Tribunal rules on income reassessment for AY 2008-09 and 2009-10

The Tribunal dismissed the appeal for AY 2008-09, upholding the assessment of lease rental income at Rs. 15,30,000. The assessee's attempt to revise the income declared in the original return in response to a notice u/s 153A was rejected. For AY 2009-10, the Tribunal allowed the appeal for statistical purposes, directing the AO to re-examine the lease rental income issue based on a reversal entry in the society's books. The decision emphasizes that section 153A proceedings are for the department's benefit and cannot be used by the assessee to alter previously declared income.

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Issues Involved:
1. Assessment of lease rental income for AY 2008-09 and 2009-10.
2. Validity of revising income declared in the original return in response to notice u/s 153A.

Issue-Wise Detailed Analysis:

1. Assessment of Lease Rental Income for AY 2008-09:

The primary issue revolves around the assessment of lease rental income declared by the assessee. Initially, the assessee declared a lease rental income of Rs. 15,30,000 in the original return for AY 2008-09, which was processed u/s 143(1). However, in response to a notice issued u/s 153A following a search operation, the assessee revised the lease rental income to Rs. 2,29,500. The AO rejected this revision, stating that section 153A is meant for assessing undisclosed income found during the search and not for revising already declared income. The AO relied on the Supreme Court decision in M/s Sun Engineering Works P. Ltd., which held that reassessment proceedings cannot be used to review concluded issues unrelated to the escapement of income. The CIT(A) upheld the AO's decision, emphasizing that the original return had been processed and the TDS certificate issued by the lessee showed a lease rental of Rs. 15,30,000. The CIT(A) also noted that the subsequent reversal of entries in the books of account was self-serving as both parties were related. The Tribunal agreed, holding that the assessee cannot revise the lease rental income declared in the original return in the return filed u/s 153A, as the proceeding is for the benefit of the department. The appeal for AY 2008-09 was dismissed.

2. Assessment of Lease Rental Income for AY 2009-10:

For AY 2009-10, the situation was different as the assessee did not file any original return. The return filed in response to the notice u/s 153A declared lease rental income of Rs. 2,29,500, which matched the TDS certificate issued by the lessee. The AO, however, added an amount of Rs. 13,00,500 based on the entries in the books of account of the society, which allegedly showed a lease rental of Rs. 15,30,000. The assessee contended that the society had reversed the excess rent of Rs. 13,05,000 shown in the previous year and that the AO's addition was based on an incorrect appreciation of facts. The Tribunal found merit in the assessee's contention and directed the AO to re-examine the issue, considering the ledger account of the assessee in the books of the society, which indicated a reversal entry. The appeal for AY 2009-10 was allowed for statistical purposes.

Conclusion:

The Tribunal dismissed the appeal for AY 2008-09, upholding the assessment of lease rental income at Rs. 15,30,000, as the assessee cannot revise the income declared in the original return in the return filed u/s 153A. For AY 2009-10, the Tribunal allowed the appeal for statistical purposes, directing the AO to re-examine the issue of lease rental income, considering the reversal entry in the books of the society. The judgment underscores the principle that section 153A proceedings are for the benefit of the department and cannot be used by the assessee to revise already declared income.

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