2013 (10) TMI 1169 - HC - Income Tax

Leasing of commercial complex - Business income or House property income - Reassessment u/s 147 - Whether status of assessee (i.e. Firm or AOP) would be relevant to determine head of income for the earlier AY ITAT had decided that the income should be taxable as income from House Property - For the current AY ITAT had remanded back the matter - Held that - when the question does not really arise for our consideration from the order of the Tribunal, it is not necessary to go into for examination of this question as for academic purpose. In so far as reopening is concerned, the matter having been remanded and being kept open, that again is not a matter which is required to be examined by this court in this appeal to decide on the substantial question of law. The Tribunal itself has reserved liberty on this aspect to the Assessing Officer. Res- judicata to apply in cases regarding taxation matters Held that - Res judicata is not strictly applied in tax matters as in civil matters and particularly under the Civil Procedure Code, 1908, as each assessment year is different and it is for the assessee to assert its position and make it good and it is always open to the assessing authority to examine such matters.

Summary

Issues:
1. Assessment year 2005-06: Reopening of assessment under section 147 of the Income-tax Act, 1961 and assessment under the head "House property" instead of "Business income."
2. Relevance of status of the assessee as partnership firm or association of persons in determining the nature of income.
3. Applicability of res judicata in tax matters and the liberty of the Assessing Officer to examine issues in different assessment years.

Analysis:
1. Assessment Year 2005-06:
The appeal under section 260A of the Income-tax Act, 1961 was directed against the common order passed by the Income-tax Appellate Tribunal, Bangalore Bench, relating to the assessment year 2005-06. The assessee, a partnership firm, had filed its return claiming income under "Business" from leasing properties. However, the Assessing Officer issued a notice under section 148 of the Act before finalizing the return, leading to an assessment under section 143 read with section 147(3) treating the income as from house property instead of business income.

2. Status of the Assessee and Nature of Income:
The Tribunal partly allowed the appeal for the assessment year 2005-06, upholding the assessment under the head "House property" but remanding the question of reopening to the Assessing Officer for further consideration based on judgments relied upon by the assessee. The status of the assessee as a partnership firm or association of persons was a key point of contention in determining whether the income should be assessed under "House property" or "Business income."

3. Res Judicata and Assessing Officer's Liberty:
The Tribunal's order reserved liberty for the Assessing Officer to decide on the validity of the notice under section 147 and the nature of income. The High Court emphasized that the concept of res judicata is not strictly applied in tax matters, allowing the assessing authority to examine issues in different assessment years. The court dismissed the appeal, maintaining that each assessment year is distinct, and the assessee can assert its position as needed, leaving the Assessing Officer free to address relevant matters based on the Tribunal's remand order.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing the liberty granted to the Assessing Officer to address the issues of reopening and nature of income in the assessment year 2005-06. The court highlighted the importance of considering each assessment year separately in tax matters and dismissed the appeal while allowing the assessee to raise contentions as per the law in future situations.