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Income Tax Appellate Tribunal, “A”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI RAVISH SOOD, JM
आदेश / O R D E R PER BENCH:
These are the appeals filed by the assessee against the order of CIT(A) for the assessment years 1998-99 to 2003-04, in the matter of order passed u/s.143(3) r.w.s.254.
Rival contentions have been heard and record perused.
Facts in brief are that in all the years under consideration, assessee had shown income under the head compensation and service charges as income from business. The original return was processed u/s.143(1), thereafter, all the assessments were reopened by issuance of notice 2 M/s. Ashok Vatika Pvt. Ltd., u/s.148. In the reassessment proceedings, AO assessed income under head of “Income from House Property”.
In the first round CIT(A) confirmed the action of the AO against which assessee filed appeal before the Tribunal and the Tribunal vide its order dated 17/06/2009 and 17/05/2012 for different assessment years restored the matter to the file of AO/CIT(A) for deciding both the grounds of reopening as well as merit of the addition made. Thereafter, CIT(A) after recording following observation confirmed the reopening.
As far as submissions made in point Nos.I.2,3,4 and 5 regarding the reasons recorded by the AO for reopening the case u/s 148, the approval given by the Addl.CIT Range-10(3), Mumbai and the notice issued u/s.148 of the I.T.Act,1971 is concerned, I find it to be appropriate and the recording of reasons are as per procedure. It was not necessary for the AO to mention the judgment of Shambhu Investment Pvt. Ltd. reported in 63 ITR 143 as prima facie the income declared by the appellant as Business Income was primarily the House Property income and sec.148 of the l.T.Act is the section which is used if the particular income escapes assessment. So the AO has recorded the correct reasons for reopening the assessment. Point No.2 of the appellant that the approval letter from the Addl. CIT, Range-10(3), Mumbai is also for issue of notice u/s.148 of the I.T.Act 1961 and not for reopening of the assessment u/s.147 of the I.T.Act 1961 is baseless. I would like to mention sec.147 which is income escaping assessment. It says that "If the Assessing Officer (has reason to believe) that any income may, subject to the provisions of sections 1418 10 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes 10 his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be for the assessment year concerned (hereinafter in this section and in sections 148 to 153 referred to as the relevant assessment year. 6.2 Sec.148 is issue of notice where income has escaped assessment. It says that "Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year. in the prescribed form and verified in 3 M/s. Ashok Vatika Pvt. Ltd., the prescribed manner and selling forth such other particulars as may be prescribed and the provisions of this Act shall so far as may be apply accordingly as if such return were a return required to be furnished u/s.139. 6.3 So the contention of the assessee and the annexures mentioned and annexed with the submission do not hold any good and they are all found to be in order. The appellant's submission that the reasons recorded by the AO and the procedure followed by the AO for initiation of proceedings u/s.148 are defective and bad in law and so order passed u/s.143(3) dated 30.09.2010 may be treated as invalid is not accepted and this ground is dismissed.
We had carefully gone through the orders of the authorities below. As per the finding recorded by CIT(A), we do not find any infirmity in so far as reopening of assessment is concerned.
Now, coming to the merit of addition, recently Supreme Court in the case of Chennai Properties and Investments Ltd., vs CIT,373 ITR 673 in Civil Appeal No.4494/2004 vide order dated 09/04/2015 had held that where object of company’s business is letting out, income is liable to be assessed as business income.
Hon’ble Supreme Court in the case of Chennai Property (supra), after considering its earlier judgment of Supreme Court in the case of Sultan Brothers Pvt. Ltd., CA No.4494/2004, and Karanpura Development Co. Ltd., 44 ITR 362 held that where holding of property and earning of income by letting out those property is in main business of the assessee, the income arising thereon is liable to be assessed under the head income from business and cannot be treated as income from house property.
In view of the decision of the Hon’ble Supreme Court in the case of Chennai Properties (supra), we restore the matter back to the file of AO and assessee is directed to furnish its copy of Memorandum of Association before the AO so as to point out main object clause of the company and 4 M/s. Ashok Vatika Pvt. Ltd., after considering the object clause of Memorandum. AO to decide the matter afresh as per law. We direct accordingly. 9. In the result, appeals of the assessee are allowed in part for statistical purposes.