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TMI Blog2024 (10) TMI 866X X X X Extracts X X X X X X X X Extracts X X X X ..... used for the business purposes - HELD THAT:- AO made addition without bringing on record whether assets under consideration is habitable or not. From the facts available on record, we observed that the relevant property was repaired and made habitable only in the subsequent assessment year. However, as per the decision of ld. DRP, the property was not habitable in AY 2016-17 and merely because assessee has disclosed deemed rental income in AY 2014-15, it does not prove or show that the relevant property was habitable in AY 2012-13. Therefore, an inhabitable property cannot be brought to tax applying deemed rental income. Accordingly, the addition made by the Assessing Officer is directed to be deleted and ground no.3 is allowed. - S.Rifaur Rahman, Accountant Member And Shri Vimal Kumar, Judicial Member For the Assessee : Shri Ashok Malik, Adv. For the Revenue : Shri Munish Rajani, Sr. DR. ORDER PER S.RIFAUR RAHMAN, AM: 1. These appeals are filed by the assessee against the separate orders of ld. Commissioner of Income-tax Appeals/NFAC, Delhi (hereinafter referred to Ld. CIT (A) ) both dated 29.02.2024 for AYs 2012-13 2013-14. 2. Since the issues are common and appeals are inter- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot followed the direction given by the Ld. Apex Court in the case of GKN Drive Shafts India Ltd. vs. ITO 259 ITR 19. 3) The ld. CIT(A) has grossly erred in law in upholding addition of Rs. 15,54,000/- in the income of the assessee under section 23 of the I.T. Act. 6. At the time of hearing, ld. AR for the assessee submitted oral submissions and also filed written submission which are reproduced below :- 1. Ground no 1. In our letters dated 12-01-2021 and 17-11-2023 we had pointed out that wrong facts were written by AO while recording the reasons vide our letters dated 18-03-2020 and 11 -01 -2021 which are as follows: - 1) PARA 3 of letter dated 11.01.2021 The learned AO had recorded, that during the relevant year, the assessee had shown income from business of manufacturing Herbal/Ayurvedic/Beauty products, dividend income short term and long term capital gain /losses from Mutual funds, which were partially against the facts, from enclosed statement of income you will observe that assessee had declared deeming rental income of Rs 18,94,200/- , from reason recorded your good self will observe it gives an impression that appellant has not declared any deeming rental income. 2) We ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not issue any fresh notice u/s 142(1) after rejecting the objections raised by us, we again filed objection requesting him to pass a speaking order on our objections raised but he did not pass any order on that. He just passed the reassessment order u/s 147. The learned CIT (A) has mentioned all about this on page 9 10 of his order but while giving the decision he did not adjudicate on any of our arguments. GROUND NO 3 The Appellant's Counsel in their letter dated 19-03-2019 had filed certain photographs to support her contention that these properties are not habitable, which A.O. himself admitted in his order but did not accept it without assigning any reason except stating that it did not obviate the application of section 22/23 of the Act. Neither he admitted the fact that Dhauj building is used for R D purpose on which as per records deduction under section 35(1 )(i) has been allowed by the department itself in the assessment years of 1991 -92 1992-93. The applicant had raised the same issue vide its letter at GROUND No 4 before CIT(A) the copy of the order of DRP for the assessment year 2016-17 where such additions were deleted was also filed. The CIT(A) did not conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rental income in the hands of the assessee in that year also. Copies of Balance Sheet, Profit Loss Accounts of Investment unit is also enclosed for your file reference. The appellant had also filed the copy of P L account and Balance Sheet of R D unit of Dhauj for this year also which clearly showed that Dhauj property was and is being used for R D purposes since 1991-92 and the A.O. had accepted the same as such on the basis of previous history which is on record that the cost of this property was allowed as deduction u/s35(2)(iii)(3) of the lncomeTaxAct,1961. From the above stated facts your Hon ours will appreciate that there was not any failure on the part of the Appellant, she had declared all the facts which were duly accepted by the A.O. and these facts were not disputed by the A.O. as well as by CIT(A) in their orders. In our humble submission reopening of completed assessment where there is no failure on the part of the Appellant is not valid and requires to be quashed. We will also like to bring on the notice of Hon ble Members that all the cases cited by A.O. in the order passed while rejecting the objection against reopening of case dated 24-12-2019 (Copy Enclosed). 