CHAITALI ANKIT PAREKH,MUMBAI vs. DCIT CIRCLE 32(1), MUMBAI

At the very outset, I notice that the assessee has filed an application for raising an additional ground of appeal, and the contents of the said application are reproduced hereunder:

From the records, I also notice that the assessee had raised a claim of business loss, which was disallowed by the AO. Subsequently, it was held by the Ld. CIT(A) that the assessee's only income is derived from leasing out of the property, which has rightly been taxed under the head 'Income from House Property'. Thus, the assessee is not eligible to claim any other expenses related to the same, as it had already availed of the standard deduction at the rate of 30% from the house property income. Therefore, allowing other expenses to the assessee would tantamount to double deduction, as the assessee has already enjoyed a standard deduction of 30% of the house property income. Thus, the ground raised before the Ld. CIT(A) was rejected.

However, now, the assessee has filed an application for raising the additional ground by submitting that originally the assessee was offering rental income under the head 'Profits and Gains of Business or Profession', but it was only on account of the stand adopted by the Assessing Officer for Assessment Year 2006-07 that the head of income was changed to 'Income from House Property' for the first time.

It was further submitted that, inadvertently, a challenge to the said order had remained to be made before the higher authorities and that the assessee was under a bona fide belief that it could not challenge such change of head in subsequent years. However, in the course of compiling papers for filing the appeal in the present case, the legal counsel was made to understand that it could still challenge such change of head. Thus, the assessee is seeking liberty to raise the additional ground at this stage.

I have considered the arguments and documents placed on record and the facts obtaining in the present case. I am of the view that an additional ground can be taken at any stage of the proceedings if the same is a legal question. Since the ground now being raised by the assessee is a mixed question of law and facts and requires consideration of the assessment records as well, I allow the assessee to raise the present ground before me. Consequently, the application filed by the assessee stands allowed.

At the same time, I am of the view that since the assessee has raised this ground for the first time before me, which requires verification at the end of the AO, I restore this ground to the file of the Assessing Officer with a direction to consider the admissibility of the change of head of income after verification of the facts and decide the said question in accordance with law.

Since I have restored the matter back, there is no need to adjudicate the other grounds raised by the assessee, as I have directed the Assessing Officer to consider the same afresh, after considering the admissibility of the change of head of income, and pass the order afresh in accordance with law.

Needless to mention, the AO shall provide adequate opportunity of hearing to the assessee. The assessee shall not seek any adjournment on frivolous grounds and shall remain cooperative during the course of proceedings.

Before parting, I make it clear that my decision to restore the matter back to the file of the AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the AO independently in accordance with law.

In the result, appeal filed by the Assessee stands allowed for statistical purposes.