Per R.S. Syal, Accountant Member: This set of three appeals - two by assessee and one by revenue relate to assessment year 1997-98. Since common issue is raised in these appeals, we are, therefore, proceeding to dispose them of by this consolidated order for sake of convenience. ITA Nos. 746 & 772/JU/2005: 2. These two cross appeals - one by assessee and other by revenue relate to proceedings coming out of assessment order passed pursuant to reassessment notice. assessee has raised second ground challenging initiation of reassessment proceedings. Briefly stated, facts of this case are that assessee filed its return of income on 12-6-1997 at Rs. 7,07,350, which was processed under section 143(1) on 2-9-1997 at returned income. assessee derived rental income from house property known as Rai-ka-Bagh Palace, Jodhpur given on rent to Income-tax Department. It had shown monthly receipt of rent at Rs. 60,000 showing total annual receipts at Rs. 7,20,000. Deduction under section 24(i) on account of repairs and collection of rent from property was claimed, which was allowed by revenue, while processing return, later on, it was found that assessee had received arrears of rent of Rs. 24,12,903 from Income-tax Department for period 26-3-1996 to 31-3-1998. Out of this amount, sum of Rs. 12 lakhs pertained to year under consideration, as per which rent of Rs. 60,000 p.m. was enhanced to Rs. 1,60,000. Considering these facts, Assessing Officer issued notice under section 148 on 9-1-2002 on ground that balance amount of Rs. 12 lakhs relatable to year in question was required to be taxed on accrual basis. Accordingly, assessment was made by including arrears of rent of Rs. 12 lakhs in income already declared. Page 1 para 2.1 of order of first appellate authority speaks about fact that ld. A.R. did not press grounds challenging initiation of reassessment proceedings which were taken as Ground Nos. 1 and 2 before ld. CIT(A). 3. Before us, ld. counsel for assessee contended that though grounds challenging initiation of reassessment proceedings were not pressed before ld. first appellate authority but such non-challenging was based in background of fact that ld. CIT(A), during course of argument, conveyed that appeal would be accepted on merits. It was contended that instead of deleting addition of Rs. 12 lakhs, ld. CIT(A) made enhancement. On specific query raised from Bench ld. A.R. submitted that upon receipt of notice of enhancement from ld. CIT(A), assessee did not retract from its earlier stand of not pressing ground of initiation of reassessment proceedings. It was further argued that once facts were brought to notice of Assessing Officer by way of giving note to original return of income about arrears of rent received in year and Assessing Officer completed assessment accordingly, it was not open to him to initiate reassessment proceedings on same facts as it amounted to change of opinion. In opposition, ld. D.R. relied on impugned order. 4. Having heard rival submissions and perused relevant material on record, primarily it is not disputed that assessee had, in fact, not pressed ground challenging initiation of reassessment proceedings before first appellate authority. line of distinction is required to be drawn between case where legal ground is raised for first time before appellate authority and another case in which such ground was raised and not pressed before lower appellate court. Be that as it may, it is found as undisputed fact that assessee received arrears of rent in subsequent year out of which Rs. 12 lakhs pertained to assessment year in question. stand of department, ab initio, has remained that arrears of rent are to be put to tax in year to which they belong on accrual basis. Similar view was taken by revenue authorities in earlier years. Tribunal in assessee's own case for assessment year 1995-96 and earlier years, orders referred to in para 3.3 of impugned order, accepted assessee's claim that arrears of rent be put to tax in year of receipt and not on accrual basis. First order for assessment year 1995-96 was passed by Tribunal on 27-5-2003 and orders for assessment years 1986-87 to 1991-92 were passed subsequently on 10-8- 2004. It shows that up to date of first Tribunal order, viz., 27-5-2003, revenue was consistently holding opinion that arrears of rent are includible on accrual basis. Notice under section 148 in this case was issued on 9-1-2002, i.e., much prior to passing of order passed by Tribunal. In these circumstances, it cannot be held that notice was not valid. Explanation 2 added to section 147 has widened scope of reassessment. Clause (b) of Explanation 2 states that where return of income has been furnished by assessee but no assessment has been made and it is noticed by Assessing Officer that assessee has understated income or has claimed excessive loss, deduction, allowance or relief in return, it shall be deemed to be cases where income chargeable to tax has escaped assessment. case of assessee squarely falls within clause (b) of Explanation 2, inasmuch as though return was furnished by assessee but no assessment was made and Assessing Officer observed that income so declared was understated. assessee had only disclosed fact of receipt of arrears of rent in computation of total income, but had not offered such amount for taxation. case law relied upon by ld. A.R. are not applicable in present context of section 147. Coming to other submission of ld. A.R. that change of opinion was not permissible as assessee had already given note in return and assessment was framed under section 143(1), we find it be bereft of any force for reason that no assessment was made for year. return was simply processed. Such processing of return under section 143(1) should not be confused with making of assessment under section 143(3). By processing return under section 143(1), as is case in question, intimation which results, is only notice of demand and cannot be characterized as 'Assessment order' for present purpose. Hon'ble Delhi High Court in case of Mahanagar Telephone Nigam Ltd. v. Chairman, CBDT [2000] 246 ITR 173 has held that 'Intimation under section 143(1)(a) is not assessment, and, therefore, there can be no question of change of opinion where notice under section 148 is issued to assessee after issuing intimation under section 143(1)(a)'. Similar view has been expressed by Hon'ble Kerala High Court in case of CIT v. K.V. Manakram & Co. [2000] 245 ITR 353 by holding that intimation given under section 143(1)(a) cannot be treated to be order of assessment. further contention of ld. A.R. that it was case of change of opinion does not hold any water for reason that before qualifying for change of opinion, it is sine qua non that opinion must have been formed at initial stage. Unless opinion is formed by Assessing Officer by making assessment, there cannot be any question of change of opinion. afore noted judgment in case of MTNL (supra) is direct authority for this proposition and fully applicable to facts of instant case. Accordingly, we do not find any infirmity in initiation of reassessment proceedings. This ground is, therefore, dismissed. 5. Ground Nos. 1 and 3 of assessee's appeal and only ground of revenue's appeal deal with addition on merits and power of ld. CIT(A) on enhancement. 6. We have noted above that Assessing Officer put to tax arrears of rent of Rs. 12 lakhs on accrual basis, which action was assailed before first appellate authority. ld. CIT(A) accepted assessee's claim by relying on Tribunal orders as discussed in earlier part of present order that arrears of rent were taxable in year of receipt and not on accrual basis. He, therefore, deleted addition of Rs. 12 lakhs. However, during course of appellate proceedings, it was observed by him that assessee had received arrears of rent amounting to Rs. 15,69,355 in previous year relevant to assessment year in question, which pertained to earlier assessment years. In computation of total income at page 2 for assessment year 1997-98, assessee had given note that arrears of rent received during financial year 1996-97 from I.T. Department for period 8-1-1991 to 31-3-1996 amounted to Rs. 15,69,355. Since assessee had not offered arrears for taxation on receipt basis as well, ld. CIT(A) issued notice for enhancement. After considering objections of assessee and report of Assessing Officer, he directed Assessing Officer to enhance income by Rs. 15,69,355, which was arrear of rent received in present year and credited to Income and Expenditure account. Before us, ld. counsel for assessee relied on certain decisions to contend that power of ld. CIT(A) did not operate to make enhancement. It was contended that appellate authority cannot deal with issue which has not been dealt with by Assessing Officer. It was still further submitted that income of assessee Assessing Officer. It was still further submitted that income of assessee had to be taxed under any of heads of income mentioned under section 14 and notice of enhancement did not make any mention of head under which arrears of rent of Rs. 15,69,355 were taxable. In opposition, ld. D.R. contended that ld. CIT(A) had simply followed directions of Tribunal given in earlier years qua taxability of arrears of rent in year of receipt. 7. Insofar as departmental ground for deletion of addition of Rs. 12 lakhs is concerned, we find that ld. CIT(A) was justified in deleting it for reason that Tribunal has consistently held in assessee's own case in earlier years that arrears of rent cannot be charged to tax on accrual basis. It has further been held that such arrears are taxable in year of receipt only. Respectfully following precedent, we hold that ld. CIT(A) was fully justified in deleting addition of Rs. 12 lakhs which was made by Assessing Officer by taxing of arrears of rent on accrual basis. departmental ground is, therefore, dismissed. 8. Now coming to power of ld. CIT(A) for enhancement, we observe that section 251 has been worded widely to provide that in disposing of appeal, Commissioner (Appeals) shall have following powers - '(a) in appeal against order of assessment - he may confirm, reduce, enhance or annul assessment'. From bare perusal of language of this section, it is crystal clear that there cannot be any doubt about power of enhancement conferred by statute on Commissioner (Appeals). Insofar as submission of ld. A. R. regarding exceeding of jurisdiction by Ld. CIT(A) in putting to tax income which was not considered by Assessing Officer is concerned, we note that it is devoid of any merits. It is clear that up to stage of passing of first order by Tribunal on this aspect on 27-5-2003, department was consistently holding view that arrears of rent were to b e taxed on accrual basis. When assessment order for this year under section 147 was passed on 28-1-2003, same view was valid with Assessing Officer and thus there was no reason for including 'receipt' of arrears of rent in total income of assessee. However, when matter travelled to ld. CIT(A), order of Tribunal for earlier years had come into existence by virtue of arrears of rent became liable to tax in year of receipt and not on accrual basis. subject-matter of notice given by enhancement, being arrears of rent is same, which was considered by Assessing Officer while taxing arrears of rent. What Assessing Officer contemplated in making addition was that he charged arrears to tax on accrual basis, whereas ld. CIT(A), following order of Tribunal, came to hold that such arrears were to be taxed on receipt basis. Both authorities below considered same subject-matter for taxation, but from different angles. No new point was considered by ld. CIT(A) which was not decided by Assessing Officer qua issue in question. It cannot be argued that ld. CIT(A) travelled beyond assessment order and considered new source of income. Be that as it may, Hon'ble Supreme Court in case of CIT v. Nirbheram Daluram [1997] 224 ITR 610 has held that Appellate Assistant Commissioner's power of enhancement are not confined to items considered by Assessing Officer. Recently, Hon'ble Allahabad High Court in case of CIT v. Kashi Nath Chandiwala [2006] 280 ITR 318 has adjudicated upon scope of powers of ld. CIT(A), in enhancement. After considering several decisions on point, it was held that Tribunal was not justified in holding that ld. CIT(A) had no power of enhancement in respect of issue which was not subject-matter of appeal. In our considered opinion, question of taxability of arrears of rent was very much subject-matter of assessment and ld. CIT(A) when directed that such arrears be taxed on receipt basis and not on accrual basis, had not transgressed assessment order. As his view is in accordance with Tribunal's order passed in earlier years, we are of considered opinion that no error can be found therein. Thus, we hold that ld. CIT(A) properly exercised his power of enhancement and directed to include arrears of rent 'received' in this year in total income of assessee. Thus, grounds raised by assessee on legal aspect as well as on merits in this regard are dismissed. 9. In result, both appeals are dismissed. ITA No. 630/JU/2005: 10. This appeal by assessee is against order emanating from giving of effect by Assessing Officer to ld. CIT(A)'s order in making enhancement. 11. First ground is against not allowing statutory deduction under section 24 on amount of arrears of rent received at Rs. 15,69,355. 12. While giving effect to order of ld. CIT(A) for this year Assessing Officer excluded arrears of rent of Rs. 12 lakhs and included enhanced arrears of rent received by assessee at Rs. 15,69,355 without allowing deduction under section 24. ld. CIT(A) upheld assessment order by considering that Assessing Officer had no independent jurisdiction in matter except giving effect to direction of ld. CIT(A) as per which arrear of rent received was made taxable. ld. A.R. contended that statutory deduction available under section 24 cannot be denied. In opposition, ld. D.R. relied on section 25A to contend that no deduction under section 23 or under section 24 can be granted. 13. After considering rival submissions and perusing relevant material on record, we find that assessee received arrears of rent in this year. So what is received is 'Arrear of rent' and not 'Unrealized rent', which is subject-matter of section 25A relied upon by ld. D.R. It is clear that arrear of rent received by assessee partake character of income from house property. All permissible statutory deductions, which are available from such income, cannot be denied to assessee. direction of ld. CIT(A) for enhancing income by arrears of rent of Rs. 15,69,355 has to be read in context of section and not to be literally followed. If law permits particular deduction from income, Assessing Officer cannot deny same by being too technical in following direction of ld. CIT(A) in formalistic manner. Except for section 25A, which is not applicable to facts of case, ld. D.R. could not bring to our notice any provision or precedent debarring assessee from claiming statutory deduction available under section 24, against arrears of rent received. In our considered opinion, ld. CIT(A) was not justified in not allowing statutory deduction under section 24 on amount of arrears of rent received by assessee. We order for grant of deduction under section 24. This ground is allowed. 14. Second ground is against charging of interest under section 234B of Act. 15. ld. A.R. contended that interest under section 234B was not chargeable as assessee could not foresee receipt of income. In opposition, ld. DR relied on impugned order. 16. Having heard rival submissions and perused relevant material on record, we are not inclined to accept assessee's contention on ground that such arrears of rent were in fact received by assessee during period relevant to assessment year 1997-98. Thus, there is no question of foreseeing income as it was, in fact, received by assessee during relevant period. From language of section 234B it is manifest that advance tax is payable with reference to finally assessed income, failure of which attracts interest liability, which is mandatory in nature. As amount was received by assessee in year in question and has been held to be taxable, we fail to appreciate as to why levy of interest under section 234B be not put into operation. In our considered opinion, ld. CIT(A) was justified in upholding levy of interest under section 234B. 17. In result, this appeal is partly allowed. *** ASSISTANT COMMISSIONER OF INCOME TAX v. DOWAGER MAHARANIS RESIDENTIAL ACCOMMODATION WELFARE & AMENITIES TRUST