MODI GOVIND BHATIA, MUMBAI V. DCIT 12(2), MUMBAI

ITA 2020/MUM/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2414 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 29-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Initiation of penalty proceedings
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO. 2020 /MUM./201 6 ( ASSESSMENT YEAR : 2011 12 ) SHRI MOT I GOVIND BHATIA 10 F, HARBOUR HEIGHTS, 20, N.A. SAWANT MARG, COLABA, MUMBAI 400005 PAN AABPB3132H . APPELLANT V/S DCIT CIRCLE 12(2) MUMBAI . RESPONDENT ASSESSEE BY : SHRI BHUPENDRA SHAH REVENUE BY : SHRI MANOJ KUMAR SINGH (DR) DATE OF HEARING 08 .04.2019 DATE OF ORDER 21.06.2019 O R D E R PER SAKTIJIT DEY. J.M. THIS IS AN APPEAL BY THE ASSESSEE AGAINST ORDER DATED 22.2.2016 OF LD. COMMISSIONER OF INCOME TAX (APPEAL) 28 MUMBAI FOR THE ASSESSMENT YEAR 2011 12. 2. THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO THE ADDITION MADE TO HOUSE PROPERTY INCOME ON THE BASIS OF ANNUAL LETTING VALUE (ALV) OF THE HOUSE PROPERTIES DETERMINE D BY THE ASSESSING OFFICER. 3. BRIEFLY THE FACTS ARE , FOR THE ASSESSMENT YEAR UNDER DISPUTE ASSESSEE FILED ITS RETURN OF INCOME ON 18.07.2012 DECLARING TOTAL INCOME OF ` . 16,46,020/ . D URING THE ASSESSMENT PROCEEDING THE ASSESSING O FFICER NOTICING THAT THE INCOME DECLARED BY THE ASSESSEE COMPRISES OF INCOME FROM HOUSE PROPERTY , CALLED UPON THE ASSESSEE TO FURNISH THE DETAILS OF PROPERTIES HELD AND RENTAL INCOME SHOWN FROM EACH PROPERTY. AFTER VERIFYING THE DETAILS FURNISHED BY THE ASSESSEE , THE ASSESSING O FFICER CALLED UPON THE ASSESSEE TO EXPLAIN WHY THE PROPERTIES , OTHER THAN ONE SELF OCCUPIED PROPERTY , SHOULD NOT BE ASSESSED AS DEEMED LET OU T PROPERTIES AS PER SECTION 23(1 ) OF THE ACT. AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE , THE ASSESSING O FFICER OBSERVED , IN RESPECT OF SOME OF THE PROPERTIES THE ASSESSEE HAS EITHER NOT OFFERED ANY RENTAL INCO ME OR OFFERED RENTAL INCOME LOWER THAN THE MARKET RATE ON THE REASONING THAT THEY ARE NOT LET OUT . THUS , HE PROCEEDED TO DETERMINE THE ALV OF SUCH PROPERTIES ON THE BASIS OF MARKET RATE. AS A GAINST THE ALV OF HOUSE PROPERTIES SH OWN BY THE ASSESSEE AT ` . 55,16,461/ , THE A SSESSI NG O FFICER DETERMINED THE ALV AT ` . 1,85,15,677/ . ASSESSEE CHALLENGE D THE AFORESAID DECISION OF THE ASSESSING OFFICER BY FILING AN APPEAL BEFORE LD. COMMISSIONER (APPEALS). HOWEVER , LD. COMMISSIONER (APPEA LS) ONLY GRANTED PARTIAL RELIEF TO THE ASSESSEE. 4. REF ERR ING TO GROUND NO. 1 LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE DISPUTE WITH REGARD TO DETERMINATION OF ALV IS IN RESPECT OF FIVE PROPERTIES . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , I N RESPECT OF FLAT NO. 10 F, HARBOUR HEIGHTS THE ASSESSEE HAS SHOWN THE ALV AT ` . 69,060/ SINCE ASSESSEES CHILDREN FROM THE FIRST MARRIAGE WERE STAYING THERE AND THE FLAT WAS NOT RENTED OUT. HE SUBMITTED , ASSESSING O FFICER WITHOUT PROPERLY CONSIDERING THE SUBMISSION OF THE ASSESSEE H AS DETERMINED THE ALV AT ` . 9,54,000/ WHICH WAS REDUCED TO ` . 4,77,000/ BY THE FIRST APPELLATE A UTHORITY. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , DETERMINATION OF A LV BY THE DEP ARTMENTAL AUTHORITIES IS NEITHER IN ACCORDANCE WITH THE PROVISIONS OF BOMBAY RENT CONTROL ACT NOR AS PER THE RATEABLE VALUE OF THE PROPERTIES AS DETERMINED BY THE MUNICIPAL CORPORATION. AS REGARDS FLAT NO 11 B, HARBOUR HEIGHTS, THE LD. LEARNED AUTHORISED R EPRESENTATIVE SUBMITTED , ONLY ON THE BASIS OF THE FACT THAT ANOTHER FLAT IN THE SAME BUILDING WAS RENTED OUT AT A HIGHER R ENT, THE ASSESSING O FFICER HAS DETERMINED THE ALV AT THAT RATE. HE SUBMITTED , WHILE DOING SO THE ASSESSING OFFICER DID NOT PROPERLY AP PRECIATE THE FACT THAT IN RESPECT OF FLAT NO. 11 B THE ASSESSEE HAD RECEIVED SECURITY DEPOSIT OF ` . 70 LAC AS AGAINST SECURITY DEPOSIT OF ` . 1 LAC AGAINST THE OTHER FLAT. IN RESPECT OF FLAT AT JOLLY MARKET THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , T HIS FLAT WAS ALSO NOT RENTED OUT BUT WAS USED AS RESIDENCE BY ASSESSEES DAUGHTER. THEREFORE , THE ASSESSEE HAD SHOWN NOTIONAL RENT OF ` . 69,060/ . HE SUBMITTED , THE ALV DETERMINE D BY THE ASSESSING OFFICER IS NOT ON THE BASIS OF M UNICIPAL CORPORATION RATE. AS REGARDS THE FLAT AT P ERIN NARIMAN STREET, FORT, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE FLAT WAS USED AS STAFF QUARTER. T HEREFORE , ASSESSEE DID NOT OFFER ANY RENT . AS REGARDS ROW HOUSE AT LONAVALA, THE LEARNED AUTHORISED REPRESENTATIVE SUBM ITTED , THE HOUSE REMAIN ED VACANT FOR A PART OF THE YEAR , HENCE , THE ASSESSEE IS ENTITLED TO AVAIL VACANCY ALLOWANCE UNDER SECTION 23 ( 1 ) (C) OF THE ACT. IN SUPP ORT OF HIS CONTENTION THAT THE ASSESSING O FFICER CANNOT DETERMINE THE ALV ON ESTIMATE BASIS BUT HAS TO DETERMINE BY APPLYING RATEABLE VALUE OF MUNICIPAL C ORPORATION , THE LEARNED AUTHORISED REPRESENTATIVE RELIED UPON THE FOLLOWING DECISION S : I ) HIGHTECH REALTIES PVT. LTD. V/S ITO, ITA NO.2728/MUM./ 2017, DATED 31.10.2018 II ) PCIT V/S LAXMI JAIN , ITA NO.1285/2015, DATED 16.04.2018; III ) HIGHTECH REALTIES PVT. LTD. V/S ITO, ITA NO.5354/MUM./ 2017, DATED 31.05.2018; IV ) ITO V/S METAOXIDE PVT. LTD., [ 2018] 92 TAXMANN.COM 302 (MUM.); AND V ) PCIT V/S SHRI HARISH JAIN, ITA NO.1438/2016, DATED 05.02.2019. 3. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATION S OF LEARNED COMMISSIONER (APPEALS). 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO APPLIED OUR MIND TO THE DECISION S RELIED UPON. THE DISPUTE IN P RESENT APPEAL IS WITH REGARD TO THE DETERMINATION OF ALV OF SOME PROPERTIES OWNED BY THE ASSESSEE. FOR B ETTER APPRECIATION WE REPRODUCE HERE U NDER IN A TABULAR FORM THE DETAILS OF THE PROPERTIES ALONG WITH THE ALV AS DETERMINED BY THE ASSESSEE AND THE DEPA RTMENTAL AUTHORITIES : DESCRIPTION ALV AS PER ASSESSING OFFICER ( ` .) ALV AS PER APPELLANT ( ` .) AS PER COMMISSIONER OF INCOME TAX (A) ( ` .) 1. FLAT NO. 10 F HARBOUR HEIGHTS. 9,54,000 69.6060 4,77,000 2. FLAT NO. 1 1 B HARBOUR HEIGHTS. 12,88,536 7,33,200 12,88,536 3. FLAT AT JOLLY MARKET 19,20,000 69,060 6,40,000 4. FLAT AT PERIN NARIMAN STREET, FORT 12,0,000 0 12,00,000 5. ROW HOUSE LONAVAL 2,40,000 24,000 2,40,000 TOTAL 56,22,536 8,95,320 38,45,536 4. AS R EGARDS THE PROPERTY AT SL. NO.1 IN THE TABLE, IT IS THE CONTENTION OF THE ASSESSEE THAT HIS CHILDREN ARE USING IT AS RESIDENCE , THEREFORE, THE ASSESSEE HAS OFFERED THE MUNICIPAL RATABLE VALUE AS HOUSE PROPERTY INCOME. IT IS TO BE NOTED THAT THE ASSESSING OFFICER HAS DETERMINED THE ALV O F THE PROPERTY BY ADOPTING THE VALUE AT WHICH ANOTHER FLAT IN THE SAME BUILDING WAS LET OUT. WHEN THE ASSESSEE HAS NOT LET OUT THE PROPERTY, IN SUCH CIRCUMST ANCES THE ASSESSING OFFICER CANNOT DETERMINE THE ALV BY APPLYING THE MARKET RATE BUT HE CAN DO SO O NLY ON THE BASIS OF RATABLE VALUE ASSESSED BY THE MUNICIPAL C ORPORATION. THE DECISIONS RELIED UPON BY THE LEARNED AUTHORISED REPRESENTATIVE , INCLUDING THE DECISION S OF THE HON'BLE JURISDICTIONAL HIGH COURT , CLEARLY SUPPORT THIS VIEW. THEREFORE, THE ASSESSI NG OFFICER IS DIRECTED TO VERIFY WHETHER THE ALV SHOWN BY THE ASSESSEE IS AS PER R ATABLE VALUE DETERMINED BY THE MUNICIPAL C ORPORATION AND IF IT IS NOT SO, THE ASSESSING OFFICER IS DIRECTED TO DETERMINE THE ALV ON THE BASIS OF RATABLE VALUE OF MUNICIPAL C O RPORATION. 5. AS REGARDS THE PROPERTY AT SL . NO.2 OF THE TABLE, THE ASSESSING OFFICER DETERMINED THE ALV ON THE BASIS OF THE RENT AT WHICH ANOTHER FLAT IN THE SAME BUILDING WAS LET OUT. PERTINENTLY, IT IS THE CONTENTION OF THE ASSESSEE THAT THE REASON FOR SHOWING ALV AT A LESSER VALUE THAN THE ALV OF THE OTHER FLAT IS BECAUSE , WHILE IN RESPECT OF SUBJECT PROPERTY THE ASSESSEE HAS RECEIVED SECURITY DEPOSIT OF ` 70 LAKH , IN RESPECT OF THE OTHER FLAT IT HAS RECEIVED SECURITY DEPOSIT OF ` 1 LAKH ONLY. IN OUR V IEW, THE AFORESAID CONTENTION OF THE ASSESSEE REQUIRES CONSIDERATION KEEPING IN VIEW THE RATIO LAID DOWN IN THE DECISION S CITED BY THE LEARNED AUTHORISED REPRESENTATIVE . I F THE ALV OF THE PROPERTY SHOWN BY THE ASSESSEE IS MORE THAN THE RATABLE VALUE FIXED BY THE MUNICIPAL C ORPORATION, THEN IT HAS TO BE ACCEPTED. OTHERWISE, ALV HAS TO BE DETERMINED AS PER THE RATABLE VALUE FIXED BY THE MUNICIPAL CORPORATION . THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE AFORESAID ASPECT AND DETERMINE THE ALV ACCORDINGLY. 6. AS REGARDS PROPERTIES AT SR. NO.3, 4 AND 5 OF THE TABLE , ON A PERUSAL OF THE ASSESSMENT ORDER IT IS EVIDENT THAT THE ASSESSING OFFICER HAS DETERMINED THE ALV PURELY ON ESTIMATE BASIS WITHOUT BEING BACKED BY ANY MATERIAL. THEREFORE, SUCH DETERMINATION OF ALV BY THE ASSESSING OFFICER CANNOT BE ACCEPTED IN VIEW OF THE DECISION S CITED BEFORE US BY THE LEARNED AUTHORISED REPRESENTATIVE. THAT BEING THE CASE, THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE ALV SHOWN BY THE ASSESSEE IN RESPECT OF PROPERTIES AT S R. NO.3 AND 5 AND IF IT IS FOUND THAT THE ALV SHOWN BY THE ASSESSEE IS AS PER THE RATABLE VALUE OF MUNICIPAL CORPORATION OR MORE THAN THAT, THEN IT HAS TO BE ACCEPTED. OTHERWISE, THE ASSESSING OFFICER IS DIRECTED TO DETERMINE THE ALV OF THESE PROPERTIES AS PER THE RATABLE VALUE OF MUNICIPAL CORPORATION. 7. AS REGARDS PROPERTY AT SR. N O.4 OF THE TABLE, THE ALV HAS BEEN SHOWN BY THE ASSESSEE AS NIL. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , SINCE THE PROPERTY WAS USED BY THE STAFF OF THE ASSESSEE, THE ALV HAS BEEN SHOWN AS NIL. WE ARE UNABLE TO ACCEPT THE AFORESAID CONTENTION OF THE LEARNED AUTHORISED REPRESENTATIVE. UNDISPUTEDLY, THE ASSESSEE IS THE OWNER OF THE PROPERTY. THEREFORE, THE ALV HAS TO BE DETERMINED UNDER SECTION 23(1)(A) OF THE ACT. HAVIN G HELD SO, WE MUST OBSERVE , THE ASSESSING OFFICER HAS DETERMINED THE ALV OF THE PROPERTY AT ` 12 LAKH PURELY ON ESTIMATE BASIS. THIS ACTION OF THE ASSESSING OFFICER CANNOT BE SUPPORTED IN VIEW OF THE DECISIONS RELIED UPON BY THE LEARNED AUTHORISED REPRESEN TATIVE. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO DETERMINE THE ALV OF THIS PROPERTY AS PER THE RATABLE VALUE FIXED BY THE MUNICIPAL CORPORATION. BEFORE PARTING, WE MUST OBSERVE , THE ASSESSING OFFICER MUST AFFORD REASONABLE OPPORTUNITY OF BEING HEARD T O THE ASSESSEE BEFORE DECIDING THE ISSUE. GROUND NO.1 AND 2 ARE ALLOWED FOR STATISTICAL PURPOSES. 8. IN GROUND NO.3, THE ASSESSEE HAS CHALLENGED LEVY OF INTEREST UNDER SECTION 234 OF THE ACT AND INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. 9. THE ISSUES RAISED IN THIS GROUND BEING CONSEQUENTIAL DO NOT REQUIRE ADJUDICATION AT THIS STAGE. HENCE, GROUND NO.3, IS DISMISSED. 10. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21.06.2019 SD/ - MANOJ KUMAR AGGARWAL ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 21.06.2019 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER NISHANT VERMA / P.J. CHOWDHURY SR. PRIVATE SECRETARY (ASSISTANT REGISTRAR) ITAT, MUMBAI