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TMI Blog2024 (10) TMI 866X X X X Extracts X X X X X X X X Extracts X X X X ..... se was reopened on the ground that during the course of assessment proceedings for AY 2015-16, certain issues regarding taxation of deemed rental income came up. The assessee herself had offered Rs. 22,20,000/- for taxation as additional income under the head "Income from House Property" during assessment proceedings for AY 2014-15 on 3 properties. AO found that deemed rental income was not offered for taxation in ROI in respect of 3 properties. Accordingly, the case was re-opened after recording the reason for reopening the assessment u/s 147 of the Act that assessee had deemed rental income amounting to Rs. 22,20,000/- during the year. Therefore, notice u/s 148 of the Act dated 30.03.2019 was issued upon the assessee. In response to the notice u/s 148, the reasons recorded were also supplied to the assessee. In response, assessee filed her return of income. The assessee filed objections on the issue of reopening of assessment u/s 147 of the Act and the objections were disposed off by AO vide letter dated 24.12.2019. Subsequently, the re-assessment proceedings were completed u/s 147 r.w.s. 143(3) of the Act on 28.12.2019 determining total income at Rs. 10,36,01,940/- making an add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was made than the recorded figures while completing re assessment proceeding which clearly shows that AO was not sure which amount of income has escaped assessment at the time of recording reasons. The Learned CIT (A) while deciding on the ground no 1 in his order did not consider these arguments at all, he had only mentioned "I have carefully considered assessment order and relevant submission of the appellant, it is noticed that appellant herself admitted and offered expected rent of Rs 22,20,000/- on the properties discussed during the assessment year 2014-15. A.O. had found that appellant had not offered the same deemed rent in ROI filed for AY 2012-13 and thus failed to disclose fully and truly all material facts necessary for assessment. The appellant had also pointed out that learned Principal Commissioner of Income Tax, while giving permission as per section 151 of the Income Tax Act,1961 did not apply his mind because he had given the permission on wrong figures of concealment mentioned in the reasons, inspite of the fact that CIT (A) order was on records as it was passed before issuing of notice under section 133(6) and 148 of the Act and this fact was also brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds It is an admitted fact that the original assessment for Assessment year 2012-13 was completed under section 143(3) of the Act by A.O. vide order dated 12-08- 2014.and notice under section 148 was issued on 30-03-2019 after taking approval from Principal Commissioner of Income Tax. As per section 148 of the Act, "Where the assessment u/s 143(3) has been made for the relevant Assessment year, no action shall be taken under this section after expiry of four years from the end of relevant assessment year, unless any income chargeable to income tax has escaped assessment for such assessment year by reason of failure on the part of the assessee to make a return or in response to notice u/s 142(1) or section 148 or to disclose fully and truly all materiel facts necessary for his Assessment for that year". Whereas in case of the Appellant she had been filing her returns regularly from the last more than forty years and had been filing balance sheets with complete details of the assets and liabilities, and for this year also balance sheet of all units including Investment unit was filed with details of Movable properties which were not used for the purpose of business or any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re it was held that "Whether the material would conclusively prove the escapement is not concern at that stage specially Apex court cases relates to escapement of income within four years. The present appeal before the HON'BLE Bench is whether reopening of the case is valid beyond four year, If there is no failure on the part of the appellant and secondly can A.O. changed his opinion in present circumstances after four years on the grounds that he did not apply his mind properly. In our case we strongly rely on the following JUDGEMENTS, because in our humble submission reopening of case beyond four years is different than reopening within four years. 1. The cases beyond four years, can only be reopened if there is any failure on part of the assessee in not disclosing its income whereas the applicant had declared everything and the same was examined and accepted so later on it cannot be reopened after four years, we get supports from the following judgements: - It has been held by Allahabad High Court in the case of KANPUR TEXEL(P) LTD VS DCIT 406 ITR 353, THAT IF THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL FACTS NECESSARY FOR ASSESSMENT THAN REOPENING IS B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ICIDES (INDIA)LTD 357 ITR 330 - it was also held in this case that when the basis of concealment of income is not correct the re assessment is invalid, in our case also the basis for concealment of income was assessment year 2015-16 where addition made was reduced by CIT(A) order which was passed before the date of reason recorded and this fact was brought to the notice of AO before his recording of reasons. 3. Principal Commissioner of Income Tax vs N C CABLES LTD 391 ITR (DHC) - where it was held where there is no proper application of mind by PCIT reopening is bad in law. in our case the PCIT had given sanction on the concealment of Income of Rs 17,09,400/- when AO was informed that CIT(A) had reduced this addition to Rs 15,54,000/- and order was available in the records, so it clearly indicates no application of mind thus order passed requires to be declared invalid. Besides the above decisions following more decisions are also supports our arguments. 1. CIT VS GOYANKA LINES AND CHEMICALS LTD 273 TAXMAN378(SC). 2. UNITED ELECTRICAL COMPANY (P)LTD VS CIT AND OTHERS 258 ITR317. 3. PCIT VS RMG POLYVINYL(l)LTD 391 ITR 5 (DHC). Where it was held reopening of case on wron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment. In our case, 1. Objections were filed on 30-04-2019 2. Notice was issued U/S 142(1) ON 10-12-2019 3. Again request was made to pass order on the objection raised on 30-04-2019 vide letter date on 11-12-2019 4. Response to objection was made on 24-12-19. Again objection was filed vide our letter dated 26/12/2019 to pass speaking order on all the objection raised by us in our letter dated on 30-04-2019 5. The learned A.O. did not pass any order on this but passed the Order on 29-12- 2019. From the above stated facts your good self will observe that the procedure prescribed by Apex Court was not followed. As notice under section 142(1) was issued before passing the speaking order rejecting the objections which was against the procedure laid down by Apex court and as per the judgement of Delhi High Court as cited above the order passed is not valid on this ground itself and secondly as per decision of D.H.C. in the case of JAY BHARAT MARUTI LTD VSACIT 351 ITR 342 A.O, has to give speaking order on all the objections raised as per APEX COURT order and not following the APEX COURT order, order of assessment made cannot be upheld. We had submitted all the argume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as & upheld by CIT(A) also. In our humble submission total additions made is required to be deleted, if your Honour does not agree with us with regards to properties in Delhi than deduction with regards to Dhauj property amounting to Rs 2,40,000 minus 72000 =1,68,000/- should be done as per DRP order. We are sure goodself will find our submission in order." 7. Considered the rival submissions and material placed on record. We observed that Assessing Officer has reopened the present assessment year under consideration under section 147 of the Act, no doubt, after four years. Assessing Officer has to record as per Second Proviso to Section 147 that reasons of the failure on the part of the assessee to make a return u/s 139 or 142 (1) or 138 or to disclose fully and truly all material facts necessary for assessment of his income. As per the facts brought on record, we observed that assessee has declared deemed rental income in AY 2014-15, assessee herself stated in the submission that this was disclosed on the advice of her counsel. Based on the above disclosure, the Assessing Officer has assessed the income for AY 2015-16 by making the addition on the basis of disclosure made in A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is whether deemed rental income should be determined for the inhabitable properties for the purpose of tax or not. The similar issue was raised by the assessee in AY 2016-17 before DRP and ld. DRP held as under :- "8.1 The DRP in AY 2016-17 had decided as follows:- "8.1 We have perused the draft assessment order and considered the submission of the assessee. In view of the fact that deduction under section 35(1)(i) of the Act has been allowed on the same property, it cannot be held that the same property was not used for the business purposes in the relevant A Y. It is also submitted by the assessee that it did not offer any expected rent income with respect to the impugned property for A Y 2014-15. Even if the assessee has offered expected income on any property in any previous assessment year it has to be seen that the status of the same property in the relevant assessment year to disallow certain expenses are to make any notional income on the ground that the same was not put to use for business purposes. In view of the above discussion the proposed addition on account of notional rent is directed to be deleted. Ground of objection is allowed." 10. As discussed above, duri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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