VINOD HARBANSLAL KHETERPAL, THANE V. ASST CIT CEN CIR 46, MUMBAI

ITA 2739/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3375 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 21-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIVEK BATRA
• Assessee Lawyers: USHA GOPALAN
• Keywords: Deemed owner of house property; Earning of tax free income; Corroborative evidences
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI BEFORE SHRI JASON P. BOAZ (AM) AND SHRI SANDEEP GOS AIN (JM) ITA NO. 2739/MUM/2014 ASSESSMENT YEAR: 2008-09 VINOD HARBANSLAL KHETERPAL, 601, M.V. EVEREST BLDG, OFF L.B.S.MARGA, OPP. THANEWALA GARAGE, THANE (W)- 400601. PAN: ABDPK1556F VS. THE ACIT CENTRAL CIRCLE - 46, MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : MS. USHA GOPALAN RESPONDENT BY : SHRI. VIVEK BATRA DATE OF HEARING: 17/03/2016 DATE OF PRONOUNCEMENT: 30/03/2016 O R D E R PER JASON P. BOAZ, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER OF THE CIT(APPEALS)-38, MUMBAI DT. 21/02/2014 FOR ASST. YE AR 2008-09. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER:- 2.1 THE ASSESSEE FILED HIS RETURN OF INCOME FOR ASS T. YEAR 2008-09 ON 21/12/2009 DECLARING TOTAL INCOME OF RS. 60,34,750/ -, AND AGRICULTURAL INCOME OF RS. 14,14,515/-. THE CASE WAS TAKEN UP FO R SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME T AX ACT, 1961 ( IN SHORT THE ACT) DT. 31/12/2008 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS. 77,89,260/- IN VIEW OF THE FOLLOWING ADDITI ONS:- 2 ITA NO. 2739/MUM/2014 ASSESSMENT YEAR: 2008-09 (I) ADDITION U/S 23(4)(B) UNDER THE HEAD INCOME FROM HOUSE PROPERTY RS. 3,40,000/- (II) ADDITION U/S 68 OUT OF AGRICULTURAL INCOME RS. 14,14,515/- 2.2. AGGRIEVED BY THE ORDER OF ASSESSMENT FOR ASST. YEAR 2008-09 DT. 31/12/2010, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APPEALS)-38, MUMBAI WHO DISPOSED OF THE APPEAL VIDE THE IMPUGNED ORDER DT. 21/02/2014 ALLOWING THE ASSESSEE PARTIAL RELIEF. 3. THE ASSESSEE, BEING AGGRIEVED BY THE ORDER OF TH E CIT(APPEALS)-38, MUMBAI DT. 21/02/2014 HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL RAISING THE FOLLOWING GROUNDS:- 1. THE ASSESSING OFFICER IS NOT JUSTIFIED FOR MAKIN G AN ADHOC ADDITION OF RS. 3,40,000/- AS INCOME FROM DEEMED LE T OUT HOUSE PROPERTY IGNORING THE FACT THAT : 1.1 THE FAIR MARKET RENT FOR PROPERTY IN THE VICINI TY OF THE SAID DEEMED LET OUT PROPERTIES ARE QUOTED AT APPROX. R S. 8000 TO RS. 10,000 PER MONTH. 2. THE ASSESSING OFFICER IS NOT JUSTIFIED IN DISALL OWING RS. 14,14,515 IGNORING THE FACT THAT:- 2.1 THE APPELLANT OWNS 15 ACRES OF LAND ON WHICH A PPELLANT IS GROWING COCONUTS, MANGOES, GUAVAS AND VEGETABLES. 2.2 THE APPELLANT HAS BEEN EARNING AGRICULTURAL IN COME FROM PAST SEVERAL YEARS AND INCOME IS SHOWN AS AGRICULTURAL I NCOME IN THE RETURN OF INCOME FILED WITH THE INCOME TAX DEPARTME NT AND HAS ALSO 3 ITA NO. 2739/MUM/2014 ASSESSMENT YEAR: 2008-09 BEEN ASSESSED AS AGRICULTURAL INCOME AFTER SCRUTINY VIDE ASSESSMENT ORDER PASSED U/S 143(3) OF THE INCOME TA X DURING THE PRECEDING ASSESSMENT YEARS. 3. THE APPELLANT CRAVES LEAVE TO MAKE ADDITIONS, DE LETION OR ALTERATION TO THE ABOVE GROUNDS OF APPEAL. 4.1 IN GROUND NO: 1 (SUPRA) THE ASSESSEE CONTENDS THAT THE ASSESSING O FFICER (AO) WAS NOT JUSTIFIED IN MAKING AN ADHOC ADDITIO N OF RS. 3,40,000/- AS INCOME FROM DEEMED LET OUT PROPERTY IGNORING THE FA CT THAT THE FAIR MARKET RENT FOR PROPERTY IN THE VINCITY OF THE SAID PROPERTIES ARE QUOTED AT APPROX RS. 8,000 TO RS. 10,000 PER MONTH. THE LD. AR WAS HEARD AND T HE MERELY REITERATED THE SUBMISSIONS PUT FORTH BEFORE THE AO. 4.2 PER CONTRA, THE LD. DR VEHEMENTLY SUPPORTED TH E ORDERS OF THE AUTHORITIES BELOW. IT WAS SUBMITTED THAT INSPITE OF THE FACT TH AT THE LD. CIT(A) HAS FIXED THE ASSESSEES APPEALS AS MANY AS 5 TIMES, THE ASSESSEE FAILED TO ATTEND/ SUBMIT ANY DETAILS WHATSOEVER AND THE LD. CIT(A) DISPOSED OFF THE MATTER ON THE BASIS OF MATERIAL ON RECORD ALLOWING THE ASSESSEE DEDUCTI ON U/S 24(1) OF THE ACT. THE LD. DR FURTHER CONTENDED THAT NO MATERIAL EVIDENCE WAS BROUGHT ON RECORD BY THE ASSESSEE IN THESE PROCEEDINGS TO CONTROVERT THE FINDINGS OF THE LD. CIT(A) IN RESPECT OF THE ESTIMATION OF DEEMED RENTAL INCOME F ROM THE TWO RESIDENTIAL FLATS AT RS. 3,40,000/-. 4.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD ON THIS ISSUE. IT IS SEEN THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE AS SESSEE HAD NOT SHOWN RENTAL INCOME FROM TWO OF HIS PROPERTIES; I.E. A FL AT AT 504, HAWA MAHAL, THANE AND A RESIDENTIAL HOUSE AT VAKRATUND, THANE. INVOKI NG THE PROVISIONS OF 4 ITA NO. 2739/MUM/2014 ASSESSMENT YEAR: 2008-09 SECTION 23(4)(B) OF THE ACT, THE AO COMPUTED THE IN COME FROM THE AFORESAID TWO PROPERTIES AT RS. 3,40,000/-. 4.3.2 ON APPEAL THE LD. CIT(A) WHILE UPHOLDING THE AOS ESTIMATION OF INCOME FROM THE ABOVE TWO PROPERTIES AT RS. 3,40,000/- HE DIRECTED THE AO TO ALLOW THE ASSESSEE DEDUCTION U/S 24(1) OF THE ACT @ 35% OF TH E ANNUAL LETTING VALUE DETERMINED. THE FINDING OF THE LD. CIT(A) IN THE IM PUGNED ORDER AT PARAS 7.0 TO 7.2 THEREOF ARE AS UNDER:- DECISION : 7.0 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, THE STAND TAKEN BY THE AO IN THE ASSESSMENT ORDER AND THE GROUNDS O F APPEAL. 7.1 THE APPELLANTS SUBMISSION THAT THE MONTHLY REN TAL IN RESPECT OF THE TWO PROPERTIES IN QUESTION RANGE BETWEEN RS. 8, 000/- TO RS. 10,000/- IS NOT SUPPORTED BY ANY EVIDENCE AND THERE FORE, THE APPELLANTS SUBMISSIONS ARE NOT ACCEPTABLE. THE HON BLE SUPREME COURT IN THE CASE OF SHEILA KAUSHISH VS, CIT(1981) 131 ITR 435, HELD THAT THE ANNUAL VALUE OF THE PROPERTY IS REQUIRED T O BE DETERMINED WITH REFERENCE TO STANDARD RENT AND NOT THE ACTUA L RENT RECEIVED. IN THE CASE OF SMT. RADHA DEVI DALMIYA 125 ITR 134 THE HONBLE ALLAHABAD HIGH COURT HELD THAT THE DETERMINATION OF THE ANNUAL LETTING VALUE ON THE BASIS OF 7% OF THE INVESTMENT WAS A JUST AND A FAIR METHOD OF