BHIRYANI DADLANI SALES AGENCIES PVT. LTD., MUMBAI v. ITO 12(1)(3), MUMBAI

ITA 3303/MUM/2019 | 2007-2008
Pronouncement Date: 25-03-2021 | Result: Partly Allowed

Appeal Details

RSA Number 330319914 RSA 2019
Assessee PAN AABCB7448M
Bench Mumbai
Appeal Number ITA 3303/MUM/2019
Duration Of Justice 1 year(s) 10 month(s) 9 day(s)
Appellant BHIRYANI DADLANI SALES AGENCIES PVT. LTD., MUMBAI
Respondent ITO 12(1)(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-03-2021
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 25-03-2021
Last Hearing Date 05-11-2020
First Hearing Date 30-12-2020
Assessment Year 2007-2008
Appeal Filed On 16-05-2019
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC MUMBAI ! BEFORE SHRI VIKAS AWASTHY JUDICIAL MEMBER . 3303 / /201 9 ((. . 2007-08 ) ITA NO.3303/MUM/2019 (A.Y.2007-08) . 3304 / /201 9 ((. . 2008-09 ) ITA NO.3304/MUM/2019 (A.Y.2008-09) BHIRYANI DADLANI SALES AGENCIES PVT. LTD SHOP NOS.10-11 KENWOOD APARTMENT CHS LTD. DR.AMBEDKAR ROAD BANDRA (WEST) MUMBAI 400 050 PAN: AABCB 7448M ...... * / APPELLANT ( VS. ITO- WARD 12(1)(3) ROOM NO.145A 1 ST FLOOR AAYKAR BHAVAN M.K.ROAD MUMBAI 400 020. ..... + / RESPONDENT *-/ APPELLANT BY : SHRI VIMAL PUNMIYA + -/ RESPONDENT BY : SHRI SUSHIL KUMAR MISHRA (. / DATE OF HEARING : 30/12/2020 /01 . / DATE OF PRONOUNCEMENT : 25/03/2021 / ORDER THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGA INST THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS) -20 MUMBAI (I N SHORT THE CIT(A)) FOR THE ASSESSMENT YEAR 2007-8 AND 2008-09 RESPECTIVELY. BOTH THE IMPUGNED ORDERS ARE OF EVEN DATE I.E. 25/02/2019. SINCE THE FACTS IN BOT H THE IMPUGNED ASSESSMENT YEARS ARE SIMILAR AND THE GROUNDS RAISED BY THE ASSESSEE IN BOTH THE APPEALS ARE IDENTICAL 2 ITA NO.3303/MUM/2019 (A.Y.2007-08) ITA NO.3304/MUM/2019 (A.Y.2008-09) (EXCEPT FOR THE AMOUNT OF ADDITION) THESE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION AND ARE DECIDED BY THIS COMMON ORDER. 2. SHRI VIMAL PUNMIYA APPEARING ON BEHALF OF THE AS SESSEE SUBMITTED AT THE OUTSET THAT THESE APPEALS ARE AGAINST EX-PARTE ORDE RS OF THE CIT(A) HOWEVER THESE APPEALS CAN BE DECIDED BY THE TRIBUNAL WITHOUT REST ORING TO THE FIRST APPELLATE AUTHORITY. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE HAS FILED ADDITIONAL GROUNDS OF APPEAL CHALLENGING VALIDITY OF REOPENING AND THE ASSESSMENT ORDER. 2.1. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSES SEE MADE FOUR FOLD LEGAL SUBMISSIONS CHALLENGING REOPENING UNDER SECTION 148 R.W.S. 147 OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT). THE FIRST OBJECTIO N OF THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE IS THAT REASSESSMENT PROCEEDINGS WE RE INITIATED BEYOND THE PERIOD OF FOUR YEARS. THE NOTICE UNDER SECTION 148 OF THE ACT DATED 19/3/2014 WAS ISSUED WITHOUT OBTAINING PROPER SANCTION UNDER SECTION 151 OF THE ACT. THE NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED AFTER TAKING THE APPROVAL OF ADDITIONAL CIT WHEREAS THE SECTION 151 MANDATES THAT FOR ISSUING NOTICE UN DER SECTION 148 SATISFACTION OF PRINCIPAL CHIEF COMMISSIONER CHIEF COMMISSIONER OF INCOME TAX PRINCIPAL CIT OR CIT IS REQUIRED. IN SUPPORT OF THIS ARGUMENT THE LD. AR OF THE ASSESSEE PLACED RELIANCE ON FOLLOWING DECISIONS: I. CHHUGAMAL RAJPAL VS. S.P. CHALIHA & ORS. 179 ITR 60 3(SC); II. DHADDA EXPORTS V. ITO 377 ITR 347 (RAJ.); III. HINDUSTAN LEVER LTD. VS. R.B. WADKAR 268 ITR 332 ( BOM.); IV. EAST INDIA HOTELS LTD. VS. DCIT & ORS. 204 ITR 435 (CAL.) 2.2. THE SECOND OBJECTION OF THE ASSESSEE IS THAT T HE ASSESSMENT HAS BEEN FRAMED WITHOUT ISSUING NOTICE UNDER SECTION 143(2) OF THE ACT. THE LD. AR OF THE ASSESSEE PLACED RELIANCE ON FOLLOWING DECISIONS TO SUPPORT H IS ARGUMENT: I. ACIT VS. HOTEL BLUE MOON 321 ITR 362 (SC); II. ACIT V. GENO PHARMACEUTICALS LTD 214 TAXMAN 83 (BOM.); 3 ITA NO.3303/MUM/2019 (A.Y.2007-08) ITA NO.3304/MUM/2019 (A.Y.2008-09) III. PR.CIT V. SILVER LINE 383 ITR 455 (DEL.); IV. TRAVANCORE DIAGNOSTICS (P.) LTD. V. ACIT 74 TAXMA NN.COM 239 (KERALA). 2.3. THE THIRD OBJECTION OF THE ASSESSEE IS THAT TH E NOTICE UNDER SECTION 148 HAS BEEN ISSUED BY ITO WARD 9(1)(2) AND THE ASSESSMENT ORDER HAS BEEN PASSED BY DIFFERENT ASSESSING OFFICER I.E. ITO WARD 12(1)(3 ). THE REASONS FOR REOPENING ASSESSMENT SHOULD HAVE BEEN RECORDED BY THE ASSESSI NG OFFICER HAVING VALID JURISDICTION. IN SUPPORT OF HIS THIRD OBJECTION THE LD. AR OF THE ASSESSEE RELIED ON FOLLOWING DECISIONS: I. CIT V. ANJUM H. GHASWALA 252 ITR 1 (SC); II. CIT VS. SHREE RAJASTHAN SYNTEX LTD. 212 TAXMA N 275 (RAJ.); III. HYNOUP FOOD AND OIL INDUSTRIES LTD. VS. ACIT 307 ITR 115 (GUJ.); IV. TATA SONS LTD. V. ACIT 76 TAXMANN.COM 126 (MUM.- TRIB.) THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE S UBMITTED THAT THE ASSESSMENT IS LIABLE TO BE QUASHED ON THE LEGAL GROUNDS RAISED BY THE ASSESSEE AS ADDITIONAL GROUNDS OF APPEAL. 2.4. THE FOURTH AND LAST LEGAL OBJECTION BY THE ASS ESSEE IS REGARDING VALIDITY OF REASONS FOR REOPENING. DURING THE COURSE OF HEARING OF APPEAL NO SUBMISSIONS WERE ADVANCED BY LD. AUTHORIZED REPRESENTATIVE OF THE AS SESSEE ON THIS GROUND. HOWEVER THE LD. AR OF THE ASSESSEE IN WRITTEN SUBMISSIONS H AS ASSAILED REASONS FOR REOPENING PRIMARILY ON FOLLOWING COUNTS: - THE REASONS RECORDED DO NOT QUANTIFY THE AMOUNT O F ESCAPEMENT; - THE AO HAS RECORDED REASONS BASED ON TAX EVASION PETITION RECEIVED FROM INVESTIGATION WING WITHOUT APPLYING HIS MIND. TO BUTTRESS THESE SUBMISSIONS RELIANCE HAS BEEN PLA CED ON THE FOLLOWING DECISION: - CIT VS. INSECTICIDES (INDIA) LTD. 357 ITR 330 (DELHI) 4 ITA NO.3303/MUM/2019 (A.Y.2007-08) ITA NO.3304/MUM/2019 (A.Y.2008-09) 3. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSE E SUBMITTED THAT WITHOUT PREJUDICE TO THE LEGAL GROUNDS RAISED THE ASSESSEE HAS ALSO CHALLENGED ADDITION ON MERITS. NARRATING THE FACTS OF THE CASE THE LD. AU THORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE SOLITARY ISSUE RAISED I N THIS APPEAL IS AGAINST INCOME FROM HOUSE PROPERTY DETERMINED BY THE ASSESSING OFFICER. IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT THE ASSESSEE FILED RETURN O F INCOME DECLARING ITS INCOME AS NIL. THE ASSESSEE COMPANY IS NOT ENGAGED IN ANY BUSINESS ACTIVITY DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. THE ASSESSEE IS HAVING SHOPS I.E. SHOP NO.10 & 11 SITUATED AT KENWOOD APARTMENT CHS LTD. DR. AMBEDKAR ROAD BANDRA (WEST) AND THESE SHOPS HAVE NOT BEEN ACTUALLY LET O UT DURING THE RELEVANT PERIOD. THEREFORE THE ANNUAL VALUE WOULD BE MUNICIPAL VALU ATION OF THE PROPERTY AND NOT THE MARKET RENT. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE REFERRED TO THE PROVISIONS OF SECTION 23(1)(B) OF THE ACT. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE AREA OF SHOP NO.10 IS 2 5 SQ.MTS.(256 SQ. FTS.) AND THE AREA OF SHOP NO.11 IS 22.7 SQ.MTS.(227 SQ. FTS.). I N SUPPORT OF HIS CONTENTION THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE REFERRED TO A LETTER FROM MUNICIPAL CORPORATION MUMBAI DATED 07/03/2015 (AT PAGE 17 OF THE PAPER BOOK) GIVING THE AREAS OF THE SHOP AND THE RENTAL VALUE. THE LD. AU THORISED REPRESENTATIVE SUBMITTED THAT IN THE FIRST INSTANCE THE ASSESSING OFFICER W HILE DETERMINING THE RENTAL VALUE OF THE SHOPS HAS WRONGLY TAKEN THE AREA OF EACH SHOP A S 800 SQ. FTS. WHEREAS THE ACTUAL AREA OF THE SHOPS IS FAR LESS. THE LD.AUTHOR IZED REPRESENTATIVE OF THE ASSESSEE FURTHER CONTENDED THAT THAT FAIR RENT OF THE SHOPS HAS BEEN FIXED BY THE MUNICIPAL CORPORATION AT RS.204.80 AND RS.181.60 RESPECTIVEL Y. THE ASSESSING OFFICER OUGHT TO HAVE ADOPTED THE FAIR RENTAL VALUE OF THE SHOPS AS DETERMINED BY THE MUNICIPAL CORPORATION INSTEAD OF DETERMINING RENT BASED ON TH E REPORT OF INSPECTOR. TO SUPPORT HIS SUBMISSIONS THE LD.AUTHORIZED REPRESENTATIVE O F THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING DECISIONS: (I) SHIELA KAUSHISH VS. CIT 7 TAXMAN 1(SC) 5 ITA NO.3303/MUM/2019 (A.Y.2007-08) ITA NO.3304/MUM/2019 (A.Y.2008-09) (II) M.V. SONAVALA V. CIT 42 TAXMAN 123 (BOM.) (III) SMITABEN N. AMBANI VS. CWT 181 TAXMAN 233 (BOM.) (IV) CIT VS. TIP TOP TYPOGRAPHY 48 TAXMANN.COM 191 (BOM.) 4. PER CONTRA SHRI SUSHIL KUMAR MISHRA REPRESENTIN G THE DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED F OR DISMISSING THE APPEAL OF ASSESSEE. REBUTTING LEGAL OBJECTIONS THE LD. DEPAR TMENTAL REPRESENTATIVE SUBMITTED THAT SECTION 151 OF THE ACT WAS AMENDED BY THE FINA NCE ACT 2015. SINCE THE APPEAL PERTAINS TO PERIOD PRIOR TO AMENDMENT BY THE FINANC E ACT 2015 THE UN-AMENDED PROVISIONS OF THE ACT WOULD APPLY. PRIOR TO AMENDME NT FOR REOPENING BEYOND THE PERIOD OF FOUR YEARS SATISFACTION OF JOINT COMMISSI ONER WAS REQUIRED. IN THE PRESENT CASE SATISFACTION WAS RECORDED BY ADDITIONAL CIT. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITT ED THAT THE NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO THE ASSESSEE O N 19/03/2014. THE WAS DIRECTED TO FILE RETURN IN RESPONSE TO THE SAID NOTICE WITHI N 30 DAYS FROM THE DATE OF SERVICE. THE ASSESSEE RESPONDED TO THE SAID NOTICE ON 24/07/ 2014 I.E. AFTER MUCH DELAY FROM THE DATE OF SERVICE HENCE THERE WAS NO QUESTION O F ISSUING ANY NOTICE UNDER SECTION 143(2) OF THE ACT. IN RESPONSE TO THE THIRD LEGAL OBJECTION OF THE ASS ESSEE THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE NOTICE UNDER SECT ION 148 WAS ISSUED TO THE ASSESSEE IN MARCH 2014 AFTER RECORDING REASONS BY T HE ASSESSING OFFICER HAVING VALID JURISDICTION. THEREAFTER THERE WAS MAJOR RESTRUCTU RING IN THE DEPARTMENT. THE JURISDICTION OF THE ASSESSING OFFICER WAS CHANGED B Y THE TIME ASSESSMENT ORDER WAS PASSED IN MARCH 2015. THEREFORE THE NOTICE WAS IS SUED BY A DIFFERENT ASSESSING OFFICER AND THE ASSESSMENT ORDER WAS PASSED BY DIFF ERENT OFFICER. BOTH THE ASSESSING OFFICERS HAD VALID JURISDICTION OVER THE ASSESSEE A T RELEVANT POINT OF TIME THEREFORE THE LEGAL OBJECTIONS RAISED BY THE ASSESSEE ARE WIT HOUT ANY MERIT. 6 ITA NO.3303/MUM/2019 (A.Y.2007-08) ITA NO.3304/MUM/2019 (A.Y.2008-09) 4.1. ON MERITS OF THE ADDITION THE LD. DEPARTMENTA L REPRESENTATIVE SUPPORTING THE ASSESSMENT ORDER SUBMITTED THAT THE ISSUE MAY BE RE STORED TO THE ASSESSING OFFICER TO RE-EXAMINE AREA OF THE SHOPS. THE REPORT OF THE INSPECTOR ON THE BASE OF WHICH THE ASSESSING OFFICER HAS FRAMED THE ASSESSMENT ORD ER IS NOT READILY AVAILABLE HENCE IT WILL BE DIFFICULT TO PLACE THE SAME ON RECORD NO W. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER POINTED THAT THE SHOPS HAVE BEEN GIVEN TO THE DAUGHTER OF DIRECTOR OF THE ASSESSEE COMPANY. 5. BOTH SIDES HEARD ORDERS OF AUTHORITIES BELOW EX AMINED AND THE JUDGMENTS ON WHICH THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSE SSEE HAS PLACED RELIANCE CONSIDERED. THE ASSESSEE IS IN APPEAL AGAINST EX-PA RTE ORDER OF CIT(A). THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS STATE D AT BAR THAT THE APPEAL MAY BE HEARD BY THE TRIBUNAL WITHOUT RESTORING IT TO THE F IRST APPELLATE AUTHORITY. THE ASSESSEE HAS RAISED LEGAL GROUNDS AS ADDITIONAL GRO UNDS OF APPEAL. BEFORE PROCEEDING TO ADJUDICATE GROUNDS RAISED ON MERITS IT WOULD IM PERATIVE TO FIRST ADJUDICATE THE LEGAL GROUNDS RAISED BY THE ASSESSEE. 6. THE FIRST LEGAL OBJECTION RAISED BY THE ASSESSEE IS THAT THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT IS DEFECTIVE AS IT HAS BEEN ISSUED WITHOUT PROPER SATISFACTION OF THE AUTHORITY SPECIFIED UNDER SECTION 151 OF THE AC T. A PERUSAL OF THE NOTICE AT PAGE - 3 OF THE PAPER BOOK REVEALS THAT THE NOTICE HAS BEE N ISSUED AFTER SEEKING NECESSARY SATISFACTION OF THE ADDITIONAL CIT. THE PROVISIONS OF SECTION 151 OF THE ACT AS THEY ARE APPLICABLE AT PRESENT MANDATES THAT NO NOTICE UNDER SECTION 148 OF THE ACT SHALL BE ISSUED BY THE ASSESSING OFFICER AFTER THE EXPIRY OF PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE PRINCIPA L CIT OR CCIT OR PCIT OR CIT IS SATISFIED ON THE REASONS RECORDED BY THE ASSESSING OFFICER THAT IT IS A FIT CASE FOR ISSUE OF THE NOTICE. THE PROVISIONS OF SECTION 151 OF THE ACT WERE AMENDED BY THE FINANCE ACT 2015 W.E.F. 01/06/2015. THE ASSESSMENT UNDER APPEAL IS AY 2007-08 AND THE REASSESSMENT PROCEEDINGS WERE INITIATED IN 2014 I.E . PRIOR TO AMENDMENT BY THE 7 ITA NO.3303/MUM/2019 (A.Y.2007-08) ITA NO.3304/MUM/2019 (A.Y.2008-09) FINANCE ACT 2015. THE PROVISIONS OF SECTION 151 OF THE ACT AS THEY WERE APPLICABLE AT RELEVANT POINT OF TIME REQUIRED THAT WHERE AN ASSE SSMENT U/S.147 OF THE ACT HAS BEEN MADE FOR RELEVANT ASSESSMENT YEAR NO NOTICE S HALL BE ISSUED U/S.148 BY AN ASSESSING OFFICER WHO IS BELOW THE RANK OF ASST. CO MMISSIONER OR DEPUTY COMMISSIONER UNLESS THE JOINT COMMISSIONER IS SATIS FIED ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER THAT IT IS A FIT CASE FOR TH E ISSUE OF SUCH NOTICE. SECTION 2(28C) OF THE ACT DEFINES JOINT COMMISSIONER AS UNDER: JOINT COMMISSIONER MEANS A PERSON APPOINTED TO B E A JOINT COMMISSIONER OF INCOME TAX OR AN ADDITIONAL COMMISSIONER OF INCOME TAX UNDER SUB-SECTION (1) OF SECTION 117 IN THE INSTANT CASE SINCE REOPENING PROCEEDINGS WER E INITIATED PRIOR TO AMENDMENT BY THE FINANCE ACT 2015 SATISFACTION OF JOINT COM MISSIONER WAS REQUIRED FOR ISSUING NOTICE UNDER SECTION 148 OF THE ACT. THE ASSESSING OFFICER HAS ISSUED NOTICE AFTER THE SATISFACTION WAS RECORDED BY THE ADDITIONAL CIT. TH E ADDITIONAL CIT HAS BEEN INCLUDED IN THE DEFINITION OF JOINT COMMISSIONER THEREFORE I SEE NO INFIRMITY IN THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT. THE CASE LAWS ON WHICH THE LD. AR OF THE ASSESSEE HAS PLACED RELIANCE DOES NOT APPLY TO THE FACTS OF THE CASE. CONSEQUENTLY THE GROUND NO.11 RAISED AS ADDITIONAL GROUNDS OF AP PEAL IS DISMISSED. 7. THE SECOND LEGAL OBJECTION OF THE ASSESSEE IS TH AT THE REASONS FOR REOPENING HAVE BEEN RECORDED BY AN ASSESSING OFFICER HAVING N O JURISDICTION. A PERUSAL OF NOTICE ISSUED UNDER SECTION 148 OF THE ACT SHOWS THAT THE SAME HAS BEEN ISSUED BY ITO WARD -9(1) (2) AND THE ASSESSMENT ORDER HAS BEEN PA SSED BY ITO-WARD 12(1)(3). THE LD. DEPARTMENTAL REPRESENTATIVE HAS CONTENDED THAT THERE WAS SUBSTANTIAL RESTRUCTURING OF THE DEPARTMENT DURING YEAR 2014 H ENCE THE REASONS RECORDED FOR REOPENING AND THE NOTICE UNDER SECTION 148 WAS ISSU ED BY THE ITO WHO WAS HAVING JURISDICTION OVER THE ASSESSEE AT THAT POINT OF TIM E. AFTER RESTRUCTURING THE ASSESSMENT ORDER WAS PASSED BY ITO-12(1)(3) WHO WAS HAVING JURISDICTION OVER THE ASSESSEE. UNDISPUTEDLY THE REASONS RECORDED FOR RE OPENING NOTICE U/S 148 AND THE 8 ITA NO.3303/MUM/2019 (A.Y.2007-08) ITA NO.3304/MUM/2019 (A.Y.2008-09) ASSESSMENT ORDER CAN ONLY BE PASSED BY THE ASSESSIN G OFFICER HAVING VALID JURISDICTION OVER THE ASSESSEE. REASONS RECORDED FOR REOPENING O R NOTICE U/S148 OF THE ACT OR THE ASSESSMENT ORDER PASSED BY ANY ASSESSING OFFICER WI THOUT JURISDICTION IS BAD IN LAW. I FIND THAT THIS LEGAL OBJECTION HAS BEEN RAISED BY T HE ASSESSEE IS WITHOUT ANY COGENT EVIDENCE. THE ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS TO SUBSTANTIATE THAT THE ASSESSING OFFICER WHO HAS ISSUED NOTICE UNDER SECTI ON 148 OF THE ACT OR THE ONE WHO HAS PASSED ASSESSMENT ORDER WERE NOT HAVING JURISDI CTION OVER THE ASSESSEE AT RELEVANT POINT OF TIME. THE ASSESSEE HAS MADE MERE BALD ASSERTIONS WITHOUT THERE BEING ANY SUBSTANTIVE MATERIAL ON RECORD. THE CASE LAWS RELIED ON BY THE LD. AR OF THE ASSESSEE ARE ON DIFFERENT SET OF FACTS AND HENCE D ISTINGUISHABLE. ERGO ADDITIONAL GROUND NO.12 OF THE APPEAL IS REJECTED. 8. THE THIRD LEGAL OBJECTION OF THE ASSESSEE IS THA T THE ASSESSMENT IS BAD IN LAW AS NO STATUTORY NOTICE UNDER SECTION 143(2) HAS BEEN S ERVED ON THE ASSESSEE BEFORE MAKING ASSESSMENT. IT IS TRAIT LAW THAT ISSUANCE OF NOTICE U/S 143(2) OF THE ACT IS MANDATORY BEFORE PASSING ASSESSMENT ORDER. THE HON BLE APEX COURT IN THE CASE OF HOTEL BLUE MOON (SUPRA) HAS HELD THAT ASSESSMENT FR AMED WITHOUT ISSUANCE OF MANDATORY NOTICE U/S. 143(2) OF ACT IS BAD IN LAW. THIS POSITION HAS BEEN REITERATED BY THE HONBLE HIGH COURTS TIME AND AGAIN. IN THE I NSTANT CASE NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 19/03/ 2014. THE ASSESSEE WAS REQUIRED TO RESPOND TO SAID NOTICE/FILE RETURN OF INCOME IN RESPONSE TO SAID NOTICE WITHIN 30 DAYS FROM THE DATE OF SERVICE. THE ASSESSING OFFICE R IN ASSESSMENT ORDER HAS CATEGORICALLY MENTIONED THAT IN RESPONSE TO THE NOT ICE UNDER SECTION 148 OF THE ACT ISSUED AND SERVED ON 19/03/2014 THE ASSESSEE FILED LETTER DATED 24/07/2014 STATING THAT THE RETURN FILED ON 31/10/2013 MAY BE TREATED AS RETURN IN RESPONSE TO THE NOTICE UNDER SECTION 148 OF THE ACT. THE SAID DATES HAVE NOT BEEN DISPUTED BY THE LD. AR OF THE ASSESSEE. THUS IT IS EVIDENT FROM RECORD THAT THE ASSESSEE FAILED TO COMPLY WITH THE NOTICE U/S 148 OF THE ACT WITHIN THE TIME PERIOD SPECIFIED. ONCE THE 9 ITA NO.3303/MUM/2019 (A.Y.2007-08) ITA NO.3304/MUM/2019 (A.Y.2008-09) ASSESSEE FAILS TO COMPLY WITH THE CONDITIONS GIVEN IN THE NOTICE THE ASSESSEE LOSSES ITS RIGHT TO OBJECT TO SERVICE OF NOTICE UNDER SECT ION 143(2) OF THE ACT. BEFORE SEEKING RELIEF ON LEGAL GROUNDS IT IS INCUMBENT UPON THE A SSESSEE TO FIRST COMPLY WITH THE CONDITIONS WITHIN THE TIME FRAME PRESCRIBED UNDER T HE NOTICE. THUS THE DECISIONS RELIED BY THE LD. AR OF THE ASSESSEE DOES NOT SUPPO RT THE CASE OF THE ASSESSEE. THEREFORE I SEE NO MERIT IN GROUND NO.13 RAISED AS ADDITIONAL GROUNDS OF APPEAL BY THE ASSESSEE. CONSEQUENTLY THE SAME IS DISMISSED. 9. IN GROUND NO.14 OF THE ADDITIONAL GROUNDS OF APP EAL THE ASSESSEE HAS ASSAILED REASONS FOR REOPENING ON THE GROUND THAT THE REASONS ARE NON REASONS IN THE EYES OF LAW . IN THE INSTANT CASE AS IS EVIDENT FROM THE ASSES SMENT ORDER NO ASSESSMENT WAS MADE UNDER SECTION 143(3) AS THE RETURN FILED BY TH E ASSESSEE WAS TIME BARRED HENCE INVALID. PROCEEDINGS U/S 148 R.W.S. 147 OF T HE ACT WERE INITIATED ON THE BASES OF TANGIBLE MATERIAL RECEIVED BY THE ASSESSING OFFI CER. THE ASSESSING OFFICER HAS RECORDED HIS SATISFACTION FOR REOPENING THE ASSESSM ENT EXPLICITLY MENTIONING THE NAME OF THE FIRM TO WHOM THE ASSESSEE HAS GIVEN ITS PREMISES FOR USE. I FIND NO MERIT IN THE SUBMISSIONS OF LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE ON THIS LEGAL GROUND. THE CASE LAW ON WHICH RELIANCE HAS BEEN PLA CED TO SUPPORT THIS ARGUMENT DOES NOT APPLY TO THE FACTS OF THIS CASE AND HENCE DISTINGUISHABLE. THE GROUND NO. 14 IS DISMISSED BEING DEVOID OF MERIT. 10. ALL THE LEGAL GROUNDS RAISED BY THE ASSESSEE AS ADDITIONAL GROUNDS OF APPEAL ARE WITHOUT MERIT HENCE REJECTED. NOW I PROCEED TO DECIDE THE APPEAL OF ASSESSEE ON MERITS OF THE ADDITION. THE ASSESSEE HAS RAISED AS MANY AS EIGHT GROUNDS OF APPEAL ASSAILING SINGLE ADDITION OF RS.6 72 000/- U NDER THE HEAD INCOME FROM HOUSE PROPERTY. 11. THE ASSESSEE HAS TWO SHOPS I.E. SHOP NO.10 AND SHOP NO.11 AT KENWOOD CO- OPERATIVE HOUSING SOCIETY LTD. DR. AMBEDKAR ROAD BANDRA (W) MUMBAI. THE SAID 10 ITA NO.3303/MUM/2019 (A.Y.2007-08) ITA NO.3304/MUM/2019 (A.Y.2008-09) SHOPS WERE GIVEN TO THE DAUGHTER OF THE DIRECTOR OF THE ASSESSEE COMPANY FOR HER BOUTIQUE. NO RENT WAS PURPORTEDLY CHARGED BY THE AS SESSE FOR USE OF THESE SHOPS. THE CONTENTION OF THE ASSESSEE IS THAT FOR THE PURP OSE OF DETERMINING ANNUAL LETTING VALUE UNDER SECTION 23(1)(A) MUNICIPAL VALUE SHOUL D BE ADOPTED. THE ASSESSEE HAS FILED A REPORT FROM THE OFFICE OF ASST. COLLECTOR MUNICIPAL CORPORATION GIVING THE AREA OF THE SHOPS AS WELL AS THE RENTAL VALUE (AT PAGE 1 7 OF THE PAPER BOOK). THE RELEVANT EXTRACT OF THE SAME IS REPRODUCED HEREIN BELOW: DESCRIPTIO N RENT(RS.) GROUND FLOOR AT RS.80/-PER 10 M2 SHOP NO.10 AREA 25.60 M2 204.80 LOFT AREA 10.10 M2 AT RS.40/- PER 10 M2 40.40 SHOP NO.11 AREA 22.70 M2 181.60 MEZZANINE FLOOR AREA 20.06 M2 AT RS.80/- PER 10 M2 USED AS OFFICE 160.40 TOTAL RENT RS.11517.58; TOTAL RV RS. 110165 NPA RESIDENTIAL RV RS.79065 NPA; NON RESIDENTIAL RV R S.31100 - NPA A PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT THE ASSESSING OFFICER HAD DEPUTED INSPECTOR FOR CONDUCTING THE ENQUIRY. ON THE BASIS OF REPORT FURNISHED BY THE INSPECTOR THE ASSESSING OFFICER DETERMINED NET ANN UAL VALUE OF THE SHOPS AS RS.6 72 000/- WITH AN YEARLY INCREASE OF 5% TO 10% . THE AREA OF EACH SHOP AS PER ASSESSMENT ORDER IS 800 SQ. FT. THE AREA OF SHOPS M ENTIONED IN THE ASSESSMENT ORDER AND IN THE REPORT OF MUNICIPAL CORPORATION IS AT VA RIANCE. DURING THE COURSE OF HEARING THE LD. DEPARTMENTAL REPRESENTATIVE WAS ASK ED TO PRODUCE SAID REPORT. THE LD. DEPARTMENTAL REPRESENTATIVE EXPRESSED HIS INABI LITY TO PLACE THE SAME ON RECORD. IN SO FAR AS THE RENTAL VALUE OF THE PROPERTY IS CONCERNED I FIND THAT IN THE CASE OF PARK PAPER INDUSTRIES PVT. LTD. VS. ITO REPORTED AS 25 SOT 406 THE TRIBUNAL HELD THAT WHERE THE PROPERTY HAS NOT BEEN LET OUT MUNIC IPAL VALUE WOULD BE PROPER YARDSTICK FOR DETERMINING ANNUAL VALUE. THE TRIBU NAL AFTER CONSIDERING THE DECISIONS RENDERED IN THE CASE OF M.V. SONAWALA VS. CIT (SUPR A) SHIELA KAUSHISH VS. CIT (SUPRA) 11 ITA NO.3303/MUM/2019 (A.Y.2007-08) ITA NO.3304/MUM/2019 (A.Y.2008-09) AND THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF PRABHABATI BANSALI 141 ITR 419 CONCLUDED AS UNDER:- 12. LEARNED COUNSEL FOR THE ASSESSEE RELIED ON SEVERAL OTHER JUDICIAL PRONOUNCEMENTS IN SUPPORT OF HIS CONTENTION THAT THE MUNICIPAL VAL UE SHOULD BE THE BASIS OF DETERMINING THE ANNUAL VALUE. WE ARE NOT MAKING REF ERENCE TO THOSE DECISIONS SINCE IN OUR OPINION THE AFORESAID PRONOUNCEMENT OF HON'B LE BOMBAY HIGH COURT CONSIDERS THE DECISIONS OF HON'BLE CALCUTTA HIGH COURT WHICH IN TURN HAS CONSIDERED THE LAW LAID DOWN BY THE HON'BLE APEX COURT ON THE ISSUE. IT IS CLEAR FROM THE AFORESAID EXPOSITION OF LAW THAT CHARGE UNDER SECTION 22 IS NOT ON THE M ARKET RENT; BUT IS ON THE ANNUAL VALUE AND IN THE CASE OF PROPERTY WHICH IS NOT LET OUT MUNICIPAL VALUE WOULD BE A PROPER YARDSTICK FOR DETERMINING THE ANNUAL VALUE. DECISION IN THE CASE OF MRS. SHEILA KAUSHISH (SUPRA) MENTIONS STANDARD RENT UNDER THE R ENT CONTROL ACT AS ONE OF THE YARDSTICKS. THIS DOES NOT MEAN THAT STANDARD RENT A LONE IS TO BE CONSIDERED. IN THE PRESENT CASE WE ALSO NOTICE THAT THE ASSESSING OFF ICER HAS NOT CHOSEN TO ADOPT THE STANDARD RENT AS PER THE RENT CONTROL ACT AS YARDST ICK FOR DETERMINING THE ANNUAL VALUE. WE ALSO FIND FROM THE DECISION OF HON'BLE CA LCUTTA HIGH COURT IN THE CASE OF SMT. PRABHABATI BANSALI (SUPRA) THAT STANDARD RE NT IF IT DOES NOT EXCEED THE MUNICIPAL VALUATION ALONE CAN BE ADOPTED IN PLACE O F MUNICIPAL VALUATION. FOR ALL THE ABOVE REASONS WE HOLD THAT THE MUNICIPAL VALUATION SHOULD BE THE BASIS OF DETERMINING ANNUAL VALUE IN THE PRESENT CASE. ACTIO N OF THE REVENUE AUTHORITIES IN ADOPTING ANNUAL VALUE ON THE BASIS OF INQUIRIES CON DUCTED REGARDING MARKET RENT IN THE VICINITY OF THE PROPERTY IS NOT IN ACCORDANCE W ITH LAW. THE ASSESSING OFFICER IS DIRECTED TO ACCEPT THE INCOME FROM HOUSE PROPERTY O N THE BASIS OF MUNICIPAL VALUATION . [EMPHASISED NOW] 12. TAKING INTO CONSIDERATION ENTIRE FACTS I DEEM IT APPROPRIATE TO RESTORE THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO DETERMINE THE EXACT AREA OF THE SHOPS AND THEREAFTER COMPUTE ANNUAL RENTAL VALUE IN LINE WITH THE DECISION OF TRIBUNAL RENDERED IN THE CASE OF PARK PAPER P. LTD. (SUPRA). IT IS FURTHER MADE CLEAR THAT ANY MUNICIPAL TAXES ACTUALLY PAID BY THE ASSES SEE QUA THE SHOPS UNDER QUESTION FOR THE IMPUGNED ASSESSMENT YEARS ARE TO BE ALLOWED AS DEDUCTION. THE GROUND NO.1 TO 8 OF THE APPEAL IS ALLOWED FOR STATISTICAL PURPO SE IN THE TERMS AFORESAID. 13. IN GROUND NO.9 OF APPEAL THE ASSESSEE HAS ASSA ILED LEVY OF INTEREST UNDER SECTION 234A 234B & 234C OF THE ACT. CHARGING OF INTEREST UNDER AFORESAID SECTIONS IS MANDATORY AND CONSEQUENTIAL HENCE GROUND NO.9 O F THE APPEAL IS DISMISSED. 12 ITA NO.3303/MUM/2019 (A.Y.2007-08) ITA NO.3304/MUM/2019 (A.Y.2008-09) 14. THE GROUND NO.10 OF APPEAL IS GENERAL IN NATURE HENCE REQUIRE NO ADJUDICATION. 15. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ITA NO. 3304/MUM/2019 (A.Y.2008-09) 16. BOTH SIDES ARE UNANIMOUS IN STATING THAT THE FA CTS GERMANE TO THE GROUNDS RAISED IN APPEAL ARE PARI MATERIA TO AY 2007-08. THEREFORE THE FINDINGS GIVEN WHILE ADJUDICATING THE APPEAL OF THE ASSESSEE FOR 2007-08 WOULD M UTATIS MUTANDIS APPLY TO THE GROUNDS/ADDITIONAL GROUNDS OF APPEAL. CONSEQUE NTLY THE APPEAL OF ASSESSEE FOR ASSESSMENT YEAR 2008-09 IS PARTLY ALLOWED FOR STATI STICAL PURPOSE IN SIMILAR TERMS. 17. TO SUM UP APPEALS OF THE ASSESSEE FOR ASSESSME NT YEAR 2007-08 AND 2008-09 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THURS DAY THE 25TH DAY OF MARCH 2021 SD./- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI 3(/ DATED 25/03/2021 VM SR. PS (O/S) 13 ITA NO.3303/MUM/2019 (A.Y.2007-08) ITA NO.3304/MUM/2019 (A.Y.2008-09) COPY OF THE ORDER FORWARDED TO : 1. * / THE APPELLANT 2. + / THE RESPONDENT. 3. 4 ( )/ THE CIT(A)- 4. 4 CIT 5. 56+ ( . . . / DR ITAT MUMBAI 6. 6789: / GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT MUMBAI