2023 (8) TMI 1333 - AT - Income Tax

Assessment u/s 153A - additions relating to notional income from the unsold flats and made additions relating to unsecured loans - HELD THAT - On careful consideration of the facts on record, we observe that in the case of CIT v. Continental Warehouse Corporation 2015 (5) TMI 656 - BOMBAY HIGH COURT it is held that for assessment u/s. 153A in case of unabated assessment, if no incriminating material was found during the course of search in respect of an issue, then no additions in respect of any other issue can be made to the assessment u/s. 153A and 153C. Estimation of notional rent - assessee had unsold closing stock which was kept vacant during the current Assessment Year - AO has estimated the notional income adopting the rent based on property tax - HELD THAT - As relying on M/s. Inorbit Malls Pvt. Ltd 2022 (10) TMI 1150 - ITAT MUMBAI we direct the Assessing Officer to estimate the rent on the basis of municipal ratable value for computing the notional rent. Accordingly, ground raised by the assessee is partly allowed.

Issues Involved:
1. Validity of Assessment Orders under Section 153A for A.Y. 2012-13 and 2013-14.
2. Addition of Notional Income from Unsold Flats for A.Y. 2014-15, 2015-16, and 2016-17.
3. Jurisdictional Issues and Procedural Validity.
4. Violation of Natural Justice.
5. Levy of Interest under Sections 234A, 234B, and 234C.
6. Assessment of Total Income.

Issue-wise Comprehensive Details:

1. Validity of Assessment Orders under Section 153A for A.Y. 2012-13 and 2013-14:
The assessee filed returns for A.Y. 2012-13 and 2013-14 on 26.09.2012 and 30.09.2013, respectively. The time limit for issuing notices under Section 143(2) expired on 30.09.2013 and 30.09.2014. Original assessments under Section 143(3) were completed on 11.02.2015 and 28.03.2016. A search was conducted on 04.02.2016, and notices under Section 153A were issued. The Tribunal observed that no incriminating material was found during the search that could justify the additions made. The Tribunal relied on the case of CIT v. Continental Warehouse Corporation and held that no additions could be made under Section 153A if no incriminating material was found. Therefore, the appeals for A.Y. 2012-13 and 2013-14 were allowed.

2. Addition of Notional Income from Unsold Flats for A.Y. 2014-15, 2015-16, and 2016-17:
The assessee had unsold flats, and the Assessing Officer estimated notional income based on property tax. The Tribunal referred to the case of CIT v. Ansal Housing Finance and Leasing Company Limited and held that notional rent could be assessed under the head "Income from House Property." However, the Tribunal directed the Assessing Officer to estimate the rent based on municipal ratable value. The appeals for these years were partly allowed.

3. Jurisdictional Issues and Procedural Validity:
The assessee contended that the jurisdiction vested with ITO Ward 10(3)(4), Mumbai, and no order under Section 127 was passed for the transfer of the case. The Tribunal dismissed the ground as it was not pressed during the hearing.

4. Violation of Natural Justice:
The assessee argued that the assessment was made in violation of natural justice, and adequate opportunity was not provided. This ground was also dismissed as it was not pressed during the hearing.

5. Levy of Interest under Sections 234A, 234B, and 234C:
The assessee contended that interest was levied without giving an opportunity of hearing. The Tribunal noted that this ground was consequential in nature and dismissed it.

6. Assessment of Total Income:
The assessee argued that the total income was correctly disclosed, and the addition of Rs. 1,91,184/- should be deleted. The Tribunal directed the Assessing Officer to estimate the rent based on municipal ratable value and partly allowed the appeal.

Conclusion:
Appeals for A.Y. 2012-13 and 2013-14 were allowed. Appeals for A.Y. 2014-15, 2015-16, and 2016-17 were partly allowed. Order pronounced on 31st March 2023.

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