Devender Gupta, Faridabad V. ITO, New Delhi

ITA 2638/DEL/2011

• Counselvise Citation: 263820114 RSA 2011
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 26-07-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 23-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROHIT GARG
• Assessee Lawyers: K C SINGHAL
• Keywords: Business income; Opportunity of being heard; Question of law; Assessment record
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `B: NEW DELHI BEFORE SHRI C.L.SETHI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER I.T. A. NO.2638/DEL/2011 ASSESSMENT YEAR : 2005-06 DEVENDER GUPTA, INCOME-TAX OFFICER, 1303, SECTOR-15, VS. WARD 30(2), NEW DELHI. FARIDABAD HARYANA. PAN: AGBPG5221A (APPELLANT) (RESPONDENT ) APPELLANT BY: SHRI K.C. SINGHAL, ADVOCATE RESPONDENT BY: SHRI ROHIT GARG, SR. DR. O R D E R PER C.L. SETHI, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL AGAINST THE ORDER DATED 8 .03.2011 PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IN THE MATTER OF AN ASSESSMENT MADE UNDER SEC.143(3) OF THE INCOME-TAX ACT, 1961 (THE ACT) DATED 12.12.2007 BY THE ASSESSING OFFICER FOR THE A SSESSMENT YEAR 2005- 06. 2. GROUND NO.1 RAISED BY THE ASSESSEE IS AS UNDER:- THE IMPUGNED ASSESSMENT IS ILLEGAL AND WITHOUT JUR ISDICTION BEING CONTRARY TO THE PROVISIONS OF SECTION 143(2) OF THE INCOME TAX ACT, 1961. (THE ACT). 2 3. IN THIS GROUND, THE ASSESSEE HAS CONTENDED THAT THE ASSESSMENT IS ILLEGAL AND WITHOUT JURISDICTION BEING CONTRARY TO THE PROVISIONS OF SEC. 143(2) OF THE ACT. IN THE COURSE OF HEARING OF THI S APPEAL, IT WAS EXPLAINED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT NO NOTICE UNDER SEC. 143(2) WAS SERVED UPON THE ASSESSEE WITHIN THE STATUTORY TIME LIMIT. AFTER PERUSAL OF THE ASSESSING OFFICERS ORDER AND THE LEARNED CIT(A)S ORDER, WE FIND THAT THIS OBJECTION WAS NEVER RAISED BY THE ASSESSEE EITHER B EFORE THE AO OR BEFORE THE LEARNED CIT(A). NO SUCH GROUND OF APPEAL WAS TAKEN BY THE ASSESSEE BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) HAS NO OCCA SION TO CONSIDER AND DECIDE THIS ISSUE WHICH HAS BEEN FRESHLY RAISED BEF ORE US VIDE GROUND NO.1. IN THE LIGHT OF THE FACTS OF THE PRESENT CASE, IT I S THUS CLEAR THAT THIS IS THE FRESH PLEA TAKEN BY THE ASSESSEE BEFORE THE TRIBUN AL. WE, THEREFORE, FIRST PROCEED TO DECIDE WHETHER THIS GROUND FRESHLY RAISE D BEFORE THE TRIBUNAL FOR THE FIRST TIME, CAN BE ENTERTAINED. 4. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITT ED THAT THE ISSUE REGARDING SERVICE OF NOTICE U/S 143(2) UPON THE ASS ESSEE WITHIN THE STATUTORY LIMIT FOR FRAMING THE ASSESSMENT UNDER SEC. 143(3) OF THE ACT, IS A QUESTION THAT GOES TO THE ROOT OF THE AOS JURISDICTION TO P ROCEED WITH THE ASSESSMENT PROCEEDINGS TO BE COMPLETED U/S 143(3) OF THE ACT. HE FURTHER SUBMITTED THAT THE NECESSARY PARTICULARS/FACTS HAVE, IN THE MEAN T IME BEEN OBTAINED BY THE 3 ASSESSEE FROM THE AO AND ARE PLACED IN THE PAPER BO OK BY THE ASSESSEE AND THEREFORE, THIS GROUND FRESHLY RAISED BEFORE THE TR IBUNAL BEING A QUESTION OF LAW DESERVES TO BE ADMITTED FOR A DECISION BY THE T RIBUNAL. 5. THE LEARNED DR ON THE OTHER HAND, STRONGLY OBJEC TED TO THE ASSESSEES PRAYER REGARDING ADMISSION OF THIS FRESH PLEA TAKEN BEFORE THE TRIBUNAL. THE LEARNED DR SUBMITTED THAT THE ASSESSEE HAS RAISED A FRESH PLEA OF THE ASSESSMENT BEING WITHOUT JURISDICTION ON THE GROUND THAT NOTICE UNDER SEC. 143(2) OF THE ACT WAS NOT SERVED UPON THE ASSESSEE WITHIN THE STIPULATED TIME THOUGH NO SUCH PLEA WAS EVER RAISED EITHER BEFORE T HE AO OR BEFORE THE LEARNED CIT(A). HE FURTHER SUBMITTED THAT WHETHER A NOTICE UNDER SEC. 143(2) WAS SERVED UPON THE ASSESSEE WITHIN THE STIP ULATED TIME, IS A QUESTION OF FACT TO BE DECIDED AFTER EXAMINING THE NECESSARY ASSESSMENT RECORDS AND OTHER RELEVANT MATERIAL AND SINCE THIS PLEA WAS NOT RAISED AT A LOWER FORUM, THIS PLEA OF FACT MAY NOT BE ALLOWED TO BE RAISED F OR THE FIRST TIME AS IT WOULD CAUSE PREJUDICE TO THE REVENUE. HE FURTHER SUBMITT ED THAT IF THIS PLEA WAS RAISED AT THE EARLIEST OPPORTUNITY, THE REVENUE COU LD LEAD EVIDENCE AT THAT STAGE WHICH THE REVENUE MAY NOT BE ABLE TO DO IF SU CH QUESTION IS ALLOWED TO BE RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL. HE, THEREFORE, SUBMITTED THAT THE GROUND NO.1 RAISED BY THE ASSESSEE IS TO BE REJ ECTED AS NOT MAINTAINABLE IN THE PRESENT APPEAL FILED BEFORE THE TRIBUNAL. 4 6. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y PERUSED THE ORDERS OF THE AUTHORITIES BELOW. 