Veena Jain, Chandigarh V. DCIT, Ludhiana

ITA 314/CHANDI/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 8479 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 02-09-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 29-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S S KEMWAL
• Assessee Lawyers: O P SHARMA
• Keywords: Gift; Business income; Income from undisclosed sources; Document seized; Principle of natural justice; Deemed to accrue or arise in india; Documents seized
• Section: 143(3); 153A; 68; 69; 132; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NOS. 304 TO 310/CHD/2010 ASSESSMENT YEARS: 2001-02 TO 2007-08 SHRI MANDEEP JAIN, VS. THE DCIT, CENTRAL CIRCLE, CHANDIGARH LUDHIANA PAN NO. AAOPJ5311K ITA NOS. 311 TO 317/CHD/2010 ASSESSMENT YEARS: 2001-02 TO 2007-08 SMT. VEENA JAIN, VS. THE DCIT, CENTRAL CIRCLE, CHANDIGARH LUDHIANA PAN NO. ADCPJ0030E & ITA NOS. 318 TO 324/CHD/2010 ASSESSMENT YEARS: 2001-02 TO 2007-08 SHRI KAMAL KANT JAIN, VS. THE DCIT, CENTRAL CIRC LE, CHANDIGARH LUDHIANA PAN NO. AAOPJ5311K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI O.P.SHARMA RESPONDENT BY: SHRI S.S.KEMWAL, ORDER PER SUSHMA CHOWLA, JM THESE TWENTY ONE APPEALS BY THE THREE DIFFERENT AS SESSEES THOUGH BELONGING TO SAME FAMILY, ARE AGAINST THE SEPARATE ORDERS OF CIT(A)-I, 2 LUDHIANA DATED 22.2.2010 & 25.1.2010 RELATING TO A SSESSMENT YEARS 2001- 02 TO 2007-08 AGAINST THE ORDER PASSED UNDER SECTIO N 153A R.W.S. 143(3) OF THE I.T. ACT. 2. ALL THESE APPEALS HAVING SIMILAR GROUNDS OF APPE AL WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLI DATED ORDER FOR THE SAKE OF CONVENIENCE. 3. COMMON ISSUE RAISED VIDE THREE COMMON GROUNDS O F APPEAL IN ITA NOS. 304 TO 324/CHD/2010 ARE AS UNDER:- THAT IN THE FACTS AND CIRCUMSTANCE OF THE CASE, TH E CIT(A) HAS ERRED IN HIS INTERPRETATION AND APPLICAT ION OF PROVISIONS OF CHAPTER IV C OF THE I.T. ACT TO V ACANT / UNDER RENOVATION OF CO-OWNED BUSINESS AND RESIDENTI AL PROPERTIES OF FAMILY, PENDING FAMILY SETTLEMENT. THAT THE CIT(A) HAS ERRED IN UPHOLDING THE ARBITRA RY AND ILLEGAL ORDER OF ASSESSING OFFICER TAXING THE S AID PROPERTIES ON MARKET RENT ON MISCONCEPTION THAT ANY AND EVERY PROPERTY EXISTING ON MOTHER EARTH IS TAXA BLE UNDER I.T. ACT. THAT THE CIT(A) HAS FAILED TO ADJUDICATE ON PLEA O F VACANCY ALLOWANCE, APPLICATION OF HIGHLY EXCESSIVE MARKET RATES AND DENIAL OF OPPORTUNITY TO REBUT SUC H PRESUMPTIONS. 4. THOUGH THE FACTUAL ASPECTS ARE COMMON IN ALL THE APPEALS WITH REGARD TO ABOVE SAID GROUNDS OF APPEAL, WE ARE MAKI NG A REFERENCE TO THE FACTUAL ASPECTS IN THE CASE OF SHRI KAMAL KANT JAIN I.E. ITA NO. 318CHD/2010. THE BRIEF FACTS OF THE CASE ARE THAT SEARCH U/S 132 OF THE ACT WAS CARRIED OUT ON IN THE CASES OF M/S NIKKA MA L BABU RAM & SONS, GROUP OF CASES ON 27.10.2006. THE SEARCH WAS COND UCTED AT THE RESIDENTIAL PREMISES OF THE ASSESSEE AT HOUSE NO. 1 211, SECTOR 11, CHANDIGARH AS WELL AS RESIDENTIAL PREMISES NO. 72, SECTOR 5, CHANDIGARH, H.NO. 680, SECTOR 8, CHANDIGARH, H.NO. 116, KISHANG ARH AND BUSINESS 3 PREMISES OF M/S NIKKA MAL BABU RAM & SONS, SCF-17, SECTOR 22-D, CHANDIGARH. CASH AND JEWELLERY WAS FOUND AND SEIZE D AT THE DIFFERENT RESIDENTIAL PREMISES OF ASSESSEE. THE ASSESSING OF FICER ISSUED THE NOTICES U/S 153 A OF THE ACT FOR ASSESSMENT YEARS 2001-02 T O 2006-07. THE ASSESSEE IN COMPLIANCE FILED THE RETURNS OF INCOME. THE ASSESSING OFFICER NOTED THE ASSESSEE TO HAVE OWNED VARIOUS PROPERTIES WHICH REMAINED VACANT DURING THE YEAR EXCEPT FOR H.NO. 72, SECTOR 5-A, CHANDIGARH, WHICH WAS USED AS RESIDENCE BY THE ASSESSEE. THE ASSESSING OFFICER HAS ENLISTED FIVE PROPERTIES AT S.NO. 1 TO 5 IN PARA 4. 1 OF THE ASSESSMENT ORDER RELATING TO ASSESSMENT YEAR 2001-02. OUT OF THE S AID PROPERTIES, THE PROPERTY AT S.NO.1 I.E. INDUSTRIAL SHED AT CHANDIGA RH IS SHOWN TO HAVE BEEN SOLD ON 5.10.2000. THE ASSESSING OFFICER OBSE RVED THAT UNDER THE PROVISIONS OF SECTION 22 OF THE INCOME TAX ACT, THE ANNUAL VALUE OF THE PROPERTY OF WHICH THE ASSESSEE IS THE OWNER, OTHER THAN SUCH PORTIONS OR PROPERTIES WHICH ARE OCCUPIED FOR HIS BUSINESS OR P ROFESSION, THE DEEMED INCOME FROM SUCH PROPERTIES IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE ASSESSING OFFICER INVOKING TH E PROVISIONS OF SECTION 23 (1)(A) OF THE ACT COMPUTED THE ALV OF TH E PROPERTIES AND AFTER ALLOWING DEDUCTION U/S 24 OF THE ACT DETERMINED THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE CIT(A) UPHEL D THE ORDER OF ASSESSING OFFICER HOLDING THAT INCOME FROM HOUSE PR OPERTY IS THE ONLY INCOME CHARGED TO TAX ON NOTIONAL BASIS AND THERE I S NO MERIT IN THE CLAIM OF THE ASSESSEE THAT THE PROPERTIES WERE PURCHASED / CONSTRUCTED / ACQUIRED WITH NO AIM TO RENT OUT / LET OUT. THE ASSESSEE I S AGGRIEVED BY THE ORDER OF CIT(A) AND HENCE THE PRESENT APPEAL. 5. THE LEARNED AR FOR THE ASSESSEE SUBMITTED THE DE TAILS OF PROPERTIES OWNED BY THE ASSESSEE AND THE PURPOSE FOR WHICH THE SAME WERE BEING 4 USED. THE EXPLANATION OF THE ASSESSEE WAS THAT THE FAMILY CONSTITUTED OF SELF, WIFE AND TWO SONS. IT WAS FURTHER EXPLAINED THAT BECAUSE OF THE FAMILY DISPUTE, IT WAS DECIDED TO PURCHASE SEPARATE BUSINESS AND RESIDENTIAL PREMISES FOR EACH MEMBER OF THE FAMILY AND CONSEQUENTLY THE NEW PROPERTIES WERE PURCHASED AND THE FAMILY ARRANG EMENT WAS EXECUTED ON 9 TH SEPT 2004 BETWEEN THE ASSESSEE, HIS WIFE AND HIS T WO SONS. AS PER THE TERMS OF THE FAMILY SETTLEMENT, THE DISTRIBUTIO N OF THE PROPERTIES TO EACH SEPARATE MEMBER OF THE FAMILY WAS FORMULATED I N WRITING AND IS INCORPORATED IN THE SAID FAMILY ARRANGEMENT. BEFOR E THE SETTLEMENT BY WAY OF FAMILY ARRANGEMENT ON 9.9.2004, THE LEARNE D AR FOR THE ASSESSEE STRESSED, THAT THE PROPERTIES BEING ACQUIRED WERE U NDER RENOVATION AND AS SUCH THERE WAS NO MERIT IN THE AFORESAID ADDITION M ADE ON ACCOUNT OF ALV OF THE VACANT PROPERTY. THE LEARNED AR FOR THE AS SESSEE MADE SUBMISSIONS REGARDING THE CHARGEABILITY OF TAX ON T HE INCOME FROM HOUSE PROPERTY. THE LEARNED DR FOR THE REVENUE RELYING O N THE ORDER OF CIT(A) POINTED OUT THAT IN VIEW OF THE PROVISIONS OF SECTI ON 22 AND 23 OF THE ACT, THE COMPUTATION OF INCOME FROM PROPERTY HAS BEEN CO RRECTLY MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. SECTIONS 22 & 23 OF THE INCOME TAX ACT READS AS UND ER:- 22. THE ANNUAL VALUE OF PROPERTY CONSISTING OF ANY BUIL DINGS OR LANDS APPURTENANT THERETO OF WHICH THE ASSESSEE IS THE OWNER, OTHER THAN SUCH PORTIONS OF SUCH PROPERTY AS HE MAY OCCUP Y FOR THE PURPOSES OF ANY BUSINESS OR PROFESSION CARRIED ON B Y HIM THE PROFITS OF WHICH ARE CHARGEABLE TO INCOME-TAX, SHAL L BE CHARGEABLE TO INCOME-TAX UNDER THE HEAD INCOME FROM HOUSE PRO PERTY. 23. (1) FOR THE PURPOSES OF SECTION 22 , THE ANNUAL VALUE OF ANY PROPERTY SHALL BE DEEMED TO BE (A) THE SUM FOR WHICH THE PROPERTY MIGHT REASONABL Y BE EXPECTED TO LET FROM YEAR TO YEAR; OR 5 (B) WHERE THE PROPERTY OR ANY PART OF THE PROPERTY IS LET AND THE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE O WNER IN RESPECT THEREOF IS IN EXCESS OF THE SUM REFERRED TO IN CLAUSE (A), THE AMOUNT SO RECEIVED OR RECEIVABLE; O R (C) WHERE THE PROPERTY OR ANY PART OF THE PROPERTY IS LET AND WAS VACANT DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR AND OWING TO SUCH VACANCY THE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER IN RESPECT THER EOF IS LESS THAN THE SUM REFERRED TO IN CLAUSE (A), THE AM OUNT SO RECEIVED OR RECEIVABLE : PROVIDED THAT THE TAXES LEVIED BY ANY LOCAL AUTHORITY IN RE SPECT OF THE PROPERTY SHALL BE DEDUCTED (IRRESPECTIVE OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH TAXES WAS INCURRED BY THE OWNER ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY EMP LOYED BY HIM) IN DETERMINING THE ANNUAL VALUE OF THE PROPERTY OF THAT PREVIOUS YEAR IN WHICH SUCH TAXES ARE ACTUALLY PAID BY HIM. EXPLANATION.FOR THE PURPOSES OF CLAUSE (B) OR CLAU SE (C) OF THIS SUB-SECTION, THE AMOUNT OF ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER SHALL NOT INCLUDE, SUBJECT TO SUCH RULES AS MAY BE MADE IN THIS BEHALF, THE AMOUNT OF RENT WHICH THE OWNER CANNOT REALISE. (2) WHERE THE PROPERTY CONSISTS OF A HOUSE OR PART OF A HOUSE WHICH (A) IS IN THE OCCUPATION OF THE OWNER FOR THE PURP OSES OF HIS OWN RESIDENCE; OR (B) CANNOT ACTUALLY BE OCCUPIED BY THE OWNER BY RE ASON OF THE FACT THAT OWING TO HIS EMPLOYMENT, BUSINESS OR PROFESSION CARRIED ON AT ANY OTHER PLACE, HE HAS TO RESIDE AT THAT OTHER PLACE IN A BUILDING NOT BELONGING TO HIM, THE ANNUAL VALUE OF SUCH HOUSE OR PART OF THE HOUSE SHALL BE TAKEN TO BE NIL. (3) THE PROVISIONS OF SUB-SECTION (2) SHALL NOT APP LY IF (A) THE HOUSE OR PART OF THE HOUSE IS ACTUALLY LET DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR; OR (B) ANY OTHER BENEFIT THEREFROM IS DERIVED BY THE OWNER. (4) WHERE THE PROPERTY REFERRED TO IN SUB-SECTION ( 2) CONSISTS OF MORE THAN ONE HOUSE ( A ) THE PROVISIONS OF THAT SUB-SECTION SHALL APPLY ONLY IN RESPECT OF ONE OF SUCH HOUSES, WHICH THE ASSESSEE M AY, AT HIS OPTION, SPECIFY IN THIS BEHALF; (B) THE ANNUAL VALUE OF THE HOUSE OR HOUSES, OTH ER THAN THE HOUSE IN RESPECT OF WHICH THE ASSESSEE HAS EXER CISED AN OPTION UNDER CLAUSE (A), SHALL BE DETERMINED UNDER SUB- SECTION (1) AS IF SUCH HOUSE OR HOUSES HAD BEEN LET .] 6 7. UNDER THE PROVISIONS OF SECTION 22 OF THE ACT, T HE ANNUAL VALUE OF THE PROPERTY, OWNED BY THE ASSESSEE, CONSISTING OF ANY BUILDING OR LANDS APPURTANT THERETO OTHER THAN SUCH PORTIONS WHICH AR E OCCUPIED FOR THE PURPOSE OF BUSINESS OR PROFESSION CARRIED ON BY THE ASSESSEE, PROFITS OF WHICH ARE CHARGEABLE TO TAX, SHALL BE CHARGED TO IN COME TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. SECTION 23 PRESCRIBE S THE FORMULA FOR DETERMINATION OF THE ANNUAL VALUE OF THE PROPERTY. AS ENVISAGED BY SECTION 22 OF THE ACT, WHERE THE ASSESSEE IS OWNER OF A PROPERTY CONSISTING OF BUILDING OR LANDS APPURTENANT THERETO, THE REQUI REMENT OF LAW IS THAT ANNUAL VALUE OF SUCH PROPERTY IS TO BE CHARGED TO T AX IN THE HANDS OF THE ASSESSEE AS INCOME FROM HOUSE PROPERTY. THE SECTIO N PROVIDES EXEMPTION FROM THE SAID PROVISIONS TO SUCH PORTIONS OF THE PR OPERTY OR SUCH PROPERTIES WHICH ARE BEING UTILIZED BY THE ASSESSEE OWNER WHILE CARRYING ON HIS BUSINESS OR PROFESSION, PROFITS OF WHICH AR E CHARGEABLE TO TAX. 8. SECTIONS 22 AND 23 OF THE ACT PRESCRIBES THE SCH EME OF TAXATION OF INCOME FROM PROPERTY. THE ASSESSIBILITY OF INCOME FROM HOUSE PROPERTY IN THE HANDS OF THE OWNER OF THE PROPERTY IS ASSESSED NOT ON ACCRUAL BASIS OR RECEIPT BASIS BUT IS ASSESSABLE AS NOTIONAL INCOME AGAINST WHICH ADHOC DEDUCTIONS ARE ALLOWED IRRESPECTIVE OF THE ACTUAL E XPENDITURE INCURRED FOR EARNING THE SAID INCOME. THE HON'BLE APEX COURT IN BHAGWAN DASS JAIN VS. UNION OF INDIA [(1981) 128 ITR 315 (SC) ] HAD U PHELD THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF LEVING TAX ON INCOME FROM PROPERTY AND IT WAS EXPLAINED THAT THE LEVY IN QUE STION SQUARELY FALLS UNDER ENTRY 82 OF LIST 1 OF VIITH SCHEDULE OF THE CONSTITUTION. 9. THE TAX IS CHARGEABLE UNDER CHAPTER IV-C ON THE DEEMED INCOME FROM THE PROPERTY, CONSISTING OF BUILDING OR LAND APPURT ENANT THERETO. THE CONCEPT 7 OF OWNER OF PROPERTY, ANNUAL VALUE, BUILDING AND / OR LAND APPURTENANT THERETO TO, HAVE BEEN SUBJECT MATTER OF VARIOUS JUD ICIAL INTERPRETATIONS. THE HON'BLE SUPREME COURT IN EAST INDIA HOUSING AND LAND DEVELOPMENT TRUST LTD VS. CIT [(1961) 42 ITR 49 (SC)] HAD HELD THAT WORD BUILDING WOULD INCLUDE BUILDING OCCUPIED OR INTENDED FOR RES IDENCE, BUILDING LET FOR OFFICE USE, STORAGE OR FOR WELFARE HOUSING, OR FOR USE AS A FACTORY AND SHOP OR A BAZZAR AND WOULD ALSO INCLUDE STALLS AND PLATFORM IN MARKET ENCLOSURES. 10. THE HON'BLE SUPREME COURT IN SHAMBU INVESTMENT PVT LTD VS. CIT [(2003) 263 ITR 143 (SC)] HAD AFFIRMED THE DECISIO N OF HON'BLE CALCUTTA HIGH COURT IN SHAMBU INVESTMENT PVT LTD VS. CIT (24 9 ITR 47), WHEREIN THE HON'BLE HIGH COURT HAD HELD AS UNDER:- TAKING A SUM TOTAL OF THE AFORESAID DECISIONS IT C LEARLY APPEARS THAT MERELY BECAUSE INCOME IS ATTACHED TO A NY IMMOVABLE PROPERTY THAT CANNOT BE THE SOLE FACTOR F OR ASSESSMENT OF SUCH INCOME AS INCOME FROM PROPERTY. WHAT HAS TO BE SEEN IS WHAT WAS THE PRIMARY OBJECT OF TH E ASSESSEE WHILE EXPLOITING THE PROPERTY. IF IT IS FOUND APPL YING SUCH TEST THAT THE MAIN INTENTION IS FOR LETTING OUT THE PROPERTY OR ANY PORTION THEREOF THE SAME MUST BE CONSIDERED AS RENTAL INCOME OR INCOME FROM PROPERTY. IN CASE IT IS FOUN D THAT THE MAIN INTENTION IS TO EXPLOIT THE IMMOVABLE PROPERTY BY WAY OF COMPLEX COMMERCIAL ACTIVITIES IN THAT EVENT IT MUST BE HELD AS BUSINESS INCOME. 11. THE CRITERIA FOR CHARGING ANNUAL VALUE TO TAX I S THE OWNERSHIP OF THE PROPERTY COUPLED WITH ITS INHERENT CAPACITY OF BEIN G LET. THE CHARGE IS LEVIED ON THE OWNER OF THE HOUSE PROPERTY AND IT IS IMMATERIAL WHETHER THE OWNER IS IN POSSESSION AND ENJOYMENT OF THE PROPERT Y OR HAD LET IT OUT ON RENT TO A THIRD PERSON. THE BASIS FOR ASSESSING TAX UNDER THE HEAD INCOME FROM PROPERTY IS THE OWNERSHIP OF THE PROPERTY AND NOT NECESSARILY THE ACTUAL REALIZATION OF INCOME. THE PROPERTY MUST BE CAPABLE OF BEING LET 8 OUT IN ORDER TO BE CHARGED TO TAX UNDER THE PROVISI ONS OF SECTION 22 OF THE ACT. WHERE THE PROPERTY IS NOT CAPABLE OF BEING LE T OUT, EVEN WHERE THE ASSESSEE IS OWNER OF THE PROPERTY, THE NOTIONAL INC OME FROM SUCH PROPERTY IS NOT INCLUDIBLE IN HIS HANDS UNDER THE PROVISIONS OF SECTION 22 OF THE ACT. THE SAID RATIO HAS BEEN LAID DOWN BY THE HON 'BLE BOMBAY HIGH COURT IN SHREE NIRMAL COMMERCIAL LTD VS. CIT [(1992 ) 193 ITR 694 (BOM)]. 12. THE SAID VIEW OF THE HON'BLE BOMBAY HIGH COURT IN SHREE NIRMAL COMMERCIAL LTD VS. CIT (SUPRA) WAS AFFIRMED BY FULL BENCH OF THE BOMBAY HIGH COURT IN CIT VS. SHREE NIRMAL COMMERCIA L LTD [(1999) 213 ITR 361 (BOM.)(FB)] 13. THE APEX COURT IN LIQUIDATOR OF MAHAMUDABAD PRO PERTIES PVT LTD VS. CIT [(1984)124 ITR 31 (SC) ] HAD LAID DOWN THE PROPOSITION THAT THE MERE FACT THAT THE BUILDING IS IN A STATE OF DESPAI R DOES NOT EFFECT ITS CHARGEABILITY TO TAX. . IN THE FACTS OF THE CASE BEFORE THE APEX COURT IN LIQUIDATOR OF MAHAMUDABAD PROPERTIES PVT LTD VS. CI T (SUPRA), A BUILDING REQUISITIONED BY THE GOVERNMENT FROM THE A SSESSEE, AFTER THE USE FOR HOUSING REFUGEES, WAS DEREQUISITIONED IN AN UNI NHABITED CONDITION. DURING THE YEAR UNDER APPEAL, THE BUILDING WAS LYIN G VACANT. THE HON'BLE APEX COURT UPHELD THE ORDER OF HIGH COURT IN HOLDIN G THAT THE SAID PROPERTY HAD AN ANNUAL VALUE. IT WAS FURTHER HELD THAT (III) THE PROVISO TO SECTION 23(1) COULD BE AVAILED OF ONLY IF THE PROPE RTY WAS IN THE OCCUPATION OF A TENANT AND THE ASSESSEE WAS NOT ENT ITLED TO DEDUCTION OF MUNICIPAL TAXES AS THE BUILDING WAS VACANT DURING T HE PREVIOUS YEAR. (IV) THAT, AS THE BUILDING WAS NOT LET OUT DURING THE PR EVIOUS YEAR, S.24(2)(IX) 9 DID NOT APPLY AND THE ASSESSEE WAS NOT ENTITLED TO VACANCY REMISSION THEREUNDER. 14. THE ASSESSIBILITY TO TAX THE INCOME FROM PROPER TY U/S 22 OF THE ACT IS ON THE OWNER OF THE PROPERTY AND THE HON'BLE SUP REME COURT AND HIGH COURTS IN VARIOUS JUDICIAL DECISIONS HAVE EXPLAINED THE MEANING OF THE WORD OWNER IN CONTEXT OF SECTION 22 OF THE ACT. UNDER THE S AID SECTION 22 ITSELF, EXEMPTION TO CHARGEABILITY TO TAX IS PRO VIDED TO SUCH PORTIONS OF THE BUILDING OR SUCH BUILDINGS, WHICH ARE OCCUPIED FOR BUSINESS. THE SECTION FURTHER LAYS DOWN THAT WHERE THE BUILDING O R ANY PART OF IT IS OCCUPIED BY AN OWNER, FOR THE PURPOSE OF ANY BUSIN ESS OR PROFESSION CARRIED ON BY HIM, THEN THE SAME IS TO BE EXCLUDED FROM THE PURVIEW OF SECTION 22 OF THE ACT, PROVIDED INCOME FROM SUCH BU SINESS OR PROFESSION IS ASSESSED TO TAX. THE SMALLNESS OF ASSESSIBIL ITY OF BUSINESS INCOME IS IRRELEVANT AND THE NATURE OF THE PROPERTY BEING UTILIZED FOR THE BUSINESS OR PROFESSION CARRIED ON BY THE OWNER AND ASSESSBIL ITY OF SUCH BUSINESS INCOME EXCLUDES THE SAME FROM THE PURVIEW OF SECTI ON 22 OF THE ACT. THE SECOND ASPECT OF THE OWNERSHIP IS WHETHER THE PROPE RTY IS OWNED BY DIFFERENT OWNERS BUT FOR THE PURPOSE OF ASSESSMENT OF INCOME U/S 22 OF THE ACT, ALL SUCH PERSONS ARE CONSIDERED AS OWNERS OF T HE PROPERTY TO THE EXTENT OF THEIR SHARE IN THE SAID PROPERTY. 15. THOUGH THE PROPERTY INCOME U/S 22 OF THE ACT IS ASSESSABLE ON NOTIONAL BASIS, BUT DETERMINATION OF THE ANNUAL VAL UE OF THE PROPERTY IS ENVISAGED U/S 23 OF THE ACT. 16. SECTION 23(1) OF THE ACT, IS THE DEEMING PROV ISION FOR COMPUTING THE ANNUAL VALUE OF THE PROPERTY. UNDER SUB CLAUSE (A) TO SECTION 23(1) 10 THE ANNUAL VALUE SHALL CONSISTS OF A SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO BE LET FROM YEAR TO YEAR AND UNDER SUB CLAUSE (B), THE ACTUAL RENT RECEIVED OR RECEIVABLES BY TH E OWNER IS TO BE TAKEN AS ANNUAL VALUE OF THE PROPERTY AND UNDER SUB CLAUSE ( C) WHERE THE PROPERTY LET OUT WAS VACANT DURING WHOLE OR ANY PART OF THE YEAR AND THE ACTUAL RENT RECEIVED IS LESS THEN THE SUM REFERRED TO CLAUSE (A ), THE SUM SO RECEIVED OR RECEIVABLE. 17. UNDER SECTION 23 (2) (A) OF THE ACT, WHERE THE PROPERTY OWNED BY THE ASSESSEE BEING THE HOUSE OR PART OF THE HOUSE, IS UNDER THE SELF OCCUPATION OF THE OWNER FOR THE PURPOSE OF HIS / HE R RESIDENCE, THEN THE ANNUAL VALUE OF SUCH PROPERTY IS TO BE TAKEN AT NIL . CLAUSE (B) OF SECTION 23(2) OF THE ACT FURTHER PRESCRIBES THAT WHERE THE PROPERTY CANNOT BE OCCUPIED BY THE OWNER BECAUSE OF HIS EMPLOYMENT, BU SINESS OR PROFESSION BEING CARRIED OUT AT ANY OTHER PLACE AND HE IS RESI DING AT THE OTHER PLACE IN A BUILDING NOT BELONGING TO HIM, IN SUCH CASES ALSO , THE ANNUAL VALUE OF THE SAID PROPERTY IS TO BE TAKEN AT NIL. UNDER SE CTION 23(3), IT IS PROVIDED THAT WHERE THE ASSESSEE HAS ACTUALLY LET A HOUSE OR PART OF THE HOUSE DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR OR WHERE THE ASSESSEE HAS EARNED ANY OTHER BENEFIT FROM THE SAID PROPERTY, TH E PROVISIONS OF SUB SECTION (2) OF SECTION 23 OF ADOPTING THE VALUE AT NIL ARE NOT APPLICABLE. SECTION 23(4) OF THE ACT PROVIDES THAT WHERE THE AS SESSEE IS OWNER OF MORE THAN ONE PROPERTY WHICH ARE UNDER HIS OCCUPATI ON, THEN THE PROVISIONS OF SUB SECTION SHALL APPLY IN RESPECT OF ONE OF SUCH HOUSES OCCUPIED BY THE ASSESSEE AND THE ANNUAL VALUE OF TH E OTHER HOUSE OR HOUSES IS TO BE DETERMINED UNDER SUB SECTION 1 OF S ECTION 23 OF THE ACT AS IF THE SAID HOUSE OR HOUSES HAD BEEN LET OUT. 11 18. IN VIEW OF THE ABOVE SAID LEGAL POSITION WITH R EGARD TO THE ASSESSIBILITY OF INCOME UNDER THE HEAD INCOