ACIT, Meerut v. M/s H.L. Warehousing Corporation,, Meerut

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C : NEW DELHI BEFORE SHRI D.R.SINGH JM AND SHRI R.C.SHARMA AM ITA NOS.3260/DEL/2009 TO 3264/DEL/2009 ASSESSMENT YEARS : 2000-01 TO 2004-05 ASSTT.COMMISSIONER OF INCOME TAX CIRCLE-1 MEERUT. VS. M/S H.L.WAREHOUSING CORPORATION 59 CHHIPI TANK MEERUT. PAN NO.AAAFH9037J. (APPELLANT) (RESPONDENT) APPELLANT BY : MS.ANUSHA KHURANA SR.DR. RESPONDENT BY : SHRI ANOOP SHARMA ADVOCATE. ORDER PER BENCH : THESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 5.5.2009 FOR THE AY 2000-01 TO 2004-05 IN TH E MATTER OF ORDER PASSED BY THE AO U/S 147/143(1) OF THE IT ACT. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. IN ALL THESE CASES THE RETURNS FILED BY THE ASSESSEE WERE PROCESSED U/ S 143(1). LATER ON IT CAME TO THE NOTICE OF THE AO THAT ASSESSEE HAD NOT INCLUDED RENTAL INCOME IN ITS TOTAL INCOME. THEREFORE AFTER OBTAINING APPROVAL FROM T HE ADDL.CIT AO ISSUED NOTICE U/S 148. WHILE FRAMING THE ASSESSMENT U/S 147/143( 3) THE AO MADE ADDITION ON PROTECTIVE BASIS IN RESPECT OF RENTAL INCOME AND ON SUBSTANTIVE BASIS IN RESPECT OF INCOME FROM OTHER SOURCES AFTER DISALLOWING SOME O F THE EXPENDITURE CLAIMED THERE AGAINST. BY THE IMPUGNED ORDER THE CIT(A) A NNULLED THE ASSESSMENT FRAMED BY THE AO BY OBSERVING THAT ASSESSEE HAS DISCLOSED ALL THE NECESSARY PRIMARY INFORMATION IN THE RETURN OF INCOME. HE FURTHER OB SERVED THAT AO HAS NOT BROUGHT ANY FRESH MATERIAL ON RECORD AND NO FRESH MATERIAL WAS AVAILABLE WITH THE AO. BY STATING THAT SINCE NO FRESH MATERIAL HAS BEEN BROUG HT ON RECORD BY THE AO WHILE RECORDING REASONS U/S 147 THE NOTICE ISSUED WAS HE LD TO BE NOT SUSTAINABLE IN LAW ITA-3260 TO 3264/D/2009 2 ACCORDINGLY THE REASSESSMENT PROCEEDINGS WERE HELD TO BE BAD IN LAW AND NOTICE ISSUED U/S 147 WAS HELD TO BE NOT REQUIRED TO BE IS SUED TO THE ASSESSEE. AGGRIEVED BY THIS ORDER OF CIT(A) THE REVENUE IS IN FURTHER APPEAL BEFORE US. 3. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOU ND FROM THE RECORD THAT ASSESSEE WAS IN RECEIPT OF RENTAL INCOME. IN RESPE CT OF THE VERY SAME RENTAL INCOME THE ITAT HAS PASSED ORDER IN ITA NO.9426 & 9227 FOR THE AY 1986-87 & 1988-89 WHEREIN SUCH RENTAL INCOME WAS DIRECTED T O BE ADDED ONLY ON PROTECTIVE BASIS INSOFAR AS OWNERSHIP OF THE PROPER TY WAS UNDER DISPUTE. IN THE RETURN OF INCOME SO FILED THE ASSESSEE HAS APPENDE D A NOTE BELOW COMPUTATION OF INCOME TO THE EFFECT THAT INCOME FROM HOUSE PROPERT Y SHOWN IN PART 5 OF THE RETURN IN VIEW OF THE ITAT ORDER. CONTENTION OF LEARNED A R WAS THAT FULL INFORMATION WAS GIVEN IN THE RETURN ITSELF THEREFORE NO INCOME HAS ESCAPED ASSESSMENT. HOWEVER WE FOUND THAT RETURN WAS FILED IN FORM NO. 2 WHICH DID NOT CONTAIN ANY AMOUNT BEING OFFERED ON ACCOUNT OF RENTAL INCOME TO BE ASSESSED ON PROTECTIVE BASIS. AS PER THE PROPOSITION LAID DOWN BY THE HON 'BLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI 291 ITR 500 THE RETURN PROCESS ED U/S 143(1) IS NOT AN ASSESSMENT THEREFORE SAME CAN BE REOPENED U/S 147 WHENEVER IT IS FOUND THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. SIN CE IN THE RETURN OF INCOME THE ASSESSEE HAS NOT DISCLOSED THE RENTAL INCOME RECEIV ED BY IT EVEN THOUGH THE SAME WAS LIABLE TO BE ASSESSED ON PROTECTIVE BASIS THE FACT OF SAME BEING NOT OFFERED TO THE DEPARTMENT IS CLEAR FROM THE RECORD. ACCORDING LY IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI (SUPRA) WE DO NOT FIND ANY INFIRMITY IN THE ACTION OF THE AO FOR REOPENING THE ASSESSMENT WHICH WAS COMPLETED BY PROCESSING THE RETURN U/S 143(1). ACC ORDINGLY THERE IS NO MERIT IN THE ACTION OF THE CIT(A) FOR HOLDING THE REASSESSME NT PROCEEDINGS AS BAD IN LAW AND QUASHING THE ASSESSMENT SO FRAMED. SINCE THE C IT(A) HAS NOT DECIDED THE ISSUE OF ADDITION ON MERITS WE RESTORE THE APPEALS TO THE FILE OF THE CIT(A) FOR DECIDING THE ADDITIONS MADE BY THE AO ON MERITS. I T IS PERTINENT TO MENTION HERE THAT ISSUE WITH REGARD TO RENTAL INCOME HAS ALREADY BEEN DECIDED BY THE TRIBUNAL IN ITA-3260 TO 3264/D/2009 3 ASSESSEES OWN CASE WHEREIN IT WAS HELD THAT SUCH RENTAL INCOME IS TO BE ADDED ON PROTECTIVE BASIS. 4. IN THE RESULT THE APPEALS OF THE REVENUE ARE AL LOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON CONCLUSIO N OF HEARING ON 13 TH JANUARY 2010. SD/- SD/- (D.R.SINGH) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 13.01.2010. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT DEPUTY REGISTRAR ITA-3260 TO 3264/D/2009 4