Per Joginder Pall, Accountant Member: These two appeals have been filed by assessee against two orders of CIT(A), Bhatinda, for assessment years 2001-02 and 2002-03. Since issues involved in both appeals are identical, these were heard together and are being disposed of by this consolidated order for sake of convenience. 2. First, we take up appeal for assessment year 2001-02. In this appeal, assessee has taken following grounds of appeal: ' 1. That Asst. order dated 26-3-2004 served by affixture on 1-4-2004 is barred by limitation as same was never properly served in accordance with order 5 rule 30 of C.P. Code. 2. That both worthy CIT(A), Amritsar and learned ITO, Ward 5(3), Amritsar have grossly erred in treating rental income of assessee at Rs. 13,95,116 as 'Income from house property' instead of 'Income from business' as claimed by assessee. 3. That both worthy CIT(A) and ld. ITO Ward 5(3), Amritsar have grossly erred in not allowing expenditure incurred by assessee-company under various expenditure heads vide schedule 9 of Audited Accounts on ground that it was not incurred in furtherance of any business activity. 4. That worthy CIT(A), Amritsar has grossly erred in not disposing off ground in respect of addition made on account of 'Misc. Income' of Rs. 28,682. 5. That worthy CIT(A), Amritsar has grossly erred in confirming charging of interest under section 234B of Income-tax Act.' 3. As regards first grievance that assessment order for assessment year 2001-02 had not been passed within time allowed, facts of case are that although assessment order was dated 26-3-2004, yet it was served on assessee by affixture only on 1-4-2004. assessee had stated before CIT(A) that no efforts were made to serve notice on assessee through normal means before serving notice by affixture. In support of this contention, assessee also filed affidavit of Sh. Kashmir Singh, Security Guard, who stated that he was on duty as guard till 31-3-2004 and no service by affixture was made upto night of 31-3-2004. Nobody came from Department to serve notice despite fact that entry into address of assessee was only through gate. It was, therefore, submitted that Assessing Officer could serve notice by affixture, if service through normal means was not possible. It was also stated that if order was passed on 26-3-2004, why same was not sent for service by registered post on that date. It was also submitted that notice under section 17(1) of Wealth-tax Act, 1957 dated 29-3-2004 for assessment year 1997-98 issued to assessee by same Assessing Officer was served on assessee on 31-3- 2004 at 6 PM. service of said notice was accepted by assessee. If asst. order was also ready along with demand notice and challan, same could have also been accepted by assessee on 31-3-2004 where was need for Assessing Officer to effect service of asst. order by affixture? Thus, it was argued before ld. CIT(A) that asst. order had not been passed on 31-3-2004. These submissions did not find favour with CIT(A), who observed that Assessing Officer had also dispatched said order by registered post on 31-3-2004 under Registration No. 14163. Therefore, ld. CIT(A) rejected this submission of assessee by recording following findings in para 4.2 of impugned order: ' 4.2 I have considered appellant's contentions and have also perused assessment records produced by Assessing Officer and after considering facts available on record, it appears that service of asst. order on appellant on 31-3-2004 has been done by Notice Server in presence of Inspector who has signed office copy of affixture order dated 31-3-2004 as well as demand notice and penalty notice. Both Notice Server as well as Inspector have put their signatures on affixture order in token of having served assessment order by affixture on 31-3-2004 and Assessing Officer has also put his initials on affixture order as token of having effected service of order by affixture through above officials. Further, it is also noticed that Assessing Officer has also dispatched said order by registered post on 31-3-2004 under registration No. 14163. In light of above facts and circumstances, it appears that appellant's contention that assessment order had not been passed till 6 PM at 31-3-2004 is not supported by evidence on record. According to Assessing Officer, affixture of assessment order made at office premises of appellant at R.B.K.C. Towers, Mcleod Road, Amritsar, whereas appellant's counsel has filed affidavit from Sh. Kashmir Singh, who is security guard posted at 3A, Mall, Amritsar. Hence, affidavit of Sh. Kashmir Singh does not seem to have any evidentiary value. Further, fact that assessment order has been dispatched on 31-3-2004 by registered post shows that this contention of appellant is not sustained. In view of above, appellant's contention regarding assessment having been barred by limitation does not appear to be justified and, therefore, same stands rejected.' assessee is aggrieved with order of CIT(A). Hence, this appeal before this Bench. 4. ld. counsel for assessee, Sh. Padam Bahl, reiterated submissions which were made before authorities below. He drew our attention to page 16 of paper book which is copy of notice issued under section 17(1) on 29-3-2004, which was served on assessee on 31-3-2004 at 6 PM. Acknowledgement for same is placed at pages 17 and 18 of paper book. He further drew our attention to page 19 of paper book which is copy of affidavit of Sh. Kashmir Singh, Security Guard in support of fact that nobody from Department came to deliver/serve any paper on 31-3-2004 from 1 PM to 9 PM. service by affixture was found only on 1-4-2004 when he came on duty at 9AM. Thus, he contended that asst. order was not passed on 29-3-2004. 5. ld. DR, on other hand, heavily relied on orders of authorities below. 6. We have heard both parties and carefully considered rival contentions with reference to facts, evidence and material on record. Since assessee has taken specific ground to challenge findings recorded by CIT(A), ld. DR was asked to produce asst. records before Bench. These directions were given on 11-7-2006 and next date was fixed on 13-9- 2 0 0 6 . These records were not produced and ld. DR again sought adjournment on 13-9-2006. request was accepted and Department was allowed time and case was adjourned to 6-10-2006. On that date, ld. counsel sought adjournment and case was fixed on 2-11-2006. However, asst. records called for from ld. DR were not produced. On next date also, ld. DR stated that asst. records have not been received from Assessing Officer. He requested for allowing one more opportunity. This request of ld. DR was accepted and final opportunity was allowed for producing assessment records at time of next hearing. Again on 19-2-2007, ld. DR could not produce asst. records. He requested for another opportunity which was allowed and case was adjourned to 9-5-2007. On that date also, ld. DR could not produce assessment records. ld. DR, Sh. R.L. Chhanalia stated that DR has written several letters to Assessing Officer requesting for assessment records. Despite this fact, Assessing Officer has not sent assessment records. Thus, he stated that matter may be decided in light of facts on records. 6.1 From facts discussed above, it is obvious that this Bench has allowed repeated opportunities to revenue for producing assessment record so that fact of service of asst. order on assessee could be verified. However, Department has not been able to produce these records. In fact, at time of last hearing, ld. DR did not even request for adjournment on this ground. Thus, we have no option but to accept contention of assessee that assessment order was not passed on 26-3-2004. No doubt, provisions of section 153 require that assessment order shall not be passed after expiry of two years from end of assessment year in which income was first assessable. This is applicable to this case. There is no requirement that service must be effected before expiry date. But there must be evidence to show that order was indeed passed before limitation date. But in present case, no such evidence has been adduced by revenue that order was indeed passed on or before 31-3-2004 though assessee had taken up this issue in appeal and revenue has repeatedly been asked to produce asst. records. If it were so, same could have been served on assessee along with notice under section 17(1) of Wealth-tax Act, which was issued on 29-3-2004 and served on 31-3-2004 at 6 PM. There is no evidence produced before this Bench to show that asst. order was dispatched by registered post on 31-3-2004. It is also surprising to us that if asst. order along with demand notice and challan was ready on 26-3-2004 why same was sent for service by registered post on 31-3-2004. Even service by affixture was made on 1-4- 2004 in presence of Inspector alone and not in presence of independent witnesses. Taking into account these facts, coupled with non-production of assessment records before Bench, we hold that asst. order was time- barred and ld. CIT(A) was not justified in rejecting this ground of appeal of assessee. Accordingly, order of CIT(A) is set aside and impugned asst. order for assessment year 2001-02 is quashed being passed after statutory time-limit. This ground of appeal is allowed. 7. next grievance of assessee projected through its grounds of appeal is that ld. CIT(A) was not justified in treating rental income of assessee at Rs. 13,95,116 as 'Income from house property' instead of 'Profit from business'. facts of case are that in return of income, assessee had shown rental income at Rs. 13,98,205 as against Rs. 13,95,116 declared in last year. rental income in past all along was being shown under head 'Income from house property'. However, for first time, assessee had declared such income under head 'Income from business'. Against said income, assessee had claimed deduction for various expenses. After claiming deduction for expenses, assessee declared total income at Rs. 1,92,971. Assessing Officer asked assessee to explain as to why income from house property was being shown as business income. T h e assessee submitted reply. However, Assessing Officer was not impressed with submissions of assessee and treated rental income as income from house property. 8. Being aggrieved, assessee filed appeal before CIT(A). It was submitted before CIT(A) that assessee-company was running business o f transport right from inception. Due to adverse business situation, assessee sold trucks one by one and transport business was closed down. assessee was carrying on business of real estate and had down. assessee was carrying on business of real estate and had developed several properties at Amritsar and Jaipur. As per Memorandum of Association, real estate was one of objects of assessee. It was submitted that principle of res judicata was not applicable and, therefore, fact that such income was being shown in past as income from house property did not mean that rental income was not business income. Reliance was also placed on various judgments of Hon'ble Supreme Court and High Courts noted at pages 4 and 5 of impugned order. None of these submissions found favour with ld. CIT(A) who decided matter against assessee for following reasons: ' (i) assessee had all along been declaring rental income from letting out property under head 'Income from house property' and not as 'Business Income'. There were no justifiable reasons to change stand. (ii) perusal of balance sheet showed that treatment given by assessee throughout past was that house property was not held as business or commercial asset. assessment record indicated that right from assessment year 1995-96 onwards, assessee had not claimed depreciation on building. Since this property was not held as commercial asset, rental income earned there from was taxable under head 'Income from House Property'. (iii) main business of assessee was Transport. Only income earned from running transport business was being shown as 'Business Income'. This business has since been closed over years and there was no income declared under this head. other source was nominal income from agricultural and Misc. income. assessee has changed stand only with view to claim expenses against business income which was in fact taxable under head 'Income from House Property'. (iv) various decisions relied upon by assessee were not applicable t o facts of case. ld. CIT(A) observed that judgment of Hon'ble Punjab & Haryana High Court in case of CIT v. Onam Rubbers Plastics 178 ITR 301 was distinguishable on facts because in that case property was part of commercial assets which was earlier used for purpose of its own business of running factory. Therefore, it was held that temporary leasing of part of asset would not convert user of commercial property into house property. (v) judgment of Hon'ble Punjab & Haryana High Court in case of CIT v. Ishar Dass Mahajan & Sons, reported in 253 ITR 284 was again found distinguishable on facts because issue involved in that case was whether rental income earned could qualify for deduction under section 80HHC after insertion of clause (baa) to Explanation to section 80HHC. Further, ld. CIT(A) noted that in that case building let out was part of factory land and building being used is commercial asset. (vi) ld. CIT(A) observed that in present case, assessee had not let out part of commercial asset in form of factory, land and building/workshop etc. earlier used for purpose of business temporarily for earning rent. He observed in present case, there was no evidence that property from which assessee earned rental income was at any point of time being used for Transport business. (vii) ld. CIT(A) also observed that judgment of Hon'ble Supreme Court in case of S.G. Mercantile Corporation Pvt. Ltd. v. CIT 83 ITR 700 relied upon by assessee was rather in favour of revenue because in that case Hon'ble Apex Court had held that annual value of property consisting of land and building pertains thereto of which assessee is owner, other than such portions of property occupied for purpose of business, profession or vocation would be taxable under head 'Income from House Property'. Hon'ble Supreme Court has also observed that fact that assessee was company incorporated with object of buying and developing landed property and promoting and setting up of market thereon would not make any difference. He further noted that in that case, Hon'ble Supreme Court held that income was assessable under section 10 of old Income-tax Act, 1922 because assessee was not co-owner. However, in present case assessee was owner of property from which rental income was being earned. He also observed that judgment of Hon'ble Supreme Court in case of Karnani Properties v. CIT 82 ITR 547 relied upon by assessee was also distinguishable on facts because in that case, assessee had let out various flats, shops along with other facilities like charges for electric currents for use of lifts, supply of hot and cold water, scavenging, providing watch & ward facilities and other amenities on payment of monthly charges. In order to provide these facilities, assessee had employed large number of permanent staff and, therefore, it was held that such activity was regular business activity and, therefore, income was taxable under head 'Profit from business'. (viii) ld. CIT(A) also referred to judgment of Hon'ble Gujarat High Court in case of CIT v. New India Industries Ltd. 201 ITR 208, where it was held that in order to decide whether income from letting out was income from house property or business it is to be seen whether asset was being exploited commercially or whether it was let out for purpose of enjoying rent. He observed that in present case conduct of assessee was all along to earn rental income and same was not being exploited as commercial asset. Thus, he held that income earned by assessee by way of rent was liable to tax under head 'Income from House Property'. Accordingly, ld. CIT(A) dismissed appeal of assessee.' Aggrieved with order of CIT(A), assessee has filed present appeal. 9. ld. counsel for assessee, Sh. Padam Bahl, contended that principle of res judicata is not applicable to income-tax proceedings. Therefore, very fact that all throughout in past, rental income was being shown under head 'Income from house property' does not mean such income was not 'Business Income'. He further submitted that as per memorandum of association of company, real estate was one of main objects of company. Thus, he submitted that rental income which was being shown as income from house property was now shown under head 'business income'. Relying on judgment of Hon'ble Supreme Court in case of Barendra Prasad Ray v. ITO [1981] 129 ITR 295, ld. counsel submitted that expression 'Business' does not necessarily mean trade or manufacture only. word 'Business' was of wide import and it means activity carried on continuously and systematically by person by application of his labour and skill with view to earn income. He only gave list of following judgments without explaining as to how these were applicable to facts of present case. In fact, most of these judgments are same which were relied upon before CIT(A). ld. CIT(A) has distinguished facts of present case from judgments relied upon by ld. counsel. Still, however, ld. counsel did not make any effort to argue before Bench as to why and how distinction drawn by ld. CIT(A) was wrong or incorrect: 1. S.G. Mercantile Corpn. (P.) Ltd. v. CIT [972] 83 ITR 700 (SC). 2. CIT v. Anand Rubber & Plastics (P.) Ltd. [1989] 178 ITR 301 (Punj. & Har.). 3. Lakshmi Narayan Board Mills (P.) Ltd. v. CIT [1994] 205 ITR 88 (Cal.). 4. CIT v. Modi Industries Ltd. [1994] 210 ITR 1 (Delhi). 5. Sri Balaji Enterprises v. CIT [1997] 225 ITR 471 (Kar.).. 6. CIT v. V.S.T. Motors (P.) Ltd. [1997] 226 ITR 155 (Mad.). 7. CIT v. Pateshwari Electrical & Association Industries (P.) Ltd. [2006] 282 ITR 61(All.). 8. CIT v. B. Nagi Reddy [1984] 147 ITR 337 (Mad.). 9. CIT v. A.P. Small Scale Industrial Development Corpn. [1989] 175 ITR 352 (AP). 10. CIT v. Amora Chemicals (P.) Ltd. [2002] 125 TAXMAN 255 (Guj.). 11. CIT v. Kongarar Spinners (P.) Ltd. [1994] 208 ITR 645 (Mad.). 12. CIT v. Malabar & Pioneer Hosiery (P.) Ltd. [1996] 221 ITR 117 (Ker.). 13. CIT v. Associated Bldg. Co. Ltd. [1982] 137 ITR 339 (Bom.). 14. CIT v. National Newsprint & Paper Mills Ltd. [1978] 114 ITR 388 (MP). 10. ld. DR, on other hand, heavily relied on orders of authorities below. He submitted that all along assessee has been showing rental income under head 'Income from house property'. facts of case remain same. Therefore, there was no justification for assessee to change his stand for showing such income under head 'Income from business'. 11. We have heard both parties and carefully considered rival submissions, gone through material and evidence placed on record as well s orders of authorities below. Since assessment order has been quashed, these grounds need not be decided on merits. However, these grounds are also common to subsequent assessment year 2002-03. Therefore, we record our findings on merits of ground also. Now there is no dispute about fact that all along in past, property income was being shown under head 'Income from house property'. It is also accepted position that assessee was carrying on transport business which has since been closed. It is no doubt true that assessee has to incur such expenses even for earning rental income and compliance with various requirements under company law. But now question that remains to be decided is whether rental income from house property could be considered as income from business because under provisions of Act, assessee is not entitled to claim deduction of expenses incurred against income from house property. ld. counsel for assessee has referred to object of company detailed in Memorandum of Association. Referring to page 13 of paper book, ld. counsel for assessee submitted that one of main object of assessee was to carry on business of builders and contractors and to acquire by purchase, lease, exchange, hire or otherwise develop or operate land, buildings etc. Thus, he submitted that this was main object of company. Therefore, rental income earned by assessee was liable to tax under head 'Income from House Property'. ld. counsel has himself relied on judgment of Hon'ble Supreme Court in case of Barendra Prasad Ray (supra), where it is held that expression 'Business' is of wide import and it means activity carried out continuously and systematically. In present case, admitted facts are that assessee was carrying on business of transport which has since been closed. rental income of property was being shown under head 'Income from house property'. This clearly shows that intention of assessee was to enjoy rental income as income from house property and same was not regular business activity carried on by assessee. This is also supported by fact that in balance sheet for earlier assessment year, assessee had never claimed any depreciation on building. This shows that buildings were not exploited commercially and were not part of commercial assets. reference to Memorandum of Association is also of no help to assessee for reasons that same Memorandum existed for earlier assessment years when income from letting out was shown as income from house property. There is no evidence or material placed on record either before authorities below or before this Bench that after closure of transport business, assessee actively started business of real estate. Carrying on business of real estate implies that such activity was undertaken regularly and systematically. However, in present case, apart from building already constructed which were never shown as commercial assets or were being used for purpose of business, assessee only added some shops for purpose of earning rental income. But same could not be said to be regular and systematic activity of development of real estate. Therefore, such income could not be considered as income from business. ld. counsel has relied on plethora of judgments which were also relied upon before CIT(A). ld. CIT(A) has drawn distinction between facts of present case and facts of cases relied upon by assessee. ld. counsel did not advance any arguments before Bench as to how distinction drawn by CIT(A) was not correct and those decisions, in fact were applicable to facts of present case. Further, ld. counsel was given time to give summary of judgments to explain as to how those were applicable to facts of present case. Apart from giving full citations of various judgments relied upon and enclosing therewith head Notes of judgments extracted from CTR Library of tax cases, ld. counsel has not made any effort in explaining how those judgments were applicable to facts of present case. Now question whether rental income is to be taxed under head 'Income from House property' or business income depends on facts of each case. ratio of each decision has to be considered in light of facts of each case. Therefore, we feel that ld. AR ought to have made effort in explaining as to which judgment was applicable to facts of present case and why. Be that as it may, ld. CIT(A) has already given detailed reasons in respect of judgments relied upon before him as to how same were not applicable to facts of present case. We have referred to those judgments and reasons given by CIT(A) as to how those are distinguishable on facts. There is no rebuttal by assessee. Thus, we agree with ld. CIT(A) that those judgments are distinguishable and are not applicable to facts of present case. 11.1 Even otherwise, we have referred facts of present case to some other judgments relied on by ld. counsel. In case of V.S.T. Motors (P.) Ltd. (supra), facts before Hon'ble Madras High Court were that building constructed by assessee was for use as business premises. same was held as commercial asset. Part of business was shifted to outside city. As result, surplus area was let out to Government Department. On these facts, Hon'ble Madras High Court held that since building was commercial asset, rental receipts were taxable as 'Business Income'. These are not facts of present case. building was not held as commercial asset. same was also not used for purpose of transport business which assessee was carrying on in past. Therefore, rationale of this decision is not applicable to facts of present case. 11.2 In case of Pateshwari Electrical & Associated Industries (P.) Ltd. (supra) relied upon by ld. AR, facts before Hon'ble Allahabad High Court were that assessee apart from letting out of property at Nainital had lease rent from letting out workshop, cold-storage, motor garage, Raj Oil. assessee claimed income from letting out of Nainital lodge to SBI as business's income. It was found that property was being used as guest house up to year 1984-85 and it was accepted by Department as business property for those years. But due to commercial reasons, assessee decided to convert property into lodge and to give it on rent to SBI along with furniture and fittings to be used as their training centre. On these facts, it was held that income from letting out Nainital property to SBI was business income. Admittedly, these are not facts of present case. above properties in question were never held as part of business asset. Therefore, ratio of this decision is not applicable to facts of present case. decision is not applicable to facts of present case. 11.3 As regards judgment of Hon'ble Karnataka High Court in case of Sri Balaji Enterprises (supra) relied upon by ld. AR, facts were that firm was constituted for carrying on business of real estate. Its business was to take property on lease, building structures thereon and leasing them out to tenants. All these activities were being carried out regularly and systematically. In fact, this was main business of assessee. Firm was not even owner of property. On these facts, it was held that letting out was part of business of assessee and, therefore, rental income was taxable under head 'Income from Business'. 11.4 other judgment relied upon by Ld. AR is of Hon'ble Madras High Court in case of Kongarar Spinners (P.) Ltd. (supra). facts before Hon'ble Madras High Court were that assessee earned rental income f r o m letting out commercial assets. assessee was running factory. Another building and factory was also constructed and same was let out to its subsidiaries. On these facts, Hon'ble High Court held that rental income derived from letting out commercial assets was business income. These are not facts of present case. Therefore, ratio of this decision is again not applicable to facts of present case. As regards contention of ld. AR that principle of res judicata is not applicable to income-tax proceedings. We have no quarrel with such proposition. But there must be change in facts, circumstances or legal position so as to deviate from earlier stand. In this case, there is none. Therefore, this submission is also of no help to assessee. 12. Thus, in light of these facts and circumstances of case and legal position discussed above and also ratio of various decisions referred to above, we are of considered opinion that ld. CIT(A) was justified in treating rental income from letting out of properties as income from house property. Therefore, we uphold order of CIT(A) and reject this ground of appeal of assessee. 13. other grievance of assessee is that ld. CIT(A) was not justified in not allowing deduction for various expenses claimed. This ground is related to ground No. 2. Briefly stated, facts are that Assessing Officer did not allow deduction for various expenses claimed because rental income was held to be taxable under head 'Income from House Property.' Therefore, Assessing Officer disallowed expenses. On appeal, ld. CIT(A) upheld disallowance of expenses because order of Assessing Officer for treating rental income as income from house property was upheld. Though this ground has been taken before us, no arguments have been advanced by ld. AR. Presumably for reason that this was dependent on outcome of first ground. Be that as it may, since no arguments have been advanced before this Bench. same is dismissed on this ground itself. Even otherwise, we have already upheld findings of ld. CIT(A) on issue of treating rental income as income from house property. same is to be computed as per provisions of Act. Only those items of expenses mentioned in sections can be allowed. There is no grievance of assessee that expenses which were admissible under head 'Income from House Property' have not been allowed. Thus, we do not find any merit in this ground of appeal of assessee. same is dismissed. 14. next ground relates to addition of Rs. 28,682 made on account of misc. income. last ground relates to interest charged under section 234B o f Act. Here also, no arguments were advanced by ld. counsel for assessee. Therefore, it appears that assessee is not interested in prosecuting these two grounds of appeal. Accordingly, these are dismissed as such. 15. Before parting with appeal for assessment year 2001-02, we wish to mention that we have already quashed assessment order on ground that same was time barred. Therefore, findings recorded by this Bench in respect of remaining grounds are only of academic interest. Even if grounds have been decided in favour of revenue and against assessee, same would not have any effect on outcome of appeal because assessment order has already been quashed. 16. Now, we take up appeal for assessment year 2002-03. first grievance of assessee in this appeal relates to treating rental income of Rs. 15,68,649 as 'Income from House Property' as against claim of assessee that same was 'Income from Business'. 16.1 facts of case, submissions of party and our findings in respect of this ground are same as for assessment year 2001-02. Therefore, for parity of reasons, we hold that order of CIT(A) does not merit any interference. same is upheld and this ground of appeal is dismissed. 17. second ground relates to sustaining action of Assessing Officer for disallowing deduction of expenses claimed against rental income. Briefly stated, facts of case are that Assessing Officer disallowed expenses for reason that rental income-tax taxable under head 'Income from House Property' which was to be computed as per provisions of Act. ld. CIT(A) upheld findings of Assessing Officer. Like assessment year 2001-02, ld. AR has not advanced any arguments in support of this ground of appeal. Since we have already upheld order of CIT(A) for treating rental income as income from house property, assessee would not be entitled to deduction of expenses which were inadmissible against business income. Here also findings for assessment year 2001-02 would be applicable. In this view of matter, we uphold order of CIT(A) and reject ground of appeal of assessee. 18. In result, appeal of assessee for assessment year 2001- 02 is allowed to extent indicated above and appeal for assessment year 2002-03 is dismissed. *** RAI BAHADUR KISHORE CHAND & SONS v. INCOME TAX OFFICER