SCAFFOLD PROPERTIES LTD,MUMBAI vs. DCIT 5(3), MUMBAI

Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा लेखा सद�य लेखा लेखा सद�य सद�य राजे�� सद�य राजे�� राजे�� केकेकेके अनुसार राजे�� अनुसार अनुसार PER RAJENDRA, AM- अनुसार Challenging the order dt. of CIT(A)-9, Mumbai the assessee has filed the present appeal. 2.Assessee-company,engaged in the business of real estate,filed its return of income on 24. 11.2006,disclosing income of 1.39 crores.The assessment was completed u/s.143(3 of the Act accepting the income returned by the assessee.Later on,a notice u/s. 148 was issued to the assessee,as the AO was of the opinion that income chargeable to tax had escaped assessment. The reasons recorded by the AO for reopening the assessment read as under:- “In this case, it is seen from the record that during the assessment year 2006-07, the assessee company has shown the following incomes: i) Income from ‘Lease rent and compensation’ :Rs.35037500/- ii) Income from ‘Leave & License compensation’ :Rs.18562163/- iii) Income from ‘Out going charges’ :Rs.4447440/- Out of these, the assessee company has offered income from ‘Lease rent and compensation’ and ‘Leave & License fee compensation’ under the head “income from House Property”.However, ‘Outgoing Charges’ of Rs.44,47,440/- has been offered under the head “Income from business or profession”. The outgoing charges are nothing but payment for providing services like maintenance charge, electricity charge, security charge, water charge etc., which are a part of rental income and therefore, the same is required to be charged under the head income from House property. The incorrect computation of income from House Property resulted in underassessment of income by Rs.31,13,208/-, as detailed below: Computation of Total Income Amount(Rs.) Amount(Rs.) Lease rent and compensation 35037500 Leave and license fees & compensation 18562163 Outgoing charges 4447440 Total 58047103 Less: Municipal taxes Paid (3997792) 54049311 Less:30% u/s.24(a) (16244793) 37834518 6748/M/13-Scaffold Properties Less : i)Interest Paid (19520101) 18314417 (ii)Pre-construction period interest (3rd (1516655) 16797762 year) Income shown by assessee under the head 13684554 income from house property Underassessment of income from House 3113208 Property The omission of outgoing charges of Rs.44,47,440/- to compute under the head income from House property, has resulted in underassessment of Rs.31,13,208/-. In view of the above, I have reason to believe that income of Rs.31,13,208/- chargeable to tax has escaped assessment for the assessment year 2006-07 in the terms of Section 147 of Income-tax Act, 1961.” The assessee informed the AO to treat the original return of income as return filed in response to notice issued u/s.148 of the Act.The assessee raised objection against reopening of the assessment.However, the AO rejected the objections.Vide his assessment order, dt.30.11. 2012,passed u/s.143(3) r.w.s 147 of the Act,the AO determined the income of the assessee at Rs.1.69 crores.While completing the assessment,he held that the outgoing charges received by the assessee for the year under consideration amounting to 44.48 lacs was to be assessed as income from house property. 3.Aggrieved by the order of the AO,the assessee filed an appeal before the First Appellate Authority (FAA).Before him,the assessee argued that the re-opening was bad in law.It also raised other grounds of appeal.The FAA after considering the submissions of the assessee and the assessment order held that the AO had validly re-opened the assessment.Appeal filed by the assessee was rejected on merits also.The FAA held that the outgoing charges received by the assessee were rightly assessed by the AO under the head House Property Income. 4.Before us,the Auhtorised Representative(AR)submitted that the assessee had submitted before the FAA that the AO had re-opened the assessment after four years,that in the reasons recorded he had not mentioned that the income had escaped assessment because of the failure of the assessee to disclose the material facts truly and fully,that while completing the original assessment u/s.143(3)of the Act the AO had accepted the contention of the assessee with regard to outgoing charges,that the FAA did not address the above submissions, that the order of the AO was ab intion void.The Departmental Representative(DR)supported the order of the FAA. 5.We have heard the rival submissions and perused the material before us.We find that in the matter before us the return was filed on 24.11.2006,that the original assessment was completed on 12.12.2008,that the period of four years lapsed on 31.03.2011,that the notice u/s.148 was issued in the Year 2012.As the re-assessment notice was issued after four years , so,the provisions of proviso to section 147 were applicable.The proviso stipulates that in such cases matter can be re-opened,if the assessee fails to disclose the material facts truly and fully.The failure of the assessee is not only to be alleged it has to be proved.We find that the AO had not discussed as to how the assessee had failed to disclose the particular material fact fully and truly.We do not find any mention about the failure of the assessee in the reasons recorded by the AO.As the basic pre-condition for invoking the provisions of section 147 are missing,so,in our opinion the order of the is invalid.Here we would like to refer to the matter of United Shippers(371 ITR 441)of Hon’ble Bombay High Court wherein the Court has held as under :