Shri Rajbir Singh Walia, Chandigarh V. ACIT,Circle-1(1), Chandigarh

ITA 247/CHANDI/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6519 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-08-2021
• Assessment Year: 2016-2017
• Appeal Filed On: 16-03-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASHOK KHANNA
• Keywords: Fair market value; Assessment record; Set aside
• Section: 10; 133(6); 250; 251; 13; 22

Judgement Text

, . , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B CHANDIGARH , , , BEFORE: SMT. DIVA SINGH, JM & SMT.ANNAPURNA GUPTA, AM ./ ITA NO. 239/CHD/2020 / ASSESSMENT YEAR : 2016-17 THE DCIT, CIRCLE 1(1), CHANDIGARH. VS SHRI RAJBIR SINGH WALIA, HOUSE NO. 336, SECTOR-9, CHANDIGARH. ./ PAN/TAN NO: AAAPW8792P / APPELLANT / RESPONDENT & ./ ITA NO. 247/CHD/2020 / ASSESSMENT YEAR : 2016-17 SHRI RAJBIR SINGH WALIA, HOUSE NO. 336, SECTOR-9, CHANDIGARH. VS THE ACIT, CIRCLE 1(1), CHANDIGARH. ./ PAN /TAN NO: AAAPW8792P / APPELLANT / RESPONDENT / REVENUE BY : SHRI ASHOK KHANNA, ADDL. CIT / ASSESSEE BY : SHRI S.K. BHASIN, CA / DATE OF HEARING : 1 1.08.2021 / DATE OF PRONOUNCEMENT : 02.09.2021 / ORDER PER DIVA SINGH THESE CROSS APPEALS FILED BY THE REVENUE AND THE ASSESSEE ASSAIL THE CORRECTNESS OF THE ORDER DATED 30 . 12.2019 ITA-239 & 247/CHD/2020 A.Y. 2016-17 PAGE 2 OF 17 OF CIT(A)-1, CHANDIGARH. FOR THE SAKE OF COMPLETENESS THE RESPECTIVE GROUNDS RAISED BY THE PARTIES ARE EXTRAC TED HEREUNDER: ITA 239/CHD/2020 (REVENUES APPEAL) : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN PARTLY ALLOWING THE APPEAL OF THE ASSESSEE FOR STATISTICAL PURPOSE WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. THE LD. CIT(A) IS NOT JUSTIFIED IN REMITTING THE MATTER BACK TO AO WITH THE DIRECTION TO OBTAIN THE ANNUAL RENTAL VALUE OF THE SAID PROPERTY FOR THE YEAR UNDER CONSIDERATION I.E. F.Y. 2015-16 AND ALSO TO V ERIFY THE REASONABLE FAIR RENTAL VALUE OF THAT PERIOD CONSIDERING THE LOCATIO N WHICH THE HOUSE CAN FETCH IN THAT LOCALITY AND CALCULATE THE DEEMED RENTAL IN COME, AS PER THE PROVISION OF SECTION 251 OF THE INCOME TAX ACT, 1961. 3. THE LD. CIT(A) HAS ERRED IN IGNORING THE LEGISLATI VE INTENT OF SECTION 251 OF THE INCOME TAX ACT, 1961 WHICH STATES THAT CIT(A) M AY CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT ORDER AGAINST WHICH APPEAL HAS BEEN FILED BY THE ASSESSEE. 4. THE ORDER OF THE LD. CIT(A) IS PERVERSE IN NATURE A ND AGAINST LAW AS IT GROSSLY OVERLOOKED THE SCHEME OF THE INCOME TAX ACT ,1 961 AND MATERIAL AVAILABLE ON RECORD. 5. THE APPELLANT CRAVES TO LEAVE TO ADD OR AMEND ANY G ROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OFF. 6. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE CA NCELLED AND THAT OF THE ASSESSING OFFICERS MAY BE RESTORED. ITA 247/CHD/2020 ( ASSESSEES APPEAL) : 1. THE LD. CIT(A) HAS ERRED IN MAKING ADDITION OF RS 6,15,440/- BEING NOTIONAL ANNUAL LETTABLE VALUE U/S 22 OF THE INCOME TAX ACT, 1961 AFTER ALLOWING 30% STANDARD DEDUCTION U/S 24(A) OF THE INCOME TAX ACT, 1961. 2. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL. ITA-239 & 247/CHD/2020 A.Y. 2016-17 PAGE 3 OF 17 2. THE LD. SR.DR INVITING ATTENTION TO THE IMPUGNED ORDER SUBMITTED THAT INSTEAD OF PASSING A FINAL ORDER, TH E LD. CIT(A) IN VIOLATION OF THE STATUTORY REMIT OF SECTION 251 OF THE INCOME TAX ACT, 1961 HAS REMANDED THE ISSUE TO THE AO. AC CORDINGLY, IT WAS HIS SUBMISSION THAT THE IMPUGNED ORDER MAY B E SET ASIDE. ATTENTION WAS INVITED TO PARA 5.2.3 OF THE ORDER. REFERRING TO THE PROVISION, IT WAS HIS SUBMI SSION THAT THE INCOME TAX ACT PURSUANT TO THE AMENDMENT OF THE PRO VISION HAS CATEGORICALLY LAID DOWN THAT THE CIT (APPEALS) SITTING AS A FIRST APPELLATE AUTHORITY MAY CONFIRM, REDUCE, ENHA NCE OR ANNUL THE ASSESSMENT ORDER HOWEVER THE POWER OF SETTING ASIDE THE ISSUE IS NO LONGER WITH THE SAID AUTHORITY. ACCORDINGLY, IT WAS HIS PRAYER THAT THE ORDER MAY BE SET ASIDE. 3. THE LD. AR REFERRING TO THE DEPARTMENTAL GROUNDS SUBMITTED THAT HE IS NOT OPPOSED TO THE PRAYER OF T HE DR. 4. REFERRING TO THE GROUND RAISED IN THE ASSESSEE'S APPEAL, IT WAS HIS SUBMISSION THAT IN THE FACTS OF THE PRESENT CASE, THE LD. COMMISSIONER HAS ERRED IN NOT ALLOWING NECESSAR Y RELIEF CONSIDERING THE CORRECT FACTS. IT WAS HIS SUBMISSI ON THAT THE ASSESSING OFFICER HAS ERRED IN MAKING THE ADDITION. IN THE FACTS, IT WAS HIS SUBMISSION THAT THE VERY ACTION OF ADDI NG NOTIONAL RENTAL VALUE WAS CONTRARY TO LAW AND FACTS. ITA-239 & 247/CHD/2020 A.Y. 2016-17 PAGE 4 OF 17 4.1 CARRYING THE ARGUMENT FURTHER IT WAS HIS SUBMIS SION THAT IT HAD BEEN BROUGHT TO THE NOTICE OF THE AUTHORITIE S THAT THE SPECIFIC HOUSE WAS IN A DILAPIDATED CONDITION, HENC E, IT WAS NOT CAPABLE OF BEING RENTED OUT. ON A READING FROM THE SUBMISSIONS OF THE ASSESSEE EXTRACTED IN THE ORDER AND THE FIND ING ARRIVED AT, THE ATTENTION OF THE COUNSEL WAS INVITED TO THE FACT THAT THESE FACTS HAVE NOT BEEN ACCEPTED BY THE AUTHORITI ES ON THE GROUND THAT EVIDENCES IN SUPPORT OF THESE CLAIMS WE RE NOT AVAILABLE ON RECORD. ACCORDINGLY, HE WAS REQUIRED T O BRING TO THE NOTICE OF THE BENCH THE SUPPORTING FACTS ON THE BASIS OF WHICH THE CLAIM WAS BEING MADE. 4.2 THE LD. AR IN REPLY SUBMITTED THAT THE CONSTRUC TION OF THE SPECIFIC HOUSE WAS COMPLETED IN 1959. COMPLETION CE RTIFICATE IN SUPPORT THEREOF WAS REFERRED TO AS EVIDENCING TH IS FACT. IT WAS HIS SUBMISSION THAT THIS FACT HAS BEEN RELIED U PON BEFORE THE LD. CIT(A). ACCORDINGLY, IT WAS HIS SUBMISSION THAT SINCE THE CONSTRUCTION WAS OLD, IT WAS NOT CAPABLE OF BEI NG INHABITED. CONSIDERING THE ARGUMENTS AND THE RECORDS, IT WAS C ONFRONTED THAT THESE GENERAL ARGUMENTS RELYING ON INFERENCES TO BE DRAWN CANNOT BE CONSIDERED AS AN EVIDENCE CONSIDERING THE FACT THAT SPECIFIC OPPORTUNITY TO DEMONSTRATE THAT IT WAS A H OUSE NOT FIT FOR INHABITATION WAS THE SPECIFIC REQUIREMENT OF TH E STATUTE. ITA-239 & 247/CHD/2020 A.Y. 2016-17 PAGE 5 OF 17 4.3. THE LD. AR FURTHER SUBMITTED THAT THE SPECIFIC HOUSE WAS OWNED BY HIM IN JANUARY, 2017 AND THE NEW BUYER AFTER PURCHASE HAD DEMOLISHED THE SPECIFIC CONSTRUCTION A S IT WAS NOT FIT FOR LIVING. THUS, A PRESUMPTION CAN BE DRAW N THAT THE SPECIFIC PROPERTY WAS DEMOLISHED BY THE NEW BUYER B ECAUSE IT WAS NOT FIT FOR INHABITATION. THE SAID ARGUMENT, I T WAS POINTED OUT AGAIN IS ON INFERENCES AND PRESUMPTIONS. THERE CAN BE MULTIPLE REASONS FOR DEMOLISHING A PERFECTLY HABITA BLE CONSTRUCTION TO SUIT PERSONAL REQUIREMENTS OF TASTE S AND DESIGNS OF A NEW BUYER FOR BUILDING A BASEMENT ETC. THUS, THIS FACT BY ITSELF DOES NOT LEAD TO THE CONCLUSION AS T HE LD. AR WOULD WANT THE FACTS TO BE CONSIDERED. HE WAS REQU IRED TO BRING TO THE NOTICE OF THE BENCH ANY OTHER EVIDENCE WHICH THE ASSESSEE HAS PLACED ON RECORD TO SUPPORT THE CLAIM. MR. BHASIN APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT READILY THERE IS NO OTHER EVIDENCE HOWEVER, ATTENTION OF TH E BENCH WAS INVITED TO THE DECISION OF THE ITAT RENDERED BY THE KOLKATA BENCH IN THE CASE OF THE BASANT KUMAR NAHATA VS ACIT DATED 07.06.2019 IN ITA 2400/KOL/2018. 4.4 IT WAS FURTHER SUBMITTED BY HIM THAT THE ASSESS EE HAD POSSESSION OF THE SAID PROPERTY FOR BARELY 8 MONTHS BETWEEN THE PERIOD OF HIS PURCHASE AND SALE OF THE SAID PRO PERTY AND ITA-239 & 247/CHD/2020 A.Y. 2016-17 PAGE 6 OF 17 THUS EVEN IF IT WAS TO BE RENTED OUT, IT IS NECESSARY THAT SOME TIME FOR CARRYING OUT THE ACTIVITY OF PAINTING ETC. SHOULD HAVE BEEN CONSIDERED. ACCORDINGLY, IT WAS HIS SUBMISSION THAT THE PROPERTY COULD NOT HAVE BEEN RENTED OUT FOR THE ENTIRE PERIOD. HE CONCLUDED THAT HE HAS NO FURTHER EVIDENCE TO RELY UPON. 5. THE LEARNING DR IN REPLY SUBMITTED THAT IN THE F ACTS OF THE PRESENT CASE THE ASSESSEE HAS HAD THE SPECIFIC PROPERTY IN HIS POSSESSION AND AS PER LAW ITS FAIR RENTAL VALUE NECESSARILY NEEDS TO BE ADDED TO THE ASSESSABLE INCOME OF THE A SSESSEE . 5.1 IT WAS HIS SUBMISSION THAT MERE ARGUMENTS HAVE BEEN RAISED THAT IT WAS IN A DILAPIDATED CONDITION WITHOUT ANY EVIDENCE. THE FACTUM OF IT BEING AN OLD CONSTRUCTI ON IS NOT DISPUTED. IT HAS ALREADY BEEN CONSIDERED AND FOUND TO BE NOT AN EVIDENCE LEADING TO THE CONCLUSION THAT IT WAS N OT HABITABLE. THE LAW IS VERY CLEAR, NO EVIDENCE HAS BEEN PLACED ON RECORD TO SHOW THAT IT WAS NOT HABITABLE. 5.2 IT WAS ALSO HIS SUBMISSION THAT THE MERE FACT T HAT IT WAS THEREAFTER DEMOLISHED FOR FRESH CONSTRUCTION IT WAS SUBMITTED AGAIN DOES NOT DEMONSTRATE THAT IT WAS NOT FIT FOR LIVING. 5.3 ADDRESSING THE ARGUMENT THAT WHETHER ANY ACTIVI TY WAS REQUIRED TO BE DONE FOR MAKING IT FIT FOR HABITATIO N, IT WAS ITA-239 & 247/CHD/2020 A.Y. 2016-17 PAGE 7 OF 17 SUBMITTED NOTHING HAS BEEN PLACED ON RECORD BY THE ASSESSEE DESPITE OPPORTUNITY. 5.4 MOREOVER, IT WAS HIS SUBMISSION THAT SINCE THE ISSUE MAY HAVE TO BE REMANDED BACK HENCE, ANY PENDING GRIEVAN CE CANNOT BE SAID TO BE STILL PENDING AS THE ASSESSEE CAN ARG UE HIS CASE AS PER LAW. 6. WE HAVE HEARD THE SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE FACTS OF THE PRESENT CASE IT IS SEEN THAT THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS WAS REQUIRED TO SUBMIT DETAI LS OF HIS IMMOVABLE ASSETS. ON A PERUSAL OF THE SAME IT WAS N OTED THAT THE ASSESSEE WAS HAVING A RESIDENTIAL PROPERTY AS K OTHI NO. 101, SECTOR 18-A CHANDIGARH. IT WAS FURTHER NOTICED THAT NO RENTAL INCOME HAD BEEN SHOWN BY THE ASSESSEE IN HIS RETURN FOR THE SPECIFIC PROPERTY IN THE AREA UNDER CONSIDERATI ON. IT WAS ALSO NOTED THAT THE ASSESSEE WAS HAVING 70% SHARE I N THE SAID HOUSE AS PER THE TITLE DEEDS. ON QUERY, THE ASSESSE E WAS FOUND TO HAVE REPLIED THAT IT WAS NOT IN A HABITABL E CONDITION AND HENCE ITS ANNUAL RENTAL VALUE SHOULD BE TAKEN A S NIL. IT WAS ALSO STATED THAT THE HOUSE WAS SOLD ON 30 TH JANUARY, 2018. ITA-239 & 247/CHD/2020 A.Y. 2016-17 PAGE 8 OF 17 6.1 CONSIDERING, THE REPLY, THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO SUPPORT THE CLAIM THAT IT WAS NOT IN HA BITABLE CONDITION AND WHAT EFFORTS ETC. HAD BEEN MADE TO LE ASE OUT THE PROPERTY. 6.2 IN RESPONSE, THE ASSESSEE AS PER RECORD MADE THE FOLLOWING SUBMISSIONS: A.) THE ASSESSEE PURCHASED THE HOUSE #101, SECTOR 18, CHANDIGARH DURING THE RELEVANT PY AND SOLD THE SAME ON 03.01.2017. B.) THE SAID HOUSE WAS VERY OLD, THE CONSTRUCTION O F WHICH WAS COMPLETED ON 02.05.1959. THE COPIES OF COMPLETION CERTIFICATE AN D TRANSFER LETTER ARE ENCLOSED AS PER ANNEXURE I & II RESPECTIVELY. C.) THE BUYER OF THE SAID HOUSE FROM THE ASSESS EE HAS ALSO DEMOLISHED THE OLD CONSTRUCTION AND BUILDING NEW HOUSE' 6.3. CONSIDERING THE SAME THE ASSESSING OFFICER C ONCLUDED THAT THESE DOCUMENTS DID NOT PROVE THAT THE HOUSE W AS NOT IN HABITABLE CONDITION. 6.4 IT IS SEEN FROM THE RECORD THAT THE ASSESSIN G OFFICER SOUGHT INFORMATION UNDER SECTION 133(6) FROM THE ES TATE OFFICER, U.T. CHANDIGARH AND THEREAFTER, HOWEVER, P ROCEEDED TO COMPUTE THE FAIR MARKET VALUE OF THE ASSESSEES PRO PERTY COMPARING IT WITH HOUSE NO. 336 IN SECTOR-9 AND MAD E AN ADDITION OF RS. 6,15,440/- IN THE FOLLOWING MANNER : ITA-239 & 247/CHD/2020 A.Y. 2016-17 PAGE 9 OF 17 3.4FURTHER, NOTICE U/S 133(6) WAS ISSUED TO THE ESTATE OFFICER, UT, CHANDIGARR/TO PROVIDE THE ANNUAL RENTAL VALUE OF TH E PROPERTY. IN THIS REGARD, THE ESTATE OFFICE, UT, CHANDIGARH, PROVIDED THE ANNUAL RENTAL VALUE OF THE PROPERTY AT RS. 76,77,955/- FOR THE YEAR 2018 VIDE THEIR MEM O NO 290376/SDO(B)/RP- 434/2018 DATED 18.12.2018 WHICH IS PLACED ON RECORD . FROM THEIR REPLY IT WAS ALSO NOTICED THAT A REVISED BUILDING PLAN WAS SANCT IONED BY THE ESTATE OFFICE, UT, CHANDIGARH ON 27.12.2017. THE REPORT GIVES A FAIR I DEA REGARDING THE STANDARD RENT AS PER THE COST OF THE LAND AND PROPERTY AS TH E HOUSE EXISTING IN RELEVANT F.Y. WAS ALSO A DOUBLE STOREYED HOUSE HENCE THE SAME CAN BE USED AS FAIR STANDARD RENT FOR THE PROPERTY UNDER CONSIDERATION. 3.5 IN VIEW OF THIS FOR ASSESSING THE REASONABLE FAIR M ARKET RENT OF THE PROPERTY, AS A COMPARABLE, HOUSE NO. 336, SECTOR-9, CHANDIGARH WAS TAKEN INTO CONSIDERATION WHICH WAS TAKEN ON RENT @ 1,57,000/- PER MONTH BY DUS FINANCE PLANNER LLP. FOR WHICH THE LEASE DOCUMENT PROVIDED BY DUS FINANCE PLANNER LLP HAS BEEN PLACED ON RECORD. HENCE, MONTHLY RENT OF RS. 1,57,000/- IS CONSIDERED AS FAIR MARKET RENT. FURTHER, IT IS NECE SSARY TO BRING ON THE RECORD THAT THE ASSESSEE DID NOT SUBMIT ANY EVIDENCE/BASIS FOR FAIR MARKET RENT OF THE PROPERTY UNDER CONSIDERATION IN ANY OF HIS REPLY. 3.6 THE COUNSEL OF THE ASSESSEE ATTENDED THE OFFICE FOR MANUAL HEARING ON 20.12.2018 AND HE WAS CONFRONTED WITH THESE FACTS. FURTHER REPORT OF THE ESTATE OFFICE, UT, CHANDIGARH AND LEASE DEED OF THE HOUSE AT 336, SECTOR-9, CHANDIGARH WERE CONFRONTED TO HIM. THE HOUSE NO. 10 1, SECTOR 18, CHANDIGARH, WAS PURCHASED BY THE ASSESSEE ON 28-07-2015 AND WAS SOLD ON 03.01.2017. THE ASSESSEE HAD 70% SHARE IN IT, HENCE THE FAIR DEEMED RENT OF THE PROPERTY AT HOUSE NO.101, SECTOR 18, CHANDIGARH IS CALCULATED AS UNDE R: FAIR MARKET VALUE OF THE HOUSE FOR 8 MONTHS : RS. 1 57000 * 8 = 12,56,000/- 70% OF FAIR MARKET VALUE : RS. 1256000*70/10 0 = RS. 8,79,200/- 3.7 CALCULATION OF NET ANNUAL VALUE AS DEEMED REN T: A) ACTUAL RENT RECEIVED : NIL B) STANDARD RENT AS PER CHANDIGARH ESTATE OFFICE: : RS. 76,77,955/- C) FAIR MARKET VALUE : RS. 8,79,200/- NET ANNUAL VALUE EQUALS TO HIGHER OF (A) & (B) I.E. RS. 76,77,955/-AND LOWER FROM HIGHER AMONG( A) & (B) AND THAT OF (C) : RS. 8,79,200/-. ITA-239 & 247/CHD/2020 A.Y. 2016-17 PAGE 10 OF 17 7. IT IS SEEN THAT THE ASSESSEE BEFORE THE CIT(A) OBJECTED TO THE COMPARISON BETWEEN THE PROPERTY OF THE ASSESSEE SITUATED IN SECTOR 18 WITH A PROPERTY IN SECTOR-9 AND ARGUED THAT THE TWO WERE NOT COMPARABLE. FURTHER, IT WAS REITERATED THAT THE CONSTRUCTION WAS OLD AND DILAPIDATED AND THE HOUSE HAD BEEN DEMOLISHED BY THE NEW PURCHASER. IT WAS ALSO ARGUED THAT THE HOUSE WAS OLD AND REQUIRED COMPLETE RENOVATION AND PROPER FINISHING. CONSIDERING THE SUBMISSIONS IN THE FACTS THE CIT(A) CAME TO THE FOLLOWING CONCLUSION : 5. GROUNDS OF APPEAL NO.1: THE APPELLANT HAS CHALLENGE D THAT THE AO HAS ERRED IN MAKING ADDITION OF RS.6,15,440/- BEING ANNUAL LETTA BLE VALUE AFTER ALLOWING 30 PERCENT STANDARD DEDUCTION U/S 24(A) OF THE INCOME TAX ACT, 1961. THE AO HAS MADE THE FOLLOWING OBSERVATIONS:- '3. ADDITION ON ACCOUNT OF DEEMED RENTAL INCOME FRO M HOUSE PROPERTY: 3.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A SSESSEE WAS ASKED TO SUBMIT DETAILS OF HIS IMMOVABLE ASSETS. ON PERUSAL OF THE REPLY, IT WAS NOTICED THAT THE ASSESSEE IS HAVING A RESIDENTIAL PROPERTY AT KOTHI NUMBER 101, SECTOR-18-A, CHANDIGARH FOR WHICH NO RENTAL INCOME HAS BEEN SHOWN BY THE ASSESSEE IN HIS RETURN OF INCOME FOR THE AY. 2016-1 7. THE ASSESSEE IS HAVING 70% OF SHARE IN THIS HOUSE PROPERTY AS PER THE TITL E DEED. IN THIS REGARD, ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY ANNUAL LETT ABLE VALUE OF H.NO.101, SECTOR-18A, CHANDIGARH NOT TO BE INCLUDED IN HIS IN COME FROM HOUSE PROPERTY. 3.2 THE ASSESSEE VIDE HIS REPLY DATED 22.11.2018 SUBMIT TED AS UNDER: 'THE ASSESSEE PURCHASED H.NO.101, SECTOR-18A, CHAND IGARH DURING THE RELEVANT FINANCIAL YEAR BUT IT WAS NOT IN A HABITAB LE CONDITION DUE TO WHICH IT WAS NOT POSSIBLE FOR ASSESSEE TO LET OUT. ACCORD INGLY, ANNUAL LETTABLE VALUE OF THE PROPERTY SHOULD NOT BE INCLUDED IN THE INCOM E OF THE ASSESSEE. MOREOVER THE HOUSE WAS SOLD ON 03.01.2018. ITA-239 & 247/CHD/2020 A.Y. 2016-17 PAGE 11 OF 17 3.3 THE REPLY OF THE ASSESSEE HAS BEEN CONSIDERED BUT THE SAME WAS NOT ACCEPTABLE AS THE ASSESSEE HAS NOT PROVIDED ANY EVI DENCE REGARDING HIS CLAIM THAT THE HOUSE WAS NOT IN A HABITABLE CONDITION AND DUE EFFORTS HAVE BEEN MADE TO LEASE OUT THE PROPERTY IN THE RELEVANT FINA NCIAL YEAR. IN VIEW OF THIS, ASSSESSEE WAS SHOW CAUSED AS TO WHY APPROPRIATE ADD ITION MAY NOT BE MADE ON ACCOUNT OF INCOME FROM HOUSE PROPERTY. IN RESPON SE THE ASSESSEE REPLIED AS UNDER:- A) THE ASSESSEE PURCHASED THE HOUSE #101, SECTOR-18, C HANDIGARH DURING THE RELEVANT PY AND SOLD THE SAME ON 03.01.2017. B) THE SAID HOUSE WAS VERY OLD, THE CONSTRUCTION OF W HICH WAS COMPLETED ON 02.05.1959. C) THE BUYER OF THE SAID HOUSE FROM THE ASSESSEE HAS A LSO DEMOLISHED THE OLD CONSTRUCTION AND BUILDING NEW HOUSE....' 3.4 THE REPLY OF THE ASSESSEE HAS BEEN CONSIDERED BUT I S NOT FOUND ACCEPTABLE AS THESE DOCUMENTS DO NOT PROVE THAT THE HOUSE WAS NOT IN A HABITABLE CONDITION IN THE RELEVANT FINANCIAL YEAR. THE OWNERSHIP OF THE S AID HOUSE HAS KEPT ON CHANGING SINCE THEN AS PER THE RECORDS. FURTHER, NO TICE U/S 133(6) WAS ISSUED TO THE ESTATE OFFICER, UT, CHANDIGARH TO PROVIDE THE A NNUAL RENTAL VALUE OF THE PROPERTY. IN THIS REGARD, THE ESTATE OFFICE, UT, CHANDIGARH, PROVIDED THE ANNUAL RENTAL VALUE OF THE PROPERTY AT RS.76,77,955/- FOR THE YEAR 2018 VIDE T HEIR MEMO NO.290376/SDO(B)/ RP-434/2018 DATED 18.12.2018 WHIC H IS PLACED ON RECORD. FROM THEIR REPLY IT WAS ALSO NOTICED THAT A REVISED BUILDING PLAN WAS SANCTIONED BY THE ESTATE OFFICE, UT, CHANDIGARH ON 27.12.2017. THE REPORT GIVES A FAIR IDEA REGARDING THE STANDARD RENT AS PER THE COST OF THE LAND AND PROPERTY AS THE HOUSE EXISTING IN RELEVANT F. Y. WAS ALSO A DOUBLE STOREY HOUSE HENCE THE SAME CAN BE USED AS FAIR STANDARD RENT FOR THE PROPERTY UNDER CONSIDERATION. 3.5 IN VIEW OF THIS FOR ASSESSING THE REASONABLE FAIR M ARKET RENT OF THE PROPERTY, AS A COMPARABLE, HOUSE NO. 336, SECTOR-9, CHANDIGAR H WAS TAKEN INTO CONSIDERATION WHICH WAS TAKEN ON RENT &.1,57,000/- PER MONTH BY PUS FINANCE PLANNER LLP. FOR WHICH THE LEASE DOCUMENT PROVIDED BY PUS FINANCE PLANNER LLP HAS BEEN PLACED ON RECORD. HENCE, MONTHLY RENT OF RS. ,57,000/- IS CONSIDERED AS FAIR MARKET RENT. FURTHER, IT IS NECESSARY TO BRING ON THE RECORD THAT THE ASSESSEE DID NOT SUBMIT ANY EVIDENCE/ BASI S FOR FAIR MARKET RENT OF THE PROPERTY UNDER CONSIDERATION IN ANY OF HIS REPLY. 3.6 THE COUNSEL OF THE ASSESSEE ATTENDED THE OFFICE FOR MANUAL HEARING ON 20.12.2018 AND HE WAS CONFRONTED WITH THESE FACTS. FURTHER REPORT OF THE ESTATE OFFICE, UT, CHANDIGARH AND LEASE DEED OF THE HOUSE AT 336, SECTOR-9, CHANDIGARH WERE CONFRONTED TO HIM. THE HOUSE NO.101, SECTOR-18 , CHANDIGARH, WAS PURCHASED BY THE ASSESSEE ON 28-07-2015 AND WAS SOL D ON 03.01.2017. THE ASSESSEE HAD 70% SHARE IN IT, HENCE THE FAIR DEEMED RENT OF THE PROPERTY AT HOUSE NO.101, SECTOR-18, CHANDIGARH IS CALCULATED AS UNDE R: ITA-239 & 247/CHD/2020 A.Y. 2016-17 PAGE 12 OF 17 FAIR MARKET VALUE OF THE HOUSE FOR 8 MONTHS: RS . 157000 * 8 - 12,56,000/- 70% OF FAIR MARKET VALUE: RS. 1256000*70/100 = RS. 8,79,200- 3.7 CALCULATION OF NET ANNUAL VALUE AS DEEMED R ENT: A) ACTUAL RENT RECEIVED : NIL B) STANDARD RENT AS PER CHANDIGARH ESTATE OFFICE RS. 7 6,77,955/- C) FAIR MARKET VALUE RS. 8,79,200/- NET ANNUAL VALUE EQUALS TO HIGHER OF(A)&(B) I. E. R S. 76,77,955/- AND LOWER FROM HIGHER AMONG (A)&(B) AND THAT OF (C) : RS. 8,79,200 HENCE, INCOME FROM HOUSE PROPERTY AFTER 30% STANDAR D DEDUCTION U/S 24(A): RS. 6,15,440/-. AS THE ASSESSEE HAS NOT PROVIDED AN Y EVIDENCE OF PAYMENT OF MUNICIPAL TAXES HENCE NO BENEFIT OF THE SAME IS BEI NG GIVEN TO THE ASSESSEE.' IN RESPONSE TO THE APPEAL FILED BY THE APPELLANT U/ S 250 OF THE ACT, AUTHORIZED REPRESENTATIVE (IN SHORT 'LD. AR') FILED WRITTEN SU BMISSION ON BEHALF OF THE ASSESSEE AS UNDER: - 'FACTS OF THE CASE WITH REGARD TO GROUND OF APPEAL: 1. DURING THE RELEVANT ASSESSMENT YEAR, ASSESSEE WAS C ARRYING ON THE BUSINESS OF TRADING OF SHARES UNDER THE FUTURE & OPTION. ASS ESSEE ALSO EARNED RENTAL AND INTEREST INCOME. 2. A) ASSESSEE PURCHASED THE HOUSE NO.101, SECTOR-18, CHANDIGARH ON 28 TH JULY, 2015. B). THE HOUSE WAS NOT IN HABITABLE CONDITION DUE TO WHICH ASSESSEE COULD NOT LET IT OUT ON RENT. C) THE SAID HOUSE WAS VERY OLD, THE CONSTRUCTION OF WH ICH WAS COMPLETED ON 2 ND MAY, 1959. THE COPY OF COMPLETION CERTIFICATE AND T RANSFER LETTER WAS PROVIDED TO LD. AC IT DURING THE ASSESSMENT PROCEEDINGS. THE COPY OF COMPLETION CERTIFICATE AND TRANSFER LETTER IS ENCLOSED AS PER ANNEXURE I & II RESPECTIVELY FOR YOUR READY REFERENCE. D) MOREOVER, ASSESSEE SOLD THE SAID HOUSE ON 3 RD JANUARY, 2017. E) THE BUYER OF THE SAID HOUSE HAS ALSO DEMOLISHED THE OLD CONSTRUCTION AND BUILT NEW HOUSE. THE COPY OF SANCTION OF REVISED BU ILDING PLAN IS BEING ATTACHED AS PER ANNEXURE-LLL FOR YOUR READY REFERENCE WHICH IS ALSO SUBMITTED TO LD. ACIT DURING THE ASSESSMENT PROCEEDINGS. GROUND OF APPEAL SUBMIT AS UNDER: ITA-239 & 247/CHD/2020 A.Y. 2016-17 PAGE 13 OF 17 1. THE ASSESSEE PURCHASED THE HOUSE #101, SECTOR -18, CHANDIGARH DURING THE RELEVANT PY AND SOLD THE SAME ON 03.01.2017. 2. THE SAID HOUSE WAS VERY OLD, THE CONSTRUCTION OF WHICH WAS COMPLETED ON 02.05.1959. THE COPY OF COMPLETION CERTIFICATE AND TRANSFER LETTER IS ENCLOSED AS PER ANNEXURE I & II RESPECTIVELY FOR YOUR READY REF ERENCE WHICH IS ALSO SUBMITTED TO LD. ACIT DURING THE ASSESSMENT PROCEED INGS. 3. THE BUYER OF THE SAID MARKET RENTAL VALUE HAS BE EN ASSESSED AT RS.1,50,000/- PER MONTH. TO FETCH THE SAID RENT THE HOUSE MUST BE FULLY RENOVATED AND BEAUTIFULLY FURNISHED TO MATCH THE ST ATUS OF THE LOCALITY & TENANT. THE SAID HOUSE WAS OLD AND REQUIRED COMPLETE RENOVA TION & PROPER FINISHING. FURTHER THE BUYER OF THE HOUSE FROM THE ASSESSEE DE MOLISHED THE SAID OLD HOUSE AND BUILD NEW HOUSE AFTER THE APPROVAL OF COMPETENT AUTHORITIES. FROM THE ABOVE FACTS IT IS CLEAR THAT THE SAID HOUS E WAS AN OLD HOUSE BEYOND RENOVATION & NOT IN HABITABLE CONDITION. ACCORDINGL Y THE PROVISIONS OF NOTIONAL RENT U/S 22 OF THE INCOME TAX ACT, 1961 ARE NOT APP LICABLE. THE SIMILAR VIEW HAS BEEN TAKEN BY HONORABLE IT AT KOLKATA IN CASE OF SHRI BASANT KUMAR NAHATA VS. ACIT I.T.A. NO.2400/KOL/201 8 DATE OF JUDGMENT/ ORDER: 07/06/2019 (ATTACHED AS PER ANNEXURE-IV) 5. IT MAYBE FURTHER ADDED THAT THE COMPARISON OF FA IR MARKET VALUE OF HOUSE IN SECTOR 18, CHANDIGARH AND HOUSE IN SECTOR-9, CHANDI GARH IS INCORRECT SINCE SECTOR-18, CHANDIGARH IN PORCH LOCALITY WHEREAS SEC TOR-9, CHANDIGARH BELONG TO A VERY HIGH PROFILE SOCIETY. IN VIEW OF THE ABOVE FACTS & DECISIONS OF HONORABLE COURTS YOU ARE REQUESTED TO SET ASIDE T HE ORDER OF LD. ACIT CIR-1(1) DATED 21.12.2018.' 5.2 HELD: I HAVE PERUSED THE ORDER OF THE ASSESSING OFFICER AND EXAMINED THE REPLY OF THE ASSESSES. BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE WAS H AVING A RESIDENTIAL PROPERTY H.NO. 101, SECTOR-18-A, CHANDIGARH FOR WHICH NO REN TAL INCOME HAS BEEN SHOWN BY THE ASSESSEE IN HIS RETURN OF INCOME FOR T HE A.Y.2016-17. AS THE ASSESSEE WAS HAVING 70% OF SHARE IN THE SAID PROPER TY AS PER THE TITLE DEED, THE AO MADE THE ADDITION OF RS.6,15,440/- AFTER GRANTIN G 30% STANDARD DEDUCTION U/S 24(A) OF THE 'ACT' BY CONSIDERING THE FACT THAT THE ASSESSEE HAS NOT PROVIDED ANY EVIDENCE REGARDING HIS CLAIM THAT THE HOUSE WAS IN A INHABITABLE CONDITION AND DUE EFFORTS HAVE BEEN MADE TO LEASE OUT THE PRO PERTY IN THE RELEVANT FINANCIAL YEAR. ITA-239 & 247/CHD/2020 A.Y. 2016-17 PAGE 14 OF 17 5.2.1 ON PERUSAL OF ASSESSMENT ORDER, IT IS SEEN TH AT THE AO HAS CONSIDERED THE ANNUAL RENTAL VALUE PROVIDED BY THE ESTATE OFFICE, UT, CHANDIGARH, OF THE SAID PROPERTY AT RS.76,77,955/- FOR THE YEAR 2018 AND FU RTHER TAKING THE GROUND THAT THE ASSESSEE DID NOT SUBMIT ANY EVIDENCE/ BASIS FOR FAIR MARKET RENT OF THE PROPERTY UNDER CONSIDERATION IN ANY OF HIS REP!/, T HE AO HAD TAKEN INTO CONSIDERATION THE HOUSE NO.336, SECTOR-9, CHANDIGAR H FOR THE PURPOSE OF ASSESSING THE REASONABLE FAIR MARKET RENT OF THE PR OPERTY WHICH WAS TAKEN ON RENT (5)1,57,000/- PER MONTH BY PUS FINANCE PLANNER LLP. DURING THE APPELLATE PROCEEDINGS, THE APPELLANT SUBMITTED THAT THE SAID HOUSE WAS AN OLD HOUSE BEYOND RENOVATION & NOT IN HABITABLE CONDITIO N. ACCORDINGLY THE PROVISIONS OF NOTIONAL RENT U/S 22 OF THE INCOME TA X ACT, 1961 ARE NOT APPLICABLE. FURTHER, HE SUBMITTED THAT TO FETCH THE RENTAL VALUE OF RS. 1,50,000/- PER MONTH, WHICH WAS CONSIDERED BY THE AO DURING AS SESSMENT PROCEEDINGS, THE HOUSE MUST BE FULLY RENOVATED AND BEAUTIFULLY FURNI SHED TO MATCH THE STATUS OF THE LOCALITY & TENANT. FURTHER, HE SUBMITTED THAT T HE COMPARISON OF FAIR MARKET VALUE OF HOUSE IN SECTOR 18, CHANDIGARH AND HOUSE I N SECTOR-9, CHANDIGARH IS INCORRECT SINCE SECTOR-18, CHANDIGARH IS IN POSH LO CALITY WHEREAS SECTOR-9, CHANDIGARH BELONGS TO A VERY HIGH PROFILE SOCIETY. THE APPELLANT ALSO RELIED UPON THE JUDGMENT OF HONORABLE ITAT KOLKATA IN THE CASE OF SHRI BASANT KUMAR NAHATA VS. ACIT I.T.A. NO.2400/KOL/2018 DATE OF JUD GMENT/ ORDER: 07/06/2019. 5.2.2 HOWEVER, ON PERUSAL OF ASSESSMENT RECORD IT I S OBSERVED THAT, DURING THE ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS, THE AP PELLANT HAS COMPLETELY FAILED TO SUBSTANTIATE WITH DOCUMENTARY OR ANY OTHER EVIDE NCE THAT SUCH PROPERTY IS IN DILAPIDATED CONDITION AND IS NOT HABITABLE. MOREOVE R, MERELY BECAUSE THE PROPERTY REQUIRES REPAIRS, IT CANNOT BE HELD THAT A LV OF SUCH PROPERTY IS NIL. AS EVEN THE DILAPIDATED PROPERTY HAS ITS ANNUAL LETTIN G VALUE, THEREFORE, IN VIEW OF FACTS AND CIRCUMSTANCES OF THE CASE, CONTENTION OF THE APPELLANT THAT BEING AN OLD HOUSE AND BEYOND RENOVATION & NOT IN HABITABLE CONDITION AND PROVISION OF SECTION 22 OF THE 'ACT' ARE NOT APPLICABLE, IS NOT ACCEPTABLE AS THE PROPERTY ALWAYS HAS THE VALUE. HOWEVER, FURTHER, IT IS OBSER VED THAT WITHOUT MAKING NECESSARY ANALYSIS ABOUT THE ANNUAL RENTAL VALUE FO R THE YEAR UNDER CONSIDERATION I.E. 2015-16, THE AO CONSIDERED THE A NNUAL RENTAL VALUE PROVIDED BY THE ESTATE OFFICE, UT, CHANDIGARH, OF THE SAID P ROPERTY WHICH WAS FOR THE YEAR 2018. MOREOVER, INSTEAD OF MAKING FIELD ENQUIR IES TO FETCH THE FAIR MARKET VALUE OF THE PROPERTY UNDER CONSIDERATION, THE AO H AS TAKEN INTO CONSIDERATION THE HOUSE NO.336, SECTOR-9, CHANDIGARH FOR ASSESSIN G THE FAIR MARKET RENT OF THE PROPERTY BY TAKING THE GROUND THAT THE APPELLAN T DID NOT SUBMIT ANY EVIDENCE/ BASIS FOR FAIR MARKET RENT OF THE PROPERT Y UNDER CONSIDERATION IN ANY OF HIS REPLY SHOWS THAT THE GROUNDS TAKEN FOR SUCH CONSIDERATION BY THE AO ARE ILLOGICAL AND WITHOUT APPLICATION OF MIND. 5.2.3 IN THE PRESENT CASE., EVEN IF THE APPELLANT H AS FAILED TO SUBMIT ANY EVIDENCE IN RESPECT OF FAIR MARKET RENT OF THE PROP ERTY UNDER CONSIDERATION, THE ITA-239 & 247/CHD/2020 A.Y. 2016-17 PAGE 15 OF 17 ASSESSING OFFICER IS ADJUDICATOR AS WELL AS INVESTI GATOR AND BEFORE REACHING ANY CONCLUSION, IT IS INCUMBENT UPON HIM TO MAKE NECESS ARY ENQUIRIES IN ORDER TO MAKE THE ASSESSMENT IN FAIR AND REASONABLE MANNER, IT IS THE DUTY OF THE ASSESSING OFFICER TO SATISFY HIMSELF ON ESCAPED INC OME AFTER MAKING NECESSARY ENQUIRIES AND MAKE THE ADDITION TO THE EXTENT WHICH IS LEGALLY BOUND TO THE APPELLANT. THEREFORE, IN VIEW OF FACTS AND CIRCUMST ANCES OF THE CASE, THE ASSESSING OFFICER IS HEREBY DIRECTED TO OBTAIN THE ANNUAL RENTAL VALUE OF THE SAID PROPERTY FOR THE YEAR UNDER CONSIDERATION I.E. F.Y.2015-16 AND ALSO VERIFY THE REASONABLE FAIR RENTAL VALUE OF THAT PERIOD CON SIDERING THE LOCATION WHICH THE HOUSE CAN FETCH IN THAT LOCALITY AND CALCULATE THE DEEMED RENTAL INCOME. THEREFORE, THIS GROUND OF APPEAL OF ASSESSES IS PAR TLY ALLOWED FOR STATISTICAL PURPOSE. 8. WE FIND ON A CONSIDERATION OF THE ABOVE THAT IN THE FACTS OF THE PRESENT CASE IN TERMS OF THE STATUTORY REMIT , THE LD. CIT(A) WHILE ARRIVING AT THE CONCLUSION SHOULD NECE SSARILY HAVE INVITED A REMAND REPORT FROM THE ASSESSING OFFICER IN VIEW OF THE FACT THAT THE POWER OF REMAND NO LONGER VESTED WITH THE SAID AUTHORITY. TO THIS EXTENT WE FIND THAT THE SUB MISSIONS OF THE REVENUE RELYING UPON GROUND NO. 2 RAISED IN THE PRESENT APPEAL IS SUPPORTED BY THE STATUTORY PROVISIONS, HE NCE, IT HAS TO BE ALLOWED AND THE ORDER HAS TO BE SET ASIDE. 9. BEFORE ADDRESSING THE GRIEVANCE OF THE ASSESS EE, WE WOULD AT THE OUTSET ADDRESS THE DECISION OF THE CO-ORDINA TE BENCH IN THE CASE OF SHRI BASANT KUMAR NAHATA VS ACIT (ITA NO. 2400/KOL/2018 DATED 07.06.2019) RELIED UPON BY THE LD. AR. ON CONSIDERING THE SAME, WE HOLD THAT ON THE FACTS AS THEY STAND, THE SAID DECISION IS NOT APPLICABLE AS IN TH E FACTS OF THE SAID DECISION RENDERED BY THE KOLKATA BENCH, THE HO USE UNDER ITA-239 & 247/CHD/2020 A.Y. 2016-17 PAGE 16 OF 17 CONSTRUCTION WAS CLAIMED TO BE IN DILAPIDATED CONDITION IN A VILLAGE SITUATED IN THE STATE OF RAJASTHAN WHICH IS NOT HABITABLE AT ALL. THIS CLAIM, ON CONSIDERING THE FACTS ON RECORD WAS FOUND TO BE ALLOWABLE. HOWEVER, IN THE FACTS OF THE PRESENT CASE, THIS IS A DISPUTED FACT AND THE SPECIFIC PROP ERTY IS NOT IN A REMOTE VILLAGE AND IN A DILAPIDATED CONDITION BUT IN SECTOR 18 IN THE MIDST OF THE CITY. HENCE, THE SAID CASE ON THE FACTS AS THEY STAND HAS NO APPLICATION. WHILE SO HOLDING, W E CLARIFY THAT FACTS ARE IN FLUX AS THE ISSUE IS BEING REMAND ED BACK. 10. THUS, IN THE SAID BACKGROUND, WE SPECIFICALLY R EQUIRED THE LD. AR TO ADDRESS WHETHER HE IS AGGRIEVED BY ANY SP ECIFIC OBSERVATION IN THE IMPUGNED ORDER WHICH HE WOULD WA NT US TO ADDRESS WHILE REMANDING THE ISSUE BACK TO THE LD. C IT(A). THE LD. AR WAS UNABLE TO ADDRESS THE QUERY. 11. ACCORDINGLY ON A CONSIDERATION OF THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, THE RELEVANT PROVISIONS OF THE ACT AND THE EVIDENCES ON RECORD, WE FIND THAT IN THE F ACTS OF THE PRESENT CASE, IT WOULD BE APPROPRIATE TO SET ASIDE THE ISSUE BACK TO THE FILE OF THE LD. CIT(A) WITH THE DIRECTI ON TO PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER TAKING INTO CONSIDERATION THE RELEVANT FACTS. THE ASSESSEE IN H IS OWN INTERESTS IS DIRECTED TO PLACE FULL FACTS AND SUBMI SSIONS BEFORE ITA-239 & 247/CHD/2020 A.Y. 2016-17 PAGE 17 OF 17 THE SAID AUTHORITY IN ORDER TO FACILITATE A PROPER CONCLUSION ON FACTS. SAID ORDER WAS PRONOUNCED AT THE TIME OF VIR TUAL HEARING ITSELF IN THE PRESENCE OF THE PARTIES VIA WEBEX. 12. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED AND THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 2 ND SEPTEMBER,2021. SD/- SD/- ( ) ( ) (ANNAPURNA GUPTA) (DIVA SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER POONAM / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. / CIT 4. ( )/ THE CIT(A) 5. , , / DR, ITAT, CHANDIGARH 6. / GUARD FILE / BY ORDER, / ASSISTANT REGISTRAR