TaxTMI 
TaxTMI 
2023 (8) TMI 1333
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....or issue of notice u/s. 143(2) of Income-tax Act, 1961 (in short "Act") were expired on 30.09.2013 and 30.09.2014 respectively. It is also brought to our notice that original Assessment Order u/s. 143(3) were passed on 11.02.2015 with regard to A.Y. 2012-13 and 28.03.2016 with regard to A.Y. 2013-14. It was submitted that both these Assessment Years are unabated and it was brought to our notice a search and seizure action was undertaken in Gurnani Group on 04.02.2016 and the assessee was also covered in the above search proceedings. Accordingly, a notice u/s. 153A were issued and served on the assessee. It was submitted that notices u/s. 143(2) and 142(1) were issued and served on the assessee. In response assessee has filed the relevant return of income and filed the submissions. 4. It was brought to our notice, notice u/s. 142(1) of the Act which is placed on record at Page No. 31 of the Paper Book. As per the above notice the assessee was issued notices with regard to on-money received during the period 2010-11 to 2015-16. However, while completing the assessment u/s. 143(3) r.w.s. 153A the additions were made merely on the basis of information and various financial statement....
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....(See 263 ITR (St) 61 at 107) the CBDT has clarified that on initiation of proceedings under section 153A, the proceedings pending in appeal, revision or rectification proceedings against finalised assessment/ reassessment shall not abate. It is only because, the finalised assessments/reassessments do not abate, the appeal revision or rectification pending against finalised assessment / reassessments would not abate. Therefore, the argument of the revenue, that on initiation of proceedings under section 153A, the assessments / reassessments finalised for the assessment years covered under section 153A stand abated cannot be accepted. Similarly on annulment of assessment made under section 153A(1) what stands revived is the pending assessment / reassessment proceedings which stood abated as per section 153A(1). "Once it is held that the assessment has attained finality, then the Assessing Officer while passing the independent assessment order under section 153A read with section 143(3) could not have disturbed the assessment / reassessment order which has attained finality, unless the materials gathered in the course of the proceedings under section 153A establish that the reliefs gr....
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....aj Riverside Park, Panvel S2 103 5 Moraj Riverside Park, Panvel S3 102 6 Moraj Riverside Park, Panvel S4 603 7 Moraj Riverside Park, Panvel S5 102 8 Moraj Riverside Park, Panvel S5 202 9 Moraj Riverside Park, Panvel S5 302 10 Moraj Riverside Park, Panvel S6 102 11 Moraj Riverside Park, Panvel S6 103 12 Moraj Riverside Park, Panvel S6 203 13 Moraj Riverside Park, Panvel S6 304 14 Moraj Riverside Park, Panvel S6 403 12. By relying on the decision of the Hon'ble Delhi High Court in the case of CIT v. Ansal Housing Finance and Leasing Company Limited and the Assessing Officer estimated the rent on the above said flats to the extent of Rs.. 1,91,814 and the relevant conclusion is reproduced below: - Sr. No Name of Project Building Flat No Estimated rent as per property Tax 1 Moraj Riverside Park, Panvel T4 404 13656 2 Moraj Riverside Park, Panvel R1 401 13656 3 Moraj Riverside Park, Panvel S1 102 13656 4 Moraj Riverside Park, Panvel S2 103 13656 5 Moraj Riverside Park, P....
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.... taxes paid and by Standard Deduction u/s. 24 @ 30% of adjusted ALV and v. the appellant further submits that no material of whatsoever nature was found and/or seized during the course of search u/s.132 of the Act in the hands of your appellant and that the additions of Rs. 1,91,184/- as deemed Income from House Property made in the order were in respect of the items and issues that were settled in the original assessment and therefore were not the subject matter of the special assessment u/s. 153A. (c) Your appellant prays that the addition of Rs. 1,91,184 be deleted from the total income of the assessee as assessed by the Ld. AO and in the alternative the lower of Standard Rent or Municipal Ratable Value be adopted and such amount be further reduced by the municipal taxes and deductions u/s. 23 and u/s. 24 of the Act. GROUND NO. 2: INVALID APPLICATION OF S. 153A & ADDITIONS MADE BY EXCEEDING THE SCOPE OF S. 153A [Para 4, Page No. 5-7 of CIT(A) Order dt. 15.12.2021 (a) The Ld. CIT(A) erred in law and on facts in confirming the actions of the ld. AO in making additions or in denying exemptions aggregating to Rs. 1,91,184/- in respect of items and....
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....e evidences and proofs and documents produced for verification and further erred in proceeding to assess the total income in total disregard of such evidences and in not conducting adequate inquiry or bringing any material on record to support his action and in denying adequate opportunity of hearing including by not furnishing the copies of material used against your appellant and not facilitating the cross examination. (b) Your appellant submits that the Ld. CIT(A) and AO did not appreciate and instead ignored the evidences produced in assessment and the appellant further submits that all the details and explanations as requested were furnished including those required as per the law and adequate inquiries were not made and the copies of material used was not furnished and examination was not facilitated and the cross examination was not provided. (c) Your appellant pleads that an assessment made in violation of the provisions of natural justice be quashed. GROUND NO. 5: LEVY OF INTEREST U/S. 234A of RS. 23,158, U/S. 234B OF RS. 92.632/-, U/S. 234C OF RS. 2,02,484/- [Para 9, Page No. 19 of CIT(A) Order dt. 15.12.2021] (a) The Ld. CIT(A) erred i....
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....y relying on the decision of the CIT v. Ansal Housing Finance and Leasing Company Limited by adopting the rent based on property tax. The Coordinate Bench in this aspect has considered the similar issue and has decided the issue and the relevant ratio is reproduced below: - "7. We have heard the rival submissions and perused the relevant finding given in the impugned orders. The main controversy as raised in ground No.1 is, whether notional income from unsold units held as stock-in-trade can be assessed under the head, "income from house property". It has been canvassed before us that, there are divergent views on this issue, one view proposed by the judgment of Hon'ble Gujarat High Court in the case of CIT Vs. Neha Builders (Supra) which is in the favour of the Assessee, whereas the other view has been proposed in the decision of the Hon'ble Delhi High Court in the case of the CIT Vs. Ansal Housing Financial Leasing Ltd. (Supra) which is in favor of the revenue. Therefore, judgment favorable the Assessee should be followed. 8. We have gone through the judgment in the case of CIT vs. Neha Builders, wherein following question of law was referred to the Hon'ble High....
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....f land or property would also be one of the businesses for which the company was incorporated". 10. True it is, that income derived from the property would always be termed as "income from the property", but if the property is used as "stock-in-trade", then they said property would become or par take the character of the stock, and any income, derived from the stock, would be "income" from the business, and not income from the property. If the business of the assessee is to construct the property and sell it or to construct and let-out the same, then that would be the "business" and the business stocks, which may include movable and immovable, would be taken to be "stock-in-trade", and any income derived from such stocks cannot be termed as "income from property". Even otherwise, it is to be seen that there was distinction between the "income from business" and "income from property" on one side, and "any income from other sources" The Tribunal, in our considered opinion, was absolutely unjustified in comparing the rental income with the dividend income on the shares or interest income on the deposits. Even otherwise, this question was not raised before the subordinate Tri....
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....e business. The authorities below have concurrently found in favor of the revenue that the rental income cannot be treated as income from business and treated it as "income from house property" under section 22 of the Income-tax Act. The question thus raised was whether the Tribunal is right in so concluding that the rental income is an income from house property. Hon'ble High Court after referring to various decisions of the Hon'ble Supreme Court held that rental income owned by the Assessee was assessable as income from house property. 11. Then, again in the case of CIT Vs. Sane & Doshi Enterprises reported in (2015) 377 165 (Bombay), Hon'ble High Court held that rental income received from unsold portion of the property constructed by the Assessee Real Estate Developer is assessable as income from house property. The Hon'ble Jurisdictional High Court again after analyzing the entire jurisprudence and various judgments of Hon'ble Supreme Court, finally held that rental income received from unsold portion of property constructed by Assessee, Real Estate Developers is assessable as income from house property and not business income. The Hon'ble High Court had further obser....
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....ALV) of flats, added on notional basis are that the assessee-company engages itself in the business of development of mini-townships, construction of house property, commercial and shop complexes etc. In the assessment completed for the year under consideration, the AO assessed the ALV of flats which the assessee had constructed, but were lying unsold under the head "Income from house property". The assessee however, contended that the said flats were its stock-in trade and therefore the ALV of the flats could not be brought to tax under the head "Income from house property". The AO however did not accept the stand of the assessee and therefore, added the notional value of unsold flats to the total income of the assessee. On appeal by the assessee, the CIT(A) however set aside the addition made by the AO. The revenue's appeal to the Tribunal was unsuccessful. 16. Hon'ble Delhi High Court after referring to various judgments of Hon'ble Supreme Court, finally observed as held in under: "In the present case, the assessee is engaged in building activities. It argues that flats are held as part of its inventory of stock-intrade, and are not let out. The further arg....
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....o where, the Hon'ble Supreme Court in any of the cases which has been referred by the Hon'ble Delhi High Court dealt with issue of notional rental income when the property held as stock-in-trade or closing stock which has not been actually let out, is liable to be taxed as income from house property. However, be that as maybe, there is no contrary decision of any other High Court and therefore, this decision Hon'ble Delhi High Court will have both binding and persuasive value. No direct contrary decision has been brought to our knowledge of any other High Court and we have already noted above that the decision of Hon'ble Gujarat High Court in the case of Neha Builder (supra) was not on the issue on notional rent from unsold stock. Therefore, it cannot be held that on this issue the judgment of Hon'ble Gujarat High Court is in favor of the Assessee and therefore, the judgment of Delhi High Court in the case of Ansal Housing Finance Leasing Company Ltd (Supra) should not be followed. Thus, in our opinion this Tribunal in the case of Dimple Enterprises vs. DCIT (Supra) as cited and relied upon by the Ld. DR has correctly appreciated this distinction. 18. One very important de....
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....is issue and against the Assessee, therefore same needs to be followed. Accordingly, we hold that Assessing Officer is correct in computing ALV on notional rent on unsold stock, but with following riders and directions to the AO as discussed herein after. 21. Firstly, the flats or units on which assessee has received any advance in this year or in the earlier years but has not delivered or given final possession of the said flat/unit to the buyer, then no notional rent can be charged as it tantamount to sale. Secondly, if unit of flat is shown as work-in-progress in the books then also no notional rent can be computed. And Lastly, Ld. Assessing Officer is not justified in making estimate of 8.5% of investment as ALV which is unsustainable in view of the decision of Hon'ble Bombay High Court in the case CIT Vs. Tip top Typography reported in 368 ITR 330, wherein, it has been held that rent should be computed at Municipal ratable value. We accordingly direct the AO to ascertain the Municipal ratable value for computing the notional rent. This is also been held by ITAT Mumbai Bench in the case of Dimple Enterprise Vs. DCIT (Supra), in the following manner:- "Now the ....