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2015 (4) TMI 594 - AT - Income TaxReopening of assessment - additions / disallowances to the returned incomes and also in assessing the income from lease rental receipts as income from house property as against business income - Validity of Assumption of Jurisdiction - Held that - As rightly pointed out by the learned Departmental Representative, the sanction and approval for assumption of jurisdiction was obtained by the Assessing Officer from the Addl. CIT and not from the CIT as contended by the assessee. This fact is very clear from the order sheet noting dt.13.3.2008 and also from the Assessing Officer s letter dt.13.3.2008 addressed to the Addl. CIT for obtaining the approval for initiating proceedings under Section 147 of the Act. It is also clear from the order sheet noting dt.19.3.2008 that the Assessing Officer has obtained the approval of the Addl.CIT for initiation of reassessment proceedings, as is envisaged in the provisions of section 151(2) of the Act. We find that it is only after this approval, that the Assessing Officer issued notices under Section 148 of the Act on 20.3.2008. On an appreciation of the records of assessment placed before us for our perusal, we are of the considered opinion that proper sanction has been obtained by the Assessing Officer from the Addl. CIT as per the requirements of section 151(2) of the Act and that the correct procedure has been followed by the Assessing Officer in initiating and invoking proceedings under Section 147 of the Act. Decided against assessee. Orders of assessment passed under Section 144 r.w.s. 147 are not tenable in law as the assessee has given all the details called for - Held that - As in the interest of equity and justice, the matter / issues with respect to whether the lease rental receipts received by the assessee from its tenants is to be treated and assessed as business income as claimed by the assessee or as income from house property as held by revenue, requires fresh consideration in the light of the observations in para 6 of the decision of the coordinate bench of this Tribunal in the assessee's own case for Assessment Year 2002-03. We, therefore, remit this matter to the file of the Assessing Officer for fresh consideration of this issue after affording the assessee adequate opportunity of being heard - Decided partly in favour of assessee for statistical purposes.
Issues Involved:
1. Validity of assumption of jurisdiction under Section 148 of the Income Tax Act. 2. Assessment of lease rental receipts as 'income from house property' versus 'business income'. 3. Procedural compliance and principles of natural justice in the assessment process. Issue-wise Detailed Analysis: 1. Validity of Assumption of Jurisdiction under Section 148 of the Income Tax Act: The assessee contended that the assessment orders were bad in law as the mandatory conditions for assumption of jurisdiction under Section 148 were not met. Specifically, the assessee argued that the Assessing Officer (AO) did not obtain the approval of the Joint Commissioner of Income Tax (JCIT) but rather the Commissioner of Income Tax (CIT), which was not in accordance with the law. The Departmental Representative countered that the correct procedure was followed, and approval was indeed obtained from the Additional Commissioner of Income Tax (Addl. CIT), not the CIT. The records, including order sheet notings and a letter dated 13.3.2008 from the AO to the Addl. CIT, confirmed this. The Tribunal examined these records and concluded that proper sanction was obtained from the Addl. CIT as required under Section 151(2) of the Act. Consequently, the objections raised by the assessee regarding the assumption of jurisdiction were rejected. 2. Assessment of Lease Rental Receipts as 'Income from House Property' versus 'Business Income': The assessee argued that the receipts from lease rentals should be assessed as 'business income' rather than 'income from house property'. The AO had assessed these receipts as 'income from house property' based on the decision of the Hon'ble Apex Court in the case of Shambu Investments Pvt. Ltd. v. CIT. The Tribunal noted that the basis for reopening the assessments for the years 2001-02 and 2003-04 was the findings in the assessment order for the year 2002-03, which had been set aside by the Tribunal for fresh consideration. The Tribunal observed that the AO should have considered the observations of the Tribunal in its order for the year 2002-03 while concluding the assessments for the years 2001-02 and 2003-04. In the interest of equity and justice, the Tribunal remitted the matter to the AO for fresh consideration of whether the lease rental receipts should be treated as 'business income' or 'income from house property'. The AO was directed to afford the assessee adequate opportunity to present details and submissions. 3. Procedural Compliance and Principles of Natural Justice in the Assessment Process: The assessee contended that the orders passed under Section 144 r.w.s. 147 were not tenable as all details had been provided, and thus the orders were based on a wrong appreciation of facts and against the principles of natural justice. The Tribunal noted that the AO had passed the orders without following the Tribunal's observations in the assessee's own case for the year 2002-03. The Tribunal emphasized that the AO should consider the observations in the Tribunal's order for the year 2002-03 while reassessing the years 2001-02 and 2003-04. The Tribunal set aside the issue of assessment of lease rental receipts to the AO for fresh consideration, ensuring compliance with procedural requirements and principles of natural justice. Conclusion: The Tribunal partly allowed the assessee's appeals for statistical purposes, setting aside the issue of assessment of lease rental receipts for fresh consideration by the AO in accordance with the Tribunal's observations and ensuring procedural compliance and adherence to principles of natural justice. The Tribunal did not adjudicate on the merits of the issue but focused on ensuring proper procedural adherence. Order Pronounced: The order was pronounced in the open court on 6th February 2015.
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