Itta/2/2005 Of Shri Maneklal Agarwal v. The Deputy Commissioner Of Income Tax

THE HON’BLE SRI JUSTICE DILIP B.BHOSALE AND THE HON’BLE SRI JUSTICE A.RAMALINGESWARA RAO ITTA Nos.264 of 2003; 121 of 2004; 2 of 2005; 370 and 390 of 2010 COMMON JUDGMENT:(per the Hon’ble Sri Justice A.Ramalingeswara Rao) Heard Sri Challa Gunaranjan, the learned counsel appearing for assessee andSri S.R.Ashok, the learned Senior Counsel appearing for Revenue. 2. All these appeals are being disposed of by this common judgment, as thefollowing substantial question of law was raised and argued before us in all theappeals. “ Whether the Tribunal was justified in holding that the rents received fromthe sub-leased property ought to be taxed in the hands of the assessee?” 3. ITTA.No.121 of 2004 is filed by the Revenue, whereas the rest of ITTANos.264 of 2003, 2 of 2005, 370 and 390 of 2010 were filed by the assessee. Inthe above appeals, though various substantial questions of law were raised, thelearned counsel for the parties confined their arguments to the abovesubstantial question of law only. ITTA No.264 of 2003: 4. In this appeal, the Assessing Officer passed an order on 29.03.2000,assessing fair rental value and including the same in the net taxable income asRs.5,59,860/-. Accordingly, he computed the tax and interest thereon.Challenging the same, the assessee preferred an appeal before the Deputy Commissioner of Income Tax, who confirmed the same by his order dated21.02.2001. Challenging the same, the assessee further preferred an appealbefore the Commissioner of Income Tax (Appeals)-VI, who by his order dated08.01.2002, dismissed the same. Aggrieved by the same, the assesseepreferred an appeal before the Income Tax Appellate Tribunal, HyderabadBench ‘B’, Hyderabad, raising 5 grounds and the Tribunal disposed ofITA.No.645/Hyd/2001 relating to the assessment year 1997-98 along withITA.No.113/Hyd/2002 relating to the assessment year 1998-99. The Tribunal,by its order dated 11.07.2003, dismissed the appeal for the assessment year1997-98 and partly allowed the appeal for the assessment year 1998-99. Whiledismissing the appeal for the assessment year 1997-98, the Tribunal relied onits earlier order dated 18.08.1998 for the assessment years 1990-91 to 1994-95in ITA.Nos.982 to 986/Hyd/97. In respect of the appeal for the assessment year1998-99, the Tribunal held that the annual letting value of the property let out toGopal Babu has to be determined on the basis of municipal valuation anddirected the Assessing Officer to determine the annual letting valueaccordingly. Challenging the said finding insofar as it went against theRevenue, the Revenue filed ITTA.No.121 of 2004. ITTA No.121 of 2004: 5. This appeal arises out of the assessment order passed by the AssessingOfficer on 08.03.2000 for the assessment year 1998-99. Later on, the case wasconverted into scrutiny and a notice under Section 143 (2) of the Income TaxAct, 1961 (for short, the Act) was issued. Several notices were issued to theassessee, who responded ultimately on 27.01.2001 by urging that theassessment may be computed as per his return of income filed. The assesseesubmitted a letter dated 06.02.2011 furnishing the details of rents received fromPremalatha Agarwal, Sunita Agarwal and Snehalatha Agarwal, totalling toRs.4,14,000/- and stated that the income cannot be taxed twice simultaneouslyand for the last more than 25 years the assessments were done and they wereupheld. However, the rental value of the property of the said three persons wastaken as per the actual rent realised and in respect of Gopal Babu Agarwal, theestimated rent based on the rents received by Smt.Snehalatha Agarwal wastaken. The total net taxable income under the head income from house property was assessed at Rs.6,38,400/- and tax was calculated accordingly. Theassessee preferred an appeal to the Commissioner, who upheld the order of theAssessing Officer, by his order dated 08.01.2002. Challenging the same, theassessee filed ITA.No.113/Hyd/2002 before the Tribunal, who disposed of thesame along with ITA.No.645/Hyd/2001 relating to the assessment year 1997-98, by its order dated 11.07.2003. ITTA.No.2 of 2005: 6. In this case, the Assessing Officer passed an order on 31.03.1999 in respectof the assessment year 1996-97 calculating the gross rental income atRs.6,50,000/- and after deducting 1/5[th] thereon for repairs, took the totalincome at Rs.5,20,000/-. The assessee preferred an appeal to the appellateauthority and it was dismissed on 19.01.2000 upholding the order of theAssessing Officer to the extent of including the rental income in the totalincome. Aggrieved by the same, the assessee preferred further appeal beforethe Tribunal, which, by its order dated 31.08.2004, dismissed the appeal basedon the earlier order dated 18.08.1998 for the assessment years 1990-91 to1994-95 in ITA.Nos.982 to 986/Hyd/97. ITTA Nos.370 and 390 of 2010: 7. These appeals arise out of assessment orders passed by the AssessingOfficer on 24.03.2003 for the assessment years 1999-00 and 2000-01respectively assessing the net taxable income under the head of income fromhouse property at Rs.6,05,925/- and Rs.6,32,085/- respectively and calculatinginterest thereon. Challenging both the assessment orders, the assesseepreferred ITA.Nos.132 and 133 respectively before the Commissioner, who bya common order dated 28.04.2004, dismissed both the appeals. The assesseetook up the matter to the Tribunal in ITA.Nos.571 and 559/Hyd/2004respectively and the Tribunal dismissed both the appeals by order dated08.11.2007 based on the order dated 18.08.1998 passed in ITA.Nos.982 to986/Hyd/97 relating to the assessment years 1991-92 to 1994-95. Against theorder in ITA.No.571 of 2004, the assessee preferred ITTA.No.370 of 2010 forthe assessment year 1999-00 and against the order in ITA.No.559 of 2004, the assessee preferred ITTA.No.390 of 2010 for the assessment year 2000-01. 8. The brief facts of the case are follows: The assessee, Maneklal Agarwal, was allotted an extent of 7260 square yardsof vacant site by the Andhra Pradesh Industrial Investment Corporation in plotNo.9/4 at road No.5, Nacharam, Hyderabad. During the period from 1978 to1987, the assessee constructed four blocks viz., 10,000 sft., of ACC structure,2 RCC structures of 5,000 sft., each called Blocks A and B and 10,000 sft., ofRCC structure called Block C. The assessee claimed that these blocks wereleased out to his family members, i.e., 10,000 sft., of ACC structure was leasedout to his wife, Smt.Premalata, Blocks A and B in favour of his daughters-in-law, Smt.Snehalata Agarwal and Smt.Sunita Agarwal and Block C in favour ofhis son Gopalababu Agarwal. Lease deeds were entered agreeing to pay anamount of Rs.500/- each per month. The ACC structure was given on lease infavour of his wife and Blocks A and B were further leased out to sub-tenantsand the lessees realised more rent. The details of the rents received by theassessee from his family members and the rent realised by the lessees fromsub-tenants are as follows: Rents received by the assessee from his family members: Sl.NoAssessmentAnnual rent receivedAnnual rent received from the sub-yearfrom the familylessees (As calculated by themembersAssessing Officer)11996-97Rs.38,400/-Rs.6,50,000/-21997-98Rs.48,000/-Rs.6,99,820/-31998-99Rs.84,000/-Rs.7,98,000/-41999-00Rs.84,000/-Rs.8,43,740/- The Assessing Officer took the rental income realised from the sub-lessees,and after deducting 1/5[th] for repairs, included the same in the total income ofthe assessee. In respect of the assessment years 1990-91 to 1994-95, theTribunal passed an order on 18.08.1998, dismissing the appeals preferred bythe assessee holding that there was no evidence to show that the assessee Rents received by the assessee from his family members: Sl.NoAssessmentAnnual rent receivedAnnual rent received from the sub-yearfrom the familylessees (As calculated by themembersAssessing Officer)11996-97Rs.38,400/-Rs.6,50,000/-21997-98Rs.48,000/-Rs.6,99,820/-31998-99Rs.84,000/-Rs.7,98,000/-41999-00Rs.84,000/-Rs.8,43,740/- The Assessing Officer took the rental income realised from the sub-lessees,and after deducting 1/5[th] for repairs, included the same in the total income ofthe assessee. In respect of the assessment years 1990-91 to 1994-95, theTribunal passed an order on 18.08.1998, dismissing the appeals preferred bythe assessee holding that there was no evidence to show that the assessee leased out the properties in an unfinished state and the respective lessees hadinvested huge amounts to make them fit for letting. It was also held that theleases were not genuine and consequently the assessee is the beneficiary ofthe rental income realised from the ultimate tenants. Hence, based on thedecisions of the Hon’ble Supreme Court, it was held that the income had to beassessed in the hands of the right person and the assessee is the right personfor assessing the rental income realised in respect of the four blocks ofindustrial structures. Accordingly, the entire rent received from the tenants iscomputed as the income of the assessee from the properties. 9. It may be noted that though the Tribunal confirmed the order of theCommissioner in respect of net taxable income from the house propertyrelating to the assessment year 1998-99 in respect of three lessees except theproperty leased out to Gopal Babu. But it appears that the assessee has notpreferred any appeal against the order in ITA.No.113/H/2002 in so far as it wentagainst those lessees whose rental income was upheld but only the Revenuepreferred an appeal in ITTA No.121 of 2004 against the finding recorded inrespect of valuation of the rental income from the property leased out to him. 10. In the light of the above facts, the learned counsel for the assesseecontended that the Tribunal erred in allowing the calculation of net taxableincome from house property based on the income realised by sub-leases of theproperties. The learned Senior Counsel for the Revenue, on the other hand,submitted that the learned counsel for the assessee did not argue with regardto the said point before the Tribunal, as the matter was already concluded inITA.Nos.982 to 986/Hyd/97, dated 18.08.1998, relating to the assessment years1990-91 to 1994-95. The learned counsel for the assessee, in reply, submittedthat though the findings were recorded against the assessee in the above ITAs,due to introduction of Kar Vivad Samadhan Scheme, the demand was settledunder the said scheme and they are not precluded from raising the said plea inthe subsequent assessment years. Act, which reads as follows: “23. Annual value how determined: (1) For the purposes of section 22, the annual value of any property shall bedeemed to be- a. the sum for which the property might reasonably be expected to let fromyear to year; oryear to year; or b. where the property is let and the annual rent received or receivable by theowner in respect thereof is in excess of the sum referred to in clause(a), the amount so received or receivable; orowner in respect thereof is in excess of the sum referred to in clause(a), the amount so received or receivable; or c. where the property or any part of the property is let and was vacant duringthe whole or any part of the previous year and owing to such vacancythe actual rent received or receivable by the owner in respect thereofis less than the sum referred to in clause (a), the amount so receivedor receivable :the whole or any part of the previous year and owing to such vacancythe actual rent received or receivable by the owner in respect thereofis less than the sum referred to in clause (a), the amount so receivedor receivable : c. where the property or any part of the property is let and was vacant duringthe whole or any part of the previous year and owing to such vacancythe actual rent received or receivable by the owner in respect thereofis less than the sum referred to in clause (a), the amount so receivedor receivable :the whole or any part of the previous year and owing to such vacancythe actual rent received or receivable by the owner in respect thereofis less than the sum referred to in clause (a), the amount so receivedor receivable : Provided that the taxes levied by any local authority in respect of the propertyshall be deducted (irrespective of the previous year in which the liability to paysuch taxes was incurred by the owner according to the method of accountingregularly employed by him) in determining the annual value of the property of thatprevious year in which such taxes are actually paid by him. Explanation.—For the purposes of clause (b) or clause (c) of this sub-section, theamount of actual rent received or receivable by the owner shall not include,subject to such rules as may be made in this behalf, the amount of rent which theowner cannot realise. (2) Where the property consists of a house or part of a house which— a. is in the occupation of the owner for the purposes of his own residence; or b. cannot actually be occupied by the owner by reason of the fact that owing tohis employment, business or profession carried on at any other place,he has to reside at that other place in a building not belonging to him,his employment, business or profession carried on at any other place,he has to reside at that other place in a building not belonging to him, the annual value of such house or part of the house shall be taken to be nil. (3) The provisions of sub-section (2) shall not apply if— a. the house or part of the house is actually let during the whole or any part ofthe previous year; orthe previous year; or b. any other benefit therefrom is derived by the owner.(4) Where the property referred to in sub-section (2) consists of more than onehouse—house— a. the provisions of that sub-section shall apply only in respect of one of suchhouses, which the assessee may, at his option, specify in this behalf;houses, which the assessee may, at his option, specify in this behalf; b. the annual value of the house or houses, other than the house in respect ofwhich the assessee has exercised an option under clause (a), shall bedetermined under sub-section (1) as if such house or houses had beenlet.”which the assessee has exercised an option under clause (a), shall bedetermined under sub-section (1) as if such house or houses had beenlet.” 12. The Tribunal, in its order dated 18.08.1998, elaborately considered the rivalcontentions and held that the assessee himself constructed the four blocks and theleases in favour of his family members are not genuine, by rejecting the plea takenon behalf of the lessees that they developed the leased property. The said order hasbecome final. Though the demand of tax was satisfied under a scheme introducedby the Government of India, it cannot be said that the findings recorded therein are open for re-agitation. In fact, the Tribunal in the appeals before it,against which the present appeals arose, took into consideration the said orderdated 18.08.1998 and passed the orders. The learned counsel for the assesseealso did not challenge the said findings nor argued anything with regard to thesaid point before the Tribunal in view of the earlier order dated 18.08.1998.Hence, it is not open to the assessee to reopen a final finding recorded by theTribunal in earlier proceedings between the same parties on the same point forthe first time before this court. In fact, as already stated above, the assesseedid not argue anything with regard to the above point before the Tribunal. therein are open for re-agitation. In fact, the Tribunal in the appeals before it,against which the present appeals arose, took into consideration the said orderdated 18.08.1998 and passed the orders. The learned counsel for the assesseealso did not challenge the said findings nor argued anything with regard to thesaid point before the Tribunal in view of the earlier order dated 18.08.1998.Hence, it is not open to the assessee to reopen a final finding recorded by theTribunal in earlier proceedings between the same parties on the same point forthe first time before this court. In fact, as already stated above, the assesseedid not argue anything with regard to the above point before the Tribunal. 13. However, we have carefully considered and examined whether thecontentions raised by the assessee are tenable. The assessee’s contention isthat the property was leased out to his family members in an unfinished stageand the lessees later on developed the property and sub-let it to the sub-lessees. No evidence was let in before the Tribunal in support of the saidcontention and hence it was rejected in the order dated 18.08.1998. TheTribunal held that the lessees were only intermediaries introduced by theassessee under the guise of alleged lease deeds for diverting the rental incomefrom the hands of the assessee and the leases are not genuine. In the saidorder, it was held that as per the decisions of the Hon’ble Supreme Court, theincome had to be assessed in the hands of the right person and the assesseeis the right person for assessing the rental income realised in respect of fourblocks of industrial structures. The Tribunal on the basis of evidence, as amatter of fact, decided that the leases were not genuine and the property wasdeveloped by the assessee only. These aspects on facts cannot be upset bythis Court while deciding the substantial question of law unless it is perverse.There is no material to show that the findings are perverse. On the basis of those findings, the only logical consequence would be to assess the incomerealised from letting out the property to the income of the assessee, he beingthe right person. This conclusion finds support in view of the followingdecisions. 14. In Jamnaprasad Kanhaiyalal V. Commissioner of Income Tax, M.P., those findings, the only logical consequence would be to assess the incomerealised from letting out the property to the income of the assessee, he beingthe right person. This conclusion finds support in view of the followingdecisions. 14. In Jamnaprasad Kanhaiyalal V. Commissioner of Income Tax, M.P., Bhopal, the Hon’ble Supreme Court held that the Income Tax Officer wasentitled to determine whether the amount disclosed was or was not the incomeof the declarant, while dealing with the case of another assessee under Section68 of the Act. The Income Tax Officer was not prevented from investigating intothe nature and source of sums credited in the books of account of an assesseeand reject his explanation to the effect that the sums belonged to the personswho had made declarations about them under Section 24 of the Act. In the saidcase, the Hon’ble Supreme Court was answering a reference made by theIncome Tax Appellate Tribunal, at the instance of the assessee. The assesseetherein was a partnership firm and it consisted of 5 partners i.e., the assesseeand his 3 major sons and minor son admitted to the benefits of the partnership.In the assessment proceedings for the assessment year 1967-68, the IncomeTax Officer noticed in the books of account of the assessee five cash credits ofRs.9,250/- each. The Income Tax Officer called upon the assessee to explainthe genuineness as well as the source of the cash credits. The assesseedisavowed all knowledge as to the capacity of the creditors to advance theamounts in question. However, he admitted that the creditors had noindependent source of income of their own. It was contended before the IncomeTax Officer that the creditors having made voluntary disclosures under theVoluntary Disclosure Scheme and the disclosures made by them having beenaccepted by the Commissioner of Income Tax and tax paid thereon, the amountof Rs.46,250/- (Rs.9,250/- X 5) could not be treated as income of the assesseefrom undisclosed sources. The Income Tax Officer held that the disclosuresmade under the Scheme granted immunity from further taxation only to thedeclarant, and not to person to whom the income actually belonged. He treatedit as the assessee’s income from undisclosed sources. According to him, suchcash credits were treated in their names after making false declarations underthe Scheme, with a view to avoid a higher rate of taxation. The Appellate Assistant Commissioner disagreed with the Income Tax Officer holding thatwhen an amount was disclosed by a person under Section 24 of the Act, therewas an immunity not only as regards the declarant, but there was also a finalityas to the assessment. The Appellate Tribunal disagreed with the AppellateAssistant Commissioner and upheld the decision of the Income Tax Officer.The assessee applied to the Appellate Tribunal under Section 256 of the Act torefer the question of law arising out of its order to the Madhya Pradesh HighCourt for its opinion. Since there was a conflict of opinion between differentHigh Courts as to the true nature of the immunity granted under Section 24 ofthe Act, the Appellate Tribunal made a reference under Section 257 of the Actto the Hon’ble Supreme Court on the following questions of law. “ 1. Whether on the facts and in the circumstances of the case, it was open tothe Revenue authorities to investigate into the genuineness of the five creditsaggregating to Rs.46,250/- and records a finding in regard thereto, when theDisclosure petitions made by the five creditors under Section 24 of the Finance(No.2) Act, 1965, had been acted upon by the Revenue authorities? 2 . If the answer to the first question is in the negative and in favour of theassessee, whether the addition of Rs.46,250/- to the income of the assessee asrepresenting its income from undisclosed sources, for the assessment years1967-68, is valid and justified in law?” 15. With regard to the first question, the Hon’ble Supreme Court held asfollows: “ 1. Whether on the facts and in the circumstances of the case, it was open tothe Revenue authorities to investigate into the genuineness of the five creditsaggregating to Rs.46,250/- and records a finding in regard thereto, when theDisclosure petitions made by the five creditors under Section 24 of the Finance(No.2) Act, 1965, had been acted upon by the Revenue authorities? 2 . If the answer to the first question is in the negative and in favour of theassessee, whether the addition of Rs.46,250/- to the income of the assessee asrepresenting its income from undisclosed sources, for the assessment years1967-68, is valid and justified in law?” 15. With regard to the first question, the Hon’ble Supreme Court held asfollows: “ 18. The immunity under Section 24 of the Act was conferred on the declarantonly, and there was nothing to preclude an investigation into the true nature andsource of the credits. The ITO was, therefore, justified in treating the cashcredits in the books of account of the assessee in the names of the creditors asunexplained cash credits. The finality under Sub-section (8) is to the order of theCentral Board of Revenue under Sub-section (6). Under Sub-section (4) theCommissioner of Income Tax was required, within thirty days, if satisfied thatthe whole or any part of the income declared had been detected or deemed tohave been detected by the ITO prior to the date of declaration, to make an orderin writing to that effect and forward a copy thereof to the declarant. Any personwho objected to such an order could appeal under Sub-section (5) to the CentralBoard of Revenue stating the grounds for such an objection. The Board wasempowered to pass such orders as it thought fit under Sub-section (6). Thisorder of the Board under Sub-section (6) was final and conclusive by reason ofSub-section (8). Thus, the finality under Sub-section (8) was to the order of theBoard under Sub-section (6) of Section 24 and not to the assessment of taxmade on the declaration furnished by the creditors under the scheme, by virtue 16. With regard to the second question, The Hon’ble Supreme Court held asfollows: “ 21. The next question that calls for determination is whether the non-obstanteclause contained in Sub-section (1) of Section 24 of the Act precludes theDepartment from proceeding against the person to whom the income actuallybelonged. Under Sub-section (1) of Section 24 the declaration was required to bemade in respect of the amount which represented the income of the declarant.The declaration could not be made in respect of an amount which was not theincome of the declarant. If, therefore, a person made a false declaration withrespect to an amount which was not his income, but was the income ofsomebody else, then there was nothing to prevent an investigation into the truenature and sources of the said amount. There was nothing in Section 24 of theAct which prevented the ITO, if he was not satisfied with the explanation of anassessee about the genuineness or source of an amount found credited in hisbooks, in spite of its having already been made the subject of a declaration bythe creditor and then taxed under the scheme. We find no warrant for thesubmission that Section 24 had an overriding effect over Section 68 of theIncome Tax Act, 1961, insofar as the persons other than the declarants wereconcerned. 20. In our judgment, the legal fiction created by Sub-section (3) of Section 24 ofthe Act by virtue of which the amount declared by the declarant was to becharged to income tax "as if such amount were the total income of the declarant"was limited in its scope, and it cannot be invoked in assessment proceedingsrelating to any person other than the person making the declaration under theAct so as to rule out the applicability of Section 68 of the Income Tax Act, 1961. 20. In our judgment, the legal fiction created by Sub-section (3) of Section 24 ofthe Act by virtue of which the amount declared by the declarant was to becharged to income tax "as if such amount were the total income of the declarant"was limited in its scope, and it cannot be invoked in assessment proceedingsrelating to any person other than the person making the declaration under theAct so as to rule out the applicability of Section 68 of the Income Tax Act, 1961. 21. The last question that remains is whether the same income cannot be taxedtwice, once in the hands of the creditors and again in the hands of the assessee.In a case of this description, there is no question of double taxation. The situationis of the assessee's own making in getting false declarations filed in the namesof the creditors with a view to avoid higher slab of taxation. Once it was foundthat the income declared by the creditors did not belong to them, there wasnothing to prevent the same being taxed in the hands of the assessee to which itactually belonged. 22. It follows that the decisions of the Gujarat High Court in Manilal GafoorbhaiShah v. Commissioner of Income Tax, of the Allahabad High Court in BadriPrasad & Sons v. Commissioner of Income Tax, and Pioneer Trading Syndicatev. Commissioner of Income Tax, Lucknow and of the Madhya Pradesh HighCourt in Addl. Commissioner of Income Tax v. Samrathmal Santoshchandwhich lay down the true scope of the Voluntary Disclosure Scheme under s. 24of the Act must be upheld. The decisions of the Delhi High Court in Rattan Lal &Ors v. Income Tax Officer and Shakuntala Devi & ors. v. C.I.T. and of theJammu & Kashmir High Court in Mohd. Ahsan Wani v. C.I.T., taking a view to the contrary, are overruled. 23. The Income Tax officer was entitled to determine whether the amountdisclosed was or was not the income of the declarant, while dealing with thecase of another assessee under Section 68 of the Income Tax Act, 1961. Thelegal fiction created by Sub-section (3) of Section 24 was restricted to theVoluntary Disclosure Scheme itself. The protection enjoyed by the declarantunder that scheme extended only to the amounts so declared being not liable tobe added, in any assessment, of the declarant. There was no absolute finalityattached to the declaration especially when the nature and source of the sumdeclared was being determined for the purpose of its inclusion in the income ofan assessee other than the declarant. There was, therefore, nothing whichprevented the Income Tax officer from investigating into the nature and source ofthe sums credited in the books of account of an assessee and reject hisexplanation to the effect that the sums belonged to the persons who had madedeclarations about them under Section 24 of the Act.” Accordingly, answered the said questions in favour of the Revenue and againstthe assessee. 17. The said decision was followed by the Hon’ble Supreme Court in IncomeTax Officer, New Delhi V. Rattan Lal a n d Radhe Shyam Tibrewal V.Commissioner of Income Tax, Assam. 18. In Income Tax Officer V. Atchaiah, the Hon’ble Supreme Court consideredthe following questions. “ Assessing officer was justified in issuing notice under Section 148 as the lawunder 1922 Act provided that once assessing officer exercises option to taxeither AOP or the individual, he cannot tax the other entity is not existing underthe Act of 1961 and revenue is bound to tax the right person if wrong person isassessed, option is available to the revenue to tax the right person and issuenotice under Section 148 to the correct person.” 19. The said case arose out of an order passed by this Court along with a WritPetition filed by the respondent therein seeking an order restraining theappellant (respondent in the said Writ Petition) from taking any action pursuantto the notice dated 17.03.1972 issued under Section 148 of the Act. The “ Assessing officer was justified in issuing notice under Section 148 as the lawunder 1922 Act provided that once assessing officer exercises option to taxeither AOP or the individual, he cannot tax the other entity is not existing underthe Act of 1961 and revenue is bound to tax the right person if wrong person isassessed, option is available to the revenue to tax the right person and issuenotice under Section 148 to the correct person.” 19. The said case arose out of an order passed by this Court along with a WritPetition filed by the respondent therein seeking an order restraining theappellant (respondent in the said Writ Petition) from taking any action pursuantto the notice dated 17.03.1972 issued under Section 148 of the Act. The respondent and another purchased an extent of 454.11 acres in a village inMedak District from two persons under a sale deed dated 20.10.1962 for aconsideration of Rs.75,000/-. Prior to the purchase, the lands were notified foracquisition under the Land Acquisition Act. The Vendees appeared before theLand Acquisition Officer claiming compensation. An award was passed on04.02.1964 determining the compensation at Rs.1,38,794.12 annas and the saidamount was received by the Vendees on 04.12.1964 in equal shares. On areference under Section 18 of the Land Acquisition Act, the amount wasenhanced to Rs.3,95,026/- and the same was also shared by them in equalproportions. In the assessment proceedings relating to the assessment year1965-66, the Income Tax Officer included a sum of Rs.35,397/- treating it as acapital gain. Relating to the assessment year 1968-69, the enhancedcompensation was brought to tax as capital gain. A notice was issued to boththe Vendees by the Income Tax Officer stating that he has reason to believethat the income chargeable to tax for the assessment year 1964-65 hasescaped assessment. He called upon them to file a return. They filed a nilreturn on 03.04.1972. The Income Tax Officer proposed to tax them as anAssociation of Persons and bring the entire profit made by them as capital gainin the hands of such Association of Persons. Though an objection was raisedby them, when they noticed that the Income Tax Officer inclined to proceedwith the assessment, they approached this Court by way of a Writ Petitionquestioning the notice dated 19.02.1972. It was contended that the Income TaxOfficer, having assessed the share of each of them in their respectiveindividual hands, has no jurisdiction to assess the same income as the incomeof and in the hands of the Association of Persons aforesaid. The saidcontention was accepted by this Court. When the matter went to Hon’bleSupreme Court, it held as follows: “ 7 . In our opinion, the contention urged by Dr.Gauri Shaker meritsacceptance. We are of the opinion that under the present Act, the IncomeTax Officer has no option like the one he had under the 1922 Act. He can,and he must, tax the right person and the right person alone. By “rightperson”, we mean the person who is liable to be taxed, according to law, withrespect to a particular income. The expression “wrong person” is obviouslyused as the opposite of the expression “right person”. Merely because awrong person is taxed with respect to a particular income, the AssessingOfficer is not precluded from taxing the right person with respect to thatincome. This is so irrespective of the fact which course is more beneficial tothe revenue. In our opinion, the language of the relevant provisions of thepresent Act is quite clear and unambiguous. Section 183 shows that whereacceptance. We are of the opinion that under the present Act, the IncomeTax Officer has no option like the one he had under the 1922 Act. He can,and he must, tax the right person and the right person alone. By “rightperson”, we mean the person who is liable to be taxed, according to law, withrespect to a particular income. The expression “wrong person” is obviouslyused as the opposite of the expression “right person”. Merely because awrong person is taxed with respect to a particular income, the AssessingOfficer is not precluded from taxing the right person with respect to thatincome. This is so irrespective of the fact which course is more beneficial tothe revenue. In our opinion, the language of the relevant provisions of thepresent Act is quite clear and unambiguous. Section 183 shows that where the Parliament intended to provide an option, it provided so expressly. Wherea person is taxed wrongfully, he is no doubt entitled to be relieved of it inaccordance with law but that is a different matter altogether. The personlawfully liable to be taxed can claim no immunity because the AssessingOfficer (Income Tax Officer) has taxed the said income in the hands ofanother person contrary to law…………” The Hon’ble Supreme Court, accordingly, allowed the appeal and set aside thejudgment of this Court. 20. In the instant case, in view of finding of fact recorded by the Tribunal withregard to the nature of the leases executed by the assessee being bogus andthe structures were raised by the assessee himself, we think it proper toinclude the net rental value to the income of the assessee. There is noprovision for assessing rental value of the property let out to Gopal Babu on thebasis of municipal valuation, as ordered by the Tribunal inITA.No.113/Hyd/2002 relating to the assessment year 1998-99. The methodadapted by the Income Tax Officer estimating the rental value in respect of hiscase appears to be proper. 21. In view of the same, we answer the substantial question of law in favour ofthe Revenue and against the assessee. Accordingly, the appeal filed by theRevenue i.e., ITTA.No.121 of 2004 is allowed and the appeals filed by theassessee i.e., ITTA Nos.264 of 2003, 2 of 2005, 370 and 390 of 2010 aredismissed. There shall be no order as to costs. Miscellaneous petitions pendingin these appeals, if any, shall stand disposed of. ______________________ DILIP B.BHOSALE, J Date: 25.02.2015 TJMR ______________________________ A.RAMALINGESWARA RAO,J THE HON’BLE SRI JUSTICE DILIP B.BHOSALE AND THE HON’BLE SRI JUSTICE A.RAMALINGESWARA RAO ITTA Nos.264 of 2003; 121 of 2004; 2 of 2005; 370 and 390 of 2010 (per the Hon’ble Sri Justice A.Ramalingeswara Rao) TJMR Date: 25.02.2015