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Income Tax Appellate Tribunal, “SMC” Bench, Mumbai
This appeal by the assessee is directed against the order of learned CIT(A) dated 27.7.2016 and pertains to A.Y. 2006-07.
The grounds of appeal read as under :-
1. On the facts and circumstances of the case and in law, the Learned CIT(A) has erred in confirming the Order of the Assessing Officer wherein the Assessee's objection against the validity of Notice u/s. 148 was dismissed.
2. On the facts and circumstances of the case and in law, the Learned C1T (A) has erred in confirming the Addition of Income of Rs. 4,29,481/- to Income from House Property made by the Learned Assessing Officer. 3. The Assessee craves the right to add, amend or alter any of the Grounds of Appeal before or at the time of Hearing.
3. In this case the assessment order under section 143(3) of the I.T. Act was passed on 15.10.2008. Thereafter notice was issued under section 148 of the Act on 11.3.2013. In the assessment order Assessing Officer referred to the objection by the assessee and reproduced his response. The Assessing Officer mentioned that earlier the assessee has not given full details of the income
2 Jasjeet Singh M. Chaddah from house property. The Assessing Officer noted that the assessee had house property at N-45, Panchsheel Park, New Delhi. He mentioned that under section 23(1)(a) estimated income from house property @ 8.5% of the value of Rs. 2,16,54,500/- came to Rs. 18,40,633/- and thereafter after giving deduction he computed four months estimated income at Rs. 4,29,481/-. In response, the assessee submitted that all necessary details were shown to the Assessing Officer at the time of original assessment. The Assessing Officer rejected assessee’s contention and estimated income at Rs. 4,29,481/-.
Against the above order assessee appealed before learned CIT(A). Learned CIT(A) summarised the facts of the case are as under :-
“The appellant is a co-owner of two house properties at Dakshinamurthy CHS, Juhu. Her share from the said property is 1/11th from Unit No.3 and 1/4th from Unit No.7, Both the units are let out property. The appellant's source of income is mainly income from house property and income from other sources. 2.2 The assessee had filed a total income of Rs.43,89,980/- in the return of income for the A.Y.2006-07 on 13.03.2007. The case was selected for scrutiny u/s 143(3) and the income declared by the appellant was accepted as it is by the AO. Subsequently the case was reopened by issue of notice under section 148 as the AO had reasons- to believe that the income chargeable to tax for the A.Y.2006-07 has escaped assessment' within the meaning of Sec. 147 of the IT Act. In response to the above notice, the appellant raised objections which were disposed off by the AO vide letter dated 29/08/2013.
2.3 The appellant submitted that the Ld.AO erred in issuing the said notice u/s. 148 of the IT Act as the notice was issued merely due to a change of opinion and hence the said notice is null and void-ab-initio and is bad in law and all the proceedings and order passed by the AO is based on such notice are also void and not sustainable. However the AO stated that the appellant at the time of assessment proceedings had failed to disclose material facts and that proceedings cannot be overlooked based on technical issues After considering the submission of the assessee, the AO made an addition of notional rent of Rs.4,29,481/-.
Learned CIT(A) rejected the assessee’s contention on reopening by observing as under :-
The assessee has primarily contended that the issue of notice u/s. 148 of the Act was on account of change of opinion between the AOs, as all the details,
3 Jasjeet Singh M. Chaddah documents, etc. were available to the AO while the original assessment u/s. 143(3) was completed on 15.10.2008, In this regard it is stated that the details, documents etc. though were available to the AO while completing assessment u/s. 143(3) on 15.10.2008 but the same per se cannot be interpreted to mean that the AO while completing the original assessment had formed an opinion that the subject income for which reassessment proceedings have been initiated, were not taxable in the hands of the appellant. Further the assessee has not been able to show that there was any specific show cause notice issued by the AO in respect of the subject income for which the assessment has been reopened. Furthermore there is no mention with any detail, wherein the subject income for which assessment has been reopened, has been spoken about or any opinion expressed anywhere in the assessment order. Under such facts and circumstances of the case it cannot be said that while completing the original assessment u/s. 143(3) on 15.10.2008, the AO had formed any opinion regarding the subject income and therefore it cannot be said that the case has been reopened because of the change of opinion, in the AOs.
On merits also he confirmed the Assessing Officer’s action.
Against the above order the assessee is in appeal before the ITAT.
I have heard learned Departmental Representative and perused the record. Firstly I note that in this case original assessment was passed under section 143(3) of the Act. Reopening was done to assess income from house property said to have been escaped assessment after four years. Learned CIT(A) in his order has accepted that detailed documents etc. were available to the Assessing Officer while computing under section 143(3) of the Act. But in the opinion of learned CIT(A) this cannot be interpreted to mean that the Assessing Officer while completing assessment has formed the opinion. I find that above view of the learned CIT(A) is wholly incorrect and unacceptable. In the present case reopening has been done beyond four years and Proviso to section 147 of the Act provides that reopening in such circumstances is permissible only if there is failure on the part of the assessee to disclose fully and truly all material facts. Learned CIT(A) is not disputing the fact that details were not available. He has held that since there was no discussion by the Assessing Officer it cannot be said that the Assessing Officer had formed an opinion. In my considered opinion reasoning of learned CIT(A) may have some iota of substance if the reopening was done within four years. In the present
4 Jasjeet Singh M. Chaddah case as mandated by the Act no reopening can be done unless there is failure on the part of the assessee to disclose fully and truly all material facts. Since details of the house property was duly available with the Assessing Officer when original assessment under section 143(3) was done in my considered opinion the reopening after four years is bad and liable to be quashed. Accordingly, I hold that the Assessing Officer has no jurisdiction to pass the order in this case.
As regards the merits of the case addition has been made on the basis of percentage of the value of the house property. No case has been made out by the Assessing Officer that there was attempt by the assessee to reduce value of the house property income. It is not the case that the Assessing Officer has made any inquiry about the prevalent rental income or he has examined the State Municipal value. Without such examination, such a substitution of house property income upon whimsies and fancies of the Assessing Officer is not sustainable on the touchstone of the Hon'ble Jurisdictional High Court in the case of Tip Top Typography (Income Tax Appeal No.1213 of 2011 dated 08/08/2014). I hold that addition on merits is also not sustainable.
In the result, this appeal filed by the assessee stands allowed.