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lid requires to be quashed. Because learned CIT (A) in-spite of all our submissions made by letters dated 12-01-2021 17-11-2023, he did not adjudicate why these decisions are not applicable in our case he did not pass a speaking order at all. The assumptions on jurisdiction u/s 147 must be on the existence of correct material before the authority, during the course of proceeding while giving reply to the observation of the AO that on the basis of completed assessment for 2015-16 which was based on the basis of additions made in the assessment year 2014-15 that income of Rs 19,61,400/- had escaped assessment as deeming income. It was explained by letters dated 19-03-2019 that addition made in assessment year 2015-16 has been reduced to same figure only of 2014-15, in spite of that in the reason recorded the A.O. had stated that income of Rs 17,09,400/- had escaped assessment as deeming rental income but he had made addition of Rs 15,54,000/- only which clearly indicates that there was no application of mind by A.O. So reopening of the case without proper application of mind is invalid, we get support from the following judgements; - 1. CIT VS ASHIN NEEDLESS PVT LTD 384 ITR 144 - whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act,1961, so reopening of assessment beyond four year is in valid. 2. The AO has not applied his mind while recording his reason for reopening where he had taken the wrong figures of concealment of income in spite of the fact that during proceeding under section 133(6) correct figures were brought to his notice, on this ground itself reassessment is invalid. 3. The learned PCIT did not apply his mind while giving sanction and gave approval on wrong figures mechanically which is apparent from the evidences produced, on this ground also the notice issued requires to be declared null and void and reassessment done on invalid notice itself is invalid. GROUND NO 2. The Learned CIT(A) has erred in law in upholding the order passed U/S 147/143(3) of The Income Tax Act 1961 as valid even though the AO had not followed the direction given by Learned Apex Court in the case of GKN Drive Shafts India Ltd vs ITO 259 ITR 19. The learned Apex Court has laid down certain procedure to be followed once the notice issued under section 148 is challenged, the A. O. has to follow, whereas in our case the A.O. did not follow that, so order passed is required to be quashed as decided by D.H.C, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of opinion given to her by her counsel at that time in the assessment year 2014-15, but in next year 2015-16 which she did not agree where again additions were made in the re assessment proceeding the appellant had stated that these properties were being used for business purposes till these were sealed in 2007 along with other properties however these properties were de sealed in 2008 November but other properties were de sealed in F.Y. 2014-15 and these properties were not habitable till repairs were carried out in the financial year 2014 - 15 and from assessmentyear2016-17 the appellant had offered for taxation deeming rental income on these properties besides other properties. During the course of proceeding under section 133(6) some photos were filed to show that these properties were not habitable properties and cannot fetch any rent and also decision of Bombay tribunal in case of SAIF ALI KHAN VS ACIT 53 CCH 486 was cited along with decision of DELHI TRIBUNAL in the case of Sunita Sanjay Kedia Gurgaon vs ITO Ward 4(3), where it was held that no deeming rental income arises in case of not suitable tenant how non habitable property can fetch any rent, It is also an ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee any reason to disturb the findings of the ld. CIT (A) with regard to reopening of the assessment. 8. With regard to ground no.1, we observed that assessee has filed objections for reopening of the assessment before the Assessing Officer and Assessing Officer has disposed off the objections on 24.12.2019. However, assessee filed further objections vide letter dated 26.12.2019. As far as procedure laid down by the Hon ble Apex Court in GKN Drive Shafts India Ltd. (supra), the Assessing Officer has to dispose off the objections raised by the assessee. In our view, it may or may not satisfy the assessee fully. In this case, the Assessing Officer has disposed off the objections vide letter dated 24.12.2019. Therefore, the Assessing Officer has followed the procedure laid down in GKN Drive Shafts India Ltd. (supra) decision. Hence, we do not see any reason to disturb the findings of ld. CIT(A). 9. With regard to ground no.3, we observed from the record that assessee has a property at Dhauj where assessee established and carried on R D unit for its business purposes since 1991-92. As per the record, assessee has claimed deduction u/s 35(2)(iii) of the Act. The abovesaid property was se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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