BARONS INN,BENGALURU vs. INCOME TAX OFFICER, WARD7(2)(1), BENGALURU

The Assessee is aggrieved with the same and has filed this Appeal.

We have heard Ms. Sahana, Advocate on behalf of the Assessee and Shri Balusamy N, JCIT – Senior DR on behalf of the Ld. Assessing Officer.

The brief facts of the case shows that Assessee is a partnership firm wherein the information is received from the insight portal and as per information available in form no. 26AS that Assessee has received a rent of Rs. 80,09,798/- which is liable to tax. In the return of income filed by the Assessee on 09.01.2021, the Assessee disclosed the income of only Rs. 6,71,630/-. Therefore, the case of the Assessee was reopened. The Assessee was given several opportunities including show cause notice which was replied in part and therefore, the reassessment order was passed on 17.03.2025 wherein the addition of Rs. 56,06,865/- was made.

This was made rejecting the explanation of the Assessee that Assessee is engaged in the business of running and maintaining commercial establishment including maintenance such as furniture etc., including canteen, housekeeping, security services and thus Assessee is not renting out the properties and income is chargeable to tax not under the head income from house property but business income. The Assessee relied upon several judicial precedents including circular no. 16/2017 dated 25.04.2017 which supports the case of the Assessee. The Assessee also submitted that the rental income received of Rs. 52,19,798/- from Speciality Restaurants Limited and Rs. 27,90,000/- from Vinith John Raj are chargeable to tax as business income. It cannot take the shape of income from house property merely for the reason that the TDS is deducted u/s. 194I of the Act. The issuance of notice u/s. 133(6) of the Act was not replied by the tenant could not be the reason for making the addition where the Assessee has submitted the details of properties, copies of agreement, annual accounts of the Assessee, details of services.

The Assessee is in Appeal before us. On careful perusal of the various grounds of Appeal and the argument of the Ld. Authorized Representative, we are of the view that merely because the income is classified u/s. 194I of the Act and tax is deducted under that section it does not become income chargeable to tax in the hands of the recipient as income from house property only. However, before us the Assessee has raised an additional ground challenging notice u/s. 148 of the Act as well as unsigned approval issued u/s. 151 of the Act. The Ld. Authorized Representative has also challenged that all these facts are mentioned in the statement of facts before the Ld. CIT(A) but same were not considered and not adjudicated. It is also the case that the income is already offered in the profit and loss account under the head business income. However, as the case of the Assessee is decided by the Ld. CIT(A) without looking into all these facts, as well as the challenge to the 148 which was also raised before the Ld. CIT(A) being not adjudicated, we restore the whole Appeal back to the file of the Ld. CIT(A) to decide and reopening of the Assessment, and the issue of unsigned approval after discussing the provisions of section 282A of the Act and specific reference to provisions of section 282A(2) which provides about deemed authentication. Thereafter, ld CIT (A) may decide the issue on the merits of the issue and if the income of the Assessee is already assessed to tax as business income, the addition on account of income from house property without reducing it from the business income could not have been made. The Ld. CIT(A) is directed to decided the issue in accordance with the law.

In the result, Appeal filed by the Assessee is allowed for statistical purposes.