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TMI Blog2025 (1) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... he income from house property has to be offered for tax purpose on the unsold inventories. We further draw our inference by placing reliance on the decision Gundecha Builders [ 2019 (1) TMI 112 - BOMBAY HIGH COURT] and CIT Vs. Sane Doshi Enterprises [ 2015 (4) TMI 882 - BOMBAY HIGH COURT] where it was held that the income from unsold inventories of a building should be offered under the head income from house property . Similar view was taken by in the case of DCIT Vs. M/s. Inorbit Malls P. Ltd. [ 2022 (10) TMI 1150 - ITAT MUMBAI] in which reliance was placed on the decision of Ansal Housing Finance Leasing Company Ltd. [ 2012 (11) TMI 323 - DELHI HIGH COURT] where it was held that the vacant units in the possession of the appellant are liable to be charged as notional rental income under the head income from house property on the basis of their annual letting value. The rental income should be offered on notional basis as per the statute. This order of the coordinate Bench was very exhaustive and binding in nature as it dealt with all cases relating to the core issue. AO committed an error of not making the addition of notional annual letting value on vacant units of building, for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of M/s. Emtci Engineering Ltd. Vs. CIT were not considered by the Ld. AO while completing the reassessment proceedings. The Ld. PCIT gave a show-cause notice dated 7.2.2024 stating that the Ld. AO has not made any addition based on the above said decisions relating to unsold inventories which comes to Rs. 4.34 crores and hence the order of the Ld. AO is erroneous and prejudicial to the interest of revenue. The Ld. PCIT has given an opportunity to file submissions. After taking into consideration submissions of the appellant company, Ld. PCIT passed an order u/s. 263 of the Act which is being challenged by the appellant company now before the ITAT. 3. None appeared on behalf of the appellant. But, the appellant filed a detailed paper book which contains correspondence between the appellant and the Ld. AO, notice issued u/s. 143(2) of the Act read with section 147 of the Act, tax audit report, statement of accounts and correspondence made during the proceedings before Ld. PCIT. Case was originally posted for hearing on 22.7.2024, 24.9.2024 and 7.11.2024. Subsequently, when the case was taken up for hearing on 22.7.2024, Ms. Sruti Kalyanikar, Advocate appeared on behalf of the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as erroneous prejudicial to the interest of revenue and for that proposition the appellant company relied on the decisions of Malabar Industrial Company and Max India Limited decisions of Hon'ble Supreme Court. 6. The Ld. DR heavily relied on the order of Revision passed by Ld. PCIT u/s. 263 of the Act and argued that both the conditions of Error and prejudicial to the interest of Revenue were fulfilled and hence the order of Revision should be upheld. He has further placed reliance on the decisions of CIT Vs. Gundecha Builders (Bombay High Court) and Sane and Doshi Enterprises (Bombay High Court) and submitted that the Revision order of Ld. PCIT may be upheld. 7. The order of Ld. PCIT and paper book filed by the appellant company were perused and arguments of Ld. DR were taken into consideration and the case was heard. The decisions of Malabar Industrial Company and Max India Limited are not applicable to the facts of this particular case because the Ld. AO has not applied his mind while passing the reassessment order as mentioned above which was quite cryptic and does not convey any meaning. In such circumstances, Ld. PCIT is empowered to issue a show-cause notice and pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. 263 can be passed when there is Error/non-application of mind of the AO and the order passed causes Prejudicial to the interest of Revenue . a) Where the stereotype order is passed, which simply accepts what the assessee has said in return and fails to make enquiries which are called for and in the circumstances of the case, the Commissioner is justified in holding that the order is erroneous and prejudicial to the interests of revenue. [Tara Devi Aggarwal Vs. CIT (1973) 88 ITR 323 (SC)] b) The Ld. AO accepted entry in statement of account filed by the appellant in the absence of any supporting material without making any enquiry. On these facts, the conclusion that the order of ITO was erroneous was irresistible. The High Court has rightly held that the jurisdiction exercised by CIT u/s. 263(1) was justified. Malabar Industrial 243/83 (SC). c) Where the Assessing Officer sought information from assessee regarding its claim of deduction under section 10B, however, without considering such information produced by assessee and without application of mind to same, he allowed such claim for deduction, it was a case of inadequate inquiries and therefore exercise of revision jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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