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TMI Blog2013 (11) TMI 1449X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the facts & circumstances of the case. 2. The action of the Ld. CIT(A)'s in confirming the action of the Ld. A.O. in making an addition of Rs. 2,18,550/- under the head income from house property as against NIL returned is illegal, arbitrary, unwarranted, uncalled for & against the facts & circumstances of the case. 3.The action of the Ld. CIT(A),s in confirming the action of the Ld. A.O. in not taking income under the head Business at Rs. 34,525/- as returned is illegal, arbitrary, unwarranted, uncalled for & against the facts & circumstances of the case. 4. The action of the Ld. A.O. in charging penal interest u/s 234B & 234D of the Income Tax Act, 1961 is illegal, arbitrary, unwarranted, uncalled for & against the facts & circumstances of the case. 5. The above grounds of appeal are without prejudice to each other. 6. The appellant reserve the right to add I alter I modify I amend or withdraw any ground of appeal. 2. At the outset, Ld AR of the assessee submitted that the assessment of the assessee was initially completed u/s 143(1) of the Act and Assessing Officer had reopened the cases on the basis of documents attached with the return of income. It was fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 004-05: The assessee had claimed various expenses in its P&L A/c. In computation of income, the assessee had correctly regrouped the rental & interest incomes into their respective heads and claimed applicable deduction(s) under those heads of incomes. This resulted into the negative balance of Rs. 1,91,780/- under the head "Business Income". The assessee had set off this negative income of Rs. 1,91,780/- with the positive incomes calculated under the above two heads of incomes, namely "Income from House Property" & "Income from other sources". From the details & reports etc., filed with the above IT return, it is clear that the assessee's only business activity was to earn the rental income. This as discussed above is covered under the head "Income from House Property". There is no other activity by the assessee during the relevant period, coverable under the head "Business Income". In the case as per the provisions of Income Tax Act, 1961 no expenses is attributable to any income coverable under the head "Business Income". Therefore, the business income of the assessee in this case should have been Nil. The assessee had claimed inadmissible expenses to reduce the taxable i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the date of processing is not mentioned in the assessment order, however, on reading of assessment orders the fact emerges that the cases were earlier processed u/s 143(1) and were reopened only on the basis of information from documents attached with the return of income. The Hon'ble Delhi High Court in the case of CIT v. Orient Craft Ltd. has dealt with the similar situation and has held that reopening in the cases processed u/s 143(1) is not permissible if there is no tangible material which came to the possession of Assessing Officer subsequent to issue of intimation u/s 143(1). The reasons recorded in that judgment as extracted in the above order vide para 3 are reproduced as under:- "On 15th August, 2005 a notice u/s 148 of the Act was issued for reopening the assessment on the ground that income chargeable to tax had escaped assessment order. According to the reasons recorded u/s 148(2) for reopening of the assessment, the assessee was wrong in treating the proceeds of sale of quota as part of export turnover for claiming deduction u/s 80HHC. It was also the opinion of the Assessing Officer that sale proceedings of the quota cannot be considered as export turnover b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended by the assessee, and quite rightly, is that if the revenue wants to invoke section 147 it should play by the rules of that sec. and cannot bog down. In other words, the expression "reason to believe" cannot have two different standards or sets of meaning, one applicable where the assessment was earlier made u/s 143(3) and another applicable where an intimation was earlier issued u/s 143(1). It follows that it is open to the assessee to contend that notwithstanding that the argument of change of opinion is not available to him, it would still be open to him to contest the reopening on the ground that there was either no reason to believe or that the alleged reason to believe is not relevant for the formation of the belief that income chargeable to tax has escaped assessment. In doing so, it is further open to the assessee to challenge the reasons recorded u/s 148(2) on the ground that they do not meet the standards set in the various judicial pronouncements. In the present case the reasons disclose that the Assessing Officer reached the belief that there was escapement of income "on going through the return of income" filed by the assessee after he accepted the return under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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