SANJAY P. AGARWAL HUF, MUMBAI V. ITO 19(3)(4), MUMBAI

ITA 1204/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92646 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 03-03-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 22-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIPSR
• Assessee Lawyers: D C SABOO; SHYAM SABCO
• Section: 154

Judgement Text

1 , INCOME TAX APPELLATE TRIBUNAL,MUMBAI - E BENCH , , BEFORE S/SH. JOGINDER SINGH , JUDICIAL MEMBER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 1204 /MUM/20 1 2 , / ASSESSMENT YEAR - 20 0 7 - 08 SANJAY P. AGARWAL - HUF 601, NAV SONAR BALA A NNEXE TURNER ROAD,BANDRA (W) MUMBAI - 400 0 5 0. PAN: AABHA 3842 D VS INCOME TAX OFFICER - 19(3)(4) PIRAMAL CHAMBER LALBAUG , MUMBAI - 400 0 1 2. ( / APPELLANT ) ( / RESPONDENT ) /ASSESSEE BY : SHRI D.C. SABOO AND SHRI SHYAM SABCO / REVENUE BY : SHRI NEIL PHILIP - SR.AR / DATE OF HEARING : 01 - 0 5 - 2015 / DATE OF PRONOUNCEMENT : 13 - 0 5 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DT.29/12/2011 OF THE CIT(A) - 30,MUMBAI,ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. CIT(A) HAS ERRED IN LAW AND FACTS CONFIRMING DISALLOWANCE OF INTEREST PAID FOR PURCHASE OF FLA T WHICH APPELLANT HAS TREATED AS COST. CIT(A) HAS NOT TAKEN INTO CONSIDERATION APPLICATION U/S. 154 TO ITO FOR MENTIONING WRONG FACT. EVEN CIT(A) HAS CONFIRMED ORDER OF ASSESSING OFFICER BY MENTIONING WRONG FACTS. 2. APPELLANT HAS SUBMITTED ALL DOCUMENTS A ND CHART OF NEXUS BETWEEN AMOUNT BORROWED AND PAYMENT MADE TO BUILDER. 3.CIT(A) HAS NEVER ASKED FOR PURCHASE AND SALE AGREEMENT. 4.APPELLANT HAS PRODUCED BALANCE SHEET AND LOAN CONFIRMATION 5.APPELLANT CRAVES YOUR LEAVE ADD ALTER AND MODIFY THESE GROUNDS O F APPEAL. ASSESSEE - HUF, FILED ITS RETURN OF INCOME ON,DECLARING TOTAL INCOME OF RS.3.85 LACS . ASSESSING OFFICER (AO) COMP LETED THE ASSESSMENT U/S.143(3)OF THE ACT ON 30.10.09 ,DETERMINING TH E INCOME OF THE ASSESSEE AT RS. 5,55,210 / - . 2 . THE EFFECTIVE GROUND OF APPEAL IS DISALLOWANCE OF INTEREST. DURING THE ASSESSMENT PROCEEDING THE AO FOUND THAT ASSESSEE HAD SHOW N SHORT TERM CAPITAL GAIN (STCG) ON SALE OF PROPERTY DURING THE YEAR UNDER APPEAL, THAT IT HAD CLAIMED 1,69 , 900/ - U/S. 48(II) AS COST OF IMPROVEMENT OF THE SAID ASSET. VIDE HIS LETTER DT. 4/8/ 20 09 , THE AO DIRECTED THE ASSESSEE TO FURNISH EVIDENCE FOR COST OF IMPROVEMENT. IN ITS REPLY THE ASSESSEE STATED THAT INTEREST PAID TO VARIOUS P ARTIES HAD BEEN CLAIMED AS DEDUCTION FROM STCG AS COST OF IMPROVEMENT. THE AO CONSIDERED THE SUBMISSION OF THE ASSESSEE BUT DID NOT FIND THE SAME WERE ACCEPTABLE. HE HELD THA T THE ASSESSEE HAD NOT FURNISHED ANY REPLY WITH REGARD TO DIRECTIONS GIVEN, THAT IT HAD NOT BEEN ABLE TO SHOW THAT INTEREST PAID TO SIX PARTIES, SHOWN AS UNSECURED LOAN HAD ANY NEXUS WITH THE ASSET PURCHASED, THAT IN CASE OF ONE PARTY I.E. SUNITA GUPTA INTEREST AMOUNT WAS SHOWN AS PROVISION, THAT THE ASSESSEE - HUF HAD NOT BEEN ABLE TO PROVIDE ANY STATEMENT/DETAILS SHOWING THE 1204/12(07 - 08) SANJAY P.AGARWAL 2 ALLOWABILITY OF SUCH INTEREST A S COST OF IMPROVEMENT OF PROPERTY FINALLY HE DISALLOW E D THE CLAIM OF ASSESSEE OF DEDUCTION AMOUNTING TO RS.1,69 LACS. 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFERRED AN APPEAL BEFOR E THE FIRST APPELLATE AUTHORITY (FAA). AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER,THE FAA HELD THAT THE ASSESSEE HAD NOT SHOWN THE DISPUTED AMOUNT IN THE BALANCE SHEET ,THAT IT WAS NOT PROVED THAT THE THAT LOAN OF 23.25 LACS W AS TAKEN FOR PURCHASE OF FLATS, THAT IT HAD NOT BEEN ESTABLISHED T HAT SAID LOAN WAS UTILIZED FOR PURCHASE OF ASSET IN QUESTION, THAT THE FLAT WAS PURCHASED ON 26/8/2005, THAT MOST OF THE PAYMENT WERE MADE IN THE FINANCIAL YEAR 2006 - 07, THAT THE ASSESSEE HAD NOT SUBMITTED THE COPIES OF PURCHASE AND SALE AGREEMENT, THAT IT WAS NOT ABLE TO PROVE NEXUS BETWEEN LOAN TAKEN AND FLAT PURCHASE, THAT IN CASE OF ONE PERSON LOAN HA D NOT BEEN PAID TILL DATE.FINALLY, HE CONFIRMED THE DISALLOWANCE MADE BY THE AO. 4 . BEFO RE US,AUTHORISED REPRESENTATIVE (AR) STATED THAT THE AO AND THE FAA MEN TIONED WRONG FACTS, AN APPLICATION FOR RECTIFYING THE ORDER OF AO WAS PASSED BEFORE HIM AFTER RECEIVING THE ASSESSMENT ORDER, THAT THE AO DID NOT PASS ANY ORDER U/S. 154 TILL DATE, THAT FAA HAD NOT TAKEN INTO CONSIDERATION THE APPLICATION FILED BEFORE THE AO. THAT THE ASSESSEE HAD SUBMITTED ALL DOCUMENTS AND CHARTS PROVING THE NEXUS BETWEEN THE AMOUNT BORROWED AND PAYMENT MADE TO THE BUILDER, THAT THE FAA MENTIONED THE DATE OF PURCHASE WHICH WAS FACTUALLY INCORRECT, THAT THE BALANCE SHEET FOR LOAN CONSIDERA TION PRESENTED BY THE ASSESSEE WERE NOT CONSIDERED. HE REFERRED TO THE PURCHASE AND SALE AGREEMENT OF THE FLAT DATED 15/11/2006 IN THAT REGARD AND ALSO REFERRED TO THE BALANCE S HEET FOR THE YEAR UNDER APPEAL. HE RELIED UPON THE CASES OF MITHLESH KUMARI (92 ITR 9 - DEL.) , MAITHREYI PAI (152 ITR 247 - KAR.) , TRISHUL INV ESTMENTS LTD. (305 ITR 434 - MAD.) 5 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE AO HAD DISALLOWED THE INTEREST OF RS.1.69 LACS, THAT HE WAS OF THE OPINION T HAT THE ASSESSEE HAD NOT PROVED THE NEXUS BETWEEN BORROWED FUNDS AND INTEREST PAID, THAT IN CASE OF ONE PERSON INTEREST WAS NOT PAID TILL THE APPELLATE ORDER WAS PASSED, THAT THE ASSESSEE HAD CLAIM ED THAT DATE OF PURCHASE OF PROPERTY WAS INCORRECTLY MENTI ONED BY THE FAA, THAT FAA HAD ALSO NOT CONSIDERED THE BALANCE SHEET WHICH WAS RELEVANT TO DECIDE THE ISSUE BEFORE HIM. WE HAVE GONE THROUGH THE BANK STATEMENT RELIED UPON BY THE AR.WE ARE OF THE OPINION THAT THE CASE NEEDS FURT HER INVESTIGATION/VERIFICATIO N. THEREF ORE, IN THE INTEREST OF JUSTICE, WE ARE REMITTING BACK THE MATTER TO FAA FOR FRESH ADJUDICATION. HE IS DIRECTED TO AFFORD REASONABLE OPPORTUNITY TO THE ASSESSEE AND CONSIDER ALL DOCUMENTS/PAPERS TO BE SUBMITTED BEFORE HIM. EFFECTIVE GROUND OF APPEA L OF THE ASSESSEE IS DECIDED IN FAVOUR OF THE ASSESSEE , IN PART . AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH , MAY, 2015. 13 TH MAY , 2015 SD/ - SD/ - ( / JOGINDER SINGH ) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 13 .05 .2015 J V . SR.PS 1204/12(07 - 08) SANJAY P.AGARWAL 3 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD F ILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.