JUDGMENT
1. This order will dispose of ITA Nos. 16 to 21 of 2005 against a common impugned order dt. 18th June, 2004, passed by the Income-tax Appellate Tribunal, Chandigarh Bench ‘A’ Chandigarh (for short ‘the Tribunal’) in ITA Nos. 205 to 210/Chd/2004, for the asst. yrs. 1993-94 to 1998-99. The appellant has also framed similar substantial questions of law by filing separate appeals for separate assessment years. The facts are being taken from ITA No. 16 of 2005. The substantial questions of law sought to be raised are as under:
(i) (a) That whether, under the facts and circumstances of the case, the assessing authority is justified in taking the action under Section 148 and making reassessment by changing the head of the income from business income to rental income based on the change of opinion and without bringing any material or evidence to justify the issue of notice under Section 148 and there being interpretation of law and hence the proceedings are unjurisdictional and need to be quashed.
(b) That under the facts and circumstances of case, the CIT (A) and Tribunal were justified in not adjudicating upon the issue of notice under Section 148.
(ii) That, whether the Tribunal was justified in upholding the reassessment under Section 148 and reversing the decision of the CIT (A) by holding that hiring of commercial assets being building and plant and machinery is an income from property and from other sources and not the business income under the facts and circumstances of the case.
(iii) That whether, under the facts and circumstances of the case, the Tribunal is justified not to have dealt with the various judgments relied upon by the respondents to adjudicate upon the issue on merits and hence the order is perverse and not a speaking order and against the judicial duty of the quasi-judicial authority to be performed.
(iv) That whether, under the facts and circumstances of the case, the Tribunal was justified in not taking into consideration the findings of the Tribunal for the asst. yrs. 1980-81 to 1983-84 in ITA Nos. 748/Chd/1992 to 751/Chd/1992 and placing the onus on the appellant to prove that he had the intention to start the business and completely taking a divergent opinion which is bad in law.
(v) That whether, under the facts and circumstances of the case, the Tribunal was justified in law in treating the income of Rs. 1,73,894 as rental income in the reassessment proceedings against the business income claimed by the appellant and having assessed as such for all the impugned years thereby disallowing the expenditure of Rs. 1,27,020.
2. The assessee filed his return of income on 16th Sept., 1993 declaring an income of Rs. 26,400 which was later on revised on January, 1994 declaring the income at Rs. 4,800 only. Though, the assessee derived income of Rs. 1,73,894 from renting out building and machinery, against which he claimed expenditure of Rs. 1,27,020 including remuneration paid to partners but the same was being shown as income from business. Since in the opinion of the AO income chargeable to tax has escaped assessment, notice under Section 148 of the IT Act, 1961 (for short ‘the Act’) was issued to the assessee. In response to the notice, the assessee reiterated his earlier return filed declaring the income at Rs. 4,800. After considering the contention raised by the assessee, the AO taxed entire receipt of the assessee on account of rent of building and machinery as income from house property and after granting statutorily available deductions demand of tax was raised.
3. Aggrieved against the order of assessment, the assessee went in appeal before the Commissioner of Income-tax (Appeals) [for short’ the CIT (A)] who relying upon the order dt. 30th July, 2001 passed in the case of the assessee by the Tribunal for the asst. yrs. 1980-81 to 1983-84, directed that the income of the assessee is to be treated as income from the business and not from the house property.
While accepting the appeal, the CIT (A) observed that the AO had not brought on record any evidence/facts to prove that the business has really been closed down and not suspended due to slump in the market. While recording this finding the CIT (A) lost sight of the fact that admittedly the business had been discontinued by the assessee since 1980-81.
4. Aggrieved against this order of CIT (A), the Revenue went in appeal before the Tribunal which was accepted vide order dt. 18th June, 2004. While accepting the appeal the Tribunal recorded the following findings in para 6 of the order:
6. We have heard the rival submissions, perused the orders of the tax authorities and gone through the material available on record as well as case law and the earlier order of the Tribunal in the case of the assessee. Whereas the assessee has relied on order of the Tribunal, learned Departmental Representative has subsequently raised a point as to the intention of the assessee of enjoying income in the form of rental only and not as business income. We find that facts in asst yrs 1980-81 to 1983-84 were somewhat different as the assessee had claimed its closure of business only some time ago and there could be an intention of the assessee to restart its business and the assessee was given benefit of such intention as the business had closed down only some time ago. But here in these cases we find that the assessee could not restart its business closed years back and it is also a fact that the assessee ultimately sold the land. Observing the above facts and circumstances of the case, we find that at no point of time during such a long gap in closure of business the assessee was able to prove its intention to restart its business. We have also considered the submissions of learned Authorised Representative that some work could not be started, as managing partner was ill. However, the contention of the assessee does not carry much strength due to the fact that the business was never started after its closure and ultimately the land was sold without being used in business. We, therefore, considering the facts of the case, are of the opinion that the ratio of the decision in the case of Scindia Potteries (supra) is well applicable to the present case as the intention of the assessee to restart its business was not at all in existence despite lapse of 17 years from its closure and the AO was left with no option but to treat the income as income from house property and the CIT(A) was not justified in deleting the finding of the AO based on the finding of the Tribunal almost ten years back in almost different circumstances. We, therefore, restore the orders of the AO in this regard and cancel that of the CIT (A).
5. The learned Counsel for the assessee reiterated submissions which were made before the authorities to the effect that the issue in the present case already stood settled by the earlier order of the Tribunal passed in favour of the assessee and there being no change in the facts and in the circumstances, the same should have been followed by the Tribunal and further that the closure of the business was temporary and the assessee still had intention to restart the same. Both these issues have been dealt with in detail by the Tribunal while deciding the appeals for the asst. yrs. 1980-81 to 1983-84. The Tribunal had given the benefit of intention of the assessee to restart the business, which according to him had to be closed temporarily at that time because of depression in the market, but as the facts speak for themselves, that closed business was not started even after lapse of 17 years. Not only this, even this also could not be disputed by the counsel for the assessee that unit was ultimately sold without business having been restarted. The reliance on the order passed by the Tribunal in the case of the assessee earlier was correctly found to be misplaced.
6. Counsel for the appellant relied upon CIT v. Vikram Cotton Mills Ltd. , CIT v. G.V. Rattaiah & Co. and
CIT v. Golden Engineering Works to support his arguments.
7. We have perused these judgments. In our view these judgments do not in any way support the case of the assessee and rather go against the assessee. In Vikram Cotton Mills Ltd. ‘s case (supra) one of the findings of the Tribunal was “at the end of the lease period, the assessee-company did not dismantle the assets and did not sell away or otherwise dispose of the assets” (p. 600 of the reports).
8. Further, Hon’ble the Supreme Court of India in the above case held that it is predominantly a matter of intention. Intention is an inference to be drawn from the relevant facts and if a plausible conclusion has been drawn on the basis of facts found, no objection can be taken. Keeping in view the findings of facts recorded by the Tribunal that there was intention to restart business by the assessee in the abovereferred case, the income from letting out of the machinery on hiring for a temporary period was held to be income from the business.
9. However, in the facts and circumstances of the case in hand, as found by the Tribunal, it is clear that the intention of the assessee was not to restart the business which was closed about 17 years back. Closure of the business ended ultimately with the sale of land, etc.
10. In the case of G.V. Rattaiah & Co. (supra), the Andhra Pradesh High Court while answering the questions referred to the Court against the Revenue held that the finding of the Tribunal could not be lightly interfered with unless the Court finds the finding ex facie erroneous and not supported by any evidence. Further, in the abovereferred case, the income from leasing out of assets to traders by the assessee was held to be income from business since the assessee was continuing in the business of buying and selling tobacco and also earning commission by purchasing tobacco for others because it was found as a fact by the Tribunal in the abovereferred case that there was no intention to abandon the business. This judgment also cannot be held to be taking a view in favour of the appellant, keeping in view the findings recorded by the Tribunal
11. As far as the judgment of this Court in Golden Engineering Works’ case (supra), while rejecting the application of the Revenue seeking reference of a question of law to this Court for opinion, relying upon earlier judgment of this Court in CIT v. Anand Rubber & Plastics (P) Ltd. , this Court held as under:
Counsel appearing for the Revenue argued that in Anand Rubber & Plastics (P) Ltd.’s case , what was held by this Court was that the question whether the rent received is assessable income from property or business income, would depend on the facts and circumstances of each case as what has to be seen is whether the asset is being exploited commercially or whether it is being let out for the purpose of enjoying rent. The distinction between the two being narrow, the same would depend on the peculiar facts of each case; it was further argued by him that in this case, the Tribunal has not recorded any finding that the premises were not let out for being exploited commercially and, therefore, a question of law does arise from the order of the Tribunal.
It is true that the Tribunal has not recorded any positive finding on this point but while dismissing the appeal, it has upheld the finding recorded by the first appellate authority that the let out premises were leased out for the commercial purpose with a motive to reduce the burden of expenditure and to reduce the loss. It would have been better if the Tribunal had recorded its own positive finding but on the facts we find that the assessee had shifted its premises from the old place to the new place due to commercial expediency and let out the old premises with a motive to reduce the burden of expenditure which it incurred for shifting to the new premises. The finding recorded by the first appellate authority which was upheld by the Tribunal to the effect that the old premises were let out for commercial exploitation to reduce the burden of expenditure and to reduce the loss, is a finding of fact, and falls in line with the law laid down by this Court in Anand Rubber & Plastics (P) Ltd. ‘s case (supra) and, therefore, no referable question of law arises from the order of the Tribunal Dismissed.
12. Keeping in view our above discussions and findings of the Tribunal, recorded on appreciation of evidence, to the effect that intention of the assessee to restart the business was not in existence, we do not find that any illegality has been committed by the Tribunal by passing the impugned order. Findings of fact recorded by the Tribunal do not call for any interference by this Court.
13. The counsel for the assessee has raised another argument that the proceedings under Section 148 of the Act are bad. Though this issue was not considered by the Tribunal but the counsel for the assessee stated that this was argued before the Tribunal. We have considered even this issue raised by the assessee and are of the view that the same is without any merit There is no weight in the arguments that once the returns were processed under Section 143(1) of the Act, proceedings under Section 148 of the Act could not be initiated. If the ingredients of Section 148 of the Act are satisfied, there is no bar to initiation of proceedings under Section 148 of the Act In the present case the counsel could not point out any illegality in the exercise of power under Section 148 of the Act.
14. In view of our above discussions, we do not find that any substantial question of law arises in the above appeals.
Appeals are accordingly dismissed.