DETERMINING THE ANNUAL LETTING VALUE . THE HONBLE SUPREME COURT IN THE CASE OF DR. BALBIR SINGH 152 I TR 388 HELD THAT IN ESTIMATING ALV, RETURN ON INVESTMENT IS TO BE TA KEN ON THE BASIS OF 7.5% TO 8.5% OF COST. IN THE CASE OF CHEM MECH ( P) LTD. 83 ITD 427, THE HONBLE ITAT, MUMBAI HELD THAT THE ALV HAS TO BE DETERMINED ON THE BASIS OF (I) STANDARD RENT DETERM INED IN ACCORDANCE WITH THE RENT CONTROL ACT (II) ANNUAL MU NICIPAL VALUE IF AVAILABLE (III) THE ACTUAL RENT, IF THE ACTUAL RENT RECEIVED OR RECEIVABLE 5 ITA NO. 2739/MUM/2014 ASSESSMENT YEAR: 2008-09 IS MORE THAN THE STANDARD RENT OR ANNUAL MUNICIPAL VALUE. THE TRIBUNAL FURTHER HELD THAT THE HIGHEST OF THESE THR EE FIGURES WAS THE STANDARD RENT AS PER THE BOMBAY RENT CONTROL ACT WH ICH WAS 8.5% OF THE TOTAL INVESTMENT AND THEREFORE THE ASSESSING OFFICER WAS DIRECTED TO ADOPT THE STANDARD RENT AT 8.5% OF THE TOTAL INVESTMENT AS THE ANNUAL VALUE. 7.2. THEREFORE, IN VIEW OF THE PROVISIONS OF SECTIO N 23(4)(B) OF THE ACT, THE ESTIMATION OF INCOME FROM THE HOUSE PROPERTIES OTHER THAN THE SELF OCCUPIED PROPERTY AT RS. 3,40,000/- MADE BY TH E AO IS CONSIDERED REASONABLE AND PARTICULARLY IN VIEW OF T HE FACT THAT THE CONTRARY HAS NOT BEEN PROVED BY THE APPELLANT AND THEREFORE, THE ADDITION IS HEREBY CONFIRMED. HOWEVER, THE AO IS DI RECTED TO ALLOW THE DEDUCTION U/S 24(1) OF THE ACT @ 30% OF ANNUAL LETTING VALUE DETERMINED. 4.3.3 BEFORE US, THE LD. AR, EXCEPT FOR REITERATING THE GROUNDS RAISED AND THE SUBMISSIONS PUT FORTH BEFORE THE AO, HAS NOT BROUGH T ON RECORD BEFORE US ANY MATERIAL EVIDENCE TO CONTROVERT THE FINDINGS OF THE LD. CIT(A) ON THIS ISSUE (SUPRA). IN THIS FACTUAL MATRIX OF THE CASE AS DISC USSED ABOVE, WE FIND NO REASON OR MATERIAL EVIDENCE BEFORE US TO WARRANT INTERFERE NCE IN OR DEVIATION FROM THE FINDING OF THE LD. CIT(A) THAT IN VIEW OF THE PROVI SIONS OF SECTION 23(4)(B) OF THE ACT, THE ESTIMATIONS OF INCOME FROM THE AFORESAID T WO PROPERTIES OTHER THAN THE SELF OCCUPIED PROPERTY AT RS. 3,40,000/- PER ANNUM IS REASONABLE AND CONSEQUENTLY UPHOLD THE SAME. ACCORDINGLY GROUND NO . 1,1.1 RAISED BY THE ASSESSEE IS DISMISSED. 5.1 IN GROUND NO. 2( 2.1 AND 2.2) , THE ASSESSEE CONTENDS THAT THE AO IS NOT JUSTIFIED IN HOLDING THAT AGRICULTURAL INCOME DECLA RED TO THE EXTENT OF RS. 14,14,515/- HAS NOT BEEN ESTABLISHED SINCE THE ASSE SSEE OWN 15 ACRES OF LAND 6 ITA NO. 2739/MUM/2014 ASSESSMENT YEAR: 2008-09 ON WHICH HE IS GROWING COCONUTS, MANGOES, GUAVAS AN D VEGETABLES FOR PAST SEVERAL YEARS, WHICH HAS BEEN DECLARED IN THE RETUR NS OF INCOME FILED WITH THE INCOME TAX DEPARTMENT AND ACCEPTED BY THEM. THE LD. AR WAS HEARD IN SUPPORT OF THE GROUNDS RAISED AND RE-ITERATED THE S UBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. A COPY OF THE ORDER OF ASSESSMEN T PASSED U/S 143(3) OF THE ACT FOR ASST. YEAR 2006-07 WAS FILED TO SHOW THAT O UT OF AGRICULTURAL INCOME DECLARED, 20% THEREOF WAS DISALLOWED FOR NON PRODUC TION OF PROOF/ RECEIPTS. IT WAS PRAYED THAT SINCE A MAJOR PORTION OF THE AGRICU LTURAL INCOME DECLARED BY THE ASSESSEE WAS ACCEPTED IN THE PAST, IN THIS YEAR ALSO THE AUTHORITIES BELOW MAY BE DIRECTED TO ALLOW THE ASSESSEES CLAIM AFTER VERIFYING THE SUPPORTING EVIDENCES IN THIS REGARD WHICH THE ASSESSEE UNDERTA KES TO FILE. 5.2 PER CONTRA, THE LD. DR EMPHATICALLY SUPPORTED T HE IMPUGNED ORDER OF THE LD. CIT(A) IN HOLDING THAT THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE AS EXEMPT WAS NOT ESTABLISHED WITH ANY MATERIAL EVIDEN CE. IT WAS CONTENDED THAT THE AUTHORITIES BELOW HAVE OBSERVED FROM THE 7/12 A BSTRACT OF THE SAID AGRICULTURAL LANDS THAT THE SAID LANDS ARE NON IRRI GATED AND NO CROPS WERE GROWN ON THE SAID AGRICULTURAL LANDS EXCEPT FOR GRA SS. IT WAS ALSO SUBMITTED THAT DESPITE AFFORDING THE ASSESSEE ADEQUATE OPPORT UNITIES, THE ASSESSEE HAS FAILED TO PRODUCE THE REQUIRED EVIDENCES DURING APP EAL PROCEEDINGS IN RESPECT OF AGRICULTURAL ACTIVITIES SUCH AS DETAILS OF VARIO US EXPENDITURES INCURRED, VOUCHERS/BILLS FOR SALE OF AGRICULTURAL PRODUCTS, E TC. THE LD. DR SUBMITS THAT IN VIEW OF THE ABOVE, THE ASSESSEES CLAIMS OUGHT TO B E REJECTED. BUT, HOWEVER, SINCE THE LD. CIT(A) IN THE IMPUGNED ORDER HAS DECI DED THE MATTER VIRTUALLY EX- PARTE AND SINCE THE LD. AR HAS SUBMITTED THAT THE A SSESSEE WILL FURNISHED EVIDENCES TO ESTABLISH THAT, AGRICULTURAL ACTIVITI ES WERE IN FACT CARRIED OUT, THE MATTER MAY BE AT BEST RESTORED TO THE FILE OF THE A UTHORITIES BELOW FOR FRESH EXAMINATION. 7 ITA NO. 2739/MUM/2014 ASSESSMENT YEAR: 2008-09 5.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. ACCORDING TO THE ASSESSEE, THE AGRICULTURAL INCOME DECLARED AT RS. 14,14,515/- WAS EARNED ON HI S LAND MEASURING 15 ACRES WHEREON HE HAD GROWN COCONUTS, MANGOES, CHICK OO, GUAVAS AND VEGETABLES. IT WAS SUBMITTED SUCH AGRICULTURAL ACTI VITIES HAVE BEEN CARRIED ON IN THE PAST YEARS ALSO, INCOME THERE FROM WAS DECLA RED IN THE RETURNS OF INCOME FILED BEFORE THE INCOME TAX DEPARTMENT. IN THIS REG ARD, THE ASSESSEE PLACED BEFORE THE BENCH A COPY OF THE ORDER OF ASSESSMENT PASSED U/S 143(3) OF THE ACT IN HIS CASE FOR ASST. YEAR 2006-07, WHEREIN IN TH E AGRICULTURAL INCOME OF RS. 5,28,830/- WAS ACCEPTED TO THE EXTENT OF 80% OF THE AMOUNT DECLARED. 5.3.2 ON THE OTHER HAND, WE FIND THAT IN THE YEAR U NDER CONSIDERATION I.E. ASST. YEAR 2008-09, WHEREIN THE AGRICULTURAL INCOME WAS D ECLARED AT RS. 14,14,515/- (ALMOST THREE TIMES MORE THAN IN ASST. YEAR 2006-07 ) THAT THE AUTHORITIES BELOW HAVE FOUND FROM THE ABSTRACT OF 7/12 OF THE S AID AGRICULTURAL LAND, THAT THE SAID LANDS ARE NON IRRIGATED AND NO CROPS WERE GROWN ON THE SAID LAND EXCEPT GRASS. FURTHER, WE FIND FROM THE ORDERS OF T HE AUTHORITIES THAT, THEY HAVE OBSERVED INSPITE OF OPPORTUNITIES AFFORDED TO THE A SSESSEE, HE HAS FAILED TO PRODUCE REQUIRED EVIDENCES OF AGRICULTURAL ACTIVITI ES CARRIED OUT AND DETAILS OF VARIOUS EXPENSES INCURRED IN THIS REGARD, AND THAT IT IS IN THESE CIRCUMSTANCES THAT THEY HAVE HELD THAT THE AGRICULTURAL INCOME DE CLARED BY THE ASSESSEE AS EXEMPT INCOME HAS NOT BEEN PROVED. THE LD. CIT(A) A T PARA 9 OF HIS ORDER, WHILE REJECTING THE ASSESSEES CLAIM, HAS HELD AS U NDER:- 9.0 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, THE STAND TAKEN BY THE A.O IN THE ASSESSMENT ORDER AND THE GR OUNDS OF APPEAL. THE A.O HAS MENTIONED IN THE ASSESSMENT ORD ER THAT THE ABSTRACT OF 7/12 OF THE AGRICULTURAL LAND SHOWS THE SAID LANDS ARE NON-IRRIGATED AND NO CROPS WERE GROWN ON THE SAID A GRICULTURAL LANDS EXCEPT GRASS. THIS HAS NOT BEEN DISPROVED BY THE APPELLANT 8 ITA NO. 2739/MUM/2014 ASSESSMENT YEAR: 2008-09 DESPITE AVAILING SUFFICIENT OPPORTUNITIES DURING TH E APPEAL PROCEEDINGS. THE APPELLANT FAILED TO PRODUCE THE RE QUIRED EVIDENCES OF AGRICULTURAL ACTIVITIES CARRIED AND DETAILS OF E XPENSES AS WELL AS VOUCHERS FOR SALE OF AGRICULTURAL PROCEEDS ETC. THE ONUS IS ON THE APPELLANT TO PROVE THAT THE INCOME SHOWN BY HIM IS EXEMPT FROM TAX WHICH THE APPELLANT FAILED TO DO. THEREFORE, THE AD DITION MADE BY THE A.O IS HEREBY CONFIRMED. 5.3.3 TAKING INTO CONSIDERATION, THE FACTS AND CIRC UMSTANCES OF THE CASE AS EMANATE FROM THE ORDERS OF THE AUTHORITIES BELOW AN D DISCUSSED AT PARAS 5.3.1 AND 5.3.2 OF THIS ORDER (SUPRA) AND IN THE LIGHT OF THE FACT THAT THE IMPUGNED ORDER OF THE LD. CIT(A) HAS BEEN ADMITTEDLY PASSED EX-PARTE SINCE NONE ATTENDED BEFORE HIM ON BEHALF OF THE ASSESSEE AND A LSO TAKING INTO CONSIDERATION THAT THE ASSESSEE HAS DECLARED AGRIC ULTURAL INCOME OF RS. 5,28,830/- BEFORE THE INCOME TAX DEPARTMENT FOR ASS T. YEAR 2006-07 WHICH WAS PARTIALLY ACCEPTED TO THE EXTENT OF 80% IN SCRU TINY ASSESSMENT PROCEEDINGS, WE ARE OF THE CONSIDERED OPINION THAT IN THE INTEREST OF EQUITY AND JUSTICE THE ISSUE OF THE ASSESSEES DECLARATION OF AGRICULTURAL INCOME AT RS. 14,14,515/- IN THIS YEAR REQUIRES TO BE RE-EXAMINED BY THE AUTHORITIES BELOW. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THIS MATTER TO THE FILE OF THE LD. CIT(A) F OR EXAMINATION AND VERIFICATION OF THE ASSESSEES CLAIM OF THE EXEMPT AGRICULTURAL INCOME AFTER AFFORDING BOTH THE ASSESSEE AND THE AO ADEQUATE OPPORTUNITY TO FIL E DETAILS REQUIRED IN THIS REGARD ON ACCOUNT OF PROOF OF VARIOUS EXPENDITURES AGRICULTURAL OPERATIONS, SALES PROCEEDS/BILLS/VOUCHERS, ETC OF AGRICULTURAL PROCEEDS ETC. IT IS ACCORDING BY ORDERED. CONSEQUENTLY GROUND NO: 2 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE ASSESSEES APPEAL IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 9 ITA NO. 2739/MUM/2014 ASSESSMENT YEAR: 2008-09 ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MARCH, 2016 SD/- SD/- ( SANDEEP GOSAIN ) (JASON P.BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: 30/03/2016 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. !' , $ !'% , / DR, ITAT, MUMBAI 6. &' ( / GUARD FILE. / BY ORDER, ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA