2019 (8) TMI 100

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....ceeds from sale of paintings as income from other sources in previous Assessment Years thereby disregarding the fact that the Appellant had offered sale of paintings as Capital Gains. (ii) CIT (A) erred in concluding that the reopening notice was not only dated within but also issued within the time allowed in section 149 of the Income Tax Act in spite of the circumstances being contrary to the Standard Operating Procedures published by the Department of Posts, (iii) The CIT (A) erred in disregarding the fact that the AO has contradicted herself at the time of recording the reasons. The AO herself acknowledged that the amount of Rs. 38,00,000/- has been offered to tax as Capital Gains in the Return of Income for the relevant assessment year; subsequently in the concluding paragraph she stated that the same amount of Rs. 38,00,000/- had escaped assessment. Ground No. 2: 'Annual Let Out Value' (i) The learned CIT(A) erred in not considering the additional ground of appeal thereby depriving the Appellant the option to categorize the property of his own choice as 'self occupied property', out of 3 properties owned by the Appellant, in....

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..... 38 Lacs, interest on Bonds for Rs. 8 Lacs and interest on Savings Account for Rs. 0.08 Lacs. However, the said return was non-est / invalid return in view of the fact it has been filed beyond time limit prescribed u/s 139(4) which permits the assessee to file its return of income at any time before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. 2.3 The case of the assessee was reopened by issuance of notice u/s 148 dated 31/03/2015 directing the assessee to respond to the same. In response, the assessee filed a return of income on 01/03/2016 declaring an income of Rs. 89.41 Lacs. The difference in income declared in two returns arises on account of the fact that in subsequent return, the assessee offered notional rent from two vacant house properties and additional Long- Term Capital Gains from sale of paintings which were stated to be gifted to him by his father over his life time. At the same time, the assessee demanded reasons for reopening the assessment which were duly supplied. Although the assessee raised objections against reopening of assessment, however, the same were rejected and the matter was proceeded wit....

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....o invoke reassessment proceedings, advanced arguments to support the fact that reassessment proceedings stood vitiated in the eyes of laws. The quantum additions have been assailed on merits also. Our attention has been drawn to the orders of the Tribunal for AYs 2006-07 & 2007-08 for the submissions that similar view may be taken in this year also. Per Contra, Ld. Departmental Representative [DR], relying upon the observations of Ld. AO, submitted that the assessee miserably failed to prove the sale of paintings and therefore, the income was nothing but undisclosed income of the assessee. 5.1 We have carefully heard the rival submissions and perused relevant material on record and deliberated on the judicial pronouncements cited before us including the decision of Tribunal in assessee's own case in earlier years. First, we take up the issue of validity or reassessment proceedings. 5.2 At the outset, the reasons recorded by Ld. AO to trigger reassessment proceedings against the assessee, could be extracted in the following manner: - "........ In this case, the assessee has filed return of income with DClT-12(2), Mumbai on 22.10.2010 declaring income of Rs. 4....

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....ld not require any interference. In result, Ground No. 1 stands dismissed. 5.3 So far as the addition of notional rental income from two flats situated at Mumbai is concerned, we find that the issue is recurring in nature. The same has already been delved into by the co-ordinate bench of this Tribunal in assessee's own case for AY 2006-07 ITA No. 4320/Mum/2016 order dated 11/05/2018, wherein the bench at para 18, relying upon the decision of Hon'ble Bombay High Court in CIT V/s Tip Top Typography 368 ITR 330 directed Ld. AO to adopt the deemed rent as per Municipal Rateable value and assess the income accordingly. This decision has subsequently been followed by Tribunal in AY 2007-08 ITA No.6989/Mum/2016 order dated 29/06/2018. Therefore, facts being parimateria the same, we direct Ld. AO to compute the deemed rent on similar lines. Ground No.2 stands partly allowed. 5.4 In the last ground of appeal, Ld. AR has advanced arguments to submit that gains arose out of sale of painting acquired by the assessee from his late father and therefore, the same has rightly been offered as Capital Gains. Upon due consideration, we find that painting to the extent of Rs. 38 Lacs are stated ....