD NOT BE APPLICABLE IN THE CASE UNDER CONSIDERATION.HOWEVER, THE OTHER FACTORS REMAIN SAME.THE ASSESS - MENT PASSED U/S. 143(3) R.W.S. 147 WAS THE RESULT O F CHANGE OF OPINION. FOLLOWING OUR ORDER FOR EARLIER ASSESSMENT YEARS, WE DECIDE THE GROUND AGAI NST THE AO. 8. A.Y. 2006-07: THE FACTS OF THE CASE FOR THE ASSESSMENT YEAR UNDER APPEAL ARE SAME AS THAT OF ASSESSMENT YEAR 2005-06.IN VIEW OF OUR ORDER FOR TH AT YEAR,WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT, APPEALS FILED BY THE AO FOR ALL THE FO UR ASSESSMENT YEARS STAND DISMISSED. > #>< @ A - B # C - D - G. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD DECEMBER,2014. - D 23 H ,2014 - . SD/- SD/- (H.L.KARWA/ . .. . . .. . ) ( ! ! ! ! / RAJENDRA) PRESIDENT/ = = = = /ACCOUNTANT MEMBER /RAIPUR. H DATE: 23.12.2014 - -- - *#IJ *#IJ *#IJ *#IJ KJ KJ KJ KJ / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / ) 2. RESPONDENT / *+) 3. THE CONCERNED CIT(A)/ L M , 4. THE CONCERNED CIT / L M 5. DR ITAT,RAIPUR BENCH/ J *## , . . . , 6. GUARD FILE/ . +J *# //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, RAIPUR