TaxTMI 
TaxTMI 
2007 (7) TMI 424
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.... the owner of the premises. Assessee has taken the premises on sub-tenancy from a Trust. In support of the above, assessee filed a copy of the agreement entered into with Shree Basant Kumar Somani Memorial Trust. Assessee also produced copy of Leave & License Agreement. It was further submitted that assessee provided certain amenities in the form of furniture, fixtures, air conditioners, EPABX Telephone systems, etc. against which assessee received some compensation. To claim that assessee's receipts were business income, assessee relied upon the following decisions : (i) CIT v. Associated Building Co. Ltd. [1982] 137 ITR 339 (Bom.) (ii) CIT v. National Storage (P.) Ltd. [1967] 66 ITR 596 (SC) (iii) Karnani Properties Ltd. v. CIT [1971] 82 ITR 547 (SC) (iv) CIT v. Russel Properties (P.) Ltd. [1982] 137 ITR 358 (Cal.). 3. Assessee's claim that its receipts should be treated as business income was rejected by the Assessing Officer and held this income from subletting is to be taxed under the head "Income from other sources". Assessee's claim that whatever assessee received for providing amenities should be treated as business income was also rej....
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....scrutiny as per the new procedure. On consideration of the same, it is held that the Assessing Officer is not justified in changing the head of income under limited scrutiny and he has transgressed the powers vested in him under section 143(2)(i) read with section 143(3)(i) of the Act. Therefore, assessment order passed in violation of specific provisions of limited scrutiny cannot be held as legally valid order. Hence, this assessment order is held void ab initio and it is, therefore, annulled. Once the assessment is annulled/quashed, no judgment is required to be given on merits. This view gets support from the following decisions of various High Courts as cited below : (1) The Hon'ble Madhya Pradesh High Court in the case of CIT v. Agha Abdul Jabbar Khan 187 ITR 587 has held that in the appeal preferred by the assessee before the Appellate Asstt. Commissioner, only question that required justification was where any facts and circumstances of the case the ITO had jurisdiction to reopen the assessment under section 147(a) of the Act and whether the order of reassessment was liable to be quashed. Once the appellate Asstt. Commissioner came to the conclusion that the ITO ha....
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....ed since he has erred to frame the assessment under section 143(3)(ii) as well. Further the Bench sought clarification from the assessee why the order should not be set aside and send back to the Assessing Officer to decide the issue after giving a reasonable opportunity to the assessee. How the assessee can contend that the proviso to section 143(2) prevent the Assessing Officer from making an assessment under section 143(3)(ii) even if the notice issued is under section 143(2)(ii). Assessee made a written submission dated 17-4-2007 briefly as under : "A reading together of the relevant provisions of sections 143(2), 143(3) and 153 reveals that firstly the assessment under section 143(3)(i) could be made only if a notice under section 143(2) is issued and served upon the assessee within 12 months from the end of the month in which the return was filed. It is further submitted that such notice can be issued only for conducting enquiry into assessee's claim of loss, exemption, deduction, allowance or relief. Hence it is submitted that Assessing Officer's jurisdiction is limited and he could only allow or reject such claim of loss, exemption, deduction, allowance or relief c....
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....ction 143(3)(ii) after the period of limitation 2 years prescribed under section 153. On this proposition the Respondent relied upon (1938) 6 ITR 370 (Lahore) where it is held that power to set aside cannot be exercised to override limitation (See Para 12). (ii)If the assessment is set aside at this stage it would empower the Assessing Officer to issue notice under section 143(2)(ii) thereby making proviso to section 143(3)(ii) redundant. It is not open to the authorities working under the provisions of the statute to state that the proviso to section 143(2) is redundant. On this proposition the Respondent relies upon (2002) 74 TTJ (Ahd.) 836 (See Para 8.1)." 8. Hearing the rival submissions, we are of the view that appeal by the revenue is liable to be dismissed. Section 143(2)(i) introduced with effect from 1-6-2002 by Finance Act, 2002 reads as under :- "where he has reason to believe that any claim of loss, exemption, deduction, allowance or relief made in the return is inadmissible, serve on the assessee a notice specifying particulars of such claim of loss, exemption, deduction, allowance or relief and require him, on a date to be specified therein to pro....