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2015 (8) TMI 1030 - ITAT HYDERABAD

2015 (8) TMI 1030 - ITAT HYDERABAD - TMI - Assessment of lease rental income - whether there is no scope for assessee to revise the lease rental income in a return filed u/s 153A - Held that:- Section 153A empowers the AO to even reassess a particular income without the strict conditions attached u/s 147. Considered in the aforesaid context, it is to be held that proceeding initiated u/s 153A of the Act is for the benefit of the department, hence, assessee cannot take advantage of such proceedin .....

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l income from ₹ 15,30,000 to ₹ 2,29,500. In our view, in the return filed u/s 153A of the Act, assessee cannot revise the income in respect of an item of income which has already been declared in the original return of income at a higher figure and which has also been processed u/s 143(1). This is simply for the reason that proceeding initiated u/s 153A is for assessing undisclosed income unearthed as a result of search operation along with other income, which have escaped assessment .....

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me in the return filed in response to notice issued u/s 148. The principle laid down clearly applies to proceeding initiated u/s 153A of the Act., as AO has been empowered u/s 153A to also reassess the income of assessee for the preceding six AYs. In the aforesaid view of the matter, we hold that assessee having already declared lease rental income at ₹ 15,30,000, in the original return of income, she cannot revise it to ₹ 2,29,500 in return filed in response to notice issued u/s 153 .....

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Y 2008-09. Thus, it was submitted by AO on an incorrect appreciation of fact, AO has added an amount of ₹ 13,00,500. After considering the submissions of AR and perusing the materials on record, we are of the view that assessee’s contention for AY 2009-10 requires examination. Though, AO has alleged that society in its books of account has shown lease rental at ₹ 15,30,000, however, the ledger account of assessee in the books of account of society, a copy of which has been submitted .....

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Y, JJ. For The Assessee by : Shri C. Kameshwar Rao For The Revenue by : Shri D. Srinivas ORDER PER SAKTIJIT DEY, J.M.: These appeals by assessee are directed against a common order dated 02/05/2014 of ld. CIT(A) - I, Hyderabad for the AYs 2005-06, 2008-09 & 2009-10. However, the present appeals are pertaining to AYs 2008-09 and 2009-10. 2. The only common issue arising for consideration in the aforesaid appeals relates to assessment of lease rental income at ₹ 15,30,000 for both the as .....

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y, assessee had filed return of income declaring total income of ₹ 25,58,349 including land lease rent of ₹ 15,30,000. The said return of income was processed u/s 143(1) on 21/06/09 accepting the income returned. Subsequently, in response to the notice issued u/s 153A of the Act, consequent upon search, assessee filed her return of income on 29/09/10 declaring total income of ₹ 12,57,850. During the assessment proceeding, AO while examining the original return as well as return .....

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ted 29/08/06, society has increased monthly rent of ₹ 1,000 per acre to ₹ 3,750 per acre. As assessee isowner of 5.094 acres, lease rent worked out to ₹ 2,29,500. AO however did not find merit in the explanation of assessee. AO observed, proceeding initiated u/s 153A is consequent to search operation u/s 132 and as a natural corollary entails filing of return having a bearing on finding of search, hence, section 153A cannot be used as a tool by assessee to revise income which o .....

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originally did not file return of income and only in pursuance to the notice issued u/s 153A, assessee filed return of income disclosing therein land lease rental income at ₹ 2,29,500, but, AO following his reasoning for AY 2008-09, adopted lease rental income at ₹ 15,30,000 and completed assessment accordingly. Being aggrieved of the assessment orders so passed for the AYs under consideration, assessee preferred appeal before ld. CIT(A). 4. In course of hearing of appeal, it was su .....

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e u/s 153A, assessee noticed the mistake and declared correct lease rent income of ₹ 2,29,500 in the return filed in pursuance to the notice issued u/s 153A. Assessee further submitted that for AY 2008-09, original return filed by assessee was processed u/s 143(1) of the Act, hence, it cannot be considered to be an assessment order so as to conclude that assessment of a particular item of income in case of assessee having been concluded, assessee cannot modify such income in the return fil .....

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CIT(A) after considering the submissions of assessee in the context of facts and materials on record, observed that for AY 2008-09, assessee filed original return of income on 30/09/08 and search took place on 10/09/09. She also observed that return in response to the notice issued u/s 153A was filed on 29/09/10. Therefore, if at all there was a lease deed modification agreement between assessee and the society on 28/09/06, it would be logical and reasonable to accept that in the original return .....

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. CIT(A) referring to certain decisions of ITAT as well as decision of Hon ble Supreme Court in case of CIT Vs. M/s Sun engineering Works P. Ltd. (supra), held that the provisions of section 153A are to assess or reassess the income of assessee for the preceding six assessment years on the basis of search operation, hence, such assessment proceeding is for the benefit of revenue, therefore, assessee cannot take recourse to proceeding u/s 153A for her benefit by reducing the income declared in th .....

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ore ld. CIT(A), ld. AR submitted, though, actually assessee for AY 2008-09 as well as 2009-10 had received lease rental of ₹ 2,29,500, but, by mistake society had mentioned the lease rental of ₹ 15,30,000 in its books of account on the basis of which society not only issued TDS certificate in favour of assessee, but, also deducted tax accordingly. However, at the time of submission of return in response to the notice issued u/s 153A, assessee having noticed the mistake, adopted corre .....

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of CIT Vs. M/s Sun Engineering Works P. Ltd. (supra), ld. AR submitted, the principle laid down therein is in the context of reopening of assessment u/s 147 of the Act, hence, will not apply to the assessment proceeding u/s 153A. Ld. AR referring to the verification provided in the return of income as well as the scope of total income as provided in section 5 of IT Act, submitted that assessee is required to give true and correct position of his income for a particular AY. He submitted, since t .....

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ponse to the notice issued u/s 153A. As far as AY 2009-10 is concerned, ld. AR submitted, assessee in this AY has filed only one return of income in response to the notice issued u/s 153A by showing lease rental income of ₹ 2,29,500. TDS certificate issued by society also mentions lease rental income at ₹ 2,29,500. That being the case, AO cannot assess lease rental at ₹ 15,30,000. He submitted, under misconception, AO treated the reversal of entry of excess lease rental of S .....

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als on record. As could be seen, for AY 2008-09, assessee originally had filed her return of income on 30/09/08 declaring lease rental income from the society at ₹ 15,30,000. In fact, as observed by ld. CIT(A), society in its books of account has not only shown lease rental income paid to assessee at ₹ 15,30,000 but had also issued TDS certificate showing lease rental income at ₹ 15,30,000 and tax deducted thereon amounting to ₹ 2,60,024. The TDS amount was also remitted .....

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osed income found as a result of search and, therefore, it is for the benefit of department, assessee cannot take advantage of such situation by revising its income already declared, to a lesser figure. Ld. AR, on the other hand, has submitted, as proceeding u/s 153A of the Act is not similar to proceeding u/s 147 of the Act, assessee can rectify the mistake committed in the original return of income by filing revised return in response to the notice issued u/s 153A of the Act. Ld. AR has submit .....

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id provision, it is very much clear that the said provision empowers the AO to assess or reassess the total income in respect of six assessment years immediately preceding AY in which search action was initiated. Further, it is also evident that the powers conferred u/s 153A is exclusive and overriding power which over rides sections 139, 147, 148, 149, 151 and 153. It is very much pertinent to mention here that as per section 153A, AO has been given power to reassess the income relating to prec .....

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of the department, hence, assessee cannot take advantage of such proceeding. Applying the aforesaid principle to the facts of the present case, it is to be seen that in the original return of income, assessee has declared lease rental income at ₹ 15,30,000. Admittedly, assessee had not filed revised return voluntarily to rectify the mistake claimed to have been committed in the original return. Only when the department issued notice u/s 153A of the Act consequent to search operation, asses .....

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of search operation along with other income, which have escaped assessment. In case of CIT Vs. M/s Sun Engg. Works P. Ltd. (supra), the Hon ble Supreme Court while holding that the provision of section 147 is for the benefit of department and not for the benefit of assessee, also held that a particular claim of assessee, if already has been considered at the time of original assessment, or assessee has not raised that claim either in the original return of income or during the original assessmen .....

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er to assess or reassess the total income of the six assessment years in question in separate assessment orders. This means that there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax. A question may arise as to how this is sought to be achieved where an assessment order had already been passed in respect of all or any of those six assessment years, either under section 143(1)(a) or sec .....

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which sub-section (1) of section opens. The time limit within which the notice under section 148 can be issued, as provided In section 149 has also been made inapplicable by the non obstante clause. section 151 which requires sanction to be obtained by the AO by issue of notice to reopen the assessment under section 148 has also been excluded in a case covered by section l53A. The time-limit prescribed for completion of an assessment or reassessment by section 153 has also been done away with i .....

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d in response to notice issued u/s 153A of the Act as assessee cannot turn the proceeding u/s 153A to her advantage. In the aforesaid view of the matter, we uphold the order of ld. CIT(A) in so far as AY 2008-09 is concerned. 9. However, as far as AY 2009-10 is concerned, the situation is different. As could be seen, for this AY assessee did not file any return of income originally. Subsequently, in response to the notice issued u/s 153A of the Act, assessee has filed her return of income declar .....

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