PREMKUMAR SURANA, MUMBAI V. ITO WD 12(1)(4), MUMBAI

ITA 1148/MUM/2012

• Counselvise Citation: 114819914 RSA 2012
• Duration Of Justice: 2 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 17-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI R.C SHARMA, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 1148/MUM/2012 ASSESSMENT YEAR: 2007-08 SMT. PREMKUMARI SURANA C/O. KARNAVAT & CO. 2A KITAB MAHAL, 1 ST FLOOR 192 DR. D.N. ROAD MUMBAI- 400 001 VS. ITO WD 12(1)(4) MUMBAI. (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. :- AMOPS 1472 J ASSESSEE BY : SHRI SUNIL HIRAWAT REVENUE BY : SHRI M. L. PERUMAL DATE OF HEARING : 03.04.2014 DATE OF PRONOUNCEMENT : 16.04.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A)-23, MUMBAI DATED 16.11.2011 FOR THE ASSES SMENT YEAR 2007-08. 2. IN GROUNDS NO. 1 TO 3, THE ASSESSEE HAS AGITATED THE ACTION OF THE LD.CIT(A) IN MAKING ENHANCEMENT OF THE INCOME TAXABLE UNDER T HE HEAD INCOME FROM HOUSE PROPERTY WITHOUT GIVING ANY REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND FURTHER AGITATED THE DECISION OF THE LD.CIT(A) DIRECTING THE AO TO COMPUTE THE ANNUAL VALUE BY TAKING 8.5% OF THE TOTAL INVESTMENT OF THE PROPERTY FOR THE PURPOSE OF CALCULATING THE INCOME FROM HOUSE PROPERTY. 2.1 BRIEFLY STATED, DURING THE COURSE OF THE ASSESS MENT PROCEEDING, THE AO NOTICED THAT THE ASSESSEE HAD THREE HOUSE PROPERTIE S LOCATED AT PRABHA DEVI (MUMBAI, NAVI MUMBAI & JAIPUR) AND THE ASSESSEE HAD TAKEN ITS PRABHA DEVI FLAT AT SOP WHILE OFFERING NOTIONAL RENT OF RS.6,000/- IN R ESPECT OF NAVI MUMBAI FLAT AND RS.16,000/- FROM JAIPUR FLAT. ACCORDING TO THE AO T HE NOTIONAL RENTAL VALUE OF THE FLAT ITA NO. 1148/MUM/2012 SMT. PREMKUMARI SURANA ASSESSMENT YEAR: 2007-08 2 TAKEN BY THE ASSESSEE WAS TOO LOW CONSIDERING THE V ALUE AND THE LOCATION OF THE PROPERTY. THEREFORE, THE AO BY RELYING ON THE RATIO IN THE CASE OF SMT. RADHA DEVI DALMIA REPORTED IN 125 ITR 134, ADOPTED NOTIONAL RENT OF THE PROPERTY AT 7% OF ITS VALUE AND ACCORDINGLY WORKED OUT THE INCOME FROM HO USE PROPERTY. ON APPEAL, THE LD.CIT(A) BY RELYING ON THE DECISION OF THE TRIBUNA L IN THE CASE OF ITO VS. CHEM MECH PVT. LTD. (2002) 83 ITD 427 DIRECTED THE AO TO CALCULATE THE ALV OF THE PROPERTY BY TAKING 8.5% OF THE TOTAL INVESTMENT IN THE PROPERTY. AGGRIEVED BY THE IMPUGNED DECISION, THE ASSESSEE HAS RAISED THESE GR OUNDS IN THE APPEAL BEFORE US. 2.2 HAVING HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD IT IS PERTINENT TO MENTION THAT SUB SECTION 2 OF SECTION 251 REQUIR E THAT COMMISSIONER (APPEALS) SHALL NOT ENHANCE THE ASSESSMENT OR A PENALTY OR RE DUCE THE AMOUNT OF FREE FUND UNLESS THE APPELLANT HAS REASONABLE OPPORTUNITY TO SHOW CAUSE AGAINST SUCH ENHANCEMENT. IN THE PRESENT CASE, IT IS OBSERVED TH AT THE REQUIREMENT OF THE SAID SUB SECTION IS NOT FULFILLED BY THE LD.CIT(A) BY NO T PROVIDING NECESSARY OPPORTUNITY TO THE ASSESSEE. THEREFORE, IN THE INTEREST OF JUSTICE WE ARE OF THE OPINION THAT IT IS JUST AND FAIR THAT THE CASE MAY BE RE-ADJUDICATED BY THE LD.CIT(A) BY PROVIDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. ACCORDINGLY, GROUNDS NO. 1 TO 3 ARE ALLOWED FOR STATISTICAL PURPOSE. 3. GROUNDS NO. 4 & 5 RELATE TO THE DISALLOWANCE OF 10% OF TELEPHONE EXPENSES AND DISALLOWANCE OF 10% OF VEHICLE EXPENSES PARTLY CONFIRMED BY THE LD.CIT(A) ON THE 20% DISALLOWANCE MADE BY THE AO ON THE SAID EXP ENSES. 3.1 HAVING HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD IT IS OBSERVED THAT THE SAID AD HOC DISALLOWANCES HAVE BEEN MADE B Y THE AO WHICH HAS BEEN PARTLY CONFIRMED BY THE LD.CIT(A) IS ON ACCOUNT OF INVOLVE MENT OF PERSONAL USE. CONSIDERING THE ENTIRETY OF FACTS, WE ARE OF THE OP INION THAT THE SAID AD HOC DISALLOWANCES MAY BE RESTRICTED TO 5% OF THE TELEPH ONE EXPENSES & VEHICLE EXPENSES, RESPECTIVELY, WHICH WOULD JUSTIFY THE CAS E OF THE ASSESSEE. WE DIRECT AND ORDER ACCORDINGLY. ACCORDINGLY, GROUNDS NO. 4 AND 5 ARE PARTLY ALLOWED . ITA NO. 1148/MUM/2012 SMT. PREMKUMARI SURANA ASSESSMENT YEAR: 2007-08 3 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN THE ABOVE SAID TERMS . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF APRIL, 2014. SD/- SD/- (R.C. SHARMA) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 16.04.2014. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.