ITO, New Delhi V. Sh Hem Chand Gupta, Delhi

ITA 2303/DEL/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4093 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 21-09-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 18-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MADHUR AGGA

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH C, NEW DELHI BEFORE : SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 2303/DEL/2013 ASSESSMENT YEAR: 2009-10 INCOME - TAX OFFICER, WARD 35(1), NEW DELHI (APPELLANT) VS. HEM CHAND GUPTA, 1/429/15, GALI NO. 1, FRIENDS COLONY INDUSTRIAL AREA, SHAHDARA, DELHI. PAN- AALPH2688Q (RESPONDENT) APPELLANT BY SH. AMIT KATOCH, SR. DR RESPONDENT BY S/ SH. SALIL AGGARWAL, ADV., SHAILESH GUPTA, CA & MADHUR AGGARWAL, ADVOCATE. ORDER PER L.P. SAHU, A.M.: AT AN EARLIER OCCASION, THIS APPEAL STOOD DISPOSED OF BY THE TRIBUNAL ALONGWITH ASSESSEES APPEAL NO. 2493/DEL/2013 FOR A .Y. 2009-10 VIDE CONSOLIDATED ORDER DATED 01.11.2016, WHEREBY THE PR ESENT APPEAL OF THE REVENUE WAS DISMISSED. THEREAFTER, THE REVENUE FILE D A MISCELLANEOUS APPLICATION BEARING NO. 239/DEL/2017 ON THE AVERMEN TS THAT GROUND NOS. 2 & 3 RAISED BY REVENUE IN ITS APPEAL WERE NOT ADJUDICATE D UPON Y THE TRIBUNAL WHILE DISPOSING OF THE APPEAL. ACCORDINGLY, THE TRIBUNAL VIDE ORDER DATED 28.09.2017 RECALLED ITS ORDER DATED 01.11.2016 FOR ADJUDICATIO N OF GROUND NOS. 2 & 3 OF THIS APPEAL. IT IS HOW THIS APPEAL AGAIN CAME UP FOR HEA RING BEFORE US FOR THE LIMITED DATE OF HEARING 12.03.2019 DATE OF PRONOUNCEMENT 08.05. 20 19 ITA NO. 2303/DEL/2013 2 PURPOSE TO ADJUDICATE UPON GROUND NOS. 2 & 3 OF THI S APPEAL. THESE GROUNDS OF APPEAL READ AS UNDER : 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS BY DELETING THE ADDITION OF RS.6,5 5,201/- ON ACCOUNT OF RENTAL INCOME IN RESPECT OF HOUSE PROPERTY WITHOUT JUSTIFIABLE REASON AND WITHOUT CONSIDERING THE REASONING GIVEN BY THE ASSE SSING OFFICER FOR THE COMPUTATION OF RENTAL INCOME OF THE SAID PROPERTY. 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS THAT ASSESSEE HAD NOT SHOWN SUCH I NHERITED JEWELLERY IN HIS BALANCE SHEET AND DELETED THE ADDITION OF RS.4,86,7 90/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED GOLD JE WELLERY U/S. 69A OF THE IT ACT, 1961. 2. THE FACTS RELATING TO GROUND NO. 2 ARE THAT THE ASSESSEE HAD SHOWN NET INCOME FROM ITS PROPERTY SITUATED AT 537/2, GALI NO . 8, FRIENDS COLONY, DELHI AT RS.7,272/-. THE ASSESSING OFFICER OBSERVED THAT THI S PROPERTY IS CONSTRUCTED AT AN AREA MEASURING 2700 SQ. FEET HAVING DOUBLE STORE Y BUILDING WHICH WAS SHOWN TO HAVE RENTED BY ASSESSEE TO ITS HUF AT THE MONTHL Y RENT OF RS.3000/-. ON BEING ASKED TO JUSTIFY ITS CLAIM, THE ASSESSEE FILED RENT AGREEMENT FOR TWO YEARS. THE ASSESSING OFFICER NOTICED THAT THIS AGREEMENT WAS M ADE ON A PLAIN PAPER AND WAS SIGNED BY THE ASSESSEE HIMSELF AS LESSOR AND LE SSEE, BEING KARTA OF ITS HUF. THIS AGREEMENT WAS NEITHER ON STAMP PAPER NOR WAS R EGISTERED. THEREFORE, THE ASSESSING OFFICER DID NOT FIND IT CREDIBLE AND AFTE R APPLYING THE ANNUAL RENTAL VALUE OF THAT PROPERTY AT THE RATE OF RS.15/- PER S Q. FT. AND GIVING STATUTORY DEDUCTIONS, COMPUTED THE NET INCOME FROM THIS PROPE RTY AT RS.6,62,473/- AS AGAINST RS.7,272/- DECLARED BY THE ASSESSEE. HE, TH EREFORE, ADDED THE DIFFERENCE OF RS.6,55,201/- TO THE TOTAL INCOME OF THE ASSESSE E. THE LD. CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION OBSERVING THAT ITA NO. 2303/DEL/2013 3 THE PROPERTY IN QUESTION WAS HIRED BY THE ASSESSEE AND WAS SUBLEASED TO HIS HUF; THAT THE ASSESSEE HAD CHARGED AN AMOUNT OF RS. 5,388/- TO THE P&L ACCOUNT AS ANNUAL RENT PAID IN RESPECT OF THIS PROPERTY WHI CH WAS HIRED BY HIM EIGHT YEARS BACK; THAT THE ASSESSING OFFICER APPLIED THE MARKET RATE ONLY IN RESPECT OF RECEIPTS OF RENT BY THE ASSESSEE AND NOT IN RESPECT OF PAYMENTS MADE FOR HIRING OF THE PROPERTY BY ASSESSEE; AND THAT IF THE MARKET RATE IS APPLIED TO BOTH THE SIDES OF TRANSACTIONS, I.E., PAYMENT OF RENT AND RE CEIPT OF RENT, THERE WOULD BE NO NET ADDITION RESPECT OF RENTAL RECEIPTS. 3. THE LD. DR, RELYING UPON THE ASSESSMENT ORDER, S UBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION, IGNORING THE FACT THAT THE RENT AGREEMENT WAS MADE ON A PLAIN PAPER, SIGNED BY THE ASSESSEE AS LESSOR AND LESSEE BOTH AND THAT THERE IS NO CONTRARY MATERIAL ON RECORD TO JUSTIFY THAT THE ANNUAL RENTAL VALUE APPLIED BY THE ASSESSING OFFICE R WAS ARBITRARY. 4. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE, R ELYING ON THE IMPUGNED ORDER, SUBMITTED THAT THE PROPERTY WAS LEASE HOLD PROPERTY WHICH WAS TAKEN 8 YEARS BACK AT A NOMINAL RENT AND THE SAME WAS SUB-L EASED TO ITS HUF AND THAT MARKET RATE APPLIED BY THE ASSESSING OFFICER IS WIT HOUT ANY BASIS OR APPROVAL BY ANY MUNICIPAL AUTHORITY; AND THAT THE ACTUAL RENT R ECEIVED IS SUPPORTED BY LEASE AGREEMENT SUBMITTED BEFORE THE ASSESSING OFFICER. IT WAS ALSO SUBMITTED THAT NON-REGISTRATION OF LEASE AGREEMENT IS A MATTER OF STAMP DUTY AND HAD NOTHING TO DO WITH THE INCOME-TAX ACT FOR THE PURPOSE OF DETER MINING THE INCOME FROM PROPERTY. ITA NO. 2303/DEL/2013 4 5. HAVING CONSIDERED THE RIVAL SUBMISSIONS, AND GON E THROUGH THE ENTIRE MATERIAL ON RECORD, WE FIND NO INFIRMITY IN THE FIN DINGS REACHED BY THE LD. CIT(A). THE LD. DR COULD NOT BE ABLE TO REBUT THE FINDING O F THE LD. CIT(A), WHICH READ AS UNDER : 7. I HAVE CAREFULLY CONSIDERED THE APPELLANTS SU BMISSIONS, THE POINTS MADE BY THE AO IN THE ASSESSMENT ORDER AND THE FACT S OF THE CASE. THE PROPERTY UNDER CONSIDERATION WAS HIRED BY THE APPEL LANT AND WAS SUB-LEASED TO HIS HUF. A COPY OF THE LEASE AGREEMENT WAS FILED BY THE APPELLANT BEFORE THE AO AND WAS AGAIN PLACED ON RECORD DURING THE CO URSE OF THE PRESENT PROCEEDINGS. THE APPELLANT HAD CHARGED AN AMOUNT OF RS. 5,388/- TO THE P & L ACCOUNT AS ANNUAL RENT PAID IN RESPECT OF THE PRO PERTY WHICH WAS HIRED BY HIM EIGHT YEARS BACK. THUS EFFECTIVELY IN RESPECT OF THIS PROPERTY RENTAL PAYMENT HAD BEEN CLAIMED @ RS. 450/- PER MONTH AND RENTAL RECEIPTS HAD BEEN SHOWN @ RS. 3,000/- PER MONTH. THE AO APPLIED M ARKET RATE ONLY IN RESPECT OF RECEIPTS OF RENT BY THE APPELLANT AND NO T IN RESPECT OF PAYMENT FOR HIRING OF THE PROPERTY BY HIM. THEREFORE, AS THE PRO PERTY WAS HIRED BY THE APPELLANT AND WAS IN TURN SUB-LEASED TO HIS HUF, AP PLYING MARKET RATE TO BOTH SIDES OF THE TRANSACTION I.E. PAYMENT OF RENT AND RECEIPT OF RENT THERE WILL BE NO NET ADDITION IN RESPECT OF THE RENTAL RE CEIPTS. THEREFORE, THE ADDITION MADE BY THE AO AMOUNTING TO RS 6,62,473/- IS DELETED . THERE BEING NO CONTRARY MATERIAL ON RECORD, WE FIN D NO SUBSTANCE IN THIS GROUND OF APPEAL RAISED BY THE REVENUE. ACCORDINGLY , THIS GROUND DESERVES TO BE DISMISSED. 6. THE RELEVANT FACTS RELATING TO GROUND NO. 3 ARE THAT DURING THE YEAR, THE ASSESSEE HAD SHOWN TO HAVE SOLD GOLD JWELLERY WEIGH ING 1276.060 GMS FOR RS.14,95,009/-. AS TO THE SOURCE OF JWELLERY SOLD, THE ASSESSEE FILED A COPY OF DECLARATION MADE UNDER VDIS 1997 SHOWING A DECLARAT ION OF JEWELLERY VALUED AT RS.2,20,894/- ACQUIRED BY HIM DURING A.YRS. 1972-73 TO 1986-87. THE ASSESSING OFFICER WORKED OUT THE WEIGHT OF THIS JEWELLERY AT 860 GMS AND THE PREVAILING ITA NO. 2303/DEL/2013 5 MARKET RATE OF RS.2570/- PER 10 GMS. AS ON 31.03.19 87. ACCORDINGLY, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD SO LD EXCESS JEWELLERY WEIGHING 416.06 GMS., THE SOURCE OF WHICH WAS NOT PROVED. AC CORDINGLY, HE MADE ADDITION OF RS.4,86,790/- BY APPLYING THE PREVAILING MARKET RATE OF RS.1170 PER GRAM AS UNEXPLAINED SALE OF JEWELLERY. THE LD. CIT(A) HAS D ELETED THIS ADDITION VIDE IMPUGNED ORDER. 7. THE LD. DR SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION WITHOUT CONSIDERING THE FACT THAT THE SOUR CE OF EXCESS JEWELLERY SOLD BY ASSESSEE DID NOT STAND PROVED. THE JEWELLERY SAID T O HAVE BEEN INHERITED BY ASSESSEE WAS NOT SHOWN IN THE BALANCE SHEET AND THE ASSESSING OFFICER HAS RIGHTLY DISCARDED THE REPLY OF ASSESSEE. 8. THE LD. AR ON THE OTHER HAND RELIED ON THE ORDER OF THE LD. CIT(A) AND REITERATED THE SUBMISSIONS MADE BEFORE THE FIRST AP PELLATE AUTHORITY. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E GONE THROUGH THE MATERIAL ON RECORD AND WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS SCORE. IT IS NOTABLE THAT ALL THE DOCUMENTARY EVIDE NCES, SUCH AS DEATH CERTIFICATE OF ASSESSEES PARENT, THEIR WILL ETC. WERE PRODUC ED BEFORE THE ASSESSING OFFICER REGARDING INHERITANCE OF MOVABLE AND IMMOVABLE PROP ERTY. THE CONTENTION OF THE ASSESSEE HAS BEEN THAT THE INHERITED PROPERTY W AS PERSONAL ASSET OF THE ASSESSEE AND IT WAS NOT SHOWN IN THE BALANCE SHEET WHICH WAS PREPARED IN RESPECT OF THE PROPRIETARY BUSINESS OF THE ASSESSEE NAMED M/S. INDIA WIRE. THIS EXPLANATION HAS NOWHERE BEEN DISCARDED BY THE ASSES SING OFFICER. THEREFORE, THE LD. CIT(A) WAS QUITE JUSTIFIED TO HOLD THAT THE EXC ESS JEWELLERY SOLD WAS OUT OF ITA NO. 2303/DEL/2013 6 INHERITED JEWELLERY AVAILABLE WITH THE ASSESSEE, PA RTICULARLY WHEN NO INCONSISTENCY OR DEFECT WAS POINTED OUT BY THE ASSE SSING OFFICER IN THE DOCUMENTARY EVIDENCES FILED BY THE ASSESSEE. THERE BEING NO CONTRARY MATERIAL ON RECORD, WE, THEREFORE, DO NOT FIND ANY JUSTIFICA TION TO INTERFERE WITH THE FINDINGS REACHED BY THE LD. CIT(A) ON THIS SCORE. A CCORDINGLY, THIS GROUND OF APPEAL DESERVES TO BE DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.05.2019. SD/- SD/- (H.S. SIDHU) (L.P. SA HU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 08.05.2019 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI