IN HIGH COURT OF KERALA AT ERNAKULAM PRESENT HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & HONOURABLE MR. JUSTICE ASHOK MENON TUESDAY ,THE 19TH DAY OF FEBRUARY 2019 / 30TH MAGHA, 1940 ITA.No. 294 of 2010 AGAINST ORDER IN ITA 747/2007 of I.T.A.TRIBUNAL,COCHIN BENCH APPELLANT: COMMISSIONER OF INCOME TAX,COCHIN COCHIN. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT: M/S.AMRITHA CYBER PARK (P) LTD, NEDUMCHALIL BUILDINGS, MULLASSERY CANAL ROAD, KOCHI-11. OTHER PRESENT: SMT. S.PARVATHI AMICUS CURIAE THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 19.02.2019, COURT ON SAME DAY DELIVERED FOLLOWING: ITA.No. 294 of 2010 -:2:- JUDGMENT K.VINOD CHANDRAN,J. There was none appearing for respondent, despite Department having taken out paper publication, hence we appointed Advocate S. Parvathy, as Amicus Curiae. 2. issue arising in appeal is with respect to assessment of Rs.12,49,000/- which according to Company remained with company as advance for rent and never turned into income. assessee-respondent is engaged in letting out commercial spaces. assessee is said to have entered into contract with one another company, for letting out commercial space towards which other company had advanced amount of Rs.13,00,000/- as rent. This was paid by way of three cheques on various dates in September, 2001. same were also encashed. ITA.No. 294 of 2010 -:3:- 3. company, who advanced rent could not occupy premises, allegedly due to company having not received certain licences for carrying out proposed business activities. There was refund of Rs.51,000/- made by assessee respondent on 31.03.2002. balance remained in accounts. 4. In relevant previous year i.e.,2003-04, amount was shown as liability in accounts of assessee. assessee was asked to explain, as to why same should not be treated as assessee's income. assessee contended that, it still remains as liability in its account. Despite notice being issued, none appeared for company which made advance. assessee also did not produce any agreement before Assessing Officer. Assessing Officer also noticed that one of Directors in assessee company, was Director in that other company also. Assessing Officer, hence treated it as unexplained investment under Section 69 of Income Tax Act, ITA.No. 294 of 2010 -:4:- 1961. 5. appellate authority, however, found that money was credited through bank and there was conformation letter from Director of creditor company. Hence, there was no cause for adding on said amount as unexplained investment or unexplained cash credit, was specific finding. First Appellate Authority deleted income from taxation. revenue was before Tribunal which confirmed order of lower authorities. 6. Sri. Jose Joseph, learned Standing Counsel for Department would submit that by time assessment was made, remedy of other company for claiming aforesaid amounts was barred by limitation. assessee could not also prefer any explanation, as to why amounts were not returned and how it remains as liability of assessee company. In such circumstances, it was added as income; which is permissible going by decision in Commissioner of Income Tax v. T.V. ITA.No. 294 of 2010 -:5:- Sundaram Iyengar and Sons Ltd.[1996(222) ITR 345 (SC)]. 7. Smt. S.Parvathy, learned Amicus, would rely on decision of Hon'ble Supreme Court in Commissioner of Customs, Mumbai v. Toyo Engineering India Limited [2006(201) E.L.T. 513 (S.C.)]and of this Court in Bharat Petroleum Corporation Ltd. v. Union of India [2018(360)E.L.T. 848 (Ker.)] to contend that Assessing Officer could not have deviated from original proposal. Assessing Officer found amounts to be unexplained investment, which however was not originally proposed so in notice issued. It is also contended that even in relevant financing year, recovery had not been barred, since refund made earlier was on 31.03.2003. 8. questions of law are re-framed as follows: 1.Whether amount of Rs.12,49,000/- could have been assessed as unexplained investment, especially when there was no proposal to assess it as ITA.No. 294 of 2010 -:6:- that under Section 69 of Income Tax Act? 2.Whether First Appellate Authority and Tribunal erred in so far as setting aside assessment without looking at, whether amounts can be assessed under Income Tax Act under any other head? 9. In context of submission made as to deviation from proposal, we have to notice that Assessing Officer had specifically proposed to treat amount as assessee company's income, as is seen from assessment order itself. We are also of opinion that it could not have been treated as unexplained cash credit or as unexplained investment; since it was neither. source was clear and there was proper explanation for amounts as seen from books of accounts. We are also of opinion that under Income- tax Act, proposal is essentially to assess particular amount, as income, which assessee has not reckoned as such in its return. To propose ITA.No. 294 of 2010 -:7:- under one head of income and in scrutiny or reassessment to finalise under another head is perfectly permissible. 10. further question is whether there was any possibility of it being recovered. If recovery had been barred by limitation, necessarily, it has to be treated as income from business and same had to be assessed under Income Tax Act as has been held in T.V. Sundaram Iyengar and Sons Ltd. Even if deviation from proposal is found to be improper, assessment has to be sustained, as income from business; which was original proposal. If other company had occupied premises amounts would definitely be shown as income from business. 11. With respect to contention of limitation having not expired in relevant previous year, it is to be noticed that assessment itself was finalised after three years, which is normal period of limitation for ITA.No. 294 of 2010 -:8:- recovery of money, even calculated from date on which last refund was made. assessee had also not produced any agreement and in all possibility there would have been restrictive clause, in so far as forfeiture of advance amounts, if contract did not fructify. assessment order itself was passed, after three years from date of commencement of limitation and there was no claim made by assessee, who participated in assessment proceedings, as to any recovery proceedings having been commenced by other company or repayment having been effected. In said circumstances, though we do not approve of treatment of amounts as unexplained investment or unexplained cash credit, we are of opinion that assessment has to be upheld as income from business. questions stand answered accordingly and appeal stands allowed, restoring order of Assessing Officer; but however making modification ITA.No. 294 of 2010 -:9:- as herein, assessing rent received in advance as income in relevant previous year. No order as to costs in this appeal. Sd/- K.VINOD CHANDRAN JUDGE Sd/- ASHOK MENON JUDGE DST ITA.No. 294 of 2010 -:10:- APPENDIX PETITIONER'S/S EXHIBITS: ANNEXURE--A COPY OF ASSESSMENT ORDER 143(3) R.W.S. 144(1) (B) DATED 28/12/2006 FOR ASST.YEAR 2004-05. ANNEXURE-B COPY OF ORDER DATED 4/6/2007 OF COMMISSIONER OF INCOME TAX (APPEALS) ANNEXURE-C COPY OF ORDER DATED 18/3/2010 OF INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH ITA NO. 747/COCH/2007. Commissioner of Income-tax, Cochin v. Amritha Cyber Park (P) Ltd