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TMI Blog2017 (10) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... declared by assessee being her share of 1/3rd of the total rent from the property - assessee has joint ownership of the property - Held that:- The assessee had submitted before the CIT that the assessee has joint ownership of the property and therefore, is eligible to receive only 1/3rd of the rental income and therefore, she has offered the said income in her return of income but since the TDS can be credited only to the account of one person, the assessee has been credited with the TDS and the assessee alone has claimed the TDS for the entire rental income in her hands. The assessee has also filed before us the returns of income of all the three owners of the property, i.e. the assessee, her husband Shri Nama Nageswara Rao, individual and HUF of Nama Nageswara Rao, to demonstrate that though their respective shares of rental income has been offered by all the three parties in their respective returns of income, the TDS has been claimed only by the assessee and submitted that there is no loss caused to the Revenue by allowing the entire TDS in the hands of the assessee. We find that all these documents were also filed before the CIT. However, the CIT has directed the AO to verify ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eclared rental income at ₹ 2,52,304 as against the gross rental income as observed from the TDS certificate at ₹ 4,34,784 and the corresponding TDS claim of the assessee was allowed by the AO. Thus, according to the Pr. CIT, the additional amount of rent against which TDS claim was made but not declared by the assessee, was required to be brought to tax by the AO while completing the assessment. Since the AO failed to do the same, he was of the opinion that the assessment order is erroneous. He therefore, issued a show cause notice to the assessee u/s 263 of the Act. In response to the same, the assessee submitted as under which is reproduced at Para 5 of the CIT s order: 5. The assessment was completed after considering the fact that the assessee showed l/3rd share of income from property situated at Khammam and whereas the TDS was claimed on the total rental income (being the income relating to 1/3rd share of assessee, 1/3rd share of Sri N. Nageswara Rao in Individual capacity and 1/3rd in the capacity of HUF) by the assessee. Further, their share of income was admitted in their hands of Nama Chinnamma, Nama Nageswara Rao-Individual, N.Nageswara Rao-HUF. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions of the assessee in the following judgment of Honorable Supreme Court of India in the case of MALABAR INDUSTRIAL CO. LTD. vs. COMMISSIONER OF INCOME TAX (2000)- 243-ITR -0083 -(SC). 6. The Ld, Commissioner of Income Tax(Central) ought to have appreciated that the Revisionary order u/ s 263 of the Act as well as the order passed u/s 143(3) r.w.s 153C of the Act would become invalid since the order u/s 143(3) r.w.s 153C of the Act has been passed without recording satisfaction by the present Assessing Officer as well as by the Assessing Officer having jurisdiction over the searched party in view of the judgment of A.P High Court in the case of CIT V s. M/s Shettys Pharmaceuticals Biologicals Ltd in ITTA No.662 of 2014 dated 26.11.2014. 7. The Ld. Commissioner of Income Tax(Central) ought to have appreciated that no addition can be made to the income of the assessee not only in the order passed u/s 143(3) r.w.s 153C of the Act but also in the revisionary order u/ s 263 of the Act dated 27-03-2015 without there being any incriminating material found during the course of search. 8. The Ld. Commissioner of Income Tax(Central) ought to have appreciated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ify or substitute any other point to the grounds of appeal at any time before or after the time of hearing of the appeal 6. At the outset, it is noticed that the assessee is challenging the validity of the assessment completed u/s 143(3) rws 153C of the Act in Grounds 6 to 8 on the ground that there was no incriminating material found during the course of search and also that the order u/s 143(3) rws 153C of the Act has been passed without recording of satisfaction by the AO of the assessee as well as the AO having jurisdiction over the searched party. Since the appeal before us is against the order u/s 263 and not against the assessment order itself, we are of the opinion that the validity of the assessment cannot be challenged in this appeal before us. Therefore, these grounds 6 to 8 are rejected as not maintainable. 7. Coming to the additional ground of appeal raised by the assessee, we find that this is a legal ground and goes to the root of the matter and therefore, we admit the same and proceed to dispose of the same first. From the assessment order dated 28.3.2013, it is seen that there was a search in the case of M/s. Madhucon Projects Ltd group including the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessment has also resulted in prejudice to the Revenue. As held by the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd vs. CIT reported in (2000) 243 ITR 0083, the CIT has to be satisfied with the twin conditions namely (i) the order of the AO sought to be revised is erroneous; and that (ii) it is prejudicial to the interests of the Revenue. In the case before us, the assessee had submitted before the CIT that the assessee has joint ownership of the property and therefore, is eligible to receive only 1/3rd of the rental income and therefore, she has offered the said income in her return of income but since the TDS can be credited only to the account of one person, the assessee has been credited with the TDS and the assessee alone has claimed the TDS for the entire rental income in her hands. The learned Counsel for the assessee has also filed before us the returns of income of all the three owners of the property, i.e. the assessee, her husband Shri Nama Nageswara Rao, individual and HUF of Nama Nageswara Rao, to demonstrate that though their respective shares of rental income has been offered by all the three parties in their respective returns of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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