DCIT, CC-47, MUMBAI V. SUDHIR BAHL, MUMBAI

ITA 2752/MUM/2009

• Counselvise Citation: 275219914 RSA 2009
• Duration Of Justice: 2 year(s) 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 29-02-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 29-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M P LOHIA NIKHIL TIWARI; MADHVI MEHTA
• Assessee Lawyers: C G K NAIR
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH J, MUMBAI BEFORE SHRI P.M. JAGTAP (AM) & SHRI S.S. GODARA (JM) I.T.A. NOS. 4722 /MUM/2007 & 2752/MUM/2009 (A.YS. 2003-04 & 2004-05) DY. COMMR. OF INCOME-TAX, CC-47, R.NO.658/676, M.K. ROAD, MUMBAI-400 020. VS. SHRI SUDHEER BAHL, 145, KALA GHODA, M.G.ROAD, FORT, MUMBAI-400 001. PAN: AAMPB8549F APPELLANT RESPONDENT APPELLANT BY S/SHRI M.P. LOHIA, NIKHIL TIWARI & MS. MADHVI MEHTA. RESPONDENT BY SHRI C .G.K. NAIR. DATE OF HEARING 29-02-2012 DATE OF PRONOUNCEMENT 16-03-2012 O R D E R PER S.S. GODARA, JM : SINCE BOTH APPEALS ARE HEARD AND BEING DECIDED TOGE THER BY US, THEREFORE, WE ARE TAKING THE FACTS FROM ITA NO.4722/M/2007 FOR TH E AY 2003-04. ITA NO.4722/M/2007 (AY: 2003-04): 2. INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESSE E AGAINST THE ORDER PASSED BY LD. CIT (A) DATED 30.4.2007. GROUNDS RAISED IN THE INSTANT APPEAL ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT (A) HAS ERRED IN DIRECTING THE ASSESSING OF FICER TO DETERMINE THE ANNUAL LETTING VALUE BY ADOPTING RENT RECEIVABLE OF RS. 28,000/- PER MONTH WITHOUT APPRECIATING THE DETAILED REASONS INCORPORA TED IN THE ASSESSMENT ORDER AND OVERLOOKING THE SPECIFIC GUIDELINES OUTLI NED IN THE ORDER OF HONBLE ITAT, MUMBAI IN THE CASE OF MAKRUPA CHEMICA LS P. LTD. IN ITA NO.2435/MUM/2001, DATED 05.09.2006 BY THE HONBLE I TAT, F BENCH, MUMBAI. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN DELETING THE G.P. ADDITION OF RS. 23, 26,633/- WITHOUT APPRECIATING THE DETAILED REASONS INCORPORA TED IN THE ASSESSMENT ORDER. (III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ALSO ERRED IN ADMITTING CERTAIN EVI DENCES AND CONSIDERING THE SAME IN CONTRAVENTION OF RULE 46A OF THE INCOME TAX RULES, 1962 WITHOUT AFFORDING ANY OPPORTUNITY TO THE AO. 3. GROUND NO.1: FACTS GIVING RISE TO THIS GROUND REGARDING DETERM INATION OF ANNUAL RENTAL VALUE OF THE PREMISES IN QUESTION OWN ED BY THE ASSESSEE, AT THE HANDS OF ASSESSING OFFICER, ARE THAT REGARDING THE ASSESS MENT YEAR UNDER CONSIDERATION, THE ASSESSEE FILED RETURN DECLARING MONTHLY RENTAL VALU E OF THE PREMISES IN QUESTION @ 23,000/- PER MONTH. HOWEVER, THE AO WAS NOT SATISF IED WITH THE SAID MONTHLY RENT COMPUTED BY THE ASSESSEE. AS A RESULT, THE MONTHLY RENTAL VALUE OF THE SAID PREMISES WAS SOUGHT TO BE CONTROVERTED BY CALLING THE NECESS ARY INFORMATION FROM THE SECRETARY OF THE SAID SOCIETY AS WELL AS FROM FLAT OWNERS. A FTER THIS, THE ASSESSING OFFICER COMPUTED THE ANNUAL VALUE OF THE SAID PREMISES AT T HE RATE OF RS. 2,50,000/- UNDER THE PROVISIONS OF SEC. 23(1)(A) OF THE INCOME TAX A CT (HEREINAFTER REFERRED AS THE ACT). 4. HOWEVER, IN APPEAL PREFERRED BY THE ASSESSEE THE LD. CIT (A) PREPARED A CHART OF THE MONTHLY RENTAL VALUE OF THE PREMISES IN QUES TION RIGHT FROM THE AY 1998-99 TO 2003-04. DREW A COMPARATIVE CHART OF THE PREMISES IN QUESTION ALONG WITH SIMILARLY SITUATED FLATS. TOOK INTO CONSIDERATION THE MONTHL Y RENTAL VALUES, SECURITY DEPOSITS. THEREAFTER CALCULATED THE RENT IN HAND BY CONSIDERI NG THE COMPARATIVE SECURITY DEPOSITS. IN VIEW OF THE SAID TABULATION ETC., THE LD. CIT (A) DETERMINED THE LETTING VALUE OF THE APPELLANTS PREMISES AS RS. 28,000/-. MEANING THEREBY; THE LETTING VALUE DEDUCED BY THE ASSESSEE TO RS. 23,000/- PER MONTH W AS ENHANCED TO RS. 28,000/- PER MONTH. AGAINST THIS FINDING THE REVENUE HAS RAISED THE INSTANT GROUND BEFORE US. 5. AT THE TIME OF HEARING, THE LD. AR AS WELL AS THE LD. DR HAVE BEEN HEARD IN SUPPORT OF THEIR RESPECTIVE CONTENTIONS. WITH THEIR ABLE ASSISTANCE, THE PAPER BOOK AVAILABLE ON THE FILE HAS ALSO BEEN PERUSED. 6. OPENING HIS ARGUMENTS REGARDING GROUND NO. 1, TH E LD. DR HAS ARGUED THAT THE LD. CIT(A) HAS COMMITTED AN ILLEGALITY WHILE DETERM INING THE ANNUAL LETTING VALUE OF THE PROPERTY IN QUESTION OWNED BY THE ASSESSEE. HE FURT HER CONTENDED THAT THE ORDER OF AO WAS SELF-SPEAKING U/S. 23(1)(A) OF THE ACT WHICH SHOULD HAVE BEEN UPHELD BY THE LD. CIT(A). 7. ON THE OTHER HAND, THE LD. AR HAS RELIED ON THE ORDER DATED 18-11-2011 PASSED BY THE ITAT, MUMBAI. CONTENDED THAT IN THE CASE OF THE PRESENT ASSESSEE HIMSELF, THE BENCH HAS HELD THE ANNUAL LETTING VALUE OF THE ASS ESSEES PROPERTY AS RS.28,000/- P.M. (I.E. FAIR RENTAL VALUE FOR THE ASSESSMENT YEA R 2005-06). 8. AFTER HEARING BOTH THE PARTIES WE FIND THAT THE INSTANT CASE PERTAINS TO THE ASSESSMENT YEAR 2003-04. WHEN ITAT, MUMBAI BENCH VI DE ITS ORDER DATED 18.11.2011 HAS DETERMINED THAT FAIR RENT OF THE PROPERTY IN QU ESTION FOR THE ASSESSMENT YEAR 2005-06 AS RS.28,000/- P.M., THEN IT CAN BE SAFELY PRESUMED IN THE ABSENCE OF ANY OTHER MATERIAL, THE RENT OF THE PROPERTY IN QUESTIO N CAN BE ASSESSED FOR THE YEAR UNDER CONSIDERATION. THEREFORE, THE LD. CIT (A) HAS CORRE CTLY DETERMINED THE SAID VALUE. HENCE, FINDING NO FORCE IN GROUND NO.1, WE REJECT T HE SAME. 8. GROUND NOS. 2 & 3: THESE GROUND NOS. 2 & 3, IN OUR OPINION, ARE INTER CONNECTED AS THE LD. CIT (A) HAS DELETED THE GROSS PROFIT ADD ITION COMPUTED BY THE ASSESSING OFFICER AFTER ALLEGEDLY ADMITTING CERTAIN EVIDENCES U/S RULE 46A OF THE INCOME TAX RULES, 1962. HENCE, WE PROPOSE TO DECIDE BOTH GROU NDS TOGETHER. 9. THE ASSESSING OFFICER IN THE INSTANT CASE WAS NO T SATISFIED WITH THE RETURNS FILED BY THE ASSESSEE AS GROSS PROFITS DEDUCED BY THE ASS ESSEE WERE CONCERNED. THEREFORE, A NOTICE WAS ISSUED TO THE ASSESSEE WHICH WAS NOT A CCEPTED. THEREAFTER, THE ASSESSING OFFICER WENT ON TO REJECT THE BOOKS OF AC COUNT. ARRIVED AT CONCLUSION THAT THE SAME WERE LACKING FACTUAL DETAILS TO PROVE THE BOOK RESULTS; AT LEAST BROADLY. ACCORDINGLY, THE ASSESSEES INCOME FROM THE RETURN IN QUESTION WAS RECALCULATED AND RE-ESTIMATED GROSS PROFITS OF THE ASSESSEE @ 56% ON THE SALES OF RESTAURANT. 10. HOWEVER, IN APPEAL PREFERRED BY THE ASSESSEE TH E LD. CIT (A) MADE A COMPLETE COMPARATIVE ANALYSIS OF THE DETAILS OF PURCHASES. I SSUE OF CONSUMPTION OF MATERIAL IN RUNNING THE RESTAURANT IN QUESTION WAS RE-DECIDED A FTER RANDOMLY CHOOSING FIVE BUSINESS DAYS FROM 1.7.2006 TO 5.7.2006. THE ASSES SEE SUPPLIED ALL THE NECESSARY DETAILS OF THE BUSINESS OF THE SAID FIVE DAYS. THE REAFTER THE LD. CIT (A) ON HIS OWN COMPARED THE STATEMENT SHOWING THE RATIO OF CONSUMP TION IS IN JULY, 2006 WHICH VALID FROM 26% TO 45.54%. THE EXPLANATION OF THE ASSESSEE IN THIS REGARD WAS ACCEPTED. ALSO DECIDED THAT THE AVERAGE PROFIT MARGIN OF THE ASSESSEE AS PER MENU CARD SUPPLIED WAS 52.9%. IT IS AGAINST THIS ORDER THAT THE DEPAR TMENT HAS RAISED THESE GROUNDS BEFORE US. 11. LD. DR VEHEMENTLY ARGUED THAT THE LD. CIT (A) H AS COMMITTED ILLEGALITY AND IRREGULARITY IN DELETING THE ADDITION OF INCOME MAD E BY THE AO. HE ALSO SUBMITTED THAT THE LEARNED APPELLATE AUTHORITY HAS RELIED ON MATER IAL IN MAKING COMPARISON OF MENU CHART AND OTHER DOCUMENTS WHICH WERE NOT AVAILABLE BEFORE THE AO. TAKING CUE FROM THE SAME, ALSO SUBMITTED THAT BEFORE ADMITTING OR R ELYING ON THE SAID DOCUMENTS, THE LD. CIT(A) SHOULD HAVE AFFORDED OPPORTUNITY OF HEAR ING TO THE AO. THEREFORE, HE PRAYED THAT THE ORDER OF LD. CIT (A) TO THIS EXTENT MAY BE SET ASIDE. THE CASE MAY BE REMANDED BACK TO THE AO. 12. ON THE OTHER HAND, REPELLING THE ARGUMENTS OF L D. DR, THE LD. AR APPEARING FOR THE ASSESSEE SUBMITTED THAT IN THE INSTANT CASE, TH E LD. CIT (A) HAS EXERCISED JURISDICTION ON FACTS AS WELL AS ON LAW. FURTHER ST ATED THAT THE LD. CIT (A) HAS PASSED ORDER AFTER ISSUING NOTICE TO THE AO. ON SO-CALLED ADDITIONAL EVIDENCE, WHATEVER WAS ALLEGED BY THE ASSESSEE WAS NOT TECHNICALLY ADDITIO NAL EVIDENCE. BUT THE MENU CHART ETC. OF THE EATERY IN QUESTION WHICH WAS PRODUCED O N THE ASKING OF THE LD. CIT (A); NOT ON PART OF THE ASSESSEE HIMSELF. HE FURTHER PLACED RELIANCE ON 295 ITR 252 TO CONTEND THAT SUCH A COURSE IS OPEN TO THE CIT (A) WHILE DEC IDING APPEALS. ON OUR ASKING, HE CLARIFIED THAT AS PER THE CALCULATION OF GROSS PROF IT RATIO SUBMITTED BY THE ASSESSEE AVAILABLE ON RECORD, THE GROSS PROFIT RATIO OF THE YEAR IN QUESTION IS 53.23%. WHEREAS THE SAID RATIO IN THE ASSESSMENT YEAR 1997-98 WAS 5 9.32%. AS PER HIS SUBMISSION, THE SAME HAS COME DOWN TO 48.96% IN THE ASSESSMENT YEAR 2009-10. 13. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH T HE PARTIES. AFTER ANALYZING THE FACTS AS WELL AS DOCUMENTS AVAILABLE IN PAPER BOOK, WE ARE UNABLE TO AGREE WITH THE CONTENTION OF THE LD. DR THAT THE LD. CIT(A) HAS NO T PROVIDED AN OPPORTUNITY TO THE DEPARTMENT BEFORE SETTING ASIDE THE ADDITION OF INC OME MADE BY AO. ALTHOUGH THE PRAYER OF LD. DR FOR REMANDING THE CASE BACK TO THE AO APPEARS TO BE BASED ON TECHNICALITY; BUT, IN VIEW OF THE FACT THAT THE LD. CIT(A) HAD DULY ISSUED NOTICE TO THE AO WHO CHOSE NOT TO APPEAR DELIBERATELY, CANNOT BE A GROUND TO SET ASIDE THE ENTIRE EXERCISE UNDERTAKEN BY THE LD. CIT(A). AS IT IS CLE AR FROM THE ORDER OF THE LD. CIT(A), THE ASSESSEE NEVER FILED ANY APPLICATION TO LEAD AD DITIONAL EVIDENCE ON RECORD OR TO PRODUCE FURTHER MATERIAL WHICH WAS NOT BEFORE THE L D. AO. IT WAS ON THE ASKING OF THE LD. CIT(A) THAT COMPARATIVE MENU CHART ETC., I.E. C OST OF RANDOMLY CHOSEN FOOD ITEMS, WAS PRESENTED BY THE ASSESSEE. THEREAFTER, THE LD. CIT(A) ENTERED INTO A DETAILED ROWING ENQUIRY. CAME TO THE CONCLUSION THAT THE AVE RAGE GROSS PROFIT MARGIN WAS 52.91%. IN VIEW OF THE LAW VERY SETTLED THAT THE LD . CIT(A) CAN RE-APPRECIATE THE FACTS OF THE CASE BY EXERCISING THE POWERS OF AN AO, WHIC H HAS BEEN EXERCISED IN THE INSTANT CASE, IN THE ABSENCE OF ANY ILLEGALITY OR IRREGULAR ITY POINTED OUT BY THE LD. DR, WE ARE UNABLE TO ACCEPT THE SAID CONTENTION. HENCE, WE ARE NOT INCLINED TO REMIT THE MATTER BACK TO THE AO SO AS TO PREVENT MULTIPLICITY OF LIT IGATION. FINDING NO FORCE IN THE ARGUMENTS OF LD. DR, WE HEREBY REJECT GROUND NOS.2 & 3 AS WELL. 14. IN THE RESULT, ITA NO.4722/MUM/07 BY THE DEPART MENT IS HEREBY DISMISSED. ITA NO.2752/MUM/2009 (AY: 2004-05) 15. THE INSTANT APPEAL HAS FILED BY THE DEPARTMENT RAISING THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE A .O. TO TAKE THE ANNUAL LETTING VALUE OF THE LET-OUT PROPERTY @ RS.28,000/- PER MONTH AS AGAINST RS.2,50,000/- ADOP TED BY THE ASSESSING OFFICER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE G. P. ADDITION OF RS.5,10,786/- WITHOUT APPRECIATING THE DETAILED REA SONS INCORPORATED IN THE ASSESSMENT ORDER. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF ASSESSING OFFICER B E RESTORED. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GR OUND AND/OR ADD NEW GROUNDS WHICH MAY BE NECESSARY. 16. REGARDING THE FACTS AND LAW INVOLVED IN THE INS TANT APPEAL, THE LD. DR AS WELL AS THE LD. AR HAVE BEEN VERY FAIR TO CONCEDE THAT THE GROUNDS OF APPEAL INVOLVED IN THIS APPEAL ARE IDENTICAL TO THE APPEAL WHICH WE HAVE AL READY ADJUDICATED UPON HEREINABOVE. IN VIEW OF THE AFORESAID SUBMISSIONS M ADE BY BOTH THE LD. REPRESENTATIVES TO THE EFFECT THAT THE INSTANT APPE AL INVOLVES ISSUE OF ANNUAL VALUE OF RS.28,000/- DECIDED IN THE ORDER HEREINABOVE AND O F GROSS PROFIT ADDITION, WE FIND THAT THE ISSUES IN HAND HAVE ALREADY BEEN ADJUDICA TED UPON IN DETAIL. IN VIEW OF THE SAME, THE INSTANT APPEAL IS ALSO DISMISSED. 17. IN THE RESULT, ITA NO.2752/MUM/2009 BY THE DEPA RTMENT IS DISMISSED. WE ORDER ACCORDINGLY. ORDER PRONOUNCED ON THE 16 TH DAY OF MARCH, 2012. SD/- SD/- (P.M. JAGTAP) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI: 16 TH MARCH, 2012. NG/OKK COPY TO : 1. DEPARTMENT. 2.ASSESSEE. 3 CIT(A), CENTRAL-III, MUMBAI. 4 CIT CENTRAL-IV, MUMBAI. 5.DR,J BENCH, MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST. REGISTRAR, ITAT, M UMBAI.