DCIT, New Delhi V. Smt Gursharan Kaur, New Delhi

ITA 1900/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3635 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 29-06-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 28-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY AWASTHI
• Assessee Lawyers: KAMAL MALHOTRA
• Keywords: Gift; Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.1900/DEL/2010 ASSESSMENT YEAR : 2006-07 DCIT, CIRCLE 26(1), NEW DELHI. VS. SMT. GURSHARAN KAUR, J-12/50, RAJOURI GARDEN, NEW DELHI. PAN : AEWPC0414L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KAMAL MALHOTRA, CA REVENUE BY : SHRI. SANJAY AWASTHI, SR.DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIR ECTED AGAINST THE ORDER OF THE CIT (A) DATED 25.02.2010 FOR ASSESSMENT YEAR 20 06-07. GROUNDS OF APPEAL READ AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) ERRED IN I) DELETING THE ANNUAL VALUE OF THE TWO HOUSE P ROPERTIES AND II) DELETING THE ADDITION OF GIFT AMOUNTING TO RS. 12,00,000/- MADE TO HER SON. THE APPELLANT CRAVES THE RIGHT TO ADD OR ALTE R ANY GROUND OF APPEAL. 2. THE FIRST GROUND RELATED TO ADDITION PARTLY DELE TED BY THE CIT (A) IN RESPECT OF TWO HOUSE PROPERTIES, NAMELY PROPERTY NO.6/5E, I NDUSTRIAL AREA, KIRTI NAGAR, NEW DELHI (KIRTI NAGAR PROPERTY) AND PROPERTY NO.10 172/73 ABDUL AZIZ ROAD, ITA NO.1900/DEL/2010 2 KAROL BAGH, NEW DELHI (KAROL BAGH PROPERTY). KARO L BAGH PROPERTY WAS GIVEN FOR A MONTHLY RENT OF RS.4,000/- TO A THIRD PARTY A ND KIRTI NAGAR PROPERTY WAS GIVEN ON A MONTHLY RENT OF RS.1750/- TO THE HUSBAND OF THE ASSESSEE. THE ASSESSING OFFICER MADE INQUIRIES WITH REGARD TO MAR KET RENT OF SIMILAR PROPERTIES. AFTER OBTAINING THE INSPECTORS REPORT IN THIS REGA RD, HE HAS COME TO THE CONCLUSION THAT THE KAROL BAGH PROPERTY WAS TO BE A SSESSED FOR A RENT OF RS.20,000/- PER MONTH AND KIRTI NAGAR PROPERTY WAS TO BE ASSESSED FOR A MONTHLY RENT OF RS.21,000/-. ACCORDINGLY, A SUM OF RS.4,92 ,000/- WAS ASSESSED AS HOUSE PROPERTY INCOME IN PLACE OF THE RENTAL INCOME SHOWN BY THE ASSESSEE. 3. BEFORE CIT (A) THE REMAND REPORT WAS CALLED FOR AND AFTER CONSIDERING THE REMAND REPORT AND THE FACTUAL ASPECT THE CIT (A) HA S COME TO A CONCLUSION THAT THE PROPERTY AT KIRTI NAGAR SHOULD BE ASSESSED FOR ALV OF RS.1,44,000/- I.E., FOR RS.12,000/- PER MONTH AND AFTER ALLOWING DEDUCTION OF 30% THEREFROM HE HAS DETERMINED NET ASSESSABLE INCOME FROM THAT PROPERTY AT RS.1,00,800/-. IN RESPECT OF KAROL BAGH PROPERTY HE HAS ASSESSED RS.8 ,000/- PER MONTH ON THE BASIS OF THE FACT THAT IN SUBSEQUENT YEAR THE HUSB AND OF THE ASSESSEE HAD PAID RENT TO HER FOR RS.9,000/- PER MONTH AND, THUS, AFT ER GIVING REBATE OF 30% FROM ANNUAL LETTING VALUE DETERMINED AT RS.96,000/-. AS THE PROPERTY WAS LET OUT ONLY FOR SIX MONTHS, THE RENT FOR SIX MONTHS WAS DETERMI NED AT RS.48,000/- AND AFTER GIVING REBATE OF 30% NET ASSESSABLE INCOME WAS DETE RMINED AT RS.36,600/-. THUS, LD. CIT (A) HAS GIVEN THE RELIEF OF RS.1,51,2 00/- IN RESPECT OF KIRTI NAGAR PROPERTY AND RELIEF OF RS.2,06,400/- IN RESPECT OF KAROL BAGH PROPERTY. THE DEPARTMENT IS AGGRIEVED, HENCE, IN APPEAL. 4. LD. DR AFTER NARRATING THE FACTS RELYING ON THE ORDER OF ASSESSING OFFICER PLEADED THAT THE ASSESSING OFFICER WAS RIGHT IN DET ERMINING THE ALV OF BOTH THESE PROPERTIES AT RS.20,000/- PER MONTH AND RS.21,000/- PER MONTH RESPECTIVELY AND THE SAID ASSESSMENT OF THE ASSESSING OFFICER WAS BA SED ON INQUIRY MADE BY THE INSPECTOR. HE PLEADED THAT THE CIT (A) WAS WRONG IN GRANTING RELIEF TO THE ASSESSEE AND HIS ORDER SHOULD BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. ITA NO.1900/DEL/2010 3 5. ON THE OTHER HAND, LD. AR RELYING ON THE ORDER O F CIT (A) PLEADED THAT HE HAS FAIRLY ESTIMATED THE RENTAL INCOME OF THE ASSES SEE AND THE ASSESSEE HAS ACCEPTED THE SAID ESTIMATION AND HAS NOT FILED ANY SECOND APPEAL AND, THUS, HE PLEADED THAT THE ORDER OF THE CIT (A) SHOULD BE UPH ELD. 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GON E THROUGH THE FACTS AVAILABLE ON OUR RECORD. SO AS IT RELATES TO PROPE RTY SITUATED AT KIRTI NAGAR, IT WAS TENANTED SINCE 1991, THEREFORE, THE PRESENT VALUE O F RENT COULD NOT BE ADOPTED ON THE BASIS OF INSPECTORS REPORT AND AFTER CONSIDERI NG THE ENTIRE FACTS AND CIRCUMSTANCES AND AFTER OBTAINING THE REMAND REPORT FROM ASSESSING OFFICER, WE ARE OF THE OPINION THAT THE CIT (A) WAS FAIR ENOUGH TO ARRIVE AT A CONCLUSION THAT ANNUAL LETTING VALUE FOR THE SAID PROPERTY COULD FA IRLY BE DETERMINED AT RS.1,44,000/-. THEREFORE, WE FIND NO INFIRMITY IN SUCH FINDING OF CIT (A) MORE PARTICULARLY WHEN THE ASSESSEE HAS NO GRIEVANCE AGA INST SUCH PART DELETION. 7. SO AS IT RELATES TO KAROL BAGH PROPERTY, THIS PR OPERTY WAS STATED TO BE PURCHASED DURING THE YEAR AND IT WAS LET OUT. IT W AS NOTED BY THE CIT (A) THAT IN SUBSEQUENT YEAR THE SAID PROPERTY WAS LET OUT TO TH E HUSBAND OF THE ASSESSEE FOR A SUM OF RS.9,000/- PER MONTH FOR USING 600 SQ. FEE T OF BASEMENT SHOP AND ACCORDING TO ASSESSING OFFICERS REPORT SIMILAR PRO PERTY IN NEARBY AREA WAS FETCHING APPROXIMATELY RS.25,000/- TO RS.35,000/- P ER MONTH AND IN THAT VIEW OF THE SITUATION THE ASSESSING OFFICER SUBMITTED TO TH E CIT (A) THAT RS.10,000/- TO RS.12,000/- PER MONTH WAS FAIR MARKET RENT DURING F INANCIAL YEAR 2005-06. IN THESE CIRCUMSTANCES, IN OUR OPINION, LD. CIT (A) WA S RIGHT IN ARRIVING AT A CONCLUSION THAT KAROL BAGH PROPERTY COULD BE ESTIMA TED FOR A MONTHLY RENT OF RS.8,000/- PER MONTH. FOR THIS PURPOSE ALSO, WE FI ND NO INFIRMITY IN THE ORDER OF THE CIT (A) AND, IN THIS MANNER, WE DECLINE TO INTE RFERE IN THE ORDER OF THE CIT (A) SO AS IT RELATES TO GROUND NO.1 RELATING TO DELETIO N MADE BY THE CIT (A) IN RESPECT OF TWO HOUSE PROPERTIES. 8. NOW, COMING TO THE SECOND GROUND A SUM OF RS.12, 00,000/- GIVEN AS A GIFT BY THE ASSESSEE TO HER CHILDREN WAS ADDED TO THE IN COME OF THE ASSESSEE ON THE ITA NO.1900/DEL/2010 4 GROUND THAT THE FINANCIAL CAPACITY WAS NOT PROVED A ND IT WAS NOT EXPLAINED THAT FROM WHICH SOURCE OF FUND THE GIFTS WERE MADE AS NO ONE APPEARED ON BEHALF OF THE ASSESSEE IN RESPONSE TO LETTER ISSUED BY THE AS SESSING OFFICER. BEFORE THE CIT (A) IT WAS SUBMITTED THAT THE CASE BEFORE THE A SSESSING OFFICER WAS DULY ATTENDED ON 28 TH AUGUST, 2008, 11 TH SEPTEMBER, 2008, 12 TH NOVEMBER, 2008 AND 25 TH NOVEMBER, 2008 WHEN EVERY TIME THE ASSESSING OFFIC ER HAD CONVEYED THAT THERE WAS NO FURTHER REQUIREMENT. THE CASE WAS GET TING TIME BARRED ON 31 ST DECEMBER, 2008 AND ON 30 TH DECEMBER, 2008 THE ASSESSEE RECEIVED A LETTER FROM ASSESSING OFFICER WHICH WAS DATED 24 TH DECEMBER, 2008 AND SUCH LETTER WAS NOT ACCOMPANIED BY ANY NOTICE AND, THEREAFTER, LD. ASSESSING OFFICER HAS PROCEEDED WITH COMPLETING THE ASSESSMENT ORDER DATE D 30 TH DECEMBER, 2008 AND, IN THESE CIRCUMSTANCES, NO PROPER OPPORTUNITY WAS PROVIDED TO THE ASSESSEE. THESE FACTS WERE ALSO STATED IN THE SUBM ISSIONS MADE BEFORE THE CIT (A) WHICH ARE EXTRACTED IN PARA 4.1 OF THE ORDER OF THE CIT (A). IN FURTHERANCE IT WAS STATED THAT WHILE MAKING SUCH ADDITION THE ASSE SSING OFFICER DID NOT APPLY HIS MIND. IT WAS SUBMITTED THAT PERSONAL BALANCE S HEET OF THE ASSESSEE IS COMPILED EVERY YEAR AND THE SAME WAS FORMING PART O F THE RETURN OF INCOME. THE KNOWLEDGE OF THIS GIFT WAS PICKED UP BY THE ASSESSI NG OFFICER FROM THE BALANCE SHEET FILED BY THE ASSESSEE WHEREIN THE AMOUNT OF G IFTS WAS DEDUCTED FROM HER CAPITAL ACCOUNT. SUCH DEBIT OF CAPITAL ACCOUNT ITS ELF EXPLAINS THE SOURCE AS WELL AS FINANCIAL CAPACITY OF THE ASSESSEE FOR MAKING SU CH GIFTS. 9. CONSIDERING THESE SUBMISSIONS LD. CIT (A) HAS OB SERVED THAT IT WAS DIFFICULT TO ACCEPT THE VERSION OF ASSESSING OFFICE R AS THE GIFT ITSELF WAS DEBITED TO CAPITAL ACCOUNT AND THAT COULD NOT BE TREATED AS UN EXPLAINED. HE ALSO OBSERVED THAT WHEN IN EARLIER YEARS INCOME VIS--VIS CREDIT WORTHINESS OF THE ASSESSEE HAS BEEN ACCEPTED BY THE SAME ASSESSING OFFICER, IT IS NOT UNDERSTANDABLE THAT HOW THE ADDITION COULD BE MADE. THUS, HE HAS DELETED T HE ADDITION. THE REVENUE IS AGGRIEVED, HENCE, IN APPEAL. 10. BEFORE US, THE LD. AR OF THE ASSESSEE FILED A C OPY OF BALANCE SHEET AND COMPUTATION OF INCOME. THE CAPITAL ACCOUNT OF THE ASSESSEE SHOWS OPENING ITA NO.1900/DEL/2010 5 BALANCE OF RS.60,54,637/- TO WHICH A SURPLUS OF INC OME AND EXPENDITURE ACCOUNT HAS BEEN CREDITED BY A SUM OF RS.84,82,327/- MAKIN G THE AGGREGATE TOTAL AT RS.1,45,36,964/- WHEREFROM APART FROM RS.12 LAC BEI NG GIFTS MADE ANOTHER SUM OF RS.4,13,841/- HAS BEEN WITHDRAWN BY LEAVING CLOS ING BALANCE AT RS.1,29,23,123/-. MOREOVER, THE ASSESSING OFFICER HIMSELF HAS ASSESSED CAPITAL GAIN INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONS IDERATION AT A SUM OF RS.13,28,340/- WHICH ITSELF SHOWS THAT FINANCIAL CA PACITY OF THE DONOR COULD NOT BE DOUBTED PARTICULARLY IN THE CIRCUMSTANCES WHEN T HE AMOUNT OF GIFT ITSELF WAS SHOWN TO HAVE BEEN WITHDRAWN FROM CAPITAL ACCOUNT W HERE SUBSTANTIAL OPENING BALANCE AND CREDITS WERE THERE. IT IS NOT OUT OF P LACE TO MENTION HERE THAT IT IS NOT THE CASE OF ASSESSING OFFICER THAT THERE IS ANY UNE XPLAINED CREDIT IN THE ACCOUNTS OF THE ASSESSEE AS NO SUCH ADDITION HAS BEEN MADE B Y THE ASSESSING OFFICER WHILE MAKING THE ADDITION. IN THESE CIRCUMSTANCES, AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPINION THAT THE CIT (A) HAS RIGHTLY DELETED THE ADDITION AND IN SUCH DELETION NO INTERFERENCE IS CALLED FOR. THIS GROUN D OF THE REVENUE IS ALSO DISMISSED. 11. IN THE RESULT, THE APPEAL FILED BY THE DEPARTME NT IS DISMISSED. . THE ORDER PRONOUNCED IN THE OPEN COURT ON 30.06.20 10. [B.C. MEENA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 30.06.2010. DK ITA NO.1900/DEL/2010 6 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES