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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI M. BALAGANESH & SHRI PAVAN KUMAR GADALE
आदेश / O R D E R
PER PAVAN KUMAR GADALE JM: The assessee has filed the appeal against the order of the Commissioner of Income Tax (Appeals)- 9,
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Mumbai, passed u/s. 143 (3) r.w.s 147 and 250 of the Income Tax Act, 1961.
The assessee has raised the following grounds of appeal:-
“1.1 In the f acts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) - 9. Mumbai ["the CIT(A)"] erred in confirming the order passed by the Assistant Commissioner of Income Tax - 4 (3), Mumbai ["the AO"] u/s 143 (3) r.w.s. 147 of the Income Tax Act. 1961 ["the Act" for short] in gross violation of the principles of Natural Justice since the same is passed in ignorance of the relevant and material considerations and evidences as furnished by the Appellant.
ON JURISDICTION:
2.1 In the facts and circumstances of the case and in law, the assessment order passed by the AO u/s 143(3) r.w.s. 147 of the Act and as affirmed by the CIT(A) is had in law and void for want of jurisdiction and therefore deserves to be quashed.
2.2 In the facts and circumstances of the case and in law, the re-assessment order passed by the Ld. AO u/s 143(3) r.w.s. 147 of the Act is had in law since none of the necessary pre-conditions for initiation as well as completion of a reassessment as contemplated u/s 147 / 148 of the Act are fulfilled in the present case.
2.3 Further while affirming the order of the AO, the Ld. CIT (A) erred in:
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(a) Refusing to consider the objections raised before him. as to the legality and validity of the order passed by the AO. on frivolous grounds: (b) Not appreciating the fact that. there was no income escaping assessment in the present case since (i) the rent income of Rs.600,000/- now added was already offered to tax by the Appellant; and (ii) The Rebate u/s 88E does not fall in the purview of 'income' so as to escape assessment; and; (c) Upholding the re-assessment order despite accepting the fact, that the Notice u/s 148 as well as the proceedings u/s 147 were initiated merely oil basis of an audit objection and without any independent application of mind to the facts of the case and without obtaining the necessary and judicious sanction as contemplated u/s 151 of the Act. 2.4 in view of the above, the order passed by the AO and as affirmed by the CIT(A) deserves to be quashed.
ON MERITS:
3.1 In the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs.4,20,000/- (Gross: Rs.600,000 Less: 30% Standard Deduction) under the head income from House Property despite the fact that the same has already been taken into consideration by the Appellant while computing its taxable income under the Act. 3.2 While doing so, the Ld. CIT(A) failed to appreciate that: (a) the said Rent income of Rs. (600,000/- has already been offered to tax under the head Profits and Gains of Business and Profession while computing the taxable income of the Appellant; (b) Adding the said amount again would lead to double taxation of the same income and; (c) In any case, the business income of the Appellant would have to be reduced by an amount of Rs. 600,000/-
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pursuant to the re-assessment order which would in fact reduce the taxable income of the Appellant. 4.1 In the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not allowing the entire rebate of Rs.5,50,884/- u/s 88E of the Act as claimed by the Appellant in its return of income. 4.2 Further, while doing so, the Ld. CIT(A) failed to appreciate that: (a) The eligible rebate u/s 88E was rightly claimed by the Appellant in its return of income: and: (b) The said claim similarly made in the earlier year has also been accepted by the Department. 5. The Appellant craves leave to add, amend, alter, delete or modify all or any the above grounds at the time of hearing. 3. The Brief facts of the case are that the assessee company is engaged in the business of share and stock broking services and filed the return of income on 07.11.2006, with the total income of Rs. 1,61,20,974/-.The return of income was processed u/s 143 (1) of the Act. Subsequently, the case was selected for scrutiny under the CASS and notice u/s 143 (2) and 142 (1) of the Act are issued. In response to notice, the Ld. AR of the assessee attended the proceedings from time to time and submitted the details and the original assessment was completed u/s 143 (3) of the Act on 26.08.2008 determining the total income of Rs. 1,76,69,390/-. Subsequently, the AO has reason to belief that the income has escaped
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as the assessee company has claimed TDS credit on rent received but the rental income was not reflected in the return of income and further the assessee company has claimed higher credit of Security Transaction Tax (STT) rebate u/s 88E of the Act. Therefore, the notice u/s 148 of the Act was issued. In compliance, the assessee filed the return of income on 22.03.2013 with the total income of Rs. Rs.1,61,20,974/- and the assessee requested for providing reasons for reopening of assessment. The assessee has raised objections on the reasons and the A.O. has disposed of the objections on 16.12.2013. Further the A.O. has dealt on the allowability of rebate u/s 88E of the Act and the assessee has filed detailed explanations vide letter dated 23.11.2013 referred at para 4 of the assessment order. Similarly the assessee has filed explanations on the rental income and its set off against the rent payable. But the A.O. found the explanations are not satisfactory and made addition of Rent after allowing deduction @30% u/sec24 of the Act and also made disallowance u/s 14A of the Act of Rs. 4,20,000/- and assessed
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the total income of Rs. 1,8089,390/- and passed the order u/s 143 (3) r.w.s. 147 of the dated 28.02.2014.
Aggrieved by the order, the assessee has filed the appeal with the CIT(A). Whereas, the Ld.CIT(A) considered the grounds of appeal, submissions of the assessee, findings of the AO and upheld the validity of re-assessment proceedings and addition of rental income. In respect of claim of rebate u/s 88E of the Act, the Ld.CIT (A) has considered the explanations and details at para 6.2.1 of the order and allocation of expenses and granted rebate eligible u/s 88E of the Act of Rs3,80,420/-as against of Rs. 2,37,265/- allowed by the AO and partly allowed the assessee’s appeal.
Aggrieved by the CIT(A) order, the assessee company has filed an appeal before the Hon’ble Tribunal. At the time of hearing, the Ld.AR of the assessee made submissions on the legal ground that the notice issued u/s 148 of the Act is after lapse of 4 years from the end of assessment year. Earlier the assessment was completed u/s 143 (3) of the Act on 26.08.2008. Whereas all material information was
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filed in the original scrutiny proceedings and no new information has been found or identified by the AO to make re-assessment proceedings valid and it is only a mere change of opinion and relied on the judicial decisions and written submissions and prayed for allowing grounds of appeal of the Assessee. Contra, the Ld.DR relied on the order of the A.O. and submitted that re-assessment proceedings are valid.
We have heard the rival submissions and perused the material on record. The Ld. AR argued on validity of issue of the notice U/sec148 of the Act. Therefore we considered it appropriate to first to deal on the validity of reassessment. The Ld.AR emphasized that the AO has issued notice on the same set of facts which are available on the record in the original assessment and no new material is available for re- assessment and it is only mere change of opinion. We find the assessee is a public limited company and the Books Of Accounts are Audited under the provisions of Companies Act and the Income Tax Act. The Ld. AR of the assessee has demonstrated with the reasons for reopening of the assessment at page 66 of the paper book. The Ld. AR submitted that the original
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assessment was completed u/s 143 (3) of the Act were the assessee has produced and submitted all the material information and the A.O. has verified and fallowed scrutiny guidelines and order was passed on 26.08.2008.We considered it appropriate to refer to the provisions of Sec. 147 of the Act first proviso which is read as under: Provided that where an assessment under sub- section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to notice issued under sub-section(1) of sec. 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year.
Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year.
We find the AO has issued notice u/s 148 of the Act dated 22.03.2013 for reopening of assessment, whereas the original assessment was completed u/s 143 (3) of the Act determining the total income of Rs. 1,76,69,390/- on 26.08.2008. We observe that the AO has recorded the reasons without intangible
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information except retreating that the assessee has not disclosed the rental income from the property, but TDS credit is claimed and also higher rebate u/s 88E has been availed. Whereas the Ld. AR submitted that the said information was filed in the original assessment and referred to page 48 to 56 of the paper book. Further, the AO on verifying the facts and the explanations filed has passed the assessment order u/sec143(3) of the Act. Therefore, the reopening of assessment on the same set of facts is only a mere change of opinion and relied on the judicial decisions. We prima facie considering the facts circumstances and the evidences filed are of the view that the notice issued by the A.O. falls beyond the period of time limit. Accordingly, we treat the notice issued as bad in law and quash the assessment u/s 143(3) r.w.s 147 of the Act and allow the ground of appeal of the assessee.
Since, we have dealt on the legal ground, and the reassessment proceedings are annulled. Therefore again adjudicating on the merits become academic and are left open.
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In the result, the appeal filed by the assessee is partly allowed.
Order pronounced in the open court on 17.03.2021.
Sd/- Sd/- (M. BALAGANESH) (PAVAN KUMAR GADALE ) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 17.03.2021 AK, PS
आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / The CIT(A) 4. आयकर आयु�त(अपील) / Concerned CIT �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई 5. / DR, ITAT, Mumbai 6. गाड� फाईल / Guard file.
आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy// 1. उप/सहायक पंजीकार ( Asst. Registrar) आयकर अपीलीय अिधकरण, मुंबई / ITAT, Mumbai