7. IT IS NOT IN DISPUTE THAT AN APPELLATE AUTHORITY CAN ALLOW A QUESTION TO BE RAISED FOR THE FIRST TIME EVEN IF SUCH QUESTION WAS NOT RAISED AT A LOWER FORUM BUT THE DISCRETION TO DO SO HAS TO BE EXERCIS ED IN THE INTEREST OF JUSTICE IN THE FACTS AND CIRCUMSTANCES OF A GIVEN CASE AND NOT MECHANICALLY. NORMALLY, A QUESTION OF FACT MAY NOT BE ALLOWED TO BE RAISED FOR THE FIRST TIME AS IT MAY PREJUDICE THE OTHER SIDE. IF SUCH Q UESTION IS RAISED AT THE EARLIEST OPPORTUNITY, THE OTHER SIDE CAN LEAD EVIDE NCE WHICH IT MAY NOT BE ABLE TO DO IF SUCH QUESTION IS RAISED FOR THE FIRST TIME BEFORE THE APPELLATE AUTHORITY. OF COURSE, THERE CAN BE NO TOTAL BAR ON SUCH QUESTION BEING ALLOWED, IF INTEREST OF JUSTICE SO REQUIRES. IN TH E DECISION OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT (1998) 229 ITR 383 (SC), IT HAS NOT BEEN LAID DOWN THAT IN EVERY CASE A QUESTION OF FACT CAN BE MECHANICALLY ALLOWED TO BE RAISED FOR THE FIRST TIME. IN THE PRESENT CASE, DISPUTE IS WITH REGARD TO THE QUESTION AS TO WHETHER NOTICE ISSUED UNDER SEC. 143(2) BY THE A.O. HAS BEE N SERVED UPON THE ASSESSEE WITHIN THE STIPULATED TIME. THIS QUESTION CAN BE DECIDED AFTER EXAMINING AND VERIFYING THE FACTS OF THE PRESENT CA SE. IT IS NOT A PURE QUESTION OF LAW BUT IT IS BASED ON A FINDING OF FAC T, WHETHER THE NOTICE ISSUED 5 U/S 143(2) WAS SERVED UPON THE ASSESSEE WITHIN THE STIPULATED TIME. FROM PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT THE A SSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT. IN THE COURSE OF ASSESSMENT PROCEEDINGS, SHRI M.L. AGGARWAL, FCA AND SHRI TARUN KUMAR GUPTA, FCA HAD A PPEARED BEFORE THE AO AND FILED DETAILS/INFORMATION AS REQUIRED BY THE AO FROM TIME TO TIME. WE HAVE GONE THROUGH THE ORDER-SHEET MAINTAINED BY THE AO. IN THE COURSE OF ASSESSMENT PROCEEDINGS, SHRI TARUN KUMAR GUPTA, FCA HAD APPEARED BEFORE THE AO AND HE WAS ASKED TO FURNISH CERTAIN D ETAILS, WHICH WERE FURNISHED BY HIM FROM TIME TO TIME. SUBSEQUENTLY, S HRI M.L. AGGARWAL, FCA ALONG WITH SHRI TARUN KUMAR GUPTA, FCA HAD APPE ARED BEFORE THE AO AND FILED CERTAIN DETAILS. THEREAFTER, THE ASSESSME NT WAS COMPLETED U/S 143(3) ON 12.12.2007. IN THE COURSE OF ASSESSMENT PROCEEDINGS NEITHER SHRI TARUN KUMAR GUPTA, FCA NOR SHRI M.L. AGGARWAL, FCA HAD RAISED ANY OBJECTION THAT NOTICE U/S 143(2) ISSUED BY THE AO W AS NOT SERVED UPON THE ASSESSEE WITHIN THE STATUTORY TIME LIMIT. RATHER, THEY HAD APPEARED BEFORE THE AO AND PARTICIPATED IN THE ASSESSMENT PROCEEDIN GS AND SUBMITTED VARIOUS DETAILS. BEING AGGRIEVED WITH A VARIOUS AD DITIONS MADE BY THE AO IN THE ASSESSMENT ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED CIT(A), AND BEFORE THE LEARNED CIT(A), NO SUCH GROUND REGAR DING THE NON-SERVICE OF NOTICE UNDER SEC. 143(2) UPON THE ASSESSEE WITHIN T HE STATUTORY TIME LIMIT 6 WAS RAISED. IT IS FOR THE FIRST TIME THAT THE ASSE SSEE HAD TAKEN THIS GROUND BEFORE THE TRIBUNAL AFTER OBTAINING CERTAIN INFORMA TION FROM THE AO UNDER RTI ACT, 2005. 8. IN REPLY TO THE ASSESSEES APPLICATION UNDER THE RTI ACT, 2005, THE AO FURNISHED A COPY OF NOTICE ISSUED U/S 143(2) AND AL SO A COPY OF ORDER-SHEET RECORDED DURING ASSESSMENT PROCEEDINGS. A COPY OF NOTICE ISSUED U/S 143(2) IS DATED 28.08.2006, WHICH WAS SERVED UPON O NE SHRI TARUN KUMAR GUPTA ON 30.08.2006. A REPORT FROM PROCESS SERVER DATED 5.09.2006 STATING THAT NO PERSON WAS AVAILABLE AT THE GIVEN ADDRESS, HAS ALSO BEEN GIVEN. IN THE COURSE OF ARGUMENT OF THIS APPEAL, THE LEARNED COUN SEL FOR THE ASSESSEE HAS CONTENDED THAT THE NOTICE U/S 143(2) SERVED UPON SH RI TARUN KUMAR GUPTA ON 30.08.2006 IS NOT A VALID SERVICE INASMUCH AS SH RI TARUN KUMAR GUPTA WAS NOT PROPERLY AUTHORIZED TO RECEIVE THE NOTICE F OR AND ON BEHALF OF THE ASSESSEE. THE QUESTION, WHETHER SHRI TARUN KUAMR G UPTA WAS AUTHORIZED BY THE ASSESSEE TO RECEIVE NOTICE FOR AND ON HIS BEHAL F, IS A QUESTION OF FACT TO BE DECIDED. IN ORDER TO DECIDE THIS QUESTION AN ENQUI RY IS REQUIRED TO BE MADE FROM SHRI TARUN KUMAR GUPTA AS WELL AS FROM THE ASS ESSEE AND OTHER SURROUNDING CIRCUMSTANCES OF THE CASE ARE TO BE BRO UGHT ON RECORD. THIS FACT OF SERVICE OF NOTICE ON SHRI TARUN KUMAR GUPTA ON 30.08.2006 WAS NEVER CHALLENGED BY THE ASSESSEE BEFORE THE AO NOR BY SHRI TARUN KUMAR 7 GUPTA, CA, WHEN HE APPEARED BEFORE THE AO IN THE CO URSE OF ASSESSMENT PROCEEDINGS FOR AND ON BEHALF OF THE ASSESSEE. THU S, ALL THE FACTS TO DECIDE THE QUESTION AS TO WHETHER SHRI TARUN KUMAR GUPTA W AS PROPERLY AUTHORIZED TO RECEIVE NOTICE FOR AND ON BEHALF OF THE ASSESSEE , ARE NOT AVAILABLE ON RECORD. THUS, THIS QUESTION CANNOT BE ALLOWED TO B E RAISED AT THIS STAGE. 9. FURTHER, IN THE ASSESSMENT ORDER, IT HAS BEEN CL EARLY STATED BY THE AO THAT NOTICE U/S 143(2) DATED 31.5.2006 WAS ISSUED A ND SAME WAS SENT BY REGISTERED POST VIDE ACKNOWLEDGEMENT RECEIPT NO.RLA 5095 DATED 31.05.2006, WHICH POSTAL RECEIPT WAS PASTED ON THE BACK SIDE OF THE NOTICE, FIXING THE CASE FOR HEARING ON 8.06.2006. THIS NOT ICE REMAINED UNATTENDED. THESE FACTS ARE SPECIFICALLY STATED BY THE AO IN TH E ASSESSMENT ORDER. THE ASSESSEE HAS NOT DENIED THAT THE STATEMENT SO MADE IN THE ASSESSMENT ORDER IS INCORRECT. THEREFORE, THE QUESTION AS TO WHETHER T HE NOTICE SENT BY REGISTERED POST ON 31.05.2006 HAS BEEN SERVED UPON THE ASSESSE E OR NOT, IS A QUESTION OF FACT TO BE DECIDED AFTER EXAMINING THE POSTAL RECOR DS AND OTHER RELEVANT MATERIALS. NO OBJECTION WAS EVER RAISED BY THE ASS ESSEE BEFORE THE AO OR BEFORE THE CIT(A) THAT NOTICE SENT BY REGISTERED PO ST ON 31.05.2006 WAS NOT RECEIVED BY THE ASSESSEE. THEREFORE, THE QUESTION OF VERIFYING THE FACT THAT WHETHER NOTICE U/S 143(2) SENT ON 31.05.2006 WAS NO T RECEIVED BY THE ASSESSEE, CANNOT BE ENTERTAINED AT THIS STAGE BY RA ISING A FRESH QUESTION 8 BEFORE THE TRIBUNAL. IN ORDER TO DECIDE THIS ISSUE, CERTAIN ENQUIRIES ARE REQUIRED TO BE MADE AND ALL THE FACTS RELATING TO T HE DISPATCH OF NOTICE ARE TO BE BROUGHT ON RECORD. THUS, THE QUESTION RAISED IN THIS CASE IS A QUESTION OF FACT, WHICH SHOULD NOT BE ALLOWED TO BE RAISED FOR THE FIRST TIME AS IT WOULD PREJUDICE THE DEPARTMENT. THIS QUESTION SHOULD HAV E BEEN RAISED BY THE ASSESSEE AT THE EARLIEST OPPORTUNITY WHEN ASSESSEE S AR SHRI TARUN KUMAR GUPTA, FCA HAD APPEARED BEFORE THE AO FOR THE FIRST TIME AND REQUESTED FOR ADJOURNMENT AND WHEN THE MATTER WAS THEN ADJOURNED TO 19.07.2007. IN THIS VIEW OF THE MATTER, WE ARE, THEREFORE, OF THE CONSI DERED VIEW THAT THE QUESTION ABOUT THE FACTUM OF SERVICE OF NOTICE U/S 143(2) UPON THE ASSESSEE WITHIN THE STIPULATED TIME, CANNOT BE ALLOWED TO BE RAISED AT THIS BELATED STAGE OF APPEAL FILED BEFORE THE TRIBUNAL PARTICULA RLY IN VIEW OF THE FACT THAT THIS QUESTION WAS NEVER RAISED BY THE ASSESSEE EITH ER BEFORE THE AO NOR BEFORE THE LEARNED CIT(A). THE VIEW WE HAVE TAKEN ABOVE GETS SUPPORT FROM THE SUBSEQUENT LEGISLATIVE AMENDMENT ADDING SE C. 292BB OF THE ACT BY THE FINANCE ACT, 2008 WITH EFFECT FROM 1.04.2008 PR OVIDING THAT WHERE AN ASSESSEE HAS APPEARED IN ANY PROCEEDING OR CO-OPERA TED IN ANY INQUIRY RELATING TO AN ASSESSMENT OR REASSESSMENT, IT SHALL BE DEEMED THAT ANY NOTICE UNDER ANY PROVISION OF THIS ACT, WHICH IS REQUIRED TO BE SERVED UPON HIM, HAS BEEN DULY SERVED UPON HIM IN TIME IN ACCORDANCE WITH THE PROVISIONS OF 9 THIS ACT AND SUCH ASSESSEE SHALL BE PRECLUDED FROM TAKING ANY OBJECTION IN ANY PROCEEDING OR INQUIRY UNDER THIS ACT THAT THE N OTICE WAS NOT SERVED UPON HIM; OR NOT SERVED UPON HIM IN TIME; OR SERVED UPON HIM IN AN IMPROPER MANNER. HOWEVER, THIS PROVISION SHALL NOT APPLY WH ERE THE ASSESSEE HAS RAISED SUCH OBJECTION BEFORE THE COMPLETION OF SUCH ASSESSMENT OR REASSESSMENT. WE MAKE IT CLEAR THAT WE HAVE DECIDE D THIS ISSUE ON ITS OWN MERIT WITHOUT RELYING UPON THE PROVISIONS OF SEC. 2 92BB WHICH IS APPLICABLE FROM 1.04.2008 BUT THE PROVISION OF SEC. 292BB HAS BEEN REFERRED TO JUST TO SUPPORT THE VIEW WE HAVE TAKEN. WE, THEREFORE, REJ ECT GROUND NO.1 RAISED BY THE ASSESSEE AS NOT ADMITTED. 10. HOWEVER, WITHOUT PREJUDICE TO THE VIEW WE HAVE TAKEN ABOVE, EVEN ON MERITS, WE DO NOT FIND ANY FORCE IN THE CONTENTION OF THE ASSESSEE. 11. IN THE COURSE OF HEARING OF THIS APPEAL, THE LE ARNED COUNSEL FOR THE ASSESSEE HAS PRODUCED A COPY OF NOTICE U/S 143(2) O F THE ACT DATED 28.08.2006 FIXING THE DATE OF HEARING ON 12.09.2006 . THIS NOTICE WAS SERVED UPON SHRI TARUN KUMAR GUPTA ON 30.08.2006. HOWEVER , THIS NOTICE WAS ALSO SENT THROUGH PROCESS SERVER BUT THE PROCESS SE RVER REPORTED THAT NO SUCH PERSON WAS AVAILABLE AT THE GIVEN ADDRESS VIDE HIS REPORT DATED 5.09.2006. HERE, THE CONCERNED NOTICE IS DATED 28.08.2006, WHI CH HAS BEEN SERVED UPON SHRI TARUN KUMAR GUPTA ON 30.08.2006. IN THE COURS E OF HEARING OF THIS 10 APPEAL, THE LEARNED COUNSEL FOR THE ASSESSEE HAS SU BMITTED THAT SHRI TARUN KUMAR GUPTA WAS NOT AUTHORIZED BY THE ASSESSEE TO A CCEPT ANY NOTICE FOR AND ON BEHALF OF THE ASSESSEE AND THEREFORE, THE NO TICE SERVED UPON HIM ON 30.08.2006 WAS NOT A VALID SERVICE. IN THIS REGARD , HE INVITED OUR ATTENTION TO THE NOTING IN THE ORDER-SHEET WHEN SHRI TARUN KUMAR GUPTA FIRST APPEARED BEFORE THE AO, AND FROM THAT NOTING IT IS SEEN THAT SHRI TARUN KUMAR GUPTA HAD APPEARED BEFORE THE AO ON 3.07.2007 AND REQUEST ED FOR ADJOURNMENT. THE ADJOURNMENT WAS GRANTED BY THE AO AND SHRI TARU N KUMAR GUPTA, FCA WAS REQUESTED TO FILE THE POWER OF ATTORNEY AND OTH ER DETAILS. THE CASE WAS THEN ADJOURNED TO 19.07.2007. FROM THIS ORDER-SHEE T, IT IS PROVED AND ESTABLISHED THAT SHRI TARUN KUMAR GUPTA WAS ALLOWED TO APPEAR BEFORE THE AO AND TO SEEK ADJOURNMENT, AND ADJOURNMENT WAS ALS O ALLOWED WITHOUT THERE BEING ANY POWER OF ATTORNEY BEING FILED ON TH AT DATE. HE WAS REQUESTED TO FILE POWER OF ATTORNEY AND OTHER DETAILS AND THE CASE WAS ADJOURNED TO 19.07.2007. IT IS, THUS ESTABLISHED THAT SHRI TARU N KUMAR GUPTA HAD APPEARED FOR AND ON BEHALF OF THE ASSESSEE WITHOUT FILING ANY POWER OF ATTORNEY, AND HIS APPEARANCE ON THE VERY FIRST DAY BEFORE THE AO HAS NOT BEEN OBJECTED TO BY THE ASSESSEE. THIS GOES TO EST ABLISH THAT SHRI TARUN KUMAR GUPTA WAS AN AUTHORIZED REPRESENTATIVE OF THE ASSESSEE WHEN HE FIRST APPEARED BEFORE THE AO EVEN THOUGH THE POWER OF ATT ORNEY WAS NOT FILED BY 11 HIM ON THAT DATE. IN THE COURSE OF HEARING WE INVI TED THE LEARNED COUNSEL FOR THE ASSESSEE TO SHOW AND POINT OUT ANY STATEMENT FR OM SHRI TARUN KUMAR GUPTA THAT HE WAS NOT AUTHORIZED TO ACCEPT THE NOTI CE FOR AND ON BEHALF OF THE ASSESSEE, OR TO EXPLAIN AS TO WHY THE NOTICE WAS RE CEIVED BY HIM IF IT WAS A CASE THAT HE WAS NOT AUTHORIZED BY THE ASSESSEE TO ACCEPT THE NOTICE FOR AND ON BEHALF OF THE ASSESSEE. IN REPLY THERETO, THE L EARNED COUNSEL FOR THE ASSESSEE HAS MERELY STATED THAT THE NOTICE WAS SERV ED UPON SHRI TARUN KUMAR GUPTA ON 30.08.2006 WHEN NO POWER OF ATTORNEY IN WRITING WAS FILED BEFORE THE AO, AND THUS IT WAS NOT A PROPER AND VAL ID SERVICE OF NOTICE. IN THE PRESENT CASE, FROM THE CONDUCT OF THE ASSESSEE AND FROM THE CONDUCT OF SHRI TARUN KUMAR GUPTA, WHO IS A CHARTERED ACCOUNTA NT, IT IS FULLY ESTABLISHED AND PROVED THAT SHRI TARUN KUMAR GUPTA WAS AUTHORIZED BY THE ASSESSEE TO APPEAR FOR AND ON BEHALF OF HIM BEFORE THE AO AND TO DO ALL OTHER ACTS AND DEEDS NECESSARY FOR THE COMPLETION OF THE ASSESSMENT OF THE ASSESSEE. SHRI TARUN KUMAR GUPTA OR THE ASSESSEE A T NO STAGE OF PROCEEDINGS HAD RAISED ANY OBJECTION THAT SHRI TARU N KUMAR GUPTA WAS NOT AUTHORIZED BY THE ASSESSEE TO APPEAR BEFORE THE AO AND ACCEPT THE NOTICE FOR AND ON HIS BEHALF. THE ASSESSEE HAS FILED AN AFFID AVIT DATED 25-07-2011 MERELY STATING ONE LINE IN THE AFFIDAVIT THAT NO NO TICE U/S 143(2) OF THE ACT PERTAINING TO THE ASSESSMENT YEAR 2005-06 WAS SERVE D ON HIM BY 12 31/10/2006. IN THIS AFFIDAVIT, HE HAS NOWHERE STAT ED THAT THE NOTICE SERVED UPON SHRI TARUN KUMAR GUPTA ON 30.08.2006 WAS NOT A VALID SERVICE, AND THAT SHRI TARUN KUMAR GUPTA WAS NOT AUTHORIZED BY H IM TO ACCEPT THE NOTICE FOR AND ON HIS BEHALF. THE AFFIDAVIT FILED BY THE ASSESSEE IS GENERAL ONE STATING MERELY THAT NOTICE U/S 143(2) WAS NOT SERVE D ON THE ASSESSEE BY 31.10.2006. THERE IS NO SPECIFIC DENIAL MADE BY TH E ASSESSEE IN THE AFFIDAVIT ABOUT THE FACTUM OF SERVICE OF NOTICE ON SHRI TARUN KUMAR GUPTA ON 30.08.2006. IT IS ALSO NOT IN DISPUTE THAT SHRI TA RUN KUMAR GUPTA IS A REGULAR COUNSEL AND AUTHORIZED REPRESENTATIVE OF TH E ASSESSEE AND HAD APPEARED FOR THE ASSESSEE BEFORE THE AO FROM TIME T O TIME EVEN WITHOUT FILING POWER OF ATTORNEY ON THE VERY FIRST DAY OF H IS APPEARANCE. IT IS NOT THE ASSESSEES CASE THAT SHRI TARUN KUMAR GUPTA WAS NOT THE ASSESSEES REGULAR COUNSEL AND AUTHORIZED REPRESENTATIVE TO REPRESENT HIM BEFORE THE AO FOR THE PURPOSE OF ASSESSMENT TO BE MADE UNDER THE ACT. SIN CE SHRI TARUN KUMAR GUPTA WAS AUTHORIZED AND EMPOWERED BY THE ASSESSEE TO APPEAR AND ACT FOR AND ON HIS BEHALF, MERE FACT OF FILING OF THE POWER OF ATTORNEY ON SUBSEQUENT DATES, CANNOT BY ITSELF BE A BASIS TO HOLD THAT HE WAS NOT AUTHORIZED BY THE ASSESSEE ON 30.08.2006 TO ACCEPT SERVICE OF NOTICE FOR AND ON BEHALF OF THE ASSESSEE. IT IS AN ADMITTED POSITION THAT SHRI TAR UN KUMAR GUPTA IS A QUALIFIED CHARTERED ACCOUNTANT AND HAS BEEN APPEARI NG BEFORE THE AO. IT IS 13 NOT UNDERSTOOD AS TO WHY THE CHARTERED ACCOUNTANT D ULY AUTHORIZED BY THE CHARTERED ACCOUNTANT ACT TO REPRESENT ANY ASSESSEE BEFORE ANY ASSESSING AUTHORITY WOULD APPEAR BEFORE THE AO AND ACCEPT THE SERVICE OF NOTICE FOR AND ON BEHALF OF THE ASSESSEE UNLESS HE WAS SO INS TRUCTED BY THE ASSESSEE, PARTICULARLY IN VIEW OF THE FACT THAT NEITHER SHRI TARUN KUMAR GUPTA HAS FILED ANY OBJECTION THAT HE WAS NOT AUTHORIZED TO ACCEPT THE SERVICE OF THE NOTICE FOR AND ON BEHALF OF THE ASSESSEE NOR THE ASSESSEE IN THE AFFIDAVIT HAS STATED THAT SHRI TARUN KUMAR GUPTA WAS NOT AUTHORIZED BY H IM TO ACCEPT THE NOTICE FOR AND ON BEHALF OF THE ASSESSEE AND TO APPEAR BEF ORE THE AO. HAVING REGARD TO THE CONDUCT OF THE ASSESSEE AS WELL AS OF SHRI TARUN KUMAR GUPTA, IT IS PROVED AND ESTABLISHED BEYOND ANY DOUBT THAT THE NOTICE SERVED UPON SHRI TARUN KUMAR GUPTA ON 30.08.2006 WAS A VALID SE RVICE INASMUCH AS SERVICE ON AN AGENT EMPOWERED TO ACCEPT SERVICE IS SUFFICIENT VALID SERVICE. WE, THEREFORE, REJECT THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT NOTICE U/S 143(2) SERVED UPON SHRI TARUN KUMAR GUPTA ON 30.08.2006 WAS NOT A VALID SERVICE AS IT WAS SERVED UPON THE P ROPER PERSON. 12. EVEN IF WE LOOK TO THE ISSUE FROM ONE MORE ANGL E, IT WOULD CLEAR AND ESTABLISH THAT THERE WAS A PROPER SERVICE OF NOTICE ISSUED UNDER SEC. 143(2) UPON THE ASSESSEE WITH REFERENCE TO THE NOTICE DATE D 31.05.2006 SENT BY REGISTERED POST VIDE ACKNOWLEDGEMENT RECEIPT NO. RL A5095 DATED 14 31.05.2006. IN THE ASSESSMENT ORDER, IT HAS BEEN C LEARLY STATED BY THE AO THAT NOTICE U/S 143(2) DATED 31.05.2006 WAS ISSUED AND THE SAME WAS SENT BY REGISTERED POST VIDE ACKNOWLEDGEMENT RECEIPT NO. RL A5095 DATED 31.05.2006. THE AO HAS ALSO STATED THAT THIS NOTIC E REMAINED UNATTENDED. IT IS NOT THE CASE OF THE ASSESSEE THAT THIS NOTICE SE NT BY REGISTERED POST HAD RETURNED BACK UNSERVED, OR OTHERWISE IT WAS NOT PRO PERLY STAMPED AND ADDRESSED. IN THE PRESENT CASE, THE ASSESSEES ADD RESS SHOWN IN THE ASSESSMENT ORDER AS 7/26, ANSARI ROAD, DARYA GANJ, NEW DELHI, HAS NOT BEEN FOUND TO BE INCORRECT ADDRESS. THE NOTICE HAS BEEN SENT TO THE ASSESSEES ADDRESS BY REGISTERED POST. THIS NOTICE HAS NOT BEEN RETURNED UNSERVED. AS PER PROVISO TO O.5, R-9 OF THE CODE O F CIVIL PROCEDURE, WHERE THE SUMMONS WERE PROPERLY ADDRESSED, PRE-PAID AND D ULY SENT BY REGISTERED POST ACKNOWLEDGEMENT DUE, THE DECLARATION BY THE CO URT THAT THE SUMMONS HAD BEEN DULY SERVED ON THE DEFENDANT SHALL BE MADE NOTWITHSTANDING THE FACT THAT THE ACKNOWLEDGEMENT HAVING BEEN LOST OR M ISLAID OR FOR ANY OTHER REASON, HAS NOT BEEN RECEIVED BY THE COURT WITHIN 3 0 DAYS FROM THE DATE OF ISSUE OF SUMMONS. THEREFORE, IN THE PRESENT CASE, WHEN NOTICE WAS PROPERLY ADDRESSED, PRE-PAID AND DULY SENT BY REGISTERED POS T ACKNOWLEDGEMENT DUE, IT SHALL BE PRESUMED THAT THE NOTICE HAS BEEN SERVE D UPON THE ASSESSEE IN THE NORMAL COURSE OF TIME. THE AO IS STATIONED AT NEW DELHI AND THE NOTICE HAS 15 ALSO BEEN SENT TO THE ASSESSEE AT NEW DELHI. THERE FORE, IT SHALL BE PRESUMED THAT NOTICE SENT ON 31.05.2006 FIXING THE DATE ON 8 .06.2006 HAS BEEN SERVED UPON THE ASSESSEE WITHIN THE NORMAL TIME OF 2 TO 3 DAYS FROM THE DATE OF DESPATCH. THE ASSESSEE HAS NO WHERE STATED IN THE AFFIDAVIT THAT NO SUCH NOTICE U/S 143(2) DATED 31.05.2006 WAS SENT BY REGI STERED POST ACKNOWLEDGEMENT DUE ON 31.05.2006 AND THE SAME WAS ACTUALLY NOT RECEIVED BY THE ASSESSEE. THE PRESUMPTION THAT THE NOTICE H AS BEEN SERVED UPON THE ASSESSEE IN THE NORMAL COURSE OF TIME WHEN THE SAME WAS SENT BY REGISTERED POST ACKNOWLEDGEMENT DUE AND WAS PROPERLY STAMPED A ND ADDRESSED TO THE ASSESSEE, CAN BE REBUTTED BY THE ASSESSEE BY ADDUCI NG AND FURNISHING MATERIAL TO THE CONTRARY OR BY DENYING THE SAME BY WAY OF AN AFFIDAVIT. IN THE AFFIDAVIT, THE ASSESSEE HAS MADE A GENERAL STATEMEN T WITHOUT SPECIFICALLY DENYING THE FACT ABOUT THE DISPATCH OF NOTICE BY RE GISTERED POST ACKNOWLEDGEMENT DUE TO THE ASSESSEE ON 31.05.2006. IN THE LIGHT OF THESE FACTS, IT IS THUS CLEAR THAT NOTICE U/S 143(2) DATE D 31.05.2006 SENT BY REGISTERED POST ACKNOWLEDGEMENT DUE PROPERLY STAMPE D AND ADDRESSED SHALL BE PRESUMED TO HAVE BEEN SERVED UPON THE ASSESSEE. 13. IN THE PRESENT CASE, THE ASSESSEE FILED RETURN OF INCOME ON 31.10.2005 AND AS PER PROVISO APPLICABLE ON THAT TIME, NOTICE U/S 143(2) WAS REQUIRED TO BE SERVED UPON THE ASSESSEE BEFORE THE EXPIRY OF 12 MONTHS FROM THE END OF 16 THE MONTH IN WHICH THE RETURN WAS FURNISHED. THERE FORE, THE LAST DATE FOR SERVICE OF THE NOTICE U/S 143(2) IN THE PRESENT CAS E WAS 31.10.2006. IN THE PRESENT CASE, THE NOTICE BY REGISTERED POST HAS BEE N SERVED UPON THE ASSESSEE IN THE FIRST WEEK OF JUNE 2006, AND THEN AGAIN THE NOTICE HAS BEEN SERVED UPON THE AUTHORIZED REPRESENTATIVE, SHRI TARUN KUMA R GUPTA ON 30.08.2006, AND BOTH THE NOTICES ARE WITHIN THE STATUTORY PERIO D PROVIDED UNDER SEC. 143(2) OF THE ACT. WE, THEREFORE, HOLD THAT THE AO HAS COMPLETED THE ASSESSMENT UNDER SEC. 143(3) AFTER SERVICE OF THE N OTICE UPON THE ASSESSEE WITHIN THE STATUTORY TIME LIMIT PROVIDED UNDER THE PROVISO TO SEC. 143(2). THUS, GROUND NO.1 RAISED BY THE ASSESSEE IS DECIDED AGAINST THE ASSESSEE, EVEN ON MERIT. 14. BEFORE PARTING WITH THE ISSUE, WE WOULD LIKE TO SAY THAT THE DECISION OF INCOME-TAX APPELLATE TRIBUNAL IN THE CASE OF ACIT V S. KEWALCHAND DAKALIA REPORTED IN 121 TTJ 273 RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE IS OF NO HELP TO THE ASSESSEE INASMUCH AS, IN THAT CASE, THE NOTICE WAS SERVED UPON THE EARLIER CHARTERED ACCOUNTANT SHRI P.M. CHO PRA AFTER THE ASSESSEE FILED A FRESH POWER OF ATTORNEY IN FAVOUR OF SHRI S .M. JAIN, CA WHICH WAS ACCEPTED BY HIM AND WAS ENCLOSED WITH THE RETURN OF INCOME. IN THE LIGHT OF THOSE FACTS, IT WAS HELD THAT THE SERVICE OF NOTICE U/S 143(2) ON SHRI P.M. CHOPRA AFTER A FRESH POWER OF ATTORNEY FILED IN FAV OUR OF SHRI S.M. JAIN ALONG 17 WITH THE RETURN OF INCOME, WAS NOT A PROPER AND VAL ID SERVICE OF NOTICE. THEREFORE, THIS CASE IS NOT APPLICABLE TO THE PRESE NT CASE. 15. THE ASSESSEE HAS ALSO RELIED UPON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. GIRDHARILAL (198 4) 147 ITR 379, WHERE IT WAS HELD THAT THE POWER OF ATTORNEY GIVEN TO AN AGE NT SHOULD BE CONSTRUED STRICTLY AND FROM THAT POWER OF ATTORNEY ONLY SUCH AUTHORITY, WHICH HAS BEEN CONFERRED EXPRESSLY OR BY IMPLICATION, SHOULD BE TA KEN CONSIDERATION. THIS CASE IS ALSO OF NO HELP TO THE ASSESSEE INASMUCH AS , IN THE PRESENT CASE, SHRI TARUN KUMAR GUPTA HAS BEEN CONFERRED UPON WITH THE AUTHORITY BY IMPLICATION TO RECEIVE NOTICE ISSUED UNDER SEC. 143 (2) FOR AND ON BEHALF OF THE ASSESSEE INASMUCH AS NO SUCH OBJECTION WAS EVER TAKEN BEFORE THE A.O. EITHER BY SHRI TARUN KUMAR GUPTA OR BY THE ASSESSEE THAT SHRI TARUN KUMAR GUPTA WAS NOT AUTHORIZED TO ACCEPT ANY SERVICE OF N OTICE FOR AND ON BEHALF OF THE ASSESSEE. 16. IN THE RESULT, GROUND NO.1 RAISED BY THE ASSESS EE IS REJECTED. 17. GROUND NO.2 RAISED BY THE ASSESSEE IS AS UNDER :- THE DISALLOWANCE OF INTEREST IS NOT PROPER / JUSTI FIED ON THE FACTS OF THE CASE. ALTERNATIVELY IT IS EXCESSIVE. 18. IN THE COURSE OF HEARING OF THIS APPEAL, THE LE ARNED COUNSEL FOR THE ASSESSEE HAS MERELY STATED THAT THE AUTHORIZED REPR ESENTATIVE OF THE ASSESSEE APPEARED BEFORE THE AO, HAS FAILED TO PRESENT THE P ROPER FACTS OF THE CASE 18 BEFORE THE AO WITH REGARD TO THE CLAIM OF DEDUCTION FOR INTEREST EXPENSES AMOUNTING TO RS.11,98,347/- AND THEREFORE, THE MATT ER WAS REQUESTED TO BE REMITTED BACK TO THE ASSESSING OFFICER FOR GIVING O NE MORE OPPORTUNITY TO THE ASSESSEE TO PLACE THE CORRECT FACTS REGARDING T HE ISSUE INVOLVED IN GROUND NO.2. 19. THE LEARNED DR ON THE OTHER HAND, SUBMITTED THA T THE LEARNED COUNSEL FOR THE ASSESSEE HAS FAILED TO POINT OUT THOSE FACT S AND MATERIALS WHICH ARE RELEVANT FOR DECIDING THE ISSUE AND WHICH HAD NOT B EEN PLACED BEFORE THE AO BY THE ASSESSEES AR DURING THE COURSE OF ASSESSMEN T PROCEEDINGS. IT WAS THUS CONTENDED BY THE LEARNED COUNSEL FOR THE ASSES SEE THAT THE ASSESSEES REQUEST TO REMAND THE MATTER BACK TO THE AO IS NOT JUSTIFIED AND THE ORDER OF THE LEARNED CIT(A) CONFIRMING THE DISALLOWANCE MAY BE UPHELD. 20. WE HAVE HEARD BOTH THE PARTIES AND HAVE GONE TH ROUGH THE ORDERS OF THE AUTHORITIES BELOW. 21. IN THIS CASE, IT WAS FOUND BY THE AO THAT THE A SSESSEE DECLARED INTEREST INCOME FROM TWO BANK ACCOUNTS AMOUNTING TO RS.230/- UNDER THE HEAD INCOME FROM OTHER SOURCES. THE ASSESSEE THEN DED UCTED THE SUM OF RS.11,98,347/- ON ACCOUNT OF INTEREST PAID AND HAD SHOWN A NEGATIVE FIGURE OF RS.11,98,117/- UNDER THE HEAD INCOME FROM OTHER SOURCES. IN THE COURSE OF HEARING, THE ASSESSEE WAS ASKED TO JUSTIF Y THE CLAIM OF DEDUCTION OF 19 INTEREST AMOUNTING TO RS.11,98,347/-. THE ASSESSEE HAD FURNISHED HIS REPLY VIDE LETTER DATED 13.11.2007 AND SUBMITTED THAT THE ASSESSEE HAD PAID THE INTEREST ON THE FOLLOWING ACCOUNTS:- (I) UNSECURED LOAN RS.2,40,000/- (II) ON LOAN FROM ALLAHABAD BANK AND LIC ETC. RS. 69,022/- (III) LOAN AGAINST FUTURE RENTALS FROM ALLAHABAD BA NK RS.8,89,325/- TOTAL RS.11,98,347/- 22. IT WAS FURTHER SUBMITTED BY THE ASSESSEE THAT U NSECURED LOANS WERE VERY OLD AND WERE INVESTED IN BUSINESS. IT WAS FUR THER SUBMITTED THAT LOAN OF RS.150.00 LAKHS WAS RAISED IN FINANCIAL YEAR 2004-0 5 FOR PURCHASING PROPERTY AND PARTLY INVESTED IN OM SHUBHAM HOUSING & CONSTRUCTION CO. (P) LTD. AS AN ADVANCE. IT WAS ALSO STATED THAT AL L THESE LOANS HAVE BEEN USED FOR THE BUSINESS OF THE ASSESSEE AND THEREFORE, INT EREST SHOULD BE ALLOWED AS DEDUCTION AGAINST OTHER INCOME OF THE ASSESSEE. TH E AO CONSIDERED THE ASSESSEES SUBMISSIONS AND HAD TAKEN A VIEW THAT T HE CLAIM OF DEDUCTION OF INTEREST AMOUNTING TO RS.11,98,347/- IS NOT ADMISSI BLE BY OBSERVING AND HOLDING AS UNDER:- THE CLAIM OF THE ASSESSEE IS CLEARLY NOT ALLOWABL E. THE ASSESSEE HAS CLAIMED THAT ALL THE LOANS HAVE BEEN U SED FOR BUSINESS PURPOSES. IT IS INTERESTING TO NOTE THAT DURING THE YEAR THERE IS NO BUSINESS ACTIVITY AND NO PROFIT AND LOS S FROM ANY BUSINESS HAS BEEN DECLARED. FURTHER IT HAS ALSO NO T BEEN ESTABLISHED THAT HOW AND IN WHAT MANNER THESE LOANS HAVE BEEN 20 USED FOR ADVANCE AGAINST PROPERTY. THE ASSESSEE HA S FILED COPY OF ACCOUNT WITH OM SHUBHAM HOUSING AND CONSTRUCTION CO. (P) LTD. WHEREIN HE HAS SHOWN ADVANCES AGAINST PROP ERTY OF RS.1.25 CRORES ON 29.09.2004 AND 13.10.2004. THESE AMOUNTS APPEAR TO BE THE LOAN TAKEN FROM ALLAHABAD BANK DUR ING FINANCIAL YEAR 2004-05. THUS BANK LOANS TO THIS EX TENT APPEAR TO HAVE BEEN UTILIZED FOR ADVANCE AGAINST PROPERTIE S. THE INTEREST PAID ON THESE ADVANCES CANNOT BE ALLOWED A S DEDUCTION UNDER THE HEAD INCOME FROM OTHER SOURCES. IT IS FU RTHER INTERESTING TO NOTE THAT THE ASSESSEE HAS FILED ONE LETTER DATED 24.09.2004 ISSUED BY ALLAHABAD BANK, NOIDA BRANCH S HOWING SANCTION OF LOAN OF RS.1.5 CRORES FOR BUSINESS PURP OSES. HOWEVER, ASSESSEE HAS NOT BEEN DOING ANY BUSINESS A S IS APPARENT FROM STATEMENT OF INCOME AND BALANCE SHEET FILED. THUS THE ASSESSEE HAS NOT PROVED HIS CLAIM TO BE AL LOWABLE EITHER UNDER THE HEAD INCOME FROM OTHER SOURCES OR IN ANY OTHER HEAD OF INCOME. ACCORDINGLY, THIS CLAIM IS D ISALLOWED. AN ADDITION FOR RS.11,98,347/- ON THIS ACCOUNT. TH E ASSESSEE HAS CONCEALED HIS PARTICULARS OF HIS INCOME TO THIS EXTENT AND FURNISHING INACCURATE PARTICULARS OF HIS INCOME. P ENALTY PROCEEDINGS U/S 271(1)(C ) HAS BEEN INITIATED SEPAR ATELY FOR THIS ADDITION. 23. ON AN APPEAL, THE LEARNED CIT(A) CONFIRMED THE AOS ORDER AFTER DISCUSSING THE ISSUE AND OBSERVING AS UNDER:- 4.1. THE FACTS EMANATING FROM THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE IS THAT THE ASSESSEE HA D CLAIMED THE INTEREST PAYMENT OF RS.11,98,347/- AND HAD SET OFF AGAINST THE INTEREST INCOME FROM BANKS OF RS.230/- AND HAD CLAI MED NET LOSS OF RS.(-) 11,98,117/- (RS.11,98,347/- (-) RS.230/-) . THE ASSESSEE HAS NO BUSINESS INCOME OR INCOME FROM OTHER SOURCES . IT IS NOTED BY THE AO THAT THE ASSESSEE HAD CLAIMED THE P AYMENT OF INTEREST FOR THE LOANS OF RS.1,50,00,000/- WHICH AR E TAKEN FROM THE ALLAHABAD BANK FOR THE PURPOSE OF GIVING ADVANC E. 4.2. THE ASSESSEE HAD PURCHASED THE PROPERTY FROM O M SHUBHAM HOUSING & CONSTRUCTION CO. P. LTD. AND HAD MADE THE PAYMENT OF RS.82,50,000/- DURING THE PERIOD 17/ 06/2004 TO 21 22/09/2004. THE ASSESSEE HAD BORROWED THE LOAN OF RS.1,50,00,000/- AND HAD GIVEN SEPARATE ADVANCE OF RS.1,25,00,000/- DURING THE PERIOD 29/09/2004 TO 13 /10/2004 TO OM SHUBHAM HOUSING& CONSTRUCTION CO. P. LTD AND AS SUCH THIS ADVANCE WAS NOT AT ALL RELATED FOR THE PURCHAS E OF THE PROPERTY. THE AO WAS OF THE VIEW THAT THE INTEREST PAYMENT OF RS.11,98,347/- IS NEITHER RELATED TO BUSINESS INCOM E NOR TO INCOME FROM OTHER SOURCES NOR TO INCOME FROM HOUSE PROPERTY AND ACCORDINGLY HAS DISALLOWED THE INTEREST PAYMENT . 4.3. THE ASSESSEE IS IN APPEAL AGAINST THE DISALLOW ANCE OF THE AO BUT THE ASSESSEE HAS NOT BEEN ABLE TO BRING ANY MATERIAL ON RECORD TO SHOW AS TO HOW THE INTEREST PAYMENT CAN B E ALLOWED WHEN THE BORROWED MONEY HAS BEEN USED FOR THE PURPO SE OF GIVING ADVANCE AND IS NOT AT ALL RELATED EITHER TO HOUSE PROPERTY INCOME OR BUSINESS INCOME OR INCOME FROM OTHER SOUR CES. THE ONLY WORTHWHILE SUBMISSION OF THE ASSESSEE IS THAT THE MONEY WAS BORROWED AND ADVANCED FOR THE PURPOSE OF FUTURE PURCHASE OF PROPERTY BUT THE FACTS OF THE CASE DO NOT SUPPOR T THE ARGUMENT OF THE ASSESSEE. 4.4. I HAVE CONSIDERED THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE AND I DO NOT FIND ANY M ERIT IN THE SUBMISSION OF THE ASSESSEE. AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT TH E AO HAS RIGHTLY DISALLOWED THE INTEREST AS THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE THE CLAIM AND ACCORDINGLY, THE ADDI TION MADE BY THE AO IS CONFIRMED. 24. FROM THE ORDER OF THE LEARNED CIT(A) IT IS CLEA R THAT THE ASSESSEE PURCHASED A PROPERTY FROM OM SHUBHAM HOUSING & CONS TRUCTION CO. PVT. LTD. AND MADE THE PAYMENT OF RS.82,50,000/- DURING THE PERIOD 17/06/2004 TO 22/09/2004. THE ASSESSEE HAD BORROWED THE LOAN O F RS.1,50,00,000/- AND HAD GIVEN SEPARATE ADVANCE OF RS.1,25,00,000/- DURI NG THE PERIOD 29/09/2004 TO 13/10/2004 TO OM SHUBHAM HOUSING& CON STRUCTION CO. P. 22 LTD. FROM THIS FACT, IT WAS CLEAR THAT THE ADVANCE OF RS.1,25,00,000/- DURING THE PERIOD FROM 29-09-2004 TO 13-10-2004 WAS NOT AT ALL RELATED TO THE PURCHASE OF THE PROPERTY. BEFORE THE LEARNED CIT(A ), THE ASSESSEE WAS NOT ABLE TO BRING ANY MATERIAL ON RECORD TO SHOW AS TO HOW THE INTEREST PAYMENT CAN BE ALLOWED WHEN THE BORROWED MONEY WAS USED FOR THE PURPOSE OF GIVING ADVANCE TO M/S. OM SHUBHAM HOUSING& CONSTRUC TION CO. P. LTD. AND IT WAS NOT AT ALL EITHER RELATED TO THE HOUSE P ROPERTY INCOME OR EARNING OF BUSINESS INCOME OR INCOME FROM OTHER SOURCES. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO NOT SUBMITTED ANY DETAILS BEFORE US TO POINT OUT THAT WHAT ARE THOSE MATERIAL FACTS WHICH WERE NOT PLACED BEFO RE THE AO TO DECIDE THE ISSUE CORRECTLY. THE LEARNED COUNSEL FOR THE ASSES SEE HAS MERELY SUBMITTED A GENERAL STATEMENT THAT THE CORRECT FACTS OF THE CAS E WERE NOT PLACED BEFORE THE AO BY THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE AND THEREFORE, THE MATTER MAY BE REMANDED BACK TO THE AO FOR HIS FRESH CONSIDERATION WITHOUT STATING WHAT ARE THOSE FACTS AND DETAILS WHICH NEED TO BE TAKEN INTO ACCOUNT FOR DECIDING THE ISSUE. THE ASSESSEE COULD HAVE PR ODUCED ALL THOSE DETAILS BEFORE US WITH A REQUEST TO ADMIT THE ADDITIONAL EV IDENCES FOR PROPER ADJUDICATION OF THE MATTER, BUT THE ASSESSEE HAS NO T DONE SO. THE ASSESSEE HAS ONLY SUBMITTED THE DETAILS OF THE INTEREST PAID WITHOUT PRODUCING ANY EVIDENCE OR MATERIAL ABOUT THE PURPOSE FOR WHICH TH E BORROWED AMOUNT WAS 23 USED. THESE FACTS WERE WITHIN THE SPECIFIC KNOWLED GE OF THE ASSESSEE, AND THESE COULD HAVE BEEN SUBMITTED BY THE ASSESSEE BEF ORE US FOR PROPER APPRECIATION OF THE MATTER BUT THE ASSESSEE HAS CHO SEN NOT TO SUBMIT THE DETAILS OF THE PURPOSE FOR WHICH THE BORROWED AMOUN T WAS USED AND MADE A GENERAL SUBMISSION THAT THE MATER MAY BE RESTORED B ACK TO THE AO FOR FRESH ADJUDICATION. SINCE THE ASSESSEE HAS FAILED TO FUR NISH THE DETAILS OF PURPOSE FOR WHICH THE BORROWED AMOUNT WAS USED NOR THE ASSE SSEE HAS BEEN ABLE TO POINT OUT THOSE FACTS AND DETAILS, WHICH WERE NOT P LACED BEFORE THE AO BY HIS AUTHORIZED REPRESENTATIVE, WE ARE NOT INCLINED TO R ESTORE THE MATTER BACK TO THE FILE OF THE AO SO BLINDLY. THEREFORE, THE GROU ND NO.2 RAISED BY THE ASSESSEE IS ALSO REJECTED. 25. GROUND NO.3 IS AS UNDER:- NOTIONAL RENT ASSESSED BY THE AO IN RESPECT O PROP ERTY AT NAVI MUMBAI IS BAD IN LAW BEING CONTRARY TO THE PROVISIO NS OF SECTION 23(1)(C) OF THE ACT ALTERNATIVELY, NOTIONAL RENT ASSESSED EXCESSIVE. 26. IN THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE AO THAT THE ASSESSEE WAS HAVING PROPERTY AT MUMBAI AND NO I NCOME FROM THIS PROPERTY WAS DECLARED IN THE RETURN OF INCOME. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FURNISHED AGREEMENT FOR S ALE DATED 30.12.1997 WHEREBY THIS PROPERTY, BEING SHOP, WAS PURCHASED FO R RS.4,80,000/-. THE ASSESSEE VIDE LETTER DATED 13.11.2007 SUBMITTED BEF ORE THE AO THAT THIS SHOP 24 WAS LYING VACANT AND NO INCOME WAS ACTUALLY EARNED FROM THIS PROPERTY. HOWEVER, THE AO STATED THAT AS PER SEC. 23, EVEN IF SOME PROPERTY IS NOT EARNING ANY INCOME, ITS ANNUAL VALUE HAS TO BE TAXE D ON NOTIONAL BASIS TO DETERMINE THE VALUE FOR WHICH THE PROPERTY MIGHT RE ASONABLY BE EXPECTED TO LET OUT IN THE YEAR. THE AO, THEREFORE, ESTIMATED THE RENTAL VALUE @ RS.40/- PER SQ. FT. PER MONTH AND DETERMINE THE TOTAL RENT AT RS.20,000/- PER MONTH OF THE SHOP AREA OF 500 SQ. FT. THE ANNUAL INCOME OF RS.2,40,000/- WAS THUS, ADDED TO THE ASSESSEES INCOME. 27. ON AN APPEAL, THE LEARNED CIT(A) UPHELD THE ORD ER OF THE AO. THE CIT(A) OBSERVED THAT THE HOUSE PROPERTY WAS LOCATED IN A PRIME LOCALITY OF MUMBAI, WHERE THERE WAS A PERENNIAL SHORTAGE OF HOU SING AND THERE WAS ALWAYS A HIGH DEMAND OF HOUSE PROPERTY AND IT WAS N OT AT ALL BELIEVABLE THAT THE HOUSE WAS LYING VACANT. THE CIT(A) FURTHER OBS ERVED THAT EVEN OTHERWISE, THE AO WAS ENTITLED TO TAKE THE NOTIONAL VALUE OF THE HOUSE PROPERTY AS PROVIDED UNDER SEC. 22 & 23 OF THE ACT AND THE AO WAS VERY REASONABLE TO ALLOW THE STATUTORY DEDUCTION UNDER S EC.24 OF THE ACT. THE RENTAL INCOME ESTIMATED BY THE AO WAS THUS CONFIRME D BY THE LEARNED CIT(A). 28. HENCE, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 25 29. IN THE COURSE OF HEARING OF THIS APPEAL, THE LE ARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION OF COORDINATE BEN CH OF THE TRIBUNAL I.E. ITAT, MUMBAI BENCH `C, IN THE CASE OF PREMSUDHA EX PORTS (P) LTD. VS. ACIT (2008) 110 ITD 158 (MUM.). 30. THE LEARNED DR ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 31. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. FROM THE ORDER OF THE AO, IT IS CLEAR THAT THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE SHOP WAS LYING VAC ANT AND NO INCOME WAS EARNED FROM THIS PROPERTY. THIS FACT HAS NOT BEEN DISPUTED BY THE AO. THE LEARNED CIT(A) HAS MERELY DRAWN A PRESUMPTION THAT IN THE PRIME LOCALITY OF MUMBAI, IT COULD NOT BE BELIEVED THAT THE HOUSE WAS LYING VACANT. THE AUTHORITIES BELOW HAVE NOT BEEN ABLE TO BRING ANY M ATERIAL ON RECORD TO ESTABLISH THAT ANY RENT WAS ACTUALLY RECEIVED BY TH E ASSESSEE FROM THE PROPERTY IN QUESTION. IN THE CASE OF PREMSUDHA EXP ORTS (P) LTD. (SUPRA), THE ITAT CONSIDERED THE INTERPRETATION OF THE WORDS PR OPERTY IS LET IN CLAUSE (C) OF SEC. 23(1) OF THE ACT AND HELD THAT THE WORD S PROPERTY IS LET CANNOT MEAN ACTUAL LETTING OUT OF THE PROPERTY BUT ALSO IN CLUDE THE PROPERTIES WHICH ARE HELD FOR LETTING OUT HAVING INTENTION TO LET OU T IN THE RELEVANT YEAR COUPLED WITH THE EFFORTS MADE FOR LETTING IT OUT. THE TRIBUNAL FURTHER HELD 26 THAT IF THESE CONDITIONS ARE SATISFIED, IT HAS TO B E HELD THAT THE PROPERTY IS A LET OUT PROPERTY AND THE SAME WOULD FALL WITHIN THE PUR VIEW OF CLAUSE (C) OF SEC. 23(1) OF THE ACT. IN THAT CASE, IT WAS FOUND BY TH E TRIBUNAL THAT THE ASSESSEE WAS ENTITLED TO PURCHASE PROPERTY FOR ITS LET OUT A ND TO EARN RENTAL INCOME AND IN THAT REGARD COPY OF RESOLUTION OF BOARD OF DIREC TORS WAS TAKEN INTO CONSIDERATION. IN THE RESOLUTION, THE COMPANY ALSO FIXED MONTHLY RENT AND THE SECURITY DEPOSIT IN RESPECT OF THE PROPERTY AND THE ASSESSEE HAD APPROACHED VARIOUS ESTATE AND FINANCE CONSULTANTS F OR LETTING OUT THE PROPERTY BUT UNFORTUNATELY, THE ASSESSEE COULD NOT GET A SUITABLE TENANT ON ACCOUNT OF HEFTY RENT AND SECURITY DEPOSITS. IT WA S NOTICED BY THE BENCH THAT THE ASSESSEE HAD APPROACHED VARIOUS PROPERTY CONSUL TANTS TO LET OUT ITS PROPERTY AND DURING THE YEAR IT COULD NOT GET A SUI TABLE TENANT. THE ASSESSEE MADE ITS CONTINUOUS EFFORTS TO LET OUT THE PROPERTY DURING THE WHOLE YEAR. UNDER THESE CIRCUMSTANCES, THE TRIBUNAL HAD TAKEN A VIEW THAT THE PROPERTY COULD BE HELD TO BE LET OUT PROPERTY WITHIN THE MEA NING OF SUB-CLAUSE (C) OF SEC. 23(1) OF THE ACT. SINCE THE PROPERTY WAS HELD TO BE LET OUT PROPERTY, ITS ANNUAL LETTING VALUE WAS REQUIRED TO BE WORKED OUT AS PER CLAUSE (C) OF SEC. 23(1) OF THE ACT AND ACCORDING TO THAT CLAUSE, THE RENT RECEIVABLE DURING THAT YEAR WAS `NIL AND THE SAME WAS TO BE TAKEN AS AN A NNUAL VALUE OF THE PROPERTY IN ORDER TO COMPUTE THE INCOME FROM HOUSE PROPERTY. 27 32. HOWEVER, THE FACTS OF THE PRESENT CASE AS DISCU SSED BY THE AO AND THE LEARNED CIT(A) IN THEIR RESPECTIVE ORDERS DO NOT SU GGEST AS TO WHETHER THE PRESENT ASSESSEE MADE SINCERE EFFORTS TO LET OUT TH E PROPERTY IN QUESTION BUT DUE TO SOME REASONS, IT COULD NOT BE LET OUT. IN O RDER TO APPLY THE RATIO OF THE AFORESAID DECISION OF ITAT, MUMBAI BENCH IN THE CAS E OF PREMSUDHA EXPORTS (P) LTD. (SUPRA), CERTAIN FURTHER ENQUIRIES ARE ESSENTIAL. WE THEREFORE, RESTORE THIS MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR HIS FRESH ADJUDICATION AS PER LAW AFTER PROVIDING REASO NABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE AO SHALL CONSIDER THE A FORESAID DECISION OF ITAT MUMBAI AND THEN DECIDE THE ISSUE IN THE LIGHT OF TH E FACTS OF THE PRESENT CASE. THE ASSESSEE SHALL BE AT LIBERTY TO RAISE ALL SUCH OTHER CONTENTIONS OR SUBMISSIONS AS HE MAY WISH IN SUPPORT OF HIS CASE W HICH SHALL BE DULY CONSIDERED AND EXAMINED BY THE AO AS PER LAW. WE O RDER ACCORDINGLY. 33. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR A STATISTICAL PURPOSE. 34. THIS DECISION IS PRONOUNCED IN THE OPEN COURT O N 12 TH AUGUST, 2011. SD/- SD/- (B.C. MEENA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12 TH AUGUST, 2011. 28 ITA NO.2638/DEL/2011 COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.