2013 (3) TMI 197 - AT - Income Tax

Reassessment - reason to believe - disclosure of information - held that - The re-opening was within a period of four years and it is not the case of the assessee that there was change of opinion. When the rent received from shops located in North Stand, was Rs. 2,15,910, per annum and when the assessee has shown a loss of Rs. 5,22,053, we are of the considered opinion that the Assessing Officer has reason to believe that income has escaped assessment. Thus, we uphold the re-opening of assessments. Coming to the assessment of ALV, the assessee, in our opinion, ought to have furnished the information sought by the Assessing Officer, so as to enable him to come to a conclusion as to whether the Maharashtra Rent Control Act, 1999, applies to the facts of the case. Having said so, we also observe that the Assessing Officer has not examine the previous records of the assessee to determine as to whether the rental payments were, as claimed by the assessee, was offered on the same basis, as was done this year. - Reassessment proceeding justified. - Against assessee. Since the assessee has not furnished the information sought by the Assessing Officer and the Commissioner (Appeals) has failed to examine as to whether the Maharashtra Rent Control Act applies to the case or not, we are of the considered opinion that the issue is required to be restored to the file of Assessing Officer for fresh adjudication in accordance with law. - Matter remanded back.

Summary

Issues:
- Re-opening of assessment for assessment years 2002-03 and 2005-06
- Estimation of Annual Letting Value (ALV) for the property
- Challenge to re-opening by the assessee
- Delay in filing cross objection and its condonation

Re-opening of Assessment:
The case involved the re-opening of assessments for the assessment years 2002-03 and 2005-06 due to discrepancies in the rent income declared by the assessee. The Assessing Officer believed that the income had escaped assessment as the rent received was lower than the fair rent, leading to an understatement of income. The Commissioner (Appeals) upheld the re-opening, stating that the Assessing Officer had reason to believe that income had indeed escaped assessment. However, the Tribunal noted that the Assessing Officer had not examined previous records to verify if rental payments were consistent. The Tribunal upheld the re-opening but directed a fresh adjudication by the Assessing Officer to determine if the Maharashtra Rent Control Act applied to the case.

Estimation of Annual Letting Value (ALV):
The Assessing Officer estimated the ALV at Rs. 35,00,000 for the assessment year 2005-06 and Rs. 50,00,000 for the assessment year 2002-03. The Commissioner (Appeals) found this estimation arbitrary and deleted the addition. The Tribunal agreed that the estimation lacked a basis and ordered the issue to be restored to the Assessing Officer for proper examination. It was emphasized that if the tenancy was governed by the Rent Control Act, the ALV could not be substituted for the standard rent.

Challenge to Re-opening by the Assessee:
The assessee challenged the re-opening of assessment as being bad-in-law, arguing that it was based on mere suspicion. The Tribunal upheld the re-opening, stating that the Assessing Officer had valid reasons to believe that income had escaped assessment, given the discrepancies in rent income declared.

Delay in Filing Cross Objection and Condonation:
There was a delay of eighty days in filing the cross objection by the assessee. A petition for condonation of delay was filed, and after considering the submissions, the Tribunal condoned the delay and admitted the cross objection for further review.

In conclusion, the Revenue's appeals were allowed for statistical purposes, and the assessee's cross objection was dismissed. The Tribunal upheld the re-opening of assessments, directed a fresh examination of the ALV estimation, and addressed the challenge to the re-opening by the assessee. The delay in filing the cross objection was condoned for review.