2015 (8) TMI 1030 - AT - Income Tax

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 ... Assessment of lease rental income - whether there is no scope for assessee to revise the lease rental income in a return filed u/s 153A - Held that:- Section 153A empowers the AO to even reassess a particular income without the strict conditions attached u/s 147. Considered in the aforesaid context, it is to be held that proceeding initiated u/s 153A of the Act is for the benefit of the department, hence, assessee cannot take advantage of such proceeding. Applying the aforesaid principle to the facts of the present case, it is to be seen that in the original return of income, assessee has declared lease rental income at ₹ 15,30,000. Admittedly, assessee had not filed revised return voluntarily to rectify the mistake claimed to have been committed in the original return. Only when the department issued notice u/s 153A of the Act consequent to search operation, assessee in the return filed in response to such notice had reduced lease rental income from ₹ 15,30,000 to ₹ 2,29,500. In our view, in the return filed u/s 153A of the Act, assessee cannot revise the income in respect of an item of income which has already been declared in the original return of income at a higher figure and which has also been processed u/s 143(1). This is simply for the reason that proceeding initiated u/s 153A is for assessing undisclosed income unearthed as a result of search operation along with other income, which have escaped assessment. In case of CIT Vs. M/s Sun Engg. Works P. Ltd. (1992 (9) TMI 1 - SUPREME Court ), the Hon’ble Supreme Court while holding that the provision of section 147 is for the benefit of department and not for the benefit of assessee, also held that a particular claim of assessee, if already has been considered at the time of original assessment, or assessee has not raised that claim either in the original return of income or during the original assessment proceeding, he cannot raise the same in the return filed in response to notice issued u/s 148. The principle laid down clearly applies to proceeding initiated u/s 153A of the Act., as AO has been empowered u/s 153A to also reassess the income of assessee for the preceding six AYs. In the aforesaid view of the matter, we hold that assessee having already declared lease rental income at ₹ 15,30,000, in the original return of income, she cannot revise it to ₹ 2,29,500 in return filed in response to notice issued u/s 153A of the Act as assessee cannot turn the proceeding u/s 153A to her advantage. In the aforesaid view of the matter, we uphold the order of ld. CIT(A) in so far as AY 2008-09 is concerned. - Decided against assessee. As far as AY 2009-10 is concerned AR has stated before us that society has never shown the lease rental at ₹ 15,30,000 for AY 2009-10, rather, there is an entry in the books of society reversing the excess rent of ₹ 13,05,000 shown in the name of assessee for AY 2008-09. Thus, it was submitted by AO on an incorrect appreciation of fact, AO has added an amount of ₹ 13,00,500. After considering the submissions of AR and perusing the materials on record, we are of the view that assessee’s contention for AY 2009-10 requires examination. Though, AO has alleged that society in its books of account has shown lease rental at ₹ 15,30,000, however, the ledger account of assessee in the books of account of society, a copy of which has been submitted before us, does indicate that it is only a reversal entry of excess rent paid. Therefore, considering the fact that in AY 2009-10, lease rental income shown by assessee in return matches with the TDS certificate issued by the deductor, we direct AO to examine the issue afresh and decide it accordingly after due opportunity of being heard to assessee - Decided in favour of assessee for statistical purposes. 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.