M.Kiran Kumar, CHENNAI V. DCIT Central Circle 1(4), CHENNAI

ITA 275/CHNY/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9659 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 04-02-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R CLEMENT RAMESH KUMAR
• Assessee Lawyers: T BANUSEKAR
• Keywords: Deemed dividend
• Section: 153A; 2(22)(e); 56; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , ! ' , $ '% BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NOS.270, 271, 272, 273, 274, 275 & 276/CHNY/201 9 ( )( / ASSESSMENT YEARS : 2009-10 TO 2015-16 SHRI M. KIRAN KUMAR, NO.123, USMAN ROAD, T. NAGAR, CHENNAI - 600 017. PAN : ACHPM 2247 E V. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(4), CHENNAI. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SH. T. BANUSEKAR, CA -.+, / 0 / RESPONDENT BY : SHRI R. CLEMENT RAMESH KUMAR, ADDL.CIT 1 / 2$ / DATE OF HEARING : 13.06.2019 34) / 2$ / DATE OF PRONOUNCEMENT : 19.06.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : ALL THE APPEALS OF THE ASSESSEE ARE DIRECTED AGAI NST THE RESPECTIVE ORDERS OF THE PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL- 1, CHENNAI, PASSED UNDER SECTION 263 OF THE INCOME- TAX ACT, 1961 (IN SHORT 'THE ACT') FOR THE ASSESSMENT YEARS 2009-10, 2010-11, 2011-12, 2012-13, 2013-14, 2014-15 AND 2015-16. SINCE COMMO N ISSUE ARISES FOR CONSIDERATION IN ALL THESE APPEALS, WE HEARD THESE APPEALS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2 I.T.A. NOS.270 TO 276/CHNY/19 2. SH. T. BANUSEKAR, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSMENTS WERE COMPLETED UNDER SECTION 153A OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') AFTER THE SEARCH TOOK PLACE ON 02.09.2014 IN THE CASE OF M/S LALITHAA JEWELLERY MART PVT. LTD. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE I S THE MANAGING DIRECTOR OF M/S LALITHAA JEWELLERY MART PVT. LTD. THE ASSESSEE LET OUT HIS PROPERTY TO M/S LALITHAA JEWELLERY MART PVT. LTD. F OR RENT. THE ISSUE ARISES FOR CONSIDERATION, ACCORDING TO THE LD. REPR ESENTATIVE, IS CLASSIFICATION OF THE HEAD OF INCOME. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE DISCLOSED THE RENTAL INCOME AS INCOME FROM HOUSE PROPERTY. HOWEVER, THE PRINCIPAL COMMISSIONER DIRE CTED THE ASSESSING OFFICER TO CLASSIFY THE SAME AS INCOME FROM OTHER S OURCES. REFERRING TO THE ORDER OF THE ADMINISTRATIVE PRINCIPAL COMMISSIO NER PASSED UNDER SECTION 263 OF THE ACT FOR THE ASSESSMENT YEAR 2012 -13, THE LD. REPRESENTATIVE SUBMITTED THAT THE PROPERTY WAS USED AS CAR PARK WITH TEMPORARY STRUCTURE ON IT. THIS WAS ADMITTED BY TH E ADMINISTRATIVE PRINCIPAL COMMISSIONER AT PARA 6 OF HIS ORDER. 3. SH. T. BANUSEKAR, THE LD. REPRESENTATIVE FOR THE ASSESSEE, FURTHER SUBMITTED THAT THE ASSESSEE HAS ALSO RAISED ADDITIO NAL GROUNDS IN ALL THE APPEALS CLAIMING THAT IF THE RENT WAS ASSESSED AS I NCOME FROM OTHER SOURCES, THE PERMISSIBLE DEDUCTION UNDER SECTION 56 OF THE ACT HAS TO BE ALLOWED. BUT, THAT WAS NOT ALLOWED BY THE ADMINIST RATIVE PRINCIPAL 3 I.T.A. NOS.270 TO 276/CHNY/19 COMMISSIONER. THEREFORE, THE LD. REPRESENTATIVE SU BMITTED THAT THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE ASSE SSING OFFICER FOR RECONSIDERATION. PLACING ON RECORD A COPY OF THE O RDER OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEARS 2009-1 0 AND 2011-12 AGAINST THE ORDER OF THE CIT(APPEALS), THE LD. REPR ESENTATIVE SUBMITTED THAT THIS TRIBUNAL FOUND THAT THERE WAS NO MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION, THEREFORE, THERE CANNOT BE ANY ADDITION UNDER SECTION 153A OF THE ACT. IN VIEW OF THE ABOVE, ACC ORDING TO THE LD. REPRESENTATIVE, THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION. 4. ON THE CONTRARY, SHRI R. CLEMENT RAMESH KUMAR, T HE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE PRO PERTY WAS LET OUT FOR EXORBITANT RENT. ACCORDING TO THE LD. D.R., THE PR OPERTY WAS VALUED AT 3,75,00,000/- AND LEASE RENTAL WAS 4,00,00,000/- PER ANNUM. IN OTHER WORDS, THE ASSESSEE WAS RECEIVING RENT OF 4,00,00,000/- PER ANNUM WHICH IS MORE THAN THE COST OF THE LAND. ADMITTEDL Y, ACCORDING TO THE LD. D.R., WHAT WAS LET OUT TO M/S LALITHAA JEWELLERY MA RT PVT. LTD. IS A VACANT LAND. THEREFORE, THE LEASE RENTAL HAS TO BE ASSESS ED AS INCOME FROM OTHER SOURCES. SINCE THE EXORBITANT RENT WAS RECEI VED BY THE ASSESSEE FROM M/S LALITHAA JEWELLERY MART PVT. LTD., ACCORDI NG TO THE LD. D.R., THE ADMINISTRATIVE PRINCIPAL COMMISSIONER FOUND THAT IT IS A COLOURABLE DEVICE AND THE EXCESS AMOUNT WAS TO DIVERT THE ACCUMULATED PROFIT OF THE 4 I.T.A. NOS.270 TO 276/CHNY/19 COMPANY TO THE ASSESSEE. THEREFORE, ACCORDING TO T HE LD. D.R., THE ADMINISTRATIVE PRINCIPAL COMMISSIONER DIRECTED THE ASSESSING OFFICER TO TREAT THE EXCESS AMOUNT AS DEEMED DIVIDEND UNDER SE CTION 2(22)(E) OF THE ACT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. NO DOUBT, THERE WAS NO MATERIAL FOUND DURING THE COURSE OF SEARCH OPERA TION. FOR ASSESSMENT YEARS 2009-10, 2010-11 AND 2011-12, THE ASSESSMENT PROCEEDINGS WERE NOT PENDING ON THE DATE OF SEARCH. THEREFORE, THE ASSESSING OFFICER HAS TO CONFINE HIMSELF ONLY TO THE MATERIAL FOUND DURIN G THE COURSE OF SEARCH OPERATION. ADMITTEDLY, NO SEIZED MATERIAL IS REFER RED IN THE ASSESSMENT ORDER. MOREOVER, THE ISSUE ARISES FOR CONSIDERATIO N IS CLASSIFICATION OF HEAD OF INCOME AND THE REASONABILITY OF LEASE RENT. THE REASONABILITY OF LEASE RENT WAS ALSO RAISED BY THE REVENUE IN THE HA NDS OF THE COMPANY M/S LALITHAA JEWELLERY MART PVT. LTD. THEREFORE, T HIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT BOTH THE CASE OF THE ASSESS EE, WHO HAPPENED TO BE MANAGING DIRECTOR AND THE COMPANY M/S LALITHAA J EWELLERY MART PVT. LTD. HAVE TO BE EXAMINED TOGETHER SO THAT REASONABI LITY OF LEASE RENTAL CAN BE ASCERTAINED FOR THE PROPERTY LET OUT TO THE COMPANY. THE CLASSIFICATION OF HEAD OF INCOME HAS TO BE EXAMINED INDEPENDENTLY BY THE ASSESSING OFFICER. IN VIEW OF THE ABOVE, THE ORDERS OF THE ADMINISTRATIVE PRINCIPAL COMMISSIONER FOR ALL THE YEARS UNDER CONS IDERATION ARE 5 I.T.A. NOS.270 TO 276/CHNY/19 MODIFIED. THE ASSESSING OFFICER SHALL RE-EXAMINE T HE MATTER TO DETERMINE THE REASONABILITY OF THE LEASE RENTAL REC EIVED BY LETTING OUT THE PROPERTY TO THE COMPANY AND ALSO CLASSIFICATION OF HEAD OF INCOME, INDEPENDENTLY WITHOUT BEING INFLUENCED BY ANY OF TH E OBSERVATION MADE BY THE PRINCIPAL COMMISSIONER OF INCOME TAX IN THE IMPUGNED ORDER AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WI TH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 6. IN THE RESULT, ALL THE APPEALS FILED BY THE ASSE SSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 19 TH JUNE, 2019 AT CHENNAI. SD/- SD/- ( ! ' ) ( . . . ) (INTURI RAMA RAO) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 6 /DATED, THE 19 TH JUNE, 2019. KRI. / -278 98)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. PRINCIPAL CIT, CENTRAL-1, CHENNAI 4. 8: -2 /DR 5. ;( < /GF.