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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI SHAMIM YAHYA, AM & SHRI AMARJIT SINGH, JM
O R D E R
PER AMARJIT SINGH, JM:
The assessee has filed the above mentioned appeals against the different order passed by the Commissioner of Income Tax (Appeals) -48, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y. 2010-11. ITA Nos. 4915 & 4916/M/2018 A.Ys. 2010-11 2. The assessee has filed the present appeal against the order dated 27.06.2018 passed by the Commissioner of Income Tax (Appeals) -48, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2010- 11. 3. The assessee has raised the following grounds: - “
I. The Assessing Officer erred in view of the facts and in the circumstances of the case in reopening the assessment for the said year u/s 147. The said reopening is bad in law and the assessment made in pursuance to the same may be held to be void ab initio
2. The Assessing Officer erred in view of the facts and in the circumstances of the case in making an addition of a sum of Rs. 6,51,000/- as estimated deemed income on Security deposit for the period of 12 months. In law, no such addition is called for and the same is bad and against the established law. In any case, and without prejudice. the said Security Deposit has been retained only for 3 months and the estimation for the entire period of 12 months is against facts and the law.
3. The appellant craves leave to alter, add or amend the aforesaid grounds of appeal.”
4. The brief facts of the case are that the assessee filed her return of income on 12.10.2010 declaring total income to the tune of Rs.27,53,670/- for the A.Y.2010-11. The assessment was completed u/s 143(3) of the I. T. Act, 1961 on 18.03.2013 determining total income to the tune of Rs.1,85,35,760/-. The assessment was reopened u/s 147 of the Act by issuance of notice u/s 148 of the Act dated 30.03.2017 after the approval of the Pr. CIT(Central)-1, Mumbai. The reasons for reopening of assessment are reproduced as under.:-
On examination of records it was seen that the assessee has received rent income from property at Almeido Pork, Bandra of A.Ys. 2010-11 Rs.95.0001' per month and deposit of Ps. 1,25,00,000/-. The property is jointly owned by the assessee and her husband Shri. Ramesh Sharma. The deposit amount received is found to be disproportionately high as compared to tent offered for taxation. The benefit derived by the assessee from this deposit has to be considered for determining fair rental value. This fact was not disclosed by the assessee during original assessment. The benefit derived from the deposit of Rs. 1,25,00,000/- works out considering 10 of interest received of Ps. 12,50,000/- out of which assessee's share is Rs.6,25,000/-. being 5U share in the property. In view of the facts. the amount of Rs.6,25.000t on account of benefit derived from the deposit remained to be considered for determination of fair rental value of the property on account of assessee's failure for not disclosing fully and truly material facts. In view of the above facts, I have reason to believe that income chargeable to tax to the extent of Rs.6.25,0001- for determining fair rental value on the property has escaped assessment for AY 2010-11 by reason of the failure on the part of the assessee to disclosed fully and truly all material facts necessary for assessment. Since more than 4 years have elapsed from the end of the relevant assessment yea'. the case is covered u/s 149 r.w.s. 151 of the I.T. Act.
Subsequently, the notices u/s 143(2) & 142(1) of the Act were issued and served upon the assessee. It was asked as to why 10% of the Security Deposit i.e. amount of Rs.1,25,00,000/- should not be added to the rent for determining the Annual Letting Value of the said property. The property was under the ownership of her husband in equal share. On seeing the security received by the assessee and market rent of the property of the assessee, the income from the house property was re-worked at Rs.2,50,000/-. The difference of Rs.1,55,000/- per month of the rent was assessed and added to the income of the assessee and the remaining income was added towards the husband of the assessee. The total income of the assessee was assessed in sum of Rs.1,91,86,760/-.
ISSUE Nos. 1 to 3 A.Ys. 2010-11 7. Under these issues the assessee has challenged the reopening of the assessment u/s 147/148 of the Act. The assessment of the assessee was completed u/s 143(3) of the I. T. Act, 1961 on 18.03.2013 determining total income to the tune of Rs.1,85,35,760/-. During the course of assessment, the AO issued the notice dated 30.12.2012 to the assessee and the contents of which are hereby reproduced as under.:-
“1. From the copy of the letter dated 26.09.2008 from Satguru Kalyan Condominium it appears that possession of the property was handed over to you on 26.09.2008. The onus to prove that the possession of the flat was given to you on 26.09.2008 or any cate thereafter is on you. Therefore, it is requested to provide all necessary evidence to prove that you take possession of property on or after 26.09.2008 The proof could be first electricity bill, telephone bills, society maintenance charge or any other reliable evidence that can establish your claim of taking Possession of property only on or after 26.09.2008 and not before.
Copy of agreement entered into by you on 02.11.2007.
Details of housing loan of Rs. 50 lacs on 27.08.2002 including details of payment of the loan with documentary evidence 4. Status of the following properties with reasons of non - disclosure of any income u/s 23. i) Anukampa Builders ii) Agrasen Nagar iii) Office Gl. Khar 5. Details of expenses of Rs. 12,80,606/- with cash summary and break up of expenses with documentary evidence.
The sources of society charges of Rs. 8.33,377/- as the capital account does not show any such entry.
The details of deposit and refund of Rs. 1,25.00,000/- from Tata AIG General Insurance Co. Ltd. The monthly rentals so received may be explained with the market rate prevalent during the relevant period. A.Ys. 2010-11 8. Wealth return for the A.Y. 2009-10 & 2010-11 with valuation reports of all the properties and jewelries as or valuation date of 31.03.2009 and 31.03.2010 Please note that failure to comply with the requirement of this notice by the appointed date may lead to initiation of penalty proceedings u/s 271(1)(b) of the Act.”
On appraisal of the above mentioned notice, it is quite clear that the AO had already been asked the details of deposit and refund of Rs.1,25,00,000/- from Tata AIG General Insurance Co. Ltd. and about the monthly rent received with the market rate prevalent during the relevant period. Now it is to be seen what are the reasons for reopening of the assessment u/s 147/148 of the Act. The reasons is hereby mentioned as under.:-