PASHANKAR AUTO WHEELS PVT LTD,PUNE V. CIT(A) CIRCLE-4, PUNE

ITA 1546/PUN/2025

AI Insights

The case involves Pashankar Auto Wheels Pvt. Ltd., which appealed against the order of the CIT(A) / NFAC, Delhi, concerning the assessment year 2018-19. The primary issues in the appeal were the classification of rental income as 'income from house property' instead of 'business income', and the addition of Rs.3,82,76,613 as long-term capital gain from the sale of immovable properties. The Assessing Officer had made these additions based on information that income had escaped assessment, which the assessee contested, claiming that the income had been reported in earlier years and that the properties were sold by a JV in which they were stakeholders but did not receive any direct income. The Tribunal found merit in the assessee's request for a re-evaluation of the evidence and the context of the income reported.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717089 (ITAT-PUNE)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Appeal Filed On: 23-06-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILESH SRIVASTVA
• Assessee Lawyers: S BHEEK SINGH RAJPUROHIT
• Keywords: Business income; Opportunity of being heard; Additional evidence; Corroborative evidences; Cost of acquisition; Capital Gains; TDS; Revision of order; FORM 26AS
• Section: 148; 142(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA No.1546/PUN/2025 Assessment year : 2018-19 Pashankar Auto Wheels Pvt. Ltd. S.No.45/1 to 10/1, Katraj Dehu, Mumbai Bypass, Baner, Thergaon, Pune – 411045 Vs. ACIT, Circle 4, Pune PAN: AADCP3766A (Appellant) (Respondent) Assessee by : S/Shri Bheek Singh Rajpurohit and Abhijeet Jain Department by : Shri Akhilesh Srivastva, Addl.CIT Date of hearing : 07-08-2025 Date of pronouncement : 18-08-2025 O R D E R PER R.K. PANDA, VP: This appeal filed by the assessee is directed against the order dated 22.04.2025 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2018-19. 2. Facts of the case, in brief, are that the assessee has not filed its return of income for the year under consideration u/s 139(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). The Assessing Officer noted that the following information was available with the department: Sr. No. Gist of information Amount (in Rs.) 1 Sale by any person of immovable property 3,97,75,613 2 TDS statement interest other than interest on security 18,228/- 3 TDS statement-Rent (Section 194I) 44,19,390 4 TDS statement – Rent (section 194-I) 4,50,000 Printed from counselvise.com 2 ITA No.1546/PUN/2025 3. He, therefore, passed an order u/s 148A(d) of the Act on 26.03.2022 after following due procedure. Since income to the tune of Rs.4,46,64,231/- chargeable to tax has escaped assessment, the Assessing Officer issued notice u/s 148 of the Act on 26.03.2022 which was duly served upon the assessee through the e-filing account. However, the assessee did not file any return in response to the notice issued u/s 148 of the Act. Subsequently a notice u/s 142(1) on 12.09.2022 was issued along with a questionnaire which again was served on the assessee through e-filing account of the assessee / registered E-mail id of the assessee with a request to upload various information as per questionnaire. 4. In response to the show cause notice the assessee filed certain details, according to which the company was a dealer in four-wheeler vehicles of different automobile companies and it surrended the said dealership in the years 2014-15 and 2015-16. Since all the staff members of the company have left the company, therefore, the reply files were not traceable. The assessee further submitted that the income so reported in Form 26AS was from sale of immovable property which does not pertain to the year of reporting. It was submitted that the income from sale of property has been booked by the company in the financial year 2016-17. The sale of immovable property is actually the sale of investment which was done under JV with other company. Therefore, as the sale of flats being done by the JV company, same has been reported in 26AS for the financial purpose. However, the sale has already been reported in the previous year 2016-17 and therefore, the income appearing in 26AS is not to be taken in the previous year 2017-18 under Printed from counselvise.com 3 ITA No.1546/PUN/2025 sale of assets or sales or capital gain. It was submitted that the assessment for 2016-17 has been completed by the department and the same has been processed. The assessee also requested for video conferencing or personal representation. Subsequently the assessee filed further details. 5. However, the Assessing Officer was not satisfied with the arguments advanced by the assessee. He noted that the assessee has received interest amounting to Rs.18,228/- from Bank of India which was not offered to tax. He, therefore, added the same to the total income of the assessee. He further noted that the assessee has received rent amounting to Rs.48,69,390/- from Alfa Laval India Pvt. Ltd. The assessee also admitted the same for which he made addition of Rs.34,09,000/- after allowing deduction of Rs.14,60,817/- being 30% of such rent u/s 24 of the Act. The Assessing Officer further noted that the assessee during the year under consideration has sold immovable properties on various dates total of which comes to Rs.3,97,76,613/-. He obtained the copies of sale agreements from the office of the Sub Registrar through verification unit of the Department. The Assessing Officer rejected the submissions of the assessee that the income from sale of such properties have already been disclosed in the previous year in absence of any return of income filed by the assessee for the preceding years. Rejecting the various explanations given by the assessee, the Assessing Officer made addition of Rs.3,82,76,613/- as long term capital gain after deducting an amount of Rs.15 lakh as indexed cost of acquisition of the said properties. The Assessing Officer accordingly determined the total income of the assessee at Rs.4,17,03,841/-. Printed from counselvise.com 4 ITA No.1546/PUN/2025 6. In appeal, the Ld. CIT(A) / NFAC upheld the action of the Assessing Officer. 7. Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal by raising the following grounds: 1. The Ld. CIT(A) has erred in treating lease rent receipts under the head of \"Income from house property\" rather than treating it business receipts as the lease rent received was commercial receipts and consistently taxed under the head of \"Income from business and profession\" in earlier years even in the orders u/s 264 of the I.T. Act, the PCIT has accepted rent income as business income in AY 2015-16 to AY 2017-18. 2. The Ld. CIT(A) has erred in confirming lease rent receipts of Rs.34,09,000/- after deduction u/s 24 of the I.T. Act as income from house property because the appellant failed to prove that the rent receipts were business receipts by providing evidences. 3. The Ld. CIT(A) has erred in not allowing the claim of regular expenses of the appellant company which mainly included interest on term loan, vehicle loans, various fee/brokerage and other miscellaneous expenses aggregating to Rs.1,02,32,492/- by stating that no evidences and no loan accounts were provided during appellate proceeding. 4. The Ld. CIT(A) has erred in confirming addition of Rs.3,82,76,613/- as Income from Capital Gain on the basis of AIS data in respect of sale of properties after allowing estimated cost of indexation of Rs.15,00,000/- whereas no sale of property was made by the appellant company directly, the sale of properties was made by Shree Raviraj Pashankar Developers JV which was executed vide JV agreement dated 06.06.2014 wherein the appellant was stakeholder of 40% being land owner. 5. The Ld. CIT(A) has erred in ignoring the fact that the capital gain on receipts from Shree Raviraj Pashankar Developers JV was already offered for tax in earlier years when advances were received, therefore, set off of already offered income should have been given which was not allowed in this case. 6. The Ld. CIT(A) has not appreciated that Shree Raviraj Pashankar Developers JV has started sale of constructed units from the year under consideration, therefore, the name of appellant appearing in sale transactions as well in AIS data though it was showing 50% share in place of actual 40% share. 7. The Appellant craves leave to add, to alter, amend, or delete all or any of the aforesaid grounds of appeal on or before or at the time of hearing. Printed from counselvise.com 5 ITA No.1546/PUN/2025 8. The Ld. Counsel for the assessee at the outset filed copies of sale deeds and submitted that the name of the assessee is appearing as a consenting party only and the assessee has not received any consideration on account of sale of those properties. Further the properties were transferred to the Joint Venture and the Joint Venture has already declared the profit on sale of the flats. Thus, these vital aspects were never considered by the Assessing Officer or the Ld. CIT(A) / NFAC. This being the additional evidence, the same should be accepted and the matter may be restored to the file of the Assessing Officer. 9. So far as the interest income is concerned, the Ld. Counsel for the assessee fairly conceded the same. 10. So far as the addition of rental income is concerned, he submitted that the assessee was consistently treating such rental income as ‘business income’ and the various expenses required to maintain the corporate status and as a going concern was allowed in the past, therefore, ‘income from house property’ should be treated as ‘business income’. He, however, submitted that this plea was not taken before the lower authorities and therefore, he has no objection if the matter is restored to the file of the Assessing Officer with a direction to verify the past records of the department and pass appropriate order. 11. The Ld. DR on the other hand heavily relied on the order of the Ld. CIT(A) / NFAC. Printed from counselvise.com 6 ITA No.1546/PUN/2025 12. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. So far as the addition of Rs.3,82,76,613/- is concerned, we find the Ld. CIT(A) / NFAC while deciding the issue against the assessee has observed as under: “6.3.3 On examining the submissions of the appellant and material available on record, it is seen that appellant claimed that the income was already accounted for in prior financial years, however, the AO highlighted that no return of income was filed by the appellant for those years to substantiate this claim. The mere assertion that capital gains were previously declared, without any documentary evidence or supporting records, renders the appellant's plea devoid of merit. At the appellate stage also, appellant did not furnish any documentary evidence to substantiate its claim that it booked the income during earlier years. 6.3.4 The AO obtained copies of the sale agreements from the Sub- Registrar through the Department's verification unit. These documents revealed that the sale of immovable property was executed during the financial year under consideration. Despite being provided ample opportunity, including a letter dated 30.01.2023 requesting evidence, the appellant failed to furnish proof supporting its contention that the income did not pertain to the year under review. Additionally, the appellant did not provide any details regarding the cost of acquisition of the property. In the absence of this crucial evidence, the AO computed the indexed cost at Rs.15,00,000/- and determined the taxable capital gains to be Rs.3,82,76,613/-. 6.3.5 The Assessing Officer (AO) has conducted a thorough examination of the facts, including third-party verification, and has arrived at well-founded factual conclusions. These findings form the basis of a reasonable and well- articulated assessment order. Given the above discussion, it is my considered opinion that the AO's assessment is guided by the principles of fairness and due process. The findings are based on available records, coupled with the appellant's failure to substantiate their claims. Furthermore, the appellant's lack of cooperation and inability to provide supporting evidence reinforce the AO's decision to tax the income in the year under consideration. Therefore, ground of appeal no. 3 & 5 are hereby dismissed.” 13. It is the submission of the Ld. Counsel for the assessee that when the sale deeds show that the assessee is the consenting party and the assessee has not received any amount during the year, therefore, there was no question of making Printed from counselvise.com 7 ITA No.1546/PUN/2025 any addition during the year. It was also his submission that the assessee has entered into a JV agreement with the firm Shree Raviraj Pashankar Developers in the year 2014-15 through which the development rights were given to the developing firm to build and sell the flats. Further it is also his submission that the said firm has already filed the return of income by offering income which has been taxed by the department. Since it was the case of the Ld. CIT(A) / NFAC that the assessee has not filed any details before the Assessing Officer and since the assessee has filed certain sale deeds wherein the assessee is shown as a consenting party and has not received any amount on account of sale during the year, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to adjudicate the issue afresh and in accordance with law and after providing due opportunity of being heard to the assessee. We hold and direct accordingly. The first issue raised by the assessee is accordingly allowed for statistical purposes. 14. So far as the second issue i.e. taxing the rental income as ‘income from house property’ as against ‘business income’ is concerned, we find the Ld. CIT(A)/NFAC while deciding the issue against the assessee has observed as under: “6.4 In the submission of the appellant, it was requested to consider the few points raised by the same. Appellant stated that AO has erred in computing the income without taking in consideration of the expenses done by the company, in order to run and maintain the company. 6.4.1 Appellant, in this respect, furnished its submission which is reproduced as under: Printed from counselvise.com 8 ITA No.1546/PUN/2025 \"In the course of maintaining the business following are the expense done by the company. 1. Architect fee for advisory services - 893800 2. Repairs and maintenance to building - 150858 3. Interest on term loan-1512333.49 4. Interest on vehicle loan-4021251.00 5. Bank charges-4021251.00 6. Professional fees-53500 7. Brokerage charges-3600000 8. Other expenses-750 To support the expenses, we are attaching the loan statement, tds certificates of expenses claimed and tds deducted for your reference.\" 6.4.2 At the very outset, it is observed that the appellant has failed to attach any loan statement, nor does such a document find mention within the acknowledgment of submissions, wherein the list of appended documents is enumerated. Furthermore, no additional evidence of a documentary nature has been tendered to substantiate the claim advanced. It is a well-founded principle that no assertion may be accepted at mere face value or upon the strength of a solitary declaration. 6.4.3 In view of the above, additional contention of the appellant is found devoid of merit, thus not acceptable.” 15. It is the submission of the Ld. Counsel for the assessee that the past records show that such income was being assessed as ‘business income’. Further, due to leaving of the staff of the assessee company, records were not readily traceable for which the full details could not be provided. Since it is the submission of the Ld. Counsel for the assessee that given an opportunity, the assessee is in a position to substantiate its case by filing the requisite details before the Assessing Officer, Printed from counselvise.com 9 ITA No.1546/PUN/2025 therefore, we remit this issue to the file of the Assessing Officer with a direction to adjudicate the same afresh and in accordance with law after providing due opportunity of being heard to the assessee. We hold and direct accordingly. The second issue raised by the assessee is accordingly allowed for statistical purposes. 16. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 18th August, 2025. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 18th August, 2025 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘B’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune Printed from counselvise.com 10 ITA No.1546/PUN/2025 S.No. Details Date Initials Designation 1 Draft dictated on 07.08.2025 Sr. PS/PS 2 Draft placed before author 14.08.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order Printed from counselvise.com "