Asstt. Commissioner of Income Tax, Lucknow V. Shri Rakesh Chandra , Lucknow

ITA 250/LKW/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5760 (ITAT-LUCKNOW)
• Duration Of Justice: 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-12-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 09-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y P SRIVASTA VA
• Keywords: Unexplained investment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 250/LKW/2013 ASSESSMENT YEAR: 2008 - 09 ACIT RANGE 3 LUCKNOW V. SHRI. RAKESH CHANDRA HI G NO.111, SECTOR E ALIGANJ, LUCKNOW PAN: AAVPC4406B (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. Y. P. SRIVASTAVA, D.R. RESPONDENT BY: SHRI. RAKESH GARG, ADVOCATE DATE OF HEARING: 20.12.2013 DATE OF PRONOUNCEMENT: 07.03.2014 O R D E R PER S UNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A), INTER ALIA, ON VARIOUS GROUNDS, WHICH ARE AS UNDER: - 1 . THE CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 1,38,565 / - ON ACCOUN T OF INCOME FROM HOUSE PROPERTY WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE WAS ABSOLUTE OWNER OF 50% OF SHARE IN THE PROPERTY AFTER GETTING THE MUTATION IN HIS FAVOUR AND FURTHER AN AMOUNT OF RS. 18,16,400 / - WAS MENTIONED BY THE ASSESSEE HIMSELF AS THE GROSS RECEIPT FROM THE RENTAL INCOME. : - 2 - : 2 . THE CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.7,00,000/ - MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT AS PER AIR INFORMATION WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD MADE TWO INVESTMENTS OF RS.7,00,000/ - UNDER DIFFERENT CODES OF CIB AND AIR INFORMATION BUT HE COULD SUBMIT VERIFICATION OF ONE TRANSACTION KS.7,00,000 / - ONLY. 3 . THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION MADE ON ACCOUNT OF P REMATURE ENCASHMENT OF INVESTMENT OF RS.5,51,143 / - IN RBI RELIEF BONDS WITHOUT APPRECIATING THE FACT THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAS ONLY SUBMITTED THAT THE BONDS UNDER CONSIDERATION WERE TAX FREE/NON TAXABLE AS WRITTEN ON THE ATTAC HED CERTIFICATE WHEREIN ONLY DUE DATE OF REPAYMENT WAS MENTIONED. HOWEVER, THERE IT WAS NOT MENTIONED THAT THE PREMATURE PAYMENT OF BONDS CAN BE TAKEN AND THE ASSESSEE HAD ALSO NOT SUBMITTED ANY PROOF IN THIS REGARD BEFORE THE AO. 2 . APROPOS GROUND NO.1, IT IS NOTICED THAT THE APPELLANT WAS ENTITLED FOR 44% SHARE IN THE BUILDING SITUATED AT E - 9/11, VASANT VIHAR, NEW DELHI AS PER WILL DATED 11.9.1986 EXECUTED BY HIS MOTHER, LATE SMT. RAMA D. AGARWAL IN FAVOUR OF THE APPELLANT AND HIS FATHER, SHJRI. R. K. AGARW AL, WHOSE SHARE IN THE SAID PROPERTY IS 56%. THE APPELLANT HAS SHOWN 44% OF THE INCOME FROM THE SAID PROPERTY IN HIS RETURN OF INCOME. THE ASSESSING OFFICER, HOWEVER, TAXED 50% OF THE INCOME FROM PROPERTY IN HIS HANDS ON THE GROUND THAT IN THE MUTATION, THE ASSESSEE WAS TREATED AS OWNER OF 50% OF THE PROPERTY. THE ASSESSING OFFICER HAS TAKEN THE GROSS ANNUAL VALUE AT ` 18,16,400 ON THE BASIS OF RENT RECEIVED DURING THE RELEVANT ASSESSMENT : - 3 - : YEAR INSTEAD OF RENT DUE OF ` 16,14,193 WHICH RESULTED INTO AN ADDIT ION OF ` 1,38,565. 3 . AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND FILED WRITTEN SUBMISSION STATING THEREIN THAT THE APPELLANT WAS LEGALLY ENTITLED TO 44% SHARE IN THE BUILDING AS PER WILL DATED 11.9.1986 EXECUTED BY HIS MOTHER IN FAVO UR OF THE APPELLANT AND HIS FATHER. HE WAS NEVER THE OWNER OF MORE THAN 44% SHARE IN THE SAID PROPERTY. SO FAR AS MUTATION OF HALF OF THE SHARE IN PROPERTY IN FAVOUR OF THE APPELLANT IS CONCERNED, IT IS SETTLED LAW THAT MUTATION ENTRIES DO NOT CREATE ANY TITLE OR INTEREST IN PROPERTY. IN SUPPORT OF HIS CONTENTION, THE ASSESSEE HAS PLACED RELIANCE UPON THE COMMENTARY ON INCOME TAX LAW BY CHATURVEDI AND PITHISARIA AND THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF SANKALCHAN JAYCHANDBHAI PATEL VS. V ITHALBHAI JAYCHANDBHAI PATEL, AIR 1996 SC 2823. THE LD. CIT(A) RE - EXAMINED THE CLAIM OF THE ASSESSEE AND BEING CONVINCED WITH THE CONTENTIONS OF THE APPELLANT , HE HELD THAT MUTATION DOES NOT CREATE TITLE AND AS PER THE WILL THE ASSESSEE W AS LEGAL OW NER OF 44% OF SHARE IN THE PROPERTY ONLY AND IS LIABLE FOR TAXATION OF 44% OF THE INCOME FROM THE PROPERTY. HE ACCORDINGLY DELETED THE ADDITION OF ` 1,38,565. 4 . AGGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND PLACED HEAVY RELIANCE UPON THE O RDER OF THE ASSESSING OFFICER. 5 . THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS PLACED RELIANCE UPON THE ORDER OF THE LD. CIT(A). BESIDES, IT WAS ALSO CONTENDED THAT THE RIGHT IN THE PROPERTY HAS BEEN CREATED BY VIRTUE OF WILL AND ACCORDING TO IT THE ASSESSEE WAS ENTITLED FOR 44% SHARE IN THE PROPERTY. THEREFORE, THE INCOME FROM PROPERTY CAN ONLY BE TAXED UPTO 44% AND NOT 50%. 6 . HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND FORCE IN THE CONTENTIONS OF THE LD. : - 4 - : COUNSEL FOR THE ASSESSEE , A S THE RIGHT IN THE PROPERTY HAS BEEN CREATED BY A TESTAMENT EXECUTED IN FAVOUR OF THE APPELLANT AND ACCORDING TO THE WILL THE ASSESSEE IS ENTITLED ONLY FOR 44% OF THE INCOME FROM THE PROPERTY. THEREFORE, I T WOULD BE UNREALISTIC IF THE ASSESSEE IS TAXED FOR 50% SHARE OF THE INCOME FROM THE PROPERTY ON THE BASIS OF THE MUTATION AS THE MUTATION DOES NOT CREATE OWNERSHIP RIGHT IN THE PROPERTY. SINCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A), WE CONFIRM HIS ORDER ON THIS ISSUE. 7 . APROPOS GROUND NO.2, IT IS NOTICED THAT THE ASSESSING OFFICER RECEIVED AN INFORMATION THROUGH AIR THAT THE APPELLANT HAD MADE INVESTMENT OF ` 7 LAKHS IN MUTUAL FUNDS ON 24.8.2007. THE ASSESSING OFFICER HAS ALSO RECEIVED INFORMATION FROM THE CIB THAT THE APPELLANT MADE BANK/CASH TRANSACTION OF ` 7 LAKH ON 24.8.2007. ON BEING CONFRONTED, THE APPELLANT STATED THAT HE HAD MADE ONLY ONE TRANSACTION OF ` 7 LAKHS ON 24.8.2007 (ENTRY DATED 23.7.2007 OF SB ACCOUNT NO.67028). AS RE GARDS, THE OTHER TRANSACTION OF THE SAME AMOUNT AND DATE, THE APPELLANT DENIED THE TRANSACTION AND REQUESTED THE ASSESSING OFFICER TO FURNISH COPY OF THE AIR/CIB INFORMATION TO ENABLE HIM TO VERIFY IT. ACCORDING TO THE APPELLANT, HE HAD MADE ONLY ONE TRAN SACTION OF ` 7 LAKHS ON 24.8.2007. THE ASSESSING OFFICER NEITHER FURNISHED COPY OF AIR/CIB INFORMATION NOR MADE ANY INDEPENDENT ENQUIRY TO VERIFY IT. HE, HOWEVER, MADE AN ADDITION OF ` 7 LAKHS IN THE HANDS OF THE ASSESSEE AS UNEXPLAINED INVESTMENT, AGAINST WHICH THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WITH THE SUBMISSION THAT DESPITE REPEATED REQUESTS, THE ASSESSING OFFICER COULD NOT FURNISH THE DETAILS OF THE SECOND TRANSACTION. THEREFORE, THE ADDITION MADE ON THE BASIS OF CIB INFORMATION W ITHOUT FURNISHING THE DETAILS TO THE ASSESSEE, IS NOT SUSTAINABLE IN THE EYES OF LAW. 8 . BEING CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE, THE LD. CIT(A) DELETED THE ADDITION. : - 5 - : 9 . NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AND PLACED HEAVY RELIANCE UPO N THE ORDER OF THE ASSESSING OFFICER, WHEREAS THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE UPON THE ORDER OF THE LD. CIT(A). IT WAS ALSO CONTENDED ON BEHALF OF THE ASSESSEE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THOUGH THE ASSESSEE HAS S PECIFICALLY ASKED TO FURNISH THE DETAILS OF INFORMATION WITH REGARD TO THE SECOND TRANSACTION ON THE SAME DATE, BUT THE ASSESSING OFFICER COULD NOT FURNISH THE SAME. THEREFORE, THE ADDITION WAS MADE ON THE BASIS OF CONJECTURES AND SURMISES WITHOUT ANY MAT ERIAL AND THEREFORE NOT SUSTAINABLE IN THE EYES OF LAW. 10 . HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORIT I ES IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT WHILE MAKING ADDITION IT WAS THE DUTY OF THE ASSESSING OFFICER TO CONFRONT ALL THE MAT ERIAL WHICH ARE AVAILABLE WITH HIM FROM ANY SOURCE TO SEEK EXPLANATION FROM THE ASSESSEE. IT IS EVIDENT FROM THE ORDERS OF THE LOWER AUTHORITIES THAT THE ASSESSEE HAS SPECIFICALLY ASKED THE ASSESSING OFFICER TO FURNISH THE INFORMATION RECEIVED FROM AIR/CI B WITH REGARD TO THE ALLEGED SECOND INVESTMENT OF ` 7 LAKHS ON THE SAME DATE, BUT THE ASSESSING OFFICER COULD NOT FURNISH THE SAME AND MADE THE ADDITION. SINCE THE ASSESSING OFFICER HAS MADE THE ADDITION WITHOUT CONFRONTING THE MATERIAL TO THE ASSESSEE, TH E ADDITION MADE BY HIM IS NOT SUSTAINABLE IN THE EYES OF LAW. IT IS SETTLED POSITION OF LAW THAT WHENEVER THE ASSESSING OFFICER INTEND TO USE A PARTICULAR EVIDENCE AGAINST THE ASSESSEE, THE SAME EVIDENCE SHOULD BE CONFRONTED TO HIM IN ORDER TO SEEK HIS CL ARIFICATION OR EXPLANATION, BUT IN THE INSTANT CASE THE ASSESSING OFFICER HAS MADE ADDITION WITHOUT MAKING ANY DISCUSSION OF THE RELEVANT DOCUMENTS IN HIS ORDER. THEREFORE, THE ADDITION WAS MADE WITHOUT CONFRONTING THE MATERIAL TO THE ASSESSEE. UNDER THE SE CIRCUMSTANCES, WE FIND NO MERIT IN THIS ADDITION AND THEREFORE WE AGREE WITH THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY DELETED THE ADDITION. : - 6 - : 11 . APROPOS GROUND NO.3, IT IS NOTICED THAT THE ASSESSEE HAS PURCHASED RBI S 6.5% SAVINGS BOND, 2003 IN THE NAME OF HIS FATHER, SHRI. R. K. AGARWAL WHO IS ALSO PERMANENT POWER OF ATTORNEY HOLDER OF THE APPELLANT. THESE BONDS WHICH ARE NOTIFIED FOR THE PURPOSE OF SUB - CLAUSE (IIC) OF SECTION 10(15) OF THE ACT WERE ENCASHED PREMATURELY. INTEREST FROM THESE B ONDS IS E XEMPT UNDER SECTION 10(15)(IIC) OF THE ACT EVEN IF THESE BONDS ARE ENCHASHED PREMATURELY. THE ASSESSING OFFICER HAS APPLIED THE PROVISIONS OF SUB - SECTION (IID) OF SECTION 10(15) INSTEAD OF PROVISIONS OF SUB - CLAUSE (IIC) OF SECTION 10(15) OF THE ACT AND DI SALLOWED THE EXEMPTION IN RESPECT OF INTEREST RECEIVED AND MADE ADDITION OF ` 5,51,143. 12 . THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WITH THE SUBMISSION THAT SUB - CLAUSE (IIC) OF SECTION 10(15) OF THE ACT NOWHERE PROVIDES THAT EXEMPTION TO INTEREST INCOME FROM RBIS 6.5% SAVINGS BOND, 2003 WILL BE DENIED IF THESE BONDS ARE ENCHASED PREMATURELY. THUS , THE ASSESSING OFFICER HAS WRONGLY DENIED EXEMPTION TO THE APPELLANT BY APPLYING WRONG PROVISIONS OF THE INCOME - TAX ACT. IN SUPPORT OF THIS CONTENTIO N, HE HAS FILED COPIES OF RELI E F BONDS AND NOTIFICATION MADE UNDER SUB - CLAUSE (IIC) BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS RE - EXAMINED THE CLAIM OF THE ASSESSEE IN THE LIGHT OF THE RIVAL SUBMISSIONS AND GOVERNMENT NOTIFICATION AND HAS NOTICED THAT PROV ISO OF SECTION 10(15)(IID) OF THE ACT IS NOT APPLICABLE IN THE ASSESSEE S CASE. THE APPELLANTS INCOME IS GOVERNED BY CLAUSE (IIC) OF SECTION 10(15) OF THE ACT AND THE RELEVANT NOTIFICATION DO NOT WITHDRAW EXEMPTION OF INTEREST INCOME ON THE PREMATURE ENC HASHMENT OF B ONDS AFTER THREE YEARS FROM THE DATE OF PURCHASE. THE LD. CIT(A) ACCORDINGLY GRANTED EXEMPTION OF INTEREST INCOME ON THE PREMATURE ENCASHMENT OF BONDS. 13 . AGGRIEVED , THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND PLACED HEAVY RELIAN CE UPON THE ASSESSMENT ORDER, WHEREAS THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED HEAVY RELIANCE UPON THE ORDER : - 7 - : OF THE LD. CIT(A). BESIDES, HE HAS ALSO FILED COPY OF THE NOTIFICATION AND CERTIFICATE OF HOLDINGS IN ORDER TO ESTABLISH THAT PROVISIONS OF SEC TION 10(15)(IIC) OF THE ACT WOULD BE APPLICABLE. 14 . WE HAVE CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS AND WE FIND THAT THE LD. CIT(A) HAS ADJUDICATED THE ISSUE IN THE LIGHT OF THE RELEVANT PROVISIONS OF THE A CT AND THE NOTIFICATION WHICH ARE PLACED ON RECORD. WE FIND NO INFIRMITY IN HIS ORDER , THEREFORE, WE CONFIRM HIS ORDER ON THIS ISSUE . 15 . IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07.03.2014 SD/. SD/. [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 07.03.2014 JJ: 0403 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR