CHANDBIBI ZAIDI, MUMBAI V. ASST CIT CEN CIR 43, MUMBAI

ITA 1372/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93335 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 06-04-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 18-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N R AGARWAL
• Assessee Lawyers: PERMANAND J
• Keywords: Search and seizure; Salary income; Source of fund; Deemed to accrue or arise in india; Additional evidence
• Section: 143(3); 133(6); 68; 148

Judgement Text

CHANDBIBI ZAIDI ITA 2347 /M/201 3 ITA 1372/M/201 3 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C , MUMBAI . . , , BEFORE SHRI G S PANNU , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIA L MEMBERITA ITA NO. : 2347 /MUM/20 1 3 (ASSESSMENT YEAR: 200 3 - 04 ) DCIT, CENTRAL CIRCLE - 4 3, R. NO. 65 9, 6 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400 020 VS CHANDBIBI ZAIDI, KENNEDY HOUSE, 4 TH FLOOR, GOREGAONKAR LANE, MUMBAI - 400 007 .: PAN : AAA ZP 1431 A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PERMANAND J RESPONDENT BY : SHRI N R AGARWAL ITA NO. : 1372 /MUM/20 13 (ASSESSMENT YEAR: 200 3 - 04 ) CHANDBIBI ZAIDI, KENNEDY HOUSE, 4 TH FLOOR, GOREGAONKAR LANE, MUMBAI - 400 007 .: PAN : AAAZP 1431 A VS DCIT, CENTRAL CIRCLE - 31, R. NO. 409, AAYAKAR BHAVAN, MUMBAI - 400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N R AGARWAL RESPONDENT BY : SHRI PERMANAND J /DATE OF HEARING : 18 - 0 6 - 2015 / DATE OF PRONOUNCEMENT : 29 - 07 - 2015 ORDER PER AMIT SHUKLA , J.M. : TH E AFORESAID CROSS APPEALS HAVE BEEN FILED BY THE REVENU E AS WELL AS BY THE ASSESSEE AGAINST IMPUGNED ORDER DATED 13.12.2012 PASSED BY CIT(A) - 38, MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED U/S 143(3) R.W.S. 147 FOR THE ASSESSMENT YEAR 2003 - 04. 2. WE WILL FIRST TAKE UP REVENUES APPEAL, VIDE WHICH FOLLOWING GR OUNDS HAVE BEEN RAISED: CHANDBIBI ZAIDI ITA 2347 /M/201 3 ITA 1372/M/201 3 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE U/S 68 OF THE ACT OF RS. 17,27,400/ - BEING LOAN TAKEN FROM MS RAVISH ZAIDI AND MR. WAIZE ALI WITHOUT APPRECIATIN G THAT THE SOURCES AND GENUINENESS OF THE LOANS REMAINED UNEXPLAINED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE U/S 68 OF THE ACT OF RS.3,00,000/ - BEING LOAN TAKEN FROM MR. TAPOSH G HOSH WITHOUT APPRECIATING THAT THE ASSESSEE HAS NOT PROVED THE GENUINENESS OF THE LOAN 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE U/S 68 OF THE ACT OF RS.85,00,000/ - BEING LOAN FROM M/S MULLAH ASSOCIATES WITHOUT APPRECIATING THAT THE GENUINENESS OF THE TRANSACTION WAS NOT PROVED. 3. BRIEF FACTS REGARDING ADDITIONS CHALLENGED BY THE REVENUE ARE THAT , A SEARCH AND SEIZURE ACTION U/S 132(1) WAS CARRIED OUT ON CHANDBIBI GROUP ON 20.08.2 009. IN PURSUANCE THEREOF, A NOTICE U/S 148 WAS ISSUE D FOR REOPENING THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2003 - 04. AS AGAINST THE RETURNED INCOME OF RS. 107,76,811/ - , ASSESSMENT WAS COMPLETED AT AN INCOME OF RS. 2,04,60,450/ - AFTER MAKING VARIO US ADDITIONS / DISALLOWANCES , SOME OF WHICH HA VE BEEN CHALLENGED BY THE REVENUE , HERE IN THIS APPEAL AND PARTLY BY THE ASSESSEE. 4. AS REGARDS THE ADDITIONS OF RS. 17,27,400/ - ON A CCOUNT OF LOAN TAKEN FROM MR. W A I ZE A LI AND RAVISH P ZAIDI , T HE AO NOTED THA T THE ASSESSEE DURING THE PREVIOUS YEAR HAD RECEIVED INTEREST FREE LOANS FOR RS. 65 LACS AND RS. 24,27,400/ - RESPECTIVELY FROM THESE PERSONS AGGREGATING TO R S. 89,2 7 ,400/ - . THE ASSESSEE HAD SURRENDERED THE LOAN TAKEN FROM THEM DURING THE STATEMENT RECORDED AT THE TIME OF SEARCH , HOWEVER, LATER ON, THE ASSESSEE ONLY DECLARED THE SURRENDERED AMOUNT AT RS. 72 LAKHS IN THE RETURN OF INCOME , ACCORDINGLY , THE AO HELD THAT BALANCE LOAN AMOUNT OF RS . 17,27,400/ - SHOULD ALSO BE ADDED TO THE INCOME OF THE ASSESSEE. CHANDBIBI ZAIDI ITA 2347 /M/201 3 ITA 1372/M/201 3 3 5. BEFORE THE LD. CIT(A), THE ASSESSEES CASE AS INCORPORATED BEFORE THE CIT(A) ARE THAT THE ASSESSEE HAS DEDUCTED/DISCLOSED LOAN WHICH WAS IN THE FORM OF EDUCATION AID RECEIVED FROM RAVISH ZAIDI AMOUNTING TO RS. 33,50,000/ - AND FROM WAIZE ALI AMOUNTING TO RS. 38,50,000/ - AGGREGATING TO RS. 72,00,000/ - AT TIME OF SEARCH & SEIZURE ACTION TO BUY PEACE. IT WA S FURTHER SUBMITTED THAT OUT OF LOAN TAKEN FROM WAIZE ALI OF RS. 55,00,000/ - , RS. 10 LAKHS IS THE OPENING BALANCE WHICH CANNOT BE CONSIDERED AS INCOME; SINCE THE ASSESSEE HAD DISCLOSED RS. 38,50,000/ - , THE BALANCE AMOUNT OF RS. 16,50,000/ - WAS GIVEN AS A LOAN TO THE ASSESSEE BY MR. WAIZE ALI OUT OF THE LOAN RETURNED BY MS. PERMAL DHAROD OF RS. 8,00,000/ - , WAIZE ALIS TAXABLE INCOME OF RS. 1,39,973/ - AND O UT OF OPENING BANK BALANCE OF RS. 36,74,754/ - . IN RESPECT OF LOAN FROM RAVISH ZAIDI, IT IS SUBMITTED THAT OUT OF THE LOAN TAKEN OF RS. 40 LAKHS, ASSESSEE HAD DISCLOSED RS. 33,50,000/ - AND THE BALANCE AMOUNT OF RS. 6,50,000/ - WAS GIVEN BY RAVISH ZAIDI TO TH E ASSESSEE FROM HER TAXABLE INCOME OF RS. 2,30,026/ - & OUT OF OPENING BANK BALANCE OF RS. 25,43,486/ - . THE ASSESSEE HAS FURTHER CONTENDED THAT SHE HAS FILED CONFIRMATIONS FROM THE CREDITORS AND THE LOAN IS RECEIVED THROUGH BANKING CHANNEL BY CHEQUE & CREDI TORS ARE REGULARLY ASSESSED TO TAX. IT IS, THEREFORE, CONTENDED THAT NO ADDITION U/S 68 OF THE ACT CAN BE MADE . 6 . AFORESAID SUBMISSIONS OF THE ASSESSEE WAS FORWARD TO THE AO FOR SUBMITTING THE REMAND REPORT . I N RESPONSE, THE AO VIDE LETTER DATED 14.10 .2007 SUBMITTED HIS REMAND REPORT STATING THAT SOURCE S OF INCOME OF THESE PERSONS WERE NOT FILED BY THE ASSESSEE A ND THEY COULD NOT BE EXAMINED BECAUSE THEY WERE RESIDING OUTSIDE INDIA AND, THEREFORE, THE AMOUNT DEPOSITED HA S TO BE ADDED AS ASSESSEES INCO ME . I N REJOINDER, THE ASSESSEE SUBMITTED THAT THERE WERE NO CASH DEPOSIT IN THE BANK ACCOUNT OF THESE LENDERS AND MOST OF THE DEPOSITS WE RE OUT OF TH EIR ENCASHMENT OF BANK FDRS, MUTUAL FUNDS ETC. WHICH WE RE PREVIOUSLY INVESTED BY THEM OUT OF THE INCOME TAX ED IN THEIR HANDS. PHOTO COPIES OF BANK CHANDBIBI ZAIDI ITA 2347 /M/201 3 ITA 1372/M/201 3 4 ACCOUNTS OF THESE TWO PERSONS WERE ALSO FILED ALONG WITH OTHER DETAILS . 7 . THE LD. CIT(A) AFTER EXAMINING THE ENTIRE FACTS AND THE REMAND REPORT OF THE AO , OBSERVED THAT , THE ASSES S EE HAD MADE DISCLOSURE OF RS. 7 2 L AKHS IN THE STATEMENT RECORDED U/S 132(4) WHICH H AS ALSO BEE N TAKEN INTO ACCOUNT BY THE AO IN THE COMPUTATION OF INCOME WORKED OUT BY THE AO. THE BALANCE ADDITION OF RS. 17,27,400/ - HAS BEEN DISPUTED BY THE ASSESSEE. ON MERIT S, HE OBSERVED THAT T HESE TWO P ERSONS FROM WHOM THE ASSES S EE HAD RECEIVED LOAN WERE CLOSE RELATIVES OF THE ASSESSEE AND EXAMINED THE VARIOUS EVIDENCES AND DETAIL S ALONG WITH THE AVAILABILITY OF FUNDS WITH THE SE L E N DERS AND ALSO NOTED THE DEPOSITS AND THE WITHDRAWALS MADE BY THESE PERSON S FROM THEIR BANK STATEMENTS AND ALSO THE AMOUNT OF LOAN GIVEN TO THE ASSESSEE. HE, FURTHER NOTED THAT THE FIRST APPELLATE AUTHORITY IN THE CASE OF THESE TWO PERSONS HAVE DEALT THE SIMILAR ISSUE OF GIVING OF LOAN TO THE ASSESSEE AND SOURCES OF THE FUNDS IN GREAT DETAIL. THE FINDING OF THE CIT(A) IN CASES OF WAIZE ALI AND RAVISH P ZAIDI HAVE BEEN INCORPORATED IN THE IMPUGNED APPELLATE ORDER WHICH FOR THE SAKE OF READY REFERENCE AND BETTER APPRECIATION OF THE FACTS ARE AGAIN REPRODUCED HEREUNDER: '9.0 I HAVE CAREFULLY EXAMINED THE FACTS OF THE CASE, THE STAND TAKEN BY THE A. 0 IN THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSIONS FILED BY THE APPELLANT DURING THE APPEAL PROCEEDINGS. THE ONLY ISSUE WHICH IS AGITATED IN THIS APPEAL IS THAT THE ADDITION OF RS. 38,5 0, 000/ - , WHICH IS STATED TO HAVE BEEN RECEIVED BY THE APPELLANT FROM MUMBAI MAZDOOR SABHA UNDER THE HEAD 'EDUCATIONAL AID'. IT IS SUBMITTED THAT THE ALLEGED EDUCATIONAL AID RECEIVED BY THE APPELLANT HAS BEEN DULY DISCLOSED IN THE HANDS OF SMT. CHANDBIBI Z AIDI IN THE CHANDBIBI ZAIDI ITA 2347 /M/201 3 ITA 1372/M/201 3 5 STATEMENT RECORDED FROM HER U/S.132(4) OF THE ACT. IT IS SEEN FROM THE ASSESSMENT ORDER OF SMT. CHANDBIBI ZAIDI FOR A. Y. 2003 - 04 THAT THE AMOUNT OF RS. 73,00,000/ - WAS TAKEN INTO ACCOUNT IN THE STATEMENT OF COMPUTATION OF INCOME OF THE ASSESSM ENT ORDER ON ACCOUNT OF DISCLOSURE MADE BY SMT. CHANDBIBI ZAIDI U/S.132(4) OF THE ACT. IT IS CONTENDED BY THE APPELLANT THAT SINCE THE AMOUNT RECEIVED FROM MUMBAI MAZDOOR SABHA BY THE APPELLANT IS DULY PASSED ON TO SNIT. CHANDBIBI ZAIDI AND SHE HAS IN TURN MADE A DISCLOSURE OF RS. 73,00,000/ - WHICH HAS BEEN OFFERED AS INCOME IN THE RETURN OF INCOME FILED FOR A. Y 2003 - 04, THE ADDITION IS REQUIRED TO BE DELETED. THE FACT OF DISCLOSURE OF RS. 73,00,000/ - , WHICH IS ALSO CONSIDERED IN THE ASSESSMENT ORDER, IS N OT IN DISPUTE. DURING THE APPEAL PROCEEDINGS, THE APPELLANT HAS ALSO REFERRED TO THE SUMMARY OF THE BANK STATEMENT WITH REFERENCE TO THE AMOUNTS RECEIVED FROM CHANDBIBI ZAIDI MAZDOOR SABHA AND THE AMOUNTS LENT TO SNIT. CHANDBIBI ZAIDI. A COPY OF THE BANK A CCOUNT OF THE APPELLANT AS WELL AS SNIT. CHANDBIBI ZAIDI IS ALSO SUBMITTED IN SUPPORT OF THE EXPLANATION. THE DEPOSITS AND WITHDRAWALS BY CHEQUES FROM THE BANK ACCOUNT OF THE APPELLANT AND THE CONTRA ENTRIES IN THE BANK ACCOUNTS OF SMT. CHANDBIBI ZAIDI ARE VERIFIABLE. IT IS ALSO SEEN THAT AS ON 01.04.2002, THE APPELLANT HAS OPENING BALANCE OF RS.36,37,754/ - . THE SUMMARY OF THE TRANSACTIONS IS AS UNDER: CHANDBIBI ZAIDI ITA 2347 /M/201 3 ITA 1372/M/201 3 6 MR. WAIZE ALI BANK SUMMARY OF SCOTIA BANK FROM 01.04.2002 TO 31.03.2003 AMOUNT(RS) TOTAL AMOUNT RS. (RS.) OPENING BALANCE AS ON 01.04.2002 36,74,754.37 ADD: DEPOSITS EDUCATION AID RECEI - VED FROM MMS 6,00,000.00 EDUCATION AID RECEI - VED FROM MMS 7,50,000.00 EDUCATION AID RECEI - VED FROM MMS 10,00,000.00 EDUC ATION AID RECEI - VED FROM MMS 15,00,000.00 38,50,000.00 LOAN RETURNED BY PREMAL DHAROD 8,00,000.00 INTEREST ON APPLICA - TION MONEY RECEIVED FROM ICICI 272. 00 INTEREST RECEIVED ON RBI BONDS 45,000.00 INTEREST CREDIT ED BY BANK 74,796.21 INTEREST CREDITED BY BANK 19,904.62 97,701.03 47,89,973.03 84,64,727.40 LESS: WITHDRAWALS LOAN GIVEN TO PERMAL DHAROD 8,00,000.00 LOGAN GIVEN TO CHANDBIBI ZAIDI 40,00,000.00 LOGAN GIVEN TO CHANDBIBI ZAIDI 5,00,000.00 LOGAN GIVEN TO CHANDBIBI ZAIDI 10,00,000.00 55,00,000.00 TRANSFERRED TO CANADA FOR EDUCATION PURPOSE 3,13,000.00 TRANSFERRED TO CANADA FOR EDUCATION PURPOSE 4,30,471.79 7,43,471.79 CENTRAL FINANCE SECURITIES P LTD. (RBI BOND) 10,84,750.00 81,28,221.79 BALANCE AS ON 31.03.2003 3,36,505.01 9.1 IT IS CLEAR FROM THE ABOVE THAT THE APPELLANT HAS RECEIVED RS. 38,50,000/ - , BE IT CALLED EDUCATIONA L GRANT OR WHATEVER BE THE PURPOSE, FROM MUMBAI MAZDOOR SABHA AND IN TURN HAD LENT AN AMOUNT OF RS. 55,00,000/ - TO SMT. CHANDBIBI ZAIDI, DURING THE RELEVANT PREVIOUS YEAR. SINCE IT IS EVIDENT FROM THE ABOVE TABLE THAT THE SOURCES OF FUNDS ARE NOTHING BUT T HE CHANDBIBI ZAIDI ITA 2347 /M/201 3 ITA 1372/M/201 3 7 OPENING BALANCE AND THE AMOUNTS RECEIVED FROM MUMBAI MAZDOOR SABHA, THE ADDITION MADE AMOUNTING TO RS. 38,50,000/ - IN THE HANDS OF THE APPELLANT IS FOUND TO BE UNWARRANTED AND THEREFORE, THE SAME IS HEREBY DELETED. FINDINGS IN THE CASE OF MS. RAVISH ZAI DI: 7.0 I HAVE CAREFULLY EXAMINED THE FACTS OF THE CASE, THE STAND TAKEN BY THE A.0 IN THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSIONS FILED BY THE APPELLANT DURING THE APPEAL PROCEEDINGS. THE ONLY ISSUE WHICH IS AGITATED IN THIS APPEAL IS THAT THE ADDITI ON OF RS. 33,50,000/ - , WHICH IS STATED TO HAVE BEEN RECEIVED BY THE APPELLANT FROM MUMBAI MAZDOOR SABHA UNDER THE HEAD 'EDUCATIONAL AID'. IT IS SUBMITTED THAT THE ALLEGED EDUCATIONAL AID RECEIVED BY THE APPELLANT HAS BEEN DULY DISCLOSED IN THE HANDS OF SMT . CHANDBIBI ZAIDI IN THE STATEMENT RECORDED FROM HER U/S. 132(4) OF THE ACT. IT IS SEEN FROM THE ASSESSMENT ORDER OF SMT. CHANDBIBI ZAIDI FOR A. Y. 2003 - 04 THAT THE AMOUNT OF RS. 73,00,000/ - WAS TAKEN INTO ACCOUNT IN THE STATEMENT OF COMPUTATION OF INCOME OF THE ASSESSMENT ORDER ON ACCOUNT OF DISCLOSURE MADE BY SMT. CHANDBIBI ZAIDI U/S. 132(4) OF THE ACT. IT IS CONTENDED BY THE APPELLANT THAT SINCE THE AMOUNT RECEIVED FROM MUMBAI MAZDOOR SABHA BY THE APPELLANT IS DULY PASSED ON TO SMT. CHANDBIBI ZAIDI AND S HE HAS IN TURN MADE A DISCLOSURE OF RS. 73,00,000/ - WHICH HAS BEEN OFFERED AS INCOME IN THE RETURN OF INCOME FLIED FOR A. Y. 2003 - 04, THE ADDITION IS REQUIRED TO BE DELETED. THE FACT OF DISCLOSURE OF RS. 73,00,000/ - , WHICH IS ALSO CONSIDERED IN THE ASSESSM ENT ORDER, IS NOT IN DISPUTE. DURING THE APPEAL PROCEEDINGS, THE APPELLANT HAS ALSO REFERRED TO THE SUMMARY, OF THE BANK STATEMENT WITH REFERENCE TO THE AMOUNTS MUMBAI MAZDOOR SABHA AND THE AMOUNTS LENT TO SMT. CHANDBIBI ZAIDI. A COPY OF THE BANK ACCOUNT O F THE APPELLANT AS WELL AS SMT. CHANDBIBI ZAIDI IS ALSO SUBMITTED IN SUPPORT OF THE EXPLANATION. THE DEPOSITS AND WITHDRAWALS BY CHEQUES FROM THE BANK ACCOUNT OF THE APPELLANT AND THE CONTRA ENTRIES IN THE BANK CHANDBIBI ZAIDI ITA 2347 /M/201 3 ITA 1372/M/201 3 8 ACCOUNTS OF SMT. CHANDBIBI ZAIDI ARE VERIFIAB LE. IT IS ALSO SEEN THAT AS ON 01.04.2002, THE APPELLANT HAS OPENING BALANCE OF RS. 25,43,486 / - . THE SUMMARY OF THE TRANSACTIONS IS AS UNDER: MR. RAVISH P. ZAIDI BANK SUMMARY OF SCOTIA BANK FROM 01.04.2002 TO 31.03.2003 AMOUNT(RS) TOTAL AMOUNT RS. (RS .) OPENING BALANCE AS ON 01.04.2002 25, 4 3 , 486 . 09 ADD: DEPOSITS INTEREST RECEIVED ON APPLICATION MONEY 272.00 EDUCATION AID RECEI - VED FROM MMS 6 , 0 0,000.00 EDUCATION AID RECEI - VED FROM MMS 7 , 5 0,000.00 EDUC ATION AID RECEI - VED FROM MMS 5,00,000.00 EDUCATION AID RECEI - VED FROM MMS 15,00,000.00 33,50,000.00 LOAN RETURNED BY CHANDBIBI ZAIDI 15,00,000.00 LOAN RETURNED BY CHANDBIBI ZAIDI 10,00,000.00 25,00,000.00 INTEREST RE CEIVED FROM KONKAN RAILWAY CORPN LTD. 47,775.00 INTEREST CREDITED BY BANK 57,010.05 INTEREST CREDITED BY BANK 28,621.50 85.631.55 59,83,678.55 85,27,164.64 LESS: WITHDRAWALS TRANSFERRED TO CA NADA FOR EDUCATION PURPOSE 3,13,000.00 TRANSFERRED TO CANADA FOR EDUCATION PURPOSE 4,30,471.79 7,43,471.79 INVESTMENT IN KONKAN RAILWAY CORPN. LTD. 9,66,494.80 GIVEN TO CHANDBIBI ZAIDI 25,00,000.00 GIVEN TO CHANDBIBI ZAIDI 15,00.000.00 40,00,000.00 57,09.966.59 BALANCE AS ON 31.03.2003 28,17,198.05 9.1 IT IS CLEAR FROM THE ABOVE THAT THE APPELLANT HAS RECEIVED RS.33,50,000 / - , BE IT CALLED EDUCATIONAL GRANT OR WHATEVER BE THE PURPOSE, FROM MUMBAI MAZDOO R SABHA AND IN TUR N HAD LENT AN AMOUNT OF RS. 40,00, 000/ - TO SMT. CHANDBIBI ZAIDI, CHANDBIBI ZAIDI ITA 2347 /M/201 3 ITA 1372/M/201 3 9 DURING THE RELEVANT PREVIOUS YEAR. SINCE IT IS EVIDENT FROM THE ABOVE TABLE THAT THE SOURCES OF FUNDS ARE NOTHING BUT THE OPENING BALANCE AND THE AMOUNTS RECEIVED FROM MUMBA I MAZDOOR SABHA, THE ADDITION MADE AMOUNTING TO RS. 33,50,000/ - IN THE HANDS OF THE APPELLANT IS FOUND TO BE UNWARRANTED AND THEREFORE, THE SAME IS HEREBY DELETED . 8 . ACCORDINGLY, THE LD. CIT(A) HELD THAT THE SOURCES OF FUNDS IN CASE OF THESE TWO PERSONS HAVE BEEN EXPLAINED SATISFACTORILY AND NOT ONLY THAT , THEY HAVE BEEN SUBJECT ED TO PROPER SCRUTINY IN THE FIRST APPELLATE PROCEEDINGS OF THESE TWO CREDITORS , THEREFORE , THE SOURCE OF FUND FOR GIVING LOAN TO THE ASSESSEE ALSO STANDS EXPLAINED . ACCORDINGLY , HE DELETED THE SAID ADDITION OF RS. 17,27,400/ - . 9 . BEFORE US, THE LD. DR SUBMITTED THAT HOW THE MONEY HAS BEEN RECEIVED BY THESE TWO CREDITORS AND ALSO THE AMOUNT OF OPENING BALANCE IN THEIR BANK ACCOUNTS HAVE NOT BEEN PROVED BY THE ASSESSEE AND, THEREFO RE, THE ADDITION WAS RIGHTLY MADE BY THE ASSESSING OFFICER. ON THE OTHER HAND, LD. COUNSEL SUBMITTED THAT THE SOURCE OF THE LOAN GIVEN IS FROM THE OPENING BALANCE IN THE BANK ACCOUNT OF THE LENDERS WHICH STOOD EXPLAINED IN THEIR CASES AND IN SUPPORT OF HIS CONTENTION, HE REFERRED TO THE BANK ACCOUNT OF THESE CREDITORS; LASTLY, HE SUBMITTED THE SOURCES OF THE FUNDS IN THE HANDS OF THE CREDITOR ALREADY STANDS EXPLAINED IN THEIR RESPECTIVE CASES, AS NOTED BY THE CIT(A), THEREFORE , THE ADDITION HAS R IGHTL Y BEEN DELETED BY THE CIT(A). 1 0 . AFTER CAREFULLY CONSIDERING THE RIVAL SUBMISSIONS AND ALSO ON THE PERUSAL OF THE RELEVANT MATERIAL PLACED ON RECORD, WE FIND THAT OUT OF THE TOTAL LOANS TAKEN FROM THESE TWO PERSONS, THE ASSESSEE HAS ALREADY SURRENDERED THE AM OUNT AGGREGATING RS. 7 2 LAKHS AS INCOME OF THE ASSESSEE. REGARDING BALANCE AMOUNT OF RS. 17,27,400/ - THE ASSESSEES SUBMISSIONS HAVE BEEN THAT THEY WE RE FROM THE OPENING BALANCE S AS APPEARING IN THE BANK ACCOUNT S OF CHANDBIBI ZAIDI ITA 2347 /M/201 3 ITA 1372/M/201 3 10 THE LENDERS AS ON 01.04.2002. THE AVAILA BILITY OF FUNDS AND OPENING BALANCES AND ALSO THE FACTUM OF GIVING OF LOAN S TO THE ASSESSEE AND SOURCES THEREOF HAS BEEN EXAMINED IN DETAIL IN THE CASE OF THE CREDITORS BY THE FIRST APPELLATE AUTHORITY VIDE ORDER DATED 31.12.2012 PASSED IN THEIR CASES, FOR THE SAME ASSESSMENT YEAR. THERE IT HAD BEEN ACCEPTED. ONCE IT HAS NOT BEEN BROUGHT ON RECORD THAT SAID APPELLATE ORDER HAS NOT BEEN DISTURBED , THEN SO FAR AS THE SOURCE OF THE LOAN TAKEN BY THE ASSES S EE STANDS PROVED , BECAUSE IT HAS BEEN FOUND THAT THE CR EDITORS HAD SUFFICIENT FUNDS AND THEY HAVE ALSO SHOWN THE LOAN GIVEN TO THE ASSESSEE OUT OF THEIR OWN FUNDS DISCLOSED IN THEIR BOOKS. ACCORDINGLY , THE ADDITION DELETED BY THE CIT(A) IS UPHELD AND ACCORDINGLY GROUND NO. 1 RAISED BY THE REVENUE IS DISMISSED. 11 . IN G ROUND NO. 2, THE REVENUE HAS CHALLENGED THE DELETION O F THE ADDITION OF RS. 3 LAKHS MADE U/S 68 ON ACCOUNT OF LOAN TAKEN FROM , MR. TAPAN GHOSH. 1 2. THE ASSESSEE HAD TAKEN INTEREST FREE LOAN OF RS. 3 LAKHS FROM MR. TAPAN GHOSH, HOWEVER, THE AO OB SERVED THAT DURING THE COURSE OF SEARCH AND SEIZURE OPERATION, S HE COULD NOT REMEMBER THE SAID LOAN TAKEN FROM MR. TAPAN GHOSH ACCORDINGLY HE ADDED THE SAID AMOUNT U/S 68 AS UNEXPLAINED . 13 . BEFORE THE CIT(A) THE ASSESSEE SUBMITTED THAT SHE HAD FILED COP Y OF CONFIRMATION FROM THE SAID CREDITOR , HIS PAN AND COPY OF ACKNOWLEDGMENT OF RETURN OF INCOME OF THE CREDITOR BEFORE THE ASSESSING OFFICER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS . FURTHER, THE SAID CREDITORS W AS REGULARLY ASSESSED TO TAX WITH IT O - 20(2)(4), MUMBAI AND THE SAID LOAN WAS RECEIVED THROUGH CHEQUE. THE LE NDE R ALSO APPEARED BEFORE THE AO AND IN HIS STATEMENT HE CONFIRMED THE LOAN ALONG WITH THE ADDRESS PROOF , THEREFORE, NO ADDITION COULD HAVE BEEN MADE BY THE ASSESSING OFFICER. THIS SUB MISSION AND THE FACT GIVEN BEFORE THE CIT(A) WAS FORWARDED TO THE ASSESSING OFFICER FOR SUBMISSION OF HIS REMAND REPORT. THE LD. CHANDBIBI ZAIDI ITA 2347 /M/201 3 ITA 1372/M/201 3 11 ASSESSING OFFICER VIDE LETTER DATED 14.09.2012 THOUGH ADMITTED THAT LOAN CONFIRMATION, PAN, INCOME TAX RETURN ON INCOME OF THE SAID LENDER WAS FILED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, BUT HE WAS NOT PRODUCED BEFORE THE ASSESSING OFFICER AS ONLY MR. PRADEEP PANDEY HA D APPEARED WHO HAS GIVEN LOAN OF RS. 5 LAKHS. THE LD. CIT(A), AFTER EXAMINATION OF FACTS AND MATERIAL P LACED ON RECORD, OBSERVED THAT THE ASSESSEE HAS DISCHARGED THE PRIMARY ONUS BY FURNISHING ALL THE BASIC DETAILS INCLUDING LOAN CONFIRMATION, BANK STATEMENT, PAN AND ACKNOWLEDGEMENT OF INCOME TAX RETURN. THIS SHOWS THAT THE LOAN RECEIVED BY THE ASSES S EE AND ALSO THE EXPLANATION BY THE ASSESSEE IS GENUINE AND THE CREDITWORTHINESS OF THE CREDITOR ALSO STANDS PROVED . ACCORDINGLY, LD. CIT(A) DELETED THE SAID ADDITION. 14 . AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS FILED CONFIRMATION LETTER OF MR. TAPAN GHOSH WHEREIN HE HAS ADMITTED THAT HE HAS GIV EN LOAN AMOUNT OF RS. 11 LAKHS (RS. 8 LAKHS AND RS. 3 LAKHS) AND GAVE THE DETAILS OF HIS PAN. TH E CONFIRMATION IS APPEARING AT PAGE 47 OF THE PAPER BOOK. NOT O NLY THAT, COPY OF ACKNOWLEDGEMENT OF RETURN AND HIS BANK STATEMENT HAVE ALSO BEEN FILED WHICH CONTAINS THE RELEVANT ENTRIES OF GIVING T HE LOAN TO THE ASSESSEE. NO ADVERSE FACT IS FOUND FROM THESE DOCUMENTS THAT THE SOURCES OF FUNDS WITH THE LENDER IS NOT G ENUINE . FURTHER , IT HAS BEEN BROUGHT ON RECORD THAT THE SAID AMOUNT HAS ALSO BEEN REPAID BY THE ASSESSEE IN THE YEAR 2011. THUS, ALL THESE EVIDENCES GO TO SHOW THAT THE NATURE AND SOURCE OF CREDIT IS FULLY EXPLAINED BY THE ASSESSEE AND THE PRIMA FACIE ONUS OF ESTABLISHING THE IDENTITY, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE LENDER IS FULLY DISCHARGED. WITHOUT ANY ADVERSE MATERIAL ON RECORD, SUCH A LOAN CANNOT BE TREATED AS NON - GENUINE. ACCORDINGLY, THE FINDING OF THE CIT(A) ON THIS SCORE IS CONFIRMED. IN THE RESULT, GROUND NO. 2 AS RAISED BY THE REVENUE IS DISMISSED. CHANDBIBI ZAIDI ITA 2347 /M/201 3 ITA 1372/M/201 3 12 15 . IN GROUND NO. 3, REVENUE HAS CHALLENGED THE DELETION OF ADDITION OF RS. 85 LAKHS MADE U/S 68 ON ACCOUNT OF LOAN TAKEN FROM M/S MULAH ASSOCIATES. 1 6 . THE BRIEF FACTS QU A THE ISSUE IS THAT , THE ASSESSEE HAS TAKEN LOAN OF RS. 85 LAKHS FROM M/S MULAH ASSOCIATES AND THE SOURCE OF THE LOAN HAS BEEN EXPLAINED THAT THE SAID PARTY HAS RECEIVED LOAN OF EQUIVALENT AMOUNT FROM MUMBAI MAZDOOR SABHA (MMS). THIS LOANS RECEIVED BY THEM WERE INTEREST FREE. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS REPRODUCED THE RELEVANT EXTRACT OF THE BANK STATEMENT OF THE M/S MULAH ASSOCIATES WITH HSBC BANK, BANDRA BRANCH , WHEREIN IT HAS BEEN MENTIONED THAT IT HAS RECEIVED LOAN FROM MMS ON 21. 11.2002, WHICH HAS BEEN ADVANCED TO THE ASSESSEE ON 26.11.2002. THE ASSESSING OFFICER HELD THAT THE M/S MUL L AH ASSOCIATES HAS TAKEN CONDUIT ROUTE TO TRANSFER THE FUND FROM MMS TO THE ASSES S EE AND HAS NOT EXPLAINED THAT WHY THE LOAN WAS GIVEN TO THE ASSESSE E. ACCORDINGLY, ASSESSIN G OFFICER HAS ADDED THE AMOUNT AS UNEXPLAINED U/S 68. 1 7 . BEFORE THE CIT(A), THE ASSESSEE HAS SUBMITTED THAT LOAN WAS RECEIVED FROM M/S MULAH ASSOCIATES BY WAY OF CHEQUE AND PARTY WAS PRODUCED BEFORE THE ASSESSING OFFICER ALONG WIT H ITS BOOKS OF ACCOUNT. THEY HAVE SHOWN THE LOAN GIVEN TO THE ASSESSEE ON THE ASSET SIDE OF THE BALANCE SHEET HA VE ALSO FURNISHED BANK STATEMENT AND ALSO BALANCE SHEET BEFORE THE ASSESSING OFFICER. NOT ONLY THAT , IT WAS INFORMED THAT THEY WERE REGULARLY AS SESSED TO TAX AND THE AMOUNT HAS ALSO BEEN REPAID BY THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQUES. AFTER OBTAINING THE REMAND REPORT ON THE ENTIRE ISSUE AND MATERIAL ON RECORD, THE LD. CIT(A) OBSERVED THAT MULAH ASSOCIATES HAVE FULLY EXPLAINED THE SOURCE OF THE FUNDS AND ALSO THE ENTIRE DETAILS OF THE TRANSACTION BEFORE THE ASSESSING OFFICER. THE RELEVANT FINDING OF THE CIT(A) FOR DELETING THE SAID ADDITION IS AS UNDER: I HAVE CAREFULLY EXAMINED THE FACTS OF THE CA S E, THE STAND TAKEN BY THE AO IN THE ASSESSM ENT ORDER & THE CHANDBIBI ZAIDI ITA 2347 /M/201 3 ITA 1372/M/201 3 13 REMAND REPORT, THE GROUNDS OF APPEAL AND THE WRITTEN SUBMISSIONS FILED BY THE APPELLANT DURING THE HEARING PROCEEDINGS. THE APPELLANT HAS RELIED UPON THE EXPLANATION THAT THE LOAN AMOUNTING TO RS. 85,00,000/ - RECEIVED FROM M/S MULLAH ASSOCI ATES HAS BEEN RETURNED TO THE LENDER. COPIES OF THE BANK ACCOUNTS HAVE ALSO BEEN PRODUCED IN SUPPORT OF THE EXPLANATION. DURING THE RELEVANT PREVIOUS YEAR M/S MULLAH ASSOCIATES HAS ADVANCED A LOAN OF RS. 85,00,000/ - TO THE APPELLANT. THE SOURCES OF THE FUN DS ARE TRACED TO MUMBAI MAZDOOR SABHA. THEREFORE, IT DID APPEAR THAT THE APPELLANT HAD DIVERTED THE FUNDS FROM MUMBAI MAZDOOR SABAH TO THE EXTENT OF RS. 85,00,000/ - BY USING M/S MULLAH ASSOCIATES, ADVOCATES OF MUMBAI MAZDOOR SABHA /THE APPELLANT, AS A COND UIT. THE IDENTITY OF THE REAL LENDER AND THE SOURCES OF FUNDS HAVE BEEN ESTABLISHED. IT IS FURTHER ESTABLISHED THAT THE TRANSACTION WAS IN THE NATURE OF LOAN SINCE THE SAID ADVANCE IS RETURNED TO THE LENDER. AT THIS POINT OF TIME, HAVING REGARD TO THE EVID ENCE OF RETURNING OF THE LOAN, IT CANNOT BE HELD THAT THE SAID RECEIPTS ARE IN THE NATURE OF INCOME IN THE HANDS OF THE APPELLANT. THEREFORE, THE ADDITION OF RS. 85,00,000/ - IS HEREBY DELETED. 1 8 . BEFORE US THE LD. DR SUBMITTED THAT MERE RE - PAYMENT OF L OAN CANNOT CHANGE THE FACTUM O R PROVE THE GENUINENESS OF THE LOAN TAKEN BY THE ASSESSEE. THE VERY FACT THAT M/S MULAH ASSOCIATES HAVE RECEIVED LOAN FROM MMS AND IMMEDIATELY THEREAFTER HAVE GIVEN LOAN TO THE ASSESSEE SHOWS THAT THERE IS SOME COLOURABLE TRAN SACTION AND THERE IS DIVERSION OF FUND OF MMS FOR WHICH M/S MULAH A SSOCIATES HAVE ACT ED AS CONDUIT. THEREFORE, THIS LOAN CANNOT BE TREATED AS GENUINE. 1 9 . ON THE OTHER HAND, LD. COUNSEL SUBMITTED THAT APART FROM FURNISHING THE CONFIRMATION LETTER, BANK STATEMENT OF THE LENDER CHANDBIBI ZAIDI ITA 2347 /M/201 3 ITA 1372/M/201 3 14 AND BALANCE SHEET, THE SAID PARTY HAS DULY APPEARED BEFORE THE ASSESSING OFFICER AND ADMITTED THE FACTUM OF GIVING LOAN AND ALSO THE SOURCE OF THE MONEY FROM WHERE THE LOAN HAVE BEEN GIVEN. NOT ONLY THAT, IN THE SCRUTINY ASSESSMENT PASSED U/S 143(3) MADE IN THE CASE OF M/S MULAH ASSOCIATES , NO ADVERSE INFERENCE HAVE BEEN DRAWN WITH REGARD TO THE LOAN GIVEN TO THE ASSESSEE. THIS FACT GOES TO PROVE THE ENTIRE GENUINE NE SS OF THE LOAN. ACCORDINGLY, THE SAID LOAN GIVEN CANNOT BE TREATED AS NON - GENUINE. 2 0 . WE HAVE HEARD RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT MATERIAL ON R ECO RD. IN CASE OF AN ADDITION MAD E U/S 68, THE PRIMARY ONUS LIES UPON THE ASSESSEE TO PROVE THE NATURE AND SOURCE OF CREDIT, WHICH CAN BE PROVED BY GIVING IDEN TITY OF THE LENDER/CREDITOR, GENUINENESS OF THE TRANSACTION AND ALSO THE CREDITWORTHINESS OF THE PERSON GIVING THE LOAN. HERE IN THIS CASE, ALL THESE INGREDIENTS STANDS PROVED WHICH IS EVIDENT FROM THE FACT THAT , FIRSTLY , THE ASSESSEE HAS FILED CONFIRMATIO N LETTER WHICH GIVES THE DETAILS OF CHEQUES ISSUED TO THE ASSES S EE ON VARIOUS DATES WITH ALL THE PARTICULARS AND ALSO PAN AND R ANGE IN WHICH THE LENDER WAS ASSESSED; SECONDLY, BANK ACCOUNT OF M/S MULAH ASSOCIATES WAS PRODUCED WHICH CORROBORATES THE PARTICU LARS OF THE PAYMENT/LOAN GIVEN TO THE ASSESSEE; THIRDLY, THE SAID PARTY WAS DULY PRODUCED BEFORE THE ASSESSING OFFICER AND GAVE ALL THE PARTICULARS LIKE ENTRIES IN ITS BOOKS OF ACCOUNT, BALANCE SHEET AND ALSO THE CONFIRMED LOAN AND THE SOURCE OF THE LOAN; AND LASTLY, IN THE SCRUTINY PROCEEDINGS U/S 143(3) IN CASE OF M/S MULAH ASSOCIATES SUCH A LOAN WHICH IS APPEARING ON THE ASSET SIDE OF THE BALANCE SHEET HAS BEEN ACCEPTED. THERE IS NO ADVERSE INFERENCE WITH REGARD TO THE LOAN RECEIVED BY M/S MULAH ASSOCIAT ES FROM MMS. IN WAKE OF THESE EVIDENCES AND MATERIALS, IT CAN BE OSTENSIBLY BE INFERRED AND HELD THAT SO FAR AS THE ASSESSEE IS CONCERNED, GENUINE NE SS OF THE LOAN CANNOT BE DOUBTED . O N THE CONTRARY, T HE SOURCE OF THE SOURCE ALSO STANDS PROVED. WITHOUT ANY ADVERSE FINDING IN THE ASSESSMENT PROCEEDINGS OF M/S MULAH CHANDBIBI ZAIDI ITA 2347 /M/201 3 ITA 1372/M/201 3 15 ASSOCIATES OR ANY ENQUIRY DONE BY THE ASSESSING OFFICER IN THE PRESENT CASE, IT CAN NOT BE HELD THAT MULAH ASSOCIATES ACTED AS CONDUIT BETWEEN MMS AND THE ASSESSEE. EVEN IF IT IS ACCEPTED THEN HO W THE CREDIT OF LOAN AMOUNT IN THE CASE OF THE ASSESSEE CAN BE DISBELIEVED, BECAUSE THE SOURCE IN EITHER WAY STANDS PROVED. ACCORDINGLY, THE ADDITION DELETED BY THE CIT(A) IS AFFIRMED. THE GROUND NO. 3 AS RAISED BY THE REVENUE IS DISMISSED. 2 1 . IN THE RES ULT, APPEAL OF THE REVENUE IS DISMISSED. 2 2 . NOW, WE WILL TAKE - UP ASSESSEES APPEAL WHEREIN FOLLOWING GROUNDS HAVE BEEN RAISED: GROUND NO. 1 THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION MADE BY THE LEARNED AO IN TAXING RS. 3,87,600/ - AS DEE MED INCOME FROM VACANT FLAT & NOT ALLOWING DEDUCTION FOR BROKERAGE OF RS. 50,000/ - . GROUND NO. 2 THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION MADE BY THE LEARNED AO IN TAXING RS. 3,00,000/ - FOR REMUNERATION PAID BY THE ASSESSEE. GROUND NO. 3 THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION MADE BY THE LEARNED AO FOR CHARGING OF INTEREST U/S 234B(3) OF THE ACT. GROUND NO. 4 THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ORDER PASSED THE LEARNED AO U/S 14393) R.W.S. 147 WITHOUT D ISPOSING OFF THE OBJECTIONS OF THE ASSESSEE FOR REOPENING OF THE ASSESSMENT. 2 3 . AT THE OUTSET, THE LD. COUNSEL SUBMITTED THAT GROUND NO. 4 IS NOT PROCESSED. ACCORDINGLY, THE SAID GROUND IS DISMISSED AS NOT PRESSED. 24 . IN G ROUND NO. 1, THE ASSES S EE HAS CHALLENGED THE ADDITION OF RS. 3,87,600/ - ON ACCOUNT OF DEEMED INCOME FROM VACANT PLOT AND NOT ALLOWING DEDUCTION OF BROKERAGE OF RS.50,000/ - . 25 . SO FAR AS THE ISSUE OF BROKERAGE OF RS. 50,000/ - IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE SAME IS NOT PRESSED AND REQUESTED TO WITHDRAW THE SAID GROUND . CHANDBIBI ZAIDI ITA 2347 /M/201 3 ITA 1372/M/201 3 16 ACCORDINGLY, THE CLAIM FOR DEDUCTION OF BROKERAGE AMOUNT OF RS. 50,000/ - IS DISMISSED AS NOT PRESSED. 26 . AS REGARDS THE ADDITION OF RS.3,87,600/ - ON ACCOUNT OF DEEMED INCOME FOR HOU SE PR OPERTY, THE RELEVANT FACT IS THAT THE ASSESSEE WAS OWNER OF FIVE FLATS IN MUMBAI, OUT OF WHICH TWO FLATS AT SPEN C ERS CHS AT BANDRA WERE LET OUT AND RENTAL INCOME WAS OFFERED. FLAT AT CRESCENT HEIGHT WAS CLAIMED AS SELF OCCUPIED. HOWEVER, FOR THE REMA INING TWO FLATS I.E. GIRIRAJ APARTMENT, OCEANIC APARTMENT, ASSESSEE HAS NOT OFFERED ANY INCOME , WHICH IS THE SUBJECT MATTER OF ADDITION BY THE AO. THE ASSESSING OFFICER ISSUED NOTICE U/S 133(6) TO THE SECRETARIES OF BOTH THE HOUSING SOCIETIES FOR FURNISHIN G THE DETAILS OF LET OUT VALUE OF THE FLATS IN THEIR RESPECTIVE SOCIETIES, ON IDENTI CAL SIZE OF THE FLATS AND THE RENTAL INCOME EARNED DURING THE SAME PERIOD. IN RESPONSE, IT WAS SUBM I TTED THAT THE RENTAL RATE IN GIRIRAJ APARTMENT WAS RS. 20 PER SQ. FT. AN D ACCORDINGLY , THE ASSESSING OFFICER DETERMINED THE RENTAL VALUE AT RS. 2,32,200. SO FAR AS OCEANIC CHS, THE ASSESSING OFFICER RECEIVED N O INFORMATION , THEREFORE, HE ESTIMATED THE FAIR MARKET RENT ON SAME VALUE, I.E. AT RS. 20 AND ACCORDINGLY , THE ANNUAL L ETTING VALUE WA S ESTIMATED AT RS. 1,54,800/ - . THE ASSESSEE ON THE OTHER HAND, CONT END ED THAT THE MUNICIPAL VALUE RATES OF THESE FLATS WERE AT RS. 3,281/ - AND RS. 2,643/ - RESPECTIVELY , THEREFORE , THIS VALUE SHOULD BE ADOPTED AS THESE FLATS WERE NOT LET OUT. HOWEVER, THE ASSESSING OFFICER HELD THAT THE SAID VALUATION CANNOT BE ACCEPTED. 27. DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE SUBMITTED THAT GIRIRAJ FLAT WAS OCCUPIED BY THE ASSESSEE FOR THE FIRST 9 MONTHS FOR THE SELF OCCUPATION, THEREFORE, ASSESS ING OFFICER SHOULD HAVE ALLOWED PROPORTIONATE EXEMPTION. FURTHER , THE ASSESSEE HAD PURCHASED A FLAT AT CRESCENT HEIGHTS CHS IN DECEMBER, 2002 AND SHIFTED TO THIS NEW FLAT WHICH IS A SELF - OCCUPIED . SHE ALSO FURNISHED PURCHASE AGREEMENT WITH THE CRESCENT HEI GHTS. SINCE THESE WERE NEW FACTS AND ADDITIONAL EVIDENCES , THE LD. CIT(A) FORWARDED THE CHANDBIBI ZAIDI ITA 2347 /M/201 3 ITA 1372/M/201 3 17 SAME TO THE ASSESSING OFFICER FOR SUBMISSION OF THE REMAND REPORT. THE RELEVANT EXTRACT OF WHICH HAVE BEEN INCORPORATED BY CIT(A) IN PARA 9 (PAGE 5 OF THE APPELLATE ORD ER). 28 . ON PERUSAL OF MATERIAL ON RECORD, T HE LD. CIT(A) HELD THAT IT HAS OPTION OF THE ASSESSEE TO KEEP ONE HOUSE AS SELF - OCCUPIED PROPERTY AND THE BALANCE PROPERTIES HAVE TO BE OFFERED FO R TAXATION UNDER THE HEAD INCOME FROM HOUSE PROPERTY. SINCE AS SESSEE HAS ALREADY EXERCISE THE OPTION AT THE TIME OF FILING OF RETURN OF INCOME , THEREFORE SHE IS BOUND TO ACCEPT THE SAME AS PER THE ASSESSEES OWN DECLARATION . T HE ASSESSEE CANNOT CLAIM THAT NO ALV OF THE PROPERTY CAN BE TAKEN BECAUSE IT WAS DECLARED AS SELF - OCCUPIED PROPERTY . HE THUS UPHELD THE ALV ESTIMAT ED BY THE ASSESSING OFFICER WHICH WAS BASED ON ENQUIRY DONE THROUGH RESPECTIVE CHS. 29 . BEFORE US, THE LD. COUNSEL SUBMITTED THAT SINCE THESE PROPERTIES WERE NOT RENTED OUT IN THE ASS ESS MENT YEAR IN Q UESTION THEREFORE, THE ALV SHOULD BE TAKEN AS PER THE MUNICIPAL VALUATION, AS HELD IN SEVERAL CASES OF THE MUMBAI TRIBUNAL AS WELL AS BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS TIP TOP TYPOGRAPHY , REPORTED IN 48 TAXMAN.COM 191 . THESE PROPERTIES WERE ONLY RENTED OUT IN ASSESSMENT YEAR 2005 - 06. FURTHER, SO FAR AS CRESCENT HEIGHTS CHS IS CONCERNED, THE SAME WAS PURCHASED IN DECEMBER, 2002 THEREFORE ONLY THE VALUE OF THE THREE MONTHS SHOULD HAVE BEEN TAKEN. ON THE OTHER HAND, LD. DR RELIED UPON THE FINDING OF THE ASSESSING OFFICER AS WELL AS CIT(A). 3 0 . AFTER HEARING BOTH THE PARTIES, IT IS SEEN THAT OUT OF FIVE FLATS, THE ASSESSEE HAS RENTED OUT TWO FLATS AND ONE HAS BEEN DECLARED AS SELF - OCCUPIED PROPERTY . THE ISSUE IS , WHETHER THE OTHER TWO PROP ERTIES I.E . GIRIRAJ APARTMENT AND OCEANIC APARTMENT WHICH HAVE NOT BEEN LET OUT, WHAT SHOULD BE THE ALV . SINCE IT HAS NOT BEEN LET OUT THEN ALV CAN BE DETERMINED ON THE BASIS OF MUNICIPAL VALUATION, AS HELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASES OF TIP TOP TYPOGRAPHY ( SUPRA ) . ACCORDINGLY , THE ASSESSING OFFICER DIRECTED TO FOLLOW THE DECISION OF THE HONBLE HIGH COURT FOR CHANDBIBI ZAIDI ITA 2347 /M/201 3 ITA 1372/M/201 3 18 DETERMINATION OF THE ALV OF THE SAID TWO FLATS. ACCORDINGLY, GROUND NO.1 AS RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 3 1 . AS REGAR DS ADDITION OF RS.3 LAKHS FOR REMUNERATION PAID AS RAISED IN GROUND NO.2, THE ASSESSING OFFICER HAD MADE THE ADDITION ON THE GROUND THAT THE ASSESSEE HAS CLAIMED TO HAVE PAID HONORARIUM OF RS. 3 LAKHS TO SOME PERSONS AND CLAIMED DEDUCTION THEREOF. AT THE T IME OF SEARCH AND SEIZURE ACTION THE ASSESSEE FAILED TO G IVE ANY NAME OF THE RECIPIENT . BEFORE THE ASSESSING OFFICER, THE ASSES S EE HAD STATED THAT SHE HAD MADE PAYMENTS TO VARIOUS PERSONS IN CASH, OUT OF WHICH, TWO PERSONS HAD APPEARED BEFORE THE ASSESSING OFFICER AND STATED THEY WORK FOR THE UNIONS. HOWEVER, THEY COULD NOT EXPLAIN THE NATURE OF WORK DONE FOR THE ASSESSEE. THE ASSESSING OFFICER FURTHER NOTED OUT OF THE PAYMENT OF RS. 3 LAKHS, THE ASSES S EE COULD FURNISH VOUCHERS FOR RS.25,000/ - ONLY , WHICH T OO DOES NOT CONTAIN ANY NUMBER OR THE DETAIL AS TO WHO IS AUTHORIZE D TO PAY AND THE PURPOSE OF PAYMENT. ACCORDINGLY, H E DISALLOWED THE PAYMENT OF RS. 3 LAKHS. 3 2 . BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THE DETAILS OF MONTHLY SALARY, NATURE OF THE WORK DONE BY THE PARTIES FOR THE ASSESSEE AND THE CONFIRMATION OF THE SOME OF THE RECIPIENTS WHO WERE PRODUCED BEFORE THE ASSESSING OFFICER , AND STATED THAT THE ASSESSING OFFICER HAS NOT CARRIED OUT ANY ENQUIRY. THE LD. CIT(A) CONFIRMED THE ADDITION ON THE GROU ND THAT REMUNERATION PAID TO CERTAIN PERSONS WHO HAVE ASSISTED TO THE ASSESSEE IN RESPECT OF UNION ACTIVITIES CANNOT BE ALLOWED IN CASE OF THE ASSESSEE BECAUSE SHE HAS EARNED ONLY SALARY INCOME AND HONORARIUM HERSELF AND THERE IS NO PROVISION TO ALLOW SUCH EXPENDITURE FROM SALARY . 3 3 . AFTER HEARING BOTH THE PARTIES, WE FIND THAT NOT ONLY THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE PAYMENT BUT ALSO , HOW SUCH A DEDUCTION IS ALLOWABLE TO HER. THE FINDING OF THE CIT(A) THAT THERE IS NO PROVISION UN DER THE HEAD INCOME FROM SALARY TO ALLOW SUCH NATURE OF CLAIM TO THE ASSESSEE APPEARS TO BE CHANDBIBI ZAIDI ITA 2347 /M/201 3 ITA 1372/M/201 3 19 CORRECT. THUS, SUCH AN EXPENDITURE CLAIMED BY THE ASSESSEE HAS RIGHTLY BEEN DISALLOWED AND ACCORDINGLY , G ROUND NO.2 AS RAISED BY THE ASSESSEE IS DISMISSED. 3 4 . A S REGARDS CHARGING OF INTEREST U/S 234B, AS RAISED IN GROUND NO.3, IT HAS BEEN ADMITTED BY THE LD. COUNSEL, THAT IT IS MANDATORY AND ACCORDINGLY THE SAID GROUND IS TREATED AS DISMISSED. 35. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 36. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMISSED AND APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JU LY , 2015. SD/ - SD/ - ( . . ) ( ) ( G S PANNU ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 29 TH JU LY , 2015 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 3 8 , MUMBAI 4 ) THE CIT CENTRAL - IV , MUMBAI . 5 ) , , / THE D.R. C BENCH, MUMBAI. 6 ) COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS