Mrs. Anjana Baijnath, New Delhi V. ACIT, New Delhi

ITA 1280/DEL/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1746 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 04-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 06-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC - I , NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER ITA NO. 1280&1281 /DEL/2014 ASSESSMENT YEAR : 2008 - 09 ORDER BOTH THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE SEPARATE ORDERS DATED 16.12.2013 OF LD CIT(A), XXVIII, NEW DELHI PERTAINING TO ASSESSMENT YEAR 2008 - 09 IN THE QUANTUM AND PENALTY PROCEEDING UPHELD IN APPEAL BY THE CIT(A) RESPECTIVELY . 2. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN ITA NO.1280/DEL/2014 WHICH IS AN APPEAL FILED IN THE QUANTUM PROCEEDINGS : - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE AUTHORITIES BELOW ERRED IN MAKING AN ADDITION OF RS.1,52,000/ - OF NON - RECEIPT OF RENT FROM ONE OF THE TENANT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE AUTHORITIES BELOW ERRED IN DISALLOWING THE AMOUNT OF RS.1,31,338/ - ON ACCOUNT OF SERVICE TAX LEVY PAID BY THE ASSESSEE ON THE RENTAL INCOME. 3 . THE RELEVANT FACTS OF THE CASE ARE THA T THE ASSESSEE IN THE YEAR UNDER CONSIDERATION DECLARED A TOTAL INCOME OF RS. 9,81,660/ - . THE SAID RETURN AFTER ISSUANCE OF NOTICE U/S 143(2) WAS SELECTED FOR SCRUTINY UNDER CASS. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION DERIVED INCOME FROM HOUSE ANJANA BAJINATH B - 20, CHIRAG ENCLAVE, NEW DELHI PAN:AFAPB01870Q VS. ACIT CIRCLE 32(1), NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY : SH.TARUN KAPOOR, CA RESPONDENT BY : DR. ANJULA JAIN, SR. DR DATE OF HEARING : 04.08.2015 DATE OF PRONOUNCEMENT : 12 .08.2015 PAGE 2 OF 4 PROPERTY, INCOME FROM BUSINESS AS REMUNERATION FROM THE FIRM M/S DE IKA FURNITURE IN WHICH THE ASSESSEE IS A PARTNER. APART FROM THAT INTEREST INCOME FROM OTHER SOURCE WAS ALSO SHOWN. CONSIDERING THE RENTAL INCOME CLAIMED BY THE ASSESSEE IN RESPECT OF PROP ERTY AT C - 152, OKHLA INDUSTRIAL ESTATE(GROUND FLOOR & FIRST FLOOR) FROM THE TENANT M/S DOLPHIN MART LTD. AND THE RENT FROM TENANT M/S MAGPIE GLOBAL PVT. LTD. THE AO OBSERVED THAT THE ASSESSEE HAD CLAIMED UNREALIZED RENT FROM THE RENTAL VALUE IN RESPECT OF BOTH THE TENANTS. CONSIDERING THE FACT THAT AS PER THE LEASE DEED APPLICABLE FOR THE RELEVANT PERIOD THE ASSESSEE HAD RECEIVED THE DUE RENTAL INCOME OF RS.9,84,000/ - FROM M/S DOLPHIN MART LTD. AND RS.5,40,000/ - FROM M/S MAGPIE GLOBAL PVT LTD. AND CONSIDERI NG THE TDS CERTIFICATE ISSUED BY BOTH THE TENANTS, THE CLAIM OF THE ASSESSEE WAS CONSIDERED TO BE INCORRECT. AS A RESULT THEREOF THE ASSESSEE WAS REQUIRED TO EXPLAIN THE SAME. AS PER EXPLANATION OFFERED IT IS FOUND THAT THE ASSESSEE STATED THAT THE TENANT DID NOT AGREE TO THE PAYMENT DUE TO SERVICE TAX ON THE RENTAL INCOME. THUS THIS ADJUSTED RENT AS A RESULT THEREOF WAS THE UNREALIZED RENT AS THE RENT RECEIVED WAS NET OF SERVICE TAX. THE CLAIM OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO. THE ISSUE WAS ARGUE D IN APPEAL BEFORE LD CIT(A) ALSO UNSUCCESSFULLY, WHO CONFIRM ED THE FINDING OF THE AO BY HOLDING AS UNDER: - .THERE IS ALSO NO EVIDENCE TO SHOW THAT THE LEASE RENT AS PER THE AGREEMENT HAS NOT BEEN PAID. THE APPELLANT HAS BASED HIS CLAIM OF UNREALIZED RENT MERELY ON THE ENTRIES IN THE BANK ACCOUNT WITHOUT BACKING THE CLAIM WITH ANY CONCRETE EVIDENCE OR A CONFIRMATION FROM THE TENANT SHOWING THEREIN THAT THE LEASE AGREEMENT HAS BEEN ALTERED OR RENT OF A LESSER AMOUNT HAS BEEN PAID. IN THE ABSENCE OF ANY SUCH EVIDENCE PAYMENT OF RENT IN DIFFERENT FORM OTHER THAN CREDIT TO THE BANK ACCOUNT CANNOT BE RULED OUT. THE CLAIM OF THE APPELLANT IN REGARD TO UNREALIZED RENT IS THEREFORE NOT ACCEP TED. IN REGARD TO DEDUCTION ON ACCOUNT OF SERVICE TAX, THE SAME IS NOT ADMISSIBLE AS ONLY TAXES LEVIED BY LOCA L AUTHORITY ARE ALLOWED TO BE DEDUCTED FOR DETERMINING THE ANNUAL VALUE. THE SERVICE TAX IS LEVIED BY THE CENTRAL GOVERNMENT AND NOT BY THE LOCAL AUTHORITY, IT IS THEREFORE NOT ADMISSIBLE AS A DEDUCTION UNDER SECTION .23. THE ADDITION MADE BY THE ASSESSING OFFICER IS THEREFORE CONFIRMED . PAGE 3 OF 4 4 . THE LD COUNSEL APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD NOT REALIZED THE RENT , AND THIS FACT IT WAS SUBMITTED WAS COMING OUT FROM THE RECORD ITSELF AS TH E CHEQUES ISSUED BY THE TENANTS HAD BOUNCED AND ON A PERUSAL OF THE BANK ACCOUNT OF THE ASSESSEE ITSELF IT WOULD BE EVIDENT THAT THE ASSESSEE HAS REALIZED LESS RENT THEN WHAT WAS AGREED TO IN THE RENT AGREEMENT. THE RENT REALIZED WAS LESS BY THE AMOUNT OF SERVICE TAX AND IS EVIDENT FROM THE EXTRACTS OF THE BANK ACCOUNT . IT WAS SUBMITTED THAT THESE FACTS ARE ALSO BORNE OUT BY SPECIFIC PAGE 6 OF THE PAPERBOOK WHICH WAS AVAILABLE TO AO AS WELL LD CIT(A) . IT WAS FURTHER SUBMITTED THAT THIS FACT WAS ALSO SUPPORT ED BY CERTIFICATE OF DEDUCTION OF TAX AT SOURCE U/S 203 IN FORM NO.16A AT PAGE 15 OF THE PAPER BOOK ALONG WITH ANNEXURE AT PAGE 16. IT WAS HIS SUBMISSION THAT THE SE FACT S WERE EVIDENT ON RECORD , ITSELF AND HAVE NOT BEEN CONSIDERED IN THE CIRCUMSTANCES IT WAS HIS SUBMISSION THAT EITHER CONSIDER ING THE SUBMISSION AND THE SYNOPSIS AT PAGE 1 AND 2 THE RELIEF MAY BE GRANTED AT THIS STAGE OR IN THE ALTER NATE THE ISSUE MAY BE RESTORED BACK TO THE FILE OF AO . 5 . LD SR. DR RELIED UPON THE IMPUGNED ORDER, HOWEVE R IN REGARD TO THE CLAIM OF THE CHEQUES FROM THE TENANTS , WHICH WERE CLAIM ED TO HAVE BEEN BOUNCED AT THE BANK AND THE CLAIM THAT RENT ULTIMATELY PAID WAS LESS THEN WHAT WAS AGREDD TO AND WAS CLAIMED TO BE EVIDENT FROM THE BANK STATEMENT RELIED UPON BY THE ASSESSEE , I T WAS HER SUBMISSION THAT THESE FACTS ARE NOT COMING OUT FROM THE IMPUGNED ORDER AND IN THESE CIRCUMSTANCES SHE WOULD HAVE NO OBJECTION IF THE ISSUE IS RESTORED. HOWEVER GRANTING OF RELIEF WITHOUT FACTS BEING CORROBORATED BY THE AO WAS OBJECTED TO BY HER . 6 . I HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL AVAILABLE ON RECORD, ON A CONSIDERATION OF THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE LIGHT OF THE PLEADINGS OF THE PARTIES BEFORE THE BENCH IT APPEARS THAT THE FACT S MAY NOT HAVE BEEN CORRECTLY PLACED BEFORE THE TAX AUTHORITIES. IN VIEW OF THE ABOVE THE IMPUGNED ORDER IS SET ASIDE AND THE ISSUE IS RESTORED BACK TO THE FILE OF AO WITH THE DIRECTION TO PASS A SPEAKING PAGE 4 OF 4 ORDER IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSE E A REASONABLE OPPORTUNITY OF BEING HEARD. 7 . IN THE RESULT , ITA NO.1280/DEL/2014 IS ALLOWED FOR STATISTICAL PURPOSES. 8 . IN ITA NO.1281/DEL / 2014 THE ASSESSEE ASSAILS THE CORRECTNESS OF PENALTY AMOUNTING TO RS.69,295/ - IMPOSED ON THE ADDITION MADE IN THE QUANTUM ORDER. HOWEVER IN VIEW OF THE FACT THE ISSUE IN THE QUANTUM PROCEEDING HAS BEEN SET ASIDE TO BE RECONSIDERED ON MERITS. IN THESE PECULIAR FACTS AND CIRCUMSTANCES CONSIDERING THE SETTLED LEGAL PROPOSITION THAT THE ISSUE OF IMPOSING PENALTY ITSELF BECOMES QUESTIONABLE THE SAME CANNOT SURVIVE. IN THE CIRCUMSTANCES CONSIDERING THE SUBMISSION OF THE PARTIES THE IMPUGNED ORDER AND THE PENALTY ORDER ARE SET ASIDE. THE AO WOULD BE AT LIBERTY TO CONSIDER LEVY OF PENALTY U/ S 271(1 )( C) IF SO WARRANTED ON FACTS ONCE THE QUANTUM IS DECIDED. THE SAID ORDER WAS PRONOUNCED IN THE PRESENCE OF THE PARTIES AT THE TIME OF HEARING ITSELF. IN THE RESULT APPEAL OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNC ED IN THE OPEN COURT ON 1 2 T H AUGUST , 2015 . - S D / - ( DIVA SINGH ) JUDICIAL MEMBER DATED: 1 2 T H AUGUST, 2015 AKK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR