Rinkle Deveshkumar Saraf, Surat V. The Income Tax Officer, Ward-2(4), Surat

CO 127/AHD/2015

• Counselvise Citation: [2018] 117 COUNSELVISE.COM (IT) 2427 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 10 month(s) 9 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 18-05-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 09-07-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P MEENA
• Keywords: Unexplained investment; Deemed owner of house property; Business income; Deemed to accrue or arise in india; Additional evidence; Bad and doubtful debts; Corroborative evidences

Judgement Text

ITO 2(4) SURAT V. SMT. RINKLE DEVESHKUMAR SARAF/I.T.A. NO.1561 & CO-127/AHD/20/A.Y.:10-11 PAGE 1 OF 13 , , IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT . . , . . , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER 1. . . ./ I.T.A NO. 1561/AHD/2015 2.CO. NO. 127/AHD/2015 1. / A.Y.:2010-11 2. ASSESSMENT YEAR 2010-11 1. INCOME TAX OFFICER, WARD-1(2)(5) SURAT 2. SMT. RINLKLE DEVESHKUMAR SARAF, 208 CHANCELLOR APARTMENT OPP. RTO SURAT 395002 PAN: AKVPSS 5528 A 1. SMT. RINLKLE DEVESHKUMAR SARAF, 208 CHANCELLOR APARTMENT OPP. RTO SURAT 395002 PAN: AKVPSS 5528 A 2. INCOME TAX OFFICER, WARD-1(2)(5) SURAT APPELLANT /RESPONDENT /ASSESSEE BY NONE /REVENUE BY SHRI O. P. MEENA. SR. D.R. / DATE OF HEARING: 18.05.2018 /PRONOUNCEMENT ON 21.05.2018 /O R D E R PER O. P. MEENA, ACCOUTANT MEMBER: 1. THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, SURAT (IN SHORT THE CIT (A)) DATED 12.03.2015 PERTAINING TO ASSESSMENT YEAR 2010-11, WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE INCOME TAX OFFICER, ITO 2(4) SURAT V. SMT. RINKLE DEVESHKUMAR SARAF/I.T.A. NO.1561 & CO-127/AHD/20/A.Y.:10-11 PAGE 2 OF 13 WARD- 2(4), SURAT (IN SHORT THE AO) DATED 07.03.2013 UNDER SECTION 143 (3) OF INCOME TAX ACT,1961 (IN SHORT THE ACT). I.T.A. NO. 1561/AHD/2015 A.Y. 2010-11 BY REVENUE: 2. GROUND NO. 1 OF REVENUE STATES THAT THE LD. CIT (A) ERRED IN DELETING THE ADDITION OF RS. 45,31,430 ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PROPERTY WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS FAILED TO SUBMIT ANY SUPPORTING EVIDENCE TO PROVE HER CLAIM OF LIMITED OWNERSHIP (25.46%) AND THE SOURCE OF INVESTMENT IN THE PROPERTY. 3. SUCCINCTLY, FACTS ARE THAT THE AIR INFORMATION IN ITD REFLECTED THAT THE ASSESSEE HAS MADE INVESTMENT OF RS. 40,92,800 TOWARDS PURCHASE OF RESIDENTIAL HOUSE A-202, REGENCY TOWER , PIPLOD SURAT. IN EXPLANATION, THE ASSESSEE HAS FILED COPY OF LEDGER ACCOUNT SHOWING INVESTMENT OF RS. 11,53,630 WITHOUT GIVING ANY CLUE REGARDING SOURCE OF INVESTMENT. SINCE THE ASSESSEE HAS NOT FILED ANY EXPLANATION, THEREFORE, THE AO HAS CONSIDERED THE AMOUNT OF RS. 45,31,430 [BEING PAYMENT FOR PURCHASES OF RS. 40,92,800 + RS. 3,87,500 PAYMENT FOR STAMP DUTY + RS.41,130 PAYMENT FOR REGISTRATION+ RS.10,000 PAYMENT ITO 2(4) SURAT V. SMT. RINKLE DEVESHKUMAR SARAF/I.T.A. NO.1561 & CO-127/AHD/20/A.Y.:10-11 PAGE 3 OF 13 FOR ADVOCATE FEES.] AND ACCORDINGLY TREATED THE SAME AS UNEXPLAINED INVESTMENT. 4. BEING DISSATISFIED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS). DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE HAS FILED ADDITIONAL EVIDENCE UNDER RULE 46A, WHICH WERE ADMITTED AND A REMAND REPORT DTD. 18.02.2015 WAS OBTAINED FROM THE AO WHEREIN NO COMMENTS WERE OFFERED. IN COUNTER COMMENTS, THE ASSESSEE HAS SUBMITTED THAT THE AO HAD NOT CONTROVERTED THE SUBMISSIONS OF THE ASSESSEE THAT IMPUGNED PROPERTY IS JOINTLY OWNED BY THE ASSESSEE WITH HER SPOUSE AS IS EVIDENT FROM PURCHASE DOCUMENT AND SHOWING INVESTMENT IN THE COPY OF LEDGER ACCOUNT DULY AUDITED BALANCE SHEET. THE CIT (A) OBSERVED THAT THE ASSESSEE HAS CLAIMED THAT INVESTMENT IN PROPERTY MADE JOINTLY WITH SPOUSE SHRI DEVESH KUMAR SARAF, IN WHICH HER SHARE IS 25.46% AND HER SPOUSE SHARE IS 75.34%. THE APPELLANT HAS ONLY INVESTED RS. 11,53,630 WHICH HAVE BEEN DULY REFLECTED IN THE AUDITED BALANCE ITO 2(4) SURAT V. SMT. RINKLE DEVESHKUMAR SARAF/I.T.A. NO.1561 & CO-127/AHD/20/A.Y.:10-11 PAGE 4 OF 13 SHEET. THE CIT (A) OBSERVED THAT THE PERUSAL OF BALANCE SHEET SHOWS, WHICH THAT THE APPELLANT HAS MADE INVESTMENT IN THE PROPERTY FROM HER FUNDS AVAILABLE AS REFLECTED IN BALANCE SHEET. THE APPELLANT ALSO SUBMITTED COPY OF BALANCE SHEET WITH AUDIT REPORT OF HER SPOUSE SHOWING THE DETAILS OF THE SHARE OF INVESTMENT OF SPOUSE SHRI DEVESH KUMAR SARAF IN THE HOUSE PROPERTY, WHO IS SEPARATELY ASSESSED TO TAX AND SHOWN THE INVESTMENT IN HIS BOOKS OF ACCOUNTS. IN VIEW OF THESE FACTS, THE CIT (A) HAS DELETED THE ADDITION OF RS. 45,31,430. 5. BEING AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LD. SR. DR SUPPORTED THAT ORDER OF THE AO AND CONTENDED THAT THE ASSESSEE HAS NOT FILED ANY DETAIL BEFORE THE ASSESSING OFFICER. FURTHER, THE SOURCE OF INVESTMENT HAS NOT BEEN EXPLAINED BY THE ASSESSEE. THEREFORE, CIT (A) ERRED IN LAW IN DELETING THE ADDITION MADE BY THE AO. 6. ON THE OTHER HAND, NONE ATTENDED ON BEHALF OF THE ASSESSEE. ITO 2(4) SURAT V. SMT. RINKLE DEVESHKUMAR SARAF/I.T.A. NO.1561 & CO-127/AHD/20/A.Y.:10-11 PAGE 5 OF 13 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE FINDINGS RECORDED BY THE CIT (A) SHOWS THAT THE ASSESSEE HAS FILED ADDITIONAL EVIDENCE UNDER RULE 46A WHICH WERE SENT TO THE AO FOR REMAND REPORT. HOWEVER, THE AO DECLINED TO MAKE ANY COMMENTS IN REMAND REPORT, WHICH MEANS SUBMISSIONS AS MADE WITH ADDITIONAL EVIDENCE WERE CORRECT AS NO ADVERSE FINDINGS WERE GIVEN BY THE AO. IF THERE WAS ANY DISCREPANCY IN ADDITIONAL EVIDENCE, THE AO SHOULD HAVE POINTED OUT THE SAME. FURTHER, THE CIT (A) HAS FOUND THAT THE ASSESSEE HAS SHOWN THE INVESTMENT MADE BY HER AT RS. 11,53,630 BEING HER SHARE OF 25.46% IN PURCHASE OF PROPERTY WHICH IS EVIDENCED WITH PURCHASE DEED OUT OF HER PAST SAVINGS AND BUSINESS INCOME. THIS INVESTMENT HAS BEEN DURING REFLECTED IN AUDITED BALANCE SHEET FILED BY THE ASSESSEE. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT (A), ACCORDINGLY, SAME IS UPHELD. 8. GROUND NO. 2 RELATES TO DELETION OF RS. 42,000 ON ACCOUNT OF DEEMED HOUSE PROPERTY INCOME WITHOUT ITO 2(4) SURAT V. SMT. RINKLE DEVESHKUMAR SARAF/I.T.A. NO.1561 & CO-127/AHD/20/A.Y.:10-11 PAGE 6 OF 13 APPRECIATING THAT SHARE PROFIT HAS NOT BEEN CLEARLY MENTIONED IN PURCHASE DEED. 9. WE HAVE HEARD THE LD. SR. D.R. AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS NOTICED FROM ASSESSMENT ORDER THAT THE ASSESSEE WAS IN POSSESSION OF TWO HOUSE PROPERTY ONE BEING AT ANGAN APARTMENT AND OTHER NEWLY ACQUIRED FLAT AT REGENCY TOWER, SURAT. THEREFORE, THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY ONE PROPERTY SHOULD NOT BE TREATED AS SELF OCCUPIED PROPERTY AND FOR OTHER PROPERTY DEEMED INCOME AS PER PROVISIONS OF SECTION 23 BE COMPUTED. HOWEVER, NO EXPLANATION WAS RECEIVED. IN SUCH CIRCUMSTANCES, THE AO HAS ESTIMATED DEEMED INCOME AT RS. 10,000 PER MONTH FROM HOUSE PROPERTY AT REGENCY TOWER. SINCE SAID PROPERTY WAS IN HER POSSESSION FOR SIX MONTHS, THE AO CALCULATED RS.60,000 AS ALV AND AFTER ALLOWING DEDUCTION OF RS. 18,000 @30% UNDER SECTION 24 AND COMPUTED DEEMED INCOME AT RS. 42,000 AND TAXED ACCORDINGLY. ITO 2(4) SURAT V. SMT. RINKLE DEVESHKUMAR SARAF/I.T.A. NO.1561 & CO-127/AHD/20/A.Y.:10-11 PAGE 7 OF 13 10. BEING DISSATISFIED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). WHO HAS OBTAINED A REMAND REPORT FROM THE AO. HOWEVER, THE CIT (A) HELD THAT THE AO HAS CONSIDERED THE REGENCY TOWER PROPERTY AS DEEMED PROPERTY IN WHICH ASSESSEE`S SHARE IS ONLY AT 25.46%. THEREFORE, 25.46% OF DEEMED INCOME OF RS. 42,000 CAN ONLY BE TAXED IN THE HANDS OF THE ASSESSEE AND BALANCE AMOUNT WOULD BE CONSIDERED IN THE HANDS OF THE SPOUSE. ACCORDINGLY THE CIT (A) HAD DIRECTED THE AO TO RECALCULATE THE DEEMED INCOME BY LIMITING TO 25.46% OF DEEMED INCOME OF RS. 42,000 AND INFORM THE CONCERNED ASSESSING OFFICER OF THE APPELLANT`S SPOUSE TO TAKE APPROPRIATE ACTION REGARDING DEEMED RENTAL INCOME IN HIS CASE. 11. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LD. SR. DR VEHEMENTLY RELIED AND SUPPORTED THE ORDER OF THE AO. 12. WE HAVE HEARD THE LD. SR. D.R. AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT AS PER GROUND NO. 1 ABOVE, THE CIT (A) ITO 2(4) SURAT V. SMT. RINKLE DEVESHKUMAR SARAF/I.T.A. NO.1561 & CO-127/AHD/20/A.Y.:10-11 PAGE 8 OF 13 FOUND THAT THE SHARE IN PROPERTY OF THE ASSESSEE IS 25.46% AS EVIDENT FOR PURCHASE DEED. THEREFORE, WE DID NOT FIND ANY ILLEGAL IN IN THIS FINDING THAT ONLY ASSESSEE`S AT 25.46% CAN BE CONSIDERED AS DEEMED INCOME FROM RENTAL INCOME OF THE ASSESSEE. THIS SHARE IN HOUSE PROPERTY AT REGENCY TOWER IS ALSO SUPPORTED BY THE RATIO OF AMOUNT OF INVESTMENT MADE BY THE ASSESSEE. THEREFORE, WE ARE NOT INCLINED TO DISTURB THE FINDING RECORDED BY THE LEARNED CIT (A). HENCE, THIS GROUND OF REVENUE IS THEREFORE, DISMISSED. C.O. NO. 127/AHD/2015/A.Y. 10-11 BY THE ASSESSEE 13. GROUND NO. 1 IS AGAINST THE DIRECTION OF THE CIT (A) TO THE AO FOR INFORMING THE AO OF SPOUSE TO TAKE APPROPRIATE ACTION IN HIS CASE CONCERNING DEEMED RENTAL INCOME. 14. WE HAVE PERUSED THE RECORD AND FIND THAT THE PROPERTY IN QUESTION BELONG TO JOINT OWNERSHIP IN WHICH ASSESSEE`S SHARE IS 25.46% AND BALANCE PERTAINS TO SPOUSE OF THE ASSESSEE. THEREFORE, CIT (A) WAS WITHIN HIS POWER TO DIRECT THE AO TO INFORM THE CONCERNED THE AO OF SPOUSE FOR TAXING THE DEEMED ITO 2(4) SURAT V. SMT. RINKLE DEVESHKUMAR SARAF/I.T.A. NO.1561 & CO-127/AHD/20/A.Y.:10-11 PAGE 9 OF 13 RENTAL INCOME IN HIS CASE. AS PER PROVISION OF SECTION 251(2) READ WITH EXPLANATION THERETO, THE CIT (A) CAN CONSIDER AND DECIDE ANY MATTER ARISING OUT OF PROCEEDINGS WHICH THE ORDER APPEALED WAS PASSED, NOTWITHSTANDING THAT SUCH MATTER WAS NOT RAISED BEFORE HIM BY THE APPELLANT. IN VIEW OF THIS MATTER, THIS GROUND OF THE ASSESSEE IS THEREFORE, DISMISSED. 15. GROUND NO. 2 IS AGAINST THE CIT (A) CONFIRMING THE ADDITION ON ACCOUNT OF DEEMED RENTAL INCOME BEING 25.46% SHARE OF THE ASSESSEE. 16. THIS GROUND OF THE ASSESSEE IS COVERED BY GROUND NO. 2 OF APPEAL OF REVENUE AS DISCUSSED ABOVE. CONSIDERING THE FACTS AND OUR FINDING THEREIN, THIS GROUND OF APPEAL IS DISMISSED. 17. GROUND NO. 3 RELATES TO CONFIRMING DISALLOWANCE OF INTEREST EXPENSES OF RS. 35,175. 18. BRIEF FACTS ARE THAT THE AO DISALLOWED INTEREST EXPENSES OF RS. 35,175 PERTAINING TO CAR AND HOUSE LOAN WHEREAS THE ASSESSEE HAS ADVANCED INTEREST FREE ADVANCES OF RS. 6,50,000 TO M/S. VISION ABROAD CONSULTANCY PVT. LTD., WHILE ON THE OTHER HAND, THE ASSESSEE HAS PAID INTEREST OF RS. 35,175 TOWARDS LOAN OBTAINED BY ITO 2(4) SURAT V. SMT. RINKLE DEVESHKUMAR SARAF/I.T.A. NO.1561 & CO-127/AHD/20/A.Y.:10-11 PAGE 10 OF 13 HER ON CAR AND HOSE LOAN. IT WAS CONTENDED THAT IT WAS INTERNAL ADJUSTMENT, HENCE, NO INTEREST WAS CHARGED. THEREFORE, THE AO MADE DISALLOWANCE OF INTEREST. 19. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A). THE CIT (A) OBSERVED THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THE NEXUS OF INTEREST FREE ADVANCES AND BUSINESS CONNECTION AND UNABLE TO PROVE HER BUSINESS EXPEDIENCY DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS DURING THE APPELLATE PROCEEDINGS. HENCE, THE AO HAS RIGHTLY DISALLOWED THE SAME. 20. BEING, AGGRIEVED THE ASSESSEE HAS FILED THIS GROUND IN CROSS OBJECTION BEFORE THE TRIBUNAL. HOWEVER, NONE HAS APPEARED ON BEHALF OF THE ASSESSEE. WHEREAS THE LD. SR. DR SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. WE FIND THAT THE ASSESSEE IS NOT ABLE TO PROVE THE NEXUS BETWEEN INTEREST FREE ADVANCES OF RS. 6.50 GIVEN TO M/S. VISION ABROAD CONSULTANCY PVT. LTD. AND INTEREST ON LOAN ON CAR AND HOUSE PROPERTY. THEREFORE, WE FIND ITO 2(4) SURAT V. SMT. RINKLE DEVESHKUMAR SARAF/I.T.A. NO.1561 & CO-127/AHD/20/A.Y.:10-11 PAGE 11 OF 13 THAT THE FINDINGS RECORDED BY THE CIT (A) ARE IN ORDER HENCE, SAME ARE CONFIRMED. CONSEQUENTLY, THIS GROUNDS OF APPEAL IS DISMISSED. 21. GROUND NO. 4 RELATES TO CONFIRMATION OF DISALLOWANCE OF BAD DEBT OF RS. 1,12,384. 22. WE HAVE HEARD AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE AO NOTED THAT THE ASSESSEE HAS CLAIMED BAD DEBT OF RS. 2,73,161 WRITTEN OFF IN BOOKS AND DEBITED TO PROFIT & LOSS ACCOUNT. SINCE NO DETAILS WERE PROVIDED, THE AO THEREFORE, DISALLOWED THE SAME. IN APPEAL, THE CIT (A) HAS FOUND THAT THE LEDGER ACCOUNT OF 6 PERSON FILED OF GIVING DETAILS OF BAD DEBT OF RS. 2,73,161. HOWEVER, WITH REGARD TO BAD DEBT OF RS. 1,12,384 PERTAINING TO RELIANCE DEALERS-ALL GUJARAT NO DETAILS ARE FILED. THEREFORE, IN ABSENCE OF THE SAME, THIS AMOUNT OF RS. 1,12,384 WAS CONFIRMED AND BALANCE DISALLOWANCES WERE DELETED. WE FIND THAT THIS ACTION OF THE CIT (A) IS CORRECT AS THE ASSESSEE HAS FAILED TO FURNISH NECESSARY DETAILS IN RESPECT OF BAD DEBTS CONFIRMED ITO 2(4) SURAT V. SMT. RINKLE DEVESHKUMAR SARAF/I.T.A. NO.1561 & CO-127/AHD/20/A.Y.:10-11 PAGE 12 OF 13 BY THE CIT (A). IN VIEW OF THIS MATTER, WE UPHELD THE SAME. THEREFORE, THIS GROUND OF APPEAL IS DISMISSED. 23. GROUND NO. 5 RELATES TO CONFIRMATION OF DISALLOWANCE OF RS. 2,21,684 BEING 25% OF SEVERAL ADMINISTRATIVE EXPENSES. 24. WE HAVE PERUSED THE RECORD AND OBSERVE THAT THE AO HAS FOUND THAT THE ASSESSEE HAS CLAIMED VARIOUS EXPENSES AMOUNTING TO RS. 8,86,738 OF WHICH NO DETAILS WERE FURNISHED, HENCE, THE AO MADE DISALLOWANCE @25% OF SAID EXPENSES. IN APPEAL ALSO THE ASSESSEE HAS NOT FILED ANY DETAILS EXCEPT COPY OF LEDGER ACCOUNT. THE CIT (A) OBSERVED THAT IN ABSENCE OF SUPPORTING EVIDENCE, THE EXPENSES CANNOT BE TREATED AS GENUINE. HENCE, THIS WAS CONFIRMED. 25. BEFORE US ALSO, NO ARGUMENTS ARE ADVANCED AS NO ONE ATTENDED ON BEHALF OF THE ASSESSEE. THEREFORE, WE UPHELD THE FINDINGS OF THE CIT (A). ACCORDINGLY, THIS GROUND IS DISMISSED. 26. IN THE RESULT, THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ITO 2(4) SURAT V. SMT. RINKLE DEVESHKUMAR SARAF/I.T.A. NO.1561 & CO-127/AHD/20/A.Y.:10-11 PAGE 13 OF 13 27. IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL AS CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. 28. THE ORDER PRONOUNCED IN THE OPEN COURT ON 21-05-2018. SD/- SD/- ( . . ) /(C.M. GARG) ( . . ) /(O.P.MEENA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER / SURAT: / DATED : 21 ST MAY, 2018/OPM COPY SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT