TaxTMI 
TaxTMI 
2018 (9) TMI 427
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....s of Rs. 2.41 crores (rounded off). In the return, the petitioner had shown principally two sources of income namely, rental income earned by letting out immovable properties and income from other sources. In the return, the petitioner had shown the rent receipt of Rs. 3.46 crores (rounded off) and income from other sources at Rs. 1.09 crores (rounded off). 3. The Assessing Officer undertook the assessment of the return. During the course of assessment proceedings, several issues came up for consideration. One of them was the petitioner's claim for expenditure of Rs. 4.04 crores (rounded off) being interest paid on debentures. The Assessing Officer also examined the petitioner's computation of income from other sources and the expenditure claimed by the petitioner to have been incurred for earning such income. The Assessing Officer issued notice dated 4.8.2015 asking the petitioner to provide the following details : "3. Brief description about nature of your business. 4. Bills/vouchers for expenses claimed. 5. Please explain the reasons for claiming high ratio of refund of TDS/Advance tax. 6. Please justify your claim for deduction u/s....
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....h offered under the head income from other sources compulsory. 7. Income from the rent and CAM received of Rs. 4,48,58,396/during the year under consideration shown in the books of account. Where as figure shown in 26AS on which TDS deducted of Rs. 3,88,53,503/. 22. Detail copy of following account is attached at page no. 21 to 45 a) Property Tax Expenses b) Electricity Expenses c) Legal & Professional Expenses d) House Keeping Expenses e) AMC Cost f) Security Services Charges" 5. The Assessing Officer called further details such as property tax expenses, receipts of security expenses, receipts of house keeping expenses, receipts of professional charges paid and receipts of electricity expenses, which all were supplied by the petitioner. 6. The Assessing Officer after such scrutiny passed the order of assessment on 9.3.2016 in which he disallowed the petitioner's claim of interest expenses of Rs. 4.04 crores with which we are not directly concerned. With respect to the petitioner's declaration of rental income as well as petitioner's computation of income from other sources which would include....
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.... has claimed excess deduction of Rs. 72,15,447/( 1,59,96,78787,81,340). 5. Thus, the assessment order passed by the Assessing Officer for A.Y 201314 is erroneous and prejudicial to interest of the revenue. Therefore,1 hereby initiate proceedings u/s 263 of the Act with a view to pass a suitable order. Before passing of such order, you are hereby given an opportunity of being heard in the matter. In this connection you are requested to attend this office on 16012018 at 5:30 PM. alongwith your written submission." 8. The petitioner opposed such notice by filing a detailed reply dated 9.2.2018. In such reply, the petitioner contended that the order of assessment is neither erroneous nor prejudicial to the Revenue. It was therefore, not open for the Commissioner to exercise revisional powers. The petitioner made detailed submissions with respect to the two grounds sought to be pressed in such notice. With respect to the first of the two grounds, the petitioner contended that the annual rental charges of a property cannot be made the basis for assessing the rent received by the assessee in a particular year. In any case, annual rental value of two properties cannot be compar....
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....ition contending that the challenge at this stage of issuance of show cause notice should not be encouraged. The Commissioner has recorded proper reasons. The petitioner would have full opportunity to participate in the proceedings. The proceedings at this stage should not be terminated. Counsel further submitted that both the grounds are valid and germane. A similar property in the same locality has fetched much higher charges in case of another entity engaged in the same business. There is thus the starting point to suggest that the petitioner had not correctly declared the rental charges for its properties. Regarding the second issue, counsel submitted that same was completely unrelated and independent of the first one. The petitioner had diverted greater expenditure towards income from other sources. Proper allocation should have been done and part of the expenditure should have been diverted for earning income from house property. 11. Having heard the learned advocates for the parties and having perused the documents on record, we may peruse the reasons recorded by the Commissioner for issuing the impugned notice minutely. The Commissioner relied on two factors. In first on....