| The Tax Publishers2020 TaxPub(DT) 3569 (Del-Trib) INCOME TAX ACT, 1961
Section 147
Where CIT(A) held that the income of assessee was chargeable to tax under the head 'Business income' and it was, therefore, clear that at threshold AO was justified in reopening the assessment and subsequently on merits the CIT(A) reached a different conclusion that income falls under the head “Income from businessâ€, it fell for consideration as to whether CIT(A) was justified in refusing to take cognizance of the bifurcations of the lease and services by way of a supplementary agreement, therefore, reopening of the assessment under section 147 was beyond challenge.
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Reassessment - Incorrect treatment of the income received from house property - Assessee's intention to underassess the income -
Assessee leased out the assets along with Plant and Machinery to Little People Education Society for leasing out the business asset along with the facilities/services/equipment. Assessee had declared the gross receipts under the business and profession and in the P&L Account there was a claim for various expenses. AO observed that company had no Plant and Machinery, other than DG set, electrical panel, electrical transformer, lifts and air conditioning plant installed on the building declared in the schedule of fixed assets, and apart from this assessee had not carried any other business activity. Subsequently, AO recorded that assessee company treated the income received from house property as income received from business and profession and tried to underassess income chargeable to tax and therefore, income chargeable to tax had escaped assessment due to incorrect treatment of the income received from the house property. Held: In view of the fact of CIT(A) allowing the entire business expenses, the very basis for reopening the proceedings by recording the reasons, was removed and therefore, the addition on some other grounds was impermissible under law, was concerned, the observation of CIT(A) was that in view of the incorrect representation and the escapement of income, AO was justified in reopening the case. It was, therefore, clear that at threshold AO was justified in reopening the assessment and subsequently on merits the CIT(A) reached a different conclusion that income falls under the head “income from businessâ€. Now, it falls for Tribunal consideration as to whether the CIT(A) was justified in refusing to take cognizance of the bifurcations of the lease and services by way of a supplementary agreement. Tribunal therefore, hold that the reopening of the assessment under section 147 was beyond challenge.
Relied:Ranbaxy Laboratories Ltd. v. CIT (2011) 336 ITR 136 (Del) : 2011 TaxPub(DT) 1457 (Del-HC) CIT v. Jet Airways (I) Ltd. (2011) 331 ITR 236 (Bom) : 2011 TaxPub(DT) 0218 (Bom-HC)
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2010-11
INCOME TAX ACT, 1961
Section 271(1)(c)
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