Mrs. Shashikala S. Gade, Pune V. ITO, Ward 10(1), Pune

ITA 1297/PUN/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7674 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 13-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: UJWALA ANG RE
• Keywords: Capital receipt
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBE R AND SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 1297/PN/2010 (ASSESSMENT YEAR: 2006-07) MRS.SHASHIKALA SHRIKANT GADE .. APPELLANT C/O. B.L.NAIK, TAX CONSULTANT, O-7, IIND FLOOR, WEST WING, AURORA TOWERS, CAMP, PUNE 411 001. PAN AAXPG9878M VS. I.T.O., WD. 10(1), PUNE .. RESPONDENT APPELLANT BY: MS. UJWALA ANG RE RESPONDENT BY: SMT. NEERA MA LHOTRA, DR DATE OF HEARING: 06.01.2012 DATE OF PRONOUNCEMENT: 18 .01.2012 ORDER PER D.KARUNAKARA RAO, AM : THIS APPEAL BY THE ASSESSEE DIRECTED AGAINST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)- V, PUNE DATED 16/07/2010 FOR THE AY 2006-07. 2. THE GROUNDS OF APPEAL, AS RAISED BY THE ASSESSEE , READS AS UNDER: 1. THAT THE ORDER PASSED BY THE LEARNED COMMISSIO NER OF INCOME TAX (APPEALS) V, PUNE IS NOT IN ACCORDANCE OF LAW. 2. THE ASSESSING OFFICER HAD MADE THE ADDITION OF R S.100000/- FOR UNPAID DEPOSIT TO THE TENANT. THE PETITIONER HAD GIVEN TH E REGISTERED COPY OF LEAVE AND LICENSE TO THE ASSESSING OFFICER AT THE T IME OF ASSESSMENT AND 2 ITA NO.1297/PN/2010 ASSESSMENT YEAR : 2006 - 07. TOLD THAT THE SAID BALANCE AMOUNT IS PAID BY D.D. I N THE NEXT FINANCIAL YEAR THROUGH BANK ENTRY. THE AGREEMENT WAS FOR 5 YEARS I.E. UP TO 31.3.2007 BUT THE TENANT VACATED THE SAME IN JUNE 2 004 AND THE PETITIONER WAS FOR 5 YEARS I.E. UP TO 31.03.2007 BU T THE TENANT VACATED THE SAME IN JUNE 2004 AND THE PETITIONER GAVE 50% DEPO SIT BY CHEQUE ON 21.12.2004 AND THE BALANCE WAS REPAID AFTER EXPIRY OF THE TENURE I.E. ON 16.5.2007 BY D.D.WHICH WAS HAND OVER TO THE TENANT WHEN HE CAME TO COLLECT THE SAME. 3. AS THE SAID FACTS WERE NOT ACCEPTED BY THE LEARN ED ASSESSING OFFICER, THE APPELLANT FILED AN APPEAL FILED AN APPEAL PETITION BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) V, PUNE, WHO A LSO ASKED FOR ADDITIONAL PROOF FOR RENT. AS THE SAID TENANT VAC ATED THE SHOP PREMISES, THE APPELLANT WAS ALSO NOT HAVING ANY ADDRESS FOR C OMMUNICATION, HENCE SHE TRACED AT HIS PLACE OF RESIDENCE HE HAD GIVEN A T THE TIME OF AGREEMENT AND RECEIVED ADDRESS OF THE TENANT WHO HAD SHIFTED TO VILLAGE MOHOL, DIST. SHOLAPUR. THE PETITIONER FURNISHED THE SAID DETAILS ALONG WITH THE TELEPHONE NUMBER OF TENANT, BEFORE THE COMMISSIONER OF INCOME TAX, APPEALS V PUNE. 4. THE COMMISSIONER OF INCOME TAX DISMISSED THE APP EAL PETITION REFERRING THE STATEMENT OF THE ASSESSING OFFICER TH AT THE ASSESSEE IS NON-CO OPERATIVE WHICH IS NOT CORRECT AND JUSTIFIABLE. IT WAS NOT EASY TO THE PETITIONER TO FIND OUT THE WHERE ABOUTS OF THE TENA NT WHO HAD TAKEN HIS BUSINESS PREMISES , NOT RESIDENTIAL PREMISES ON REN T AND WHO HAD VACATED HIS PREMISES WITHIN TWO YEARS ONLY. AS THE TENANT VACATED HIS PLACE OF RESIDENCE WHICH WAS ALSO RENTED PLACE, THE PETITION ER COULD NOT FIND OUT THE TENANT IN TIME AT THE TIME OF ASSESSMENT PROCEE DINGS. AS NOTHING WAS DUE FROM THE TENANT, THE PETITIONER COULD NOT ASKED FOR HIS PERMANENT ADDRESS. HOWEVER, THE PETITIONER HAS TRIED HIS BES T AND HAS TRACED THE TENANT AND AS SUCH THE DISMISSAL OF APPEAL PETITION ER ON THE GROUND THAT THE INFORMATION IS NOT PROVIDED AT THE TIME OF ASSE SSMENT IS NOT CORRECT AND JUSTIFIABLE. 5. NOW THE PETITIONER IS NOT DOING ANY BUSINESS ACT IVITY AND IS DEPENDING ONLY ON RENT INCOME, IT IS NOT POSSIBLE TO PAY SUCH A HUGE AMOUNT OF TAX ON THE INCOME WHICH SHE HAS NOT GAINED. 6. THAT THE PETITIONER HAD FILED THE APPEAL PETITI ON AS SHE WAS HAVING ADDITIONAL INFORMATION OTHER THAN PROVIDED IN THE A SSESSMENT PROCEEDINGS AND AS SUCH THE DISMISSAL ON THE GROUND THAT THE SA ME SHOULD HAVE BEEN PROVIDED TO THE ASSESSING OFFICER IS NOT CORRECT AN D ACCEPTABLE. 3 ITA NO.1297/PN/2010 ASSESSMENT YEAR : 2006 - 07. 3. AT THE VERY OUTSET, IT IS INFORMED TO US THAT IT IS A CASE OF THE ASSESSEE RECEIVING A RENTAL DEPOSIT FROM SRI S.G.SAYYED, THE TENANT AND THE DEPOSIT TO THE EXTENT OF RS 1 LAKHS WAS RECEIVED BY THE ASSESSEE IN CASH. THERE IS NO DISPUTE ON THE ASSESSEE ACCOUNTING THE SAID AMOUNT IN THE B OOK. HOWEVER, THE DISPUTE CROPPED US REGARDING THE CONFIRMATION OF THE SAME I N THE LIGHT OF THE PROVISIONS OF SECTION 68 OF THE ACT. IN VIEW OF THE ASSESSEES FAILURE TO FILE CONFIRMATION AND FAILURE TO FURNISH DETAILS, AO PROCEEDED TO MAD E ADDITION U/S.68 OF THE ACT. ASSESSEE COULD NOT IMPROVE HIS CASE BEFORE THE FIRS T APPELLATE AUTHORITY TOO. DURING THE PROCEEDING BEFORE US, RAISING THE PRELIM INARY ISSUE, LEARNED COUNSEL DEMONSTRATED THAT INVOKING THE PROVISION OF SECTION 68 IS INNATELY INCORRECT AS THE SAID SUM OF RS 1 LAKH IS ALREADY ACCOUNTED BY T HE ASSESSEE. SHE ALSO MENTIONED THAT THE RENTAL DEPOSIT SHALL NOT CONSTIT UTED TAXABLE INCOME UNLESS THE SAID DEPOSIT SUBSEQUENTLY APPROPRIATED TOWARDS RENT OF THE ASSESSEE WHICH IS NOT THE CASE HERE. IN SUCH CIRCUMSTANCES, THE ORDER OF THE CIT(A) IS NOT LEGALLY SUSTAINABLE. 4. THE LEARNED DR FOR THE REVENUE MERELY RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). 5. WE HEARD BOTH THE PARTIES, THERE IS NO DISPUTE O N THE FACT THE AMOUNT IN QUESTION IS A RENTAL DEPOSIT AND IT WAS DULY ACCOUN TED BY THE ASSESSEE. IN OUR OPINION, THE ASSESSING OFFICER IS ERRONEOUSLY ASSUM ED U/S.68 OF THE ACT IGNORING THE FACT THAT THE SAID AMOUNT IS A ACCOUNTED ONE. T HE SAID SECTION 68. CASH CREDITS.--WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE INCOME -TAX OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. 4 ITA NO.1297/PN/2010 ASSESSMENT YEAR : 2006 - 07. UNDISPUTING THE FACT ON ACCOUNT OF THE SUM OF RS 1 LAKHS, THE AO CANNOT ASSUM JURISDICTION U/S 68 OF THE ACT. FURTHER, AO MUST KN OW THAT THE ASSESSEE IN QUESTION IS A OWNER OF THE PROPERTY AND FOR HIM, MR SAYYAD IS ONE OF THE TENANTS AND IDENTIFICATION OF THE DEPOSITOR OF THAT TIME AR ISES ONLY IF THE SUM IS UNACCOUNTED. IT IS A FACT THAT THE TENANT OF THE PREMISES KEEPS ON CHANGING WITH TIME AND THE OWNER OF THE HOUSE HAVE NOT CONTR OL OF VARIOUS OF ADDRESSES OF SUCH TENANTS . OTHERWISE, IN PRINCIPLE, RENTAL DEPOSIT DOES NOT CONSTITUTE TAXABLE INCOME OF THE ASSESSEE AS THE SAME IS REFUNDABLE ON E AND THEREFORE, THE CAPITAL RECEIPT. THEREFORE, WE ARE OF THE OPINION THAT THE CONCLUSION MENTIONED IN PARA 9 TO 11 ORDER OF THE CIT(A) ARE REQUIRED TO BE REVE RSED. ACCORDINGLY, THE GROUND OF THE APPEAL ARE ALLOWED . 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE ALLOWED . ORDER PRONOUNCED IN THE COURT ON 18-01-2012. SD/- SD/- (SHAILENDRA KUMAR YADAV) (D.KARUNAKARA RA O) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 18-01-2012 ASHWINI 5 ITA NO.1297/PN/2010 ASSESSMENT YEAR : 2006 - 07. COPY TO:- 1) ASSESSEE 2) I.T.O., WD. 10(1), PUNE 3) THE CIT(A) V, PUNE 4) THE CIT CONCERNED 5) THE DEPARTMENTAL REPRESENTATIVE, B BENCH, I.T .A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE