LITTLE DEVELOPERS, MUMBAI V. ACIT CEN CIR 24 & 26, MUMBAI

CO 12/MUM/2012

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0576 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 14 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 08-05-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 24-02-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 25-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HEMANT J LAL
• Keywords: Gift; Valuation report
• Section: 143(3); 153A; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNALD BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND SANJAY GARG, (JM) . . , , ./ I.T .A. NO . 3813 / MUM/20 1 1 ( / ASSESSMENT YEAR : 20 0 4 - 05 ) ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 2 4 & 26 , 4 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 / VS. M/S LITTLE DEVELOPERS , GODS GIFT TOWERS , 4 TH FLOORS, HILL ROAD, BANDRA (W), MUMBAI - 4000 50 ( / APPELLANT ) .. ( / RESPONDENT ) CO NO.12/MUM/2012 ARISING OUT OF ITA NO.3813/MUM/2011 M/S LITTLE DEVELOPERS , GODS GIFT TOWERS , 4 TH FLOORS, HILL ROAD, BANDRA (W), MUMBAI - 400050 / VS. ASSTT. COMMISSION ER OF INCOME TAX, CENTRAL CIRCLE - 2 4 & 26, 4 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AABFL3067F / REVENUE BY SHRI HEMANT J LAL / ASSESSEE BY SHRI R AJESH SANGHVI / DATE OF HEARING : 11.3. 2015 / DATE OF PRONOUNCEMENT : 8. 5 . 2015 / O R D E R PER B R BASKARAN, AM : THE APPEAL FILED BY THE REVENUE AND CROSS - OBJECTION THERETO FILED BY THE ASSESSEE ARE DIRE CTED AGAINST THE ORDER DATED 14.2.2011 PASSED BY THE LD. CIT(A) - 39, MUMBAI AND THEY RELATE TO THE ASSESSMENT YEAR 2004 - 05. ITA. NO . 3813 /M UM/ 20 1 1 AN D CO 12/MUM/2012 2 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN DELETING THE ADDITION OF RS.7.03 CRORES RELATING TO BOGUS TENANCY RIGHTS. 3. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF BUILDINGS. A SEARCH OPERATION U/S 132 OF THE ACT WAS CONDUCTED ON 8.5.2007 IN THE CASE OF BINDRA ROHRA GROUP AND THE ASSESSEE WAS ALSO SUBJECTED TO SEARCH. IN THE ASSESSMENT PROCEEDINGS CONDUCTED U/S 153A R.W.S. 143(3) OF THE ACT, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF PAYMENT MADE TOWARDS TE NANCY RIGHT AND ACCORDINGLY DETERMINED THE TOTAL INCOME AT RS.7,33,63,710/ - AS AGAINST THE RETURNED INCOME OF RS.29,16,621/ - . THE LD CIT(A) DELETED THE SAID ADDITION AND HENCE THE REVENUE HAS FILED THIS APPEAL BEFORE US. 4. HOWEVER, WE NOTICE THAT THE LD CIT(A) HAS DELETED THE IMPUGNED ADDITION ON THE GROUND THAT NO INCRIMINATING MATERIAL RELATING TO THE SAME WAS FOUND DURING THE COURSE OF SEARCH. FURTHER THE ISSUE RELATING TO PAYMENTS MADE TO TENANTS WAS SEEN EXAMINED AT THE ORIGINAL ASSESSMENT PROCE EDINGS. THE OBSERVATIONS MADE AND DECISION TAKEN BY LD. CIT(A) , VIDE PARAS 24 TO 27 OF HIS ORDER ARE EXTRACTED BELOW, FOR THE SAKE OF CONVENIENCE. 24 I HAVE GONE THROUGH THE ISSUE. IN THIS CASE, THE ORIGINAL ASSESSMENT FOR THIS AY 2004 - 05 WAS COMPLETE D U/S 143(3) ON 28.12.2006. THE ORIGINAL ASSESSMENT FOR AY.200 3 - 0 4 WAS COMPLETED U/S 143(3) ON 24.3.2006. THE FACT THAT THE CLAIM OF TENANCY WAS MADE IN THE EARLIER ASSESSMENT PROCEEDINGS COULD BE SEEN FROM THE ASSESSMENT ORDER DT. 24.3.2006 FOR A.Y. 2003 - 04 (PLEASE SEE PAGE 4 OF THE ASSESSMENT ORDER). THE FACT THAT THE CLAIM OF TENANCY WAS MADE IN THE ORIGINAL ASSESSMENT IN A.Y. 2003 - 04 CAN ALSO BE SEEN FROM THE CIT(A)'S ORDER FOR A.Y. 2003 - 04 [PAGE 3 OF THE CIT(A)'S ORDER]. FURTHER, IT IS SEEN FROM THE D EED OF CONVEYANCE DT. 25.1.2000 EXECUTED BY THE ERSTWHILE OWNER OF THE PROPERTY MRS. MEHRA RUSTOMJI VACHHA ALSO REFERS TO THE TENANCY. LAST PART OF PAGE 4 OF THE DEED AND PAGE 5 AND FIRST PART OF PAGE 6 OF THE DEED READ AS FOLLOWS: - ITA. NO . 3813 /M UM/ 20 1 1 AN D CO 12/MUM/2012 3 'AND WHEREAS THE MAIN STRUCTURE KNOWN AS 'ROSHANI' AND AN OUTHOUSE STANDING ON THE SAID PROPERTY WERE CONSTRUCTED PRIOR TO 1940 AN D WHEREAS THE SAID STRUCTURE 'RO SHANI' AND THE OUTHOUSE COMPRISE OF GROUND AND ONE UPPER FLOOR AND ARE VERY OLD AND ARE IN A DILAPIDATED CONDITION, HAVING A TOTAL CARPET AREA OF 5045 SQ. FT. I.E. 468.68 SQ. METRES AND WHEREAS THE VENDOR AND THE SAID NERGISH ARE IN OCCUPATION OF AN AREA ADMEASURING 1255 SQ. FT. IN THE SAID STRUCTURE ON THE FIRST FLOOR WHILE THE REMAINING PORTIONS OF THE SAID STRUCTURE AND THE OUTHOUSE ARE IN OCCUPATION OF TENANTS WHOSE DETAILS AS TO THE NAMES, AREAS OCCUPIED AND RENTS A RE SHOWN IN THE ANNEXURE' ANNEXED HERETO AND WHEREAS THERE IS ALSO AN ENCLOSED GARAGE IN THE COMPOUND OF THE SAID PROPERTY AND THE SAME IS BEING USED B Y THE VEND O R HEREIN; AND WHEREAS THE PURCHASERS HEREIN HAVE APPROACHED THE VENDOR FOR PURCHASE OF THE VENDOR'S UNDIVIDED SHARE, RIGHT, TITLE AND INTEREST IN THE SAID PROPERTY AND WHEREAS THE VENDOR HAS AGREED TO SELL AND TRANSFER HER UNDIVIDED 1/2 SHARE , RIGHT, TITLE AND INTEREST IN THE SAID PROPERTY, FREE FROM ALL ENCUMBRANCES BUT SUBJECT TO THE SAID TENANTS AS AFORESAID, TO THE PURCHASERS HEREIN FOR A LUMPSUM CONSIDERATION OF RS.52,50, 000/ - (RUPEES FIFTY TWO LAKHS FIFTY THOUSAND ONLY), IT BEING FURTHER AGREED THAT THE VENDOR SHALL NOT BE LIABLE TO THE PURCHASERS WITH REGARD TO THE REMAINING UNDIVIDED 1/2 SHARE HELD BY THE SAID NERGISH AND THAT IT SHALL BE THE SOLE RESPONSIBILITY AND LIABILITY OF THE PURCHASERS TO DEAL WITH THE SAID NERGISH; AND WHEREAS AS FAR AS THE SAID TENANTS ARE CONCERNED, IT HAS BEEN AGREED THAT T HE PURCHASERS SHALL DEAL WITH THE SAID TENANTS AS THEY MAY DEEM FIT F OR WHICH PURPOSE THE VENDOR SHALL SIMULTANEOUSLY ON THE EXECUTION OF THIS INDENTURE ATT ORN THE TENANCIES OF THE SAID TEN ANTS IN FAVOUR OF THE PURCHASERS AS FAR AS THE VENDOR'S UNDIVIDED 1/2 SHARE IS CONCERNED.' ANNEXURE OF THIS AGREEMENT READS AS FOLLOWS: - ITA. NO . 3813 /M UM/ 20 1 1 AN D CO 12/MUM/2012 4 ANNEXURE NAME OF TENANT CARPET AREA IN SQ.FT. RENT (RS.) MAIN BUILDING OCCUPANCY NARGISH AND MEHRA (OWNERS) GARAGE (APP) (MEHRA) MAIN BUILDING (TENANTS ) MRS. N FRENCHMAN MS.TINA BATHIJA MRS.SHEHZEN SIDDIQUE MRS. YASMIN PATEL OUT HOUSE MR.ZAIN VASI 1225 200 1455 625 1106 1105 1103 1106 5045 230.00 550.00 410.00 339.55 130.00 25. SIMILARLY, TH E DEED OF CONVEYANCE DT. 25.1.2000 EXECUTED BY THE ERSTWHILE OWNER MRS. NERGISH R USTOMJI VACHHA OF THE PROPERTY ALSO BRINGS OUT THE ABOVE FACTS. THE VALUATION REPORT ISSUED BY HANWARE CONSULTANTS DT. 5.1.2000 ALSO REFERS ABOUT THE TENEMENTS. THE APPELLANT ALSO COULD PRODUCE SOME OF THE RENTAL RECEIPTS ISSUED TO THE TENANTS. 26. FROM THESE FACTS, IT IS SEEN THAT THE ISSUE OF TENANCY AND THE TENANTS WERE SETTLED IN THE YEAR 2000; ITSELF AND THE ERSTWHILE OWNERS OF THE PROPERTY AND THE PURCHASERS OF THE PROPE RTY (I.E. THE APPELLANT) HAVE AGREED TO THE ISSUE OF TENANCY AND THE RESPONSIBILITY TO DEAL WITH THE TENANTS WAS OF THE APPELLANT. THE APPELLANT HAS ENTERED INTO AGREEMENTS WITH THE TENANTS AND IN VIEW OF THE TENANCY, CERTAIN BUILT UP AREA WAS ALLOTTED TO THE TENANTS. THESE FACTS WERE ALSO BROUGHT ON RECORD DURING THE ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3) OF THE IT. ACT FOR A.Y. 2003 - 04. DURING THE SEARCH PROCEEDINGS, NO INCRIMINATING DOCUMENTS WERE FOUND TO SHOW THAT THE TENANCY CLAIMED BY ANY OF THE TENANTS IS BOGUS. THE A.O. HAS NOT BELIEVED THE ISSUE OF TENANCY BECAUSE THE APPELLANT COULD NOT PRODUCE RATION CARDS AND ELECTRICITY BILLS OF THE TENANTS WHICH WERE RELATED TO THE PERIOD PRIOR TO YEAR 2000 AND THE A.O. HAS ASKED THE APPELLANT TO PRODUCE T HE DETAILS IN THE YEAR 2009. IT IS TO BE APPRECIATED THAT IT WILL BE VERY DIFFICULT TO LOCATE SUCH OLD RECORDS WHICH ARE MORE THAN 10 YEARS OLD. FURTHER, THE A.O.'S ITA. NO . 3813 /M UM/ 20 1 1 AN D CO 12/MUM/2012 5 HAS TAKEN A VIEW BECAUSE ONE OF THE TENANTS IS MS. TINA BINDRA WHO IS THE WIFE OF ONE OF TH E PARTNERS OF THE APPELLANT FIRM. IN THIS REGARD, IT IS TO BE NOTED THAT THE MARRIAGE BETWEEN MS.TINA AND MR.BINDRA HAS TAKEN PLACE IN THE YEAR 2002, WHEREAS THE DEED EXECUTED BY THE ERSTWHILE OWNER OF THE PROPERTY IN 2000 ITSELF SHOWS MS.TINA AS A TENANT AND AS A RESULT, THE CLAIM OF TENANCY BY MS. TINA BINDRA DOESN'T APPEAR TO HAVE BEEN ARRANGED BECAUSE SHE IS THE WIFE OF A PARTNER OF THE APPELLANT FIRM. 27. IN VIEW OF THESE DISCUSSIONS, I AM OF THE VIEW THAT THE ISSUE OF TENANTS WAS SUPPORTED BY EVIDE NCES AND IN FACT THE ISSUE OF TENANTS WAS ALSO KNOWN TO THE A.O. AT THE ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT AND THE A.O. IN THE ASSESSMENT U/S 153A OF THE ACT HAS NO OTHER DOCUMENTS TO DISPROVE THE APPELLANT'S CLAIM. IN VIEW OF THIS, THE APPELLANT'S CLAIM OF TENANCY AND THE BUILT UP AREA PROVIDED TO THE TENANTS HAS TO BE ACCEPTED. HENCE, THE A.O. IS DIRECTED TO DELETE THE ENTIRE ADDITION MADE IN THE IMPUGNED ASSESSMENT ORDER. 5. THE PRESENT ASSESSMENT YEAR, VIZ., ASSESSMENT YEAR 2004 - 0 5 FALLS IN THE CATEGORY OF COMPLETED ASSESSMENT, WHICH SHALL NOT ABATE BY THE REASON OF INITIATION OF PROCEEDING U/S 153A OF THE ACT. IN THE INSTANT CASE, THE LD CIT(A) HAS GIVEN A DEFINITE FINDING THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURS E OF SEARCH TO SHOW THAT THE TENANCY RIGHT CLAIMED BY ANY OF THE TENANTS WAS WRONG. UNDER THESE SET OF FACTS, THE ASSESSING OFFICER IS NOT ENTITLED TO DISTURB THE COMPLETED ASSESSMENTS AS HELD BY THE HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF MURALI AGRO PRODUCTS LTD (INCOME TAX APPEAL NO. 36 OF 2009 DATED 29.10.2010) AND ALSO BY THE MUMBAI SPECIAL BENCH OF TRIBUNAL IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD (137 ITD 287)(SB). FURTHER WE NOTICE THAT THE LD CIT(A) HAS ANALYSED THE FACTUAL M ATRIX OF THE MATTER AND HAS GIVEN A DEFINITE FINDING THAT THE CLAIM OF EXISTENCE TENANCY RIGHT STANDS PROVED BY CONTEMPORARY EVIDENCES. BEFORE US, THE REVENUE COULD NOT FURNISH ANY MATERIAL TO CONTRAD ICT THE FINDINGS GIVEN BY LD CIT(A). UNDER THESE SET O F ITA. NO . 3813 /M UM/ 20 1 1 AN D CO 12/MUM/2012 6 FACTS, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE. 6. THE ASSESSEE HAS FILED CROSS OBJECTIONS TO SUPPORT THE VIEW TAKEN BY THE LD CIT(A). APART FROM THAT, THE ASSESSEE HAS ALSO URGED CERTAIN LEGAL GROUNDS. SINCE WE ARE DISMISSING THE APPEAL FILED BY THE REVENUE, WE DO NOT FIND IT NECESSARY TO ADJUDICATE THE ISSUES URGED IN THE CROSS OBJECTION FILED BY THE ASSESSEE. 7 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND THE CROSS - O BJECTION OF THE ASSE SSEE ARE DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 8TH MAY , 2015 . 8TH MAY , 2015 SD SD ( / SANJAY GARG ) ( . . / B.R. BASKARAN) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: 8TH MAY , 201 5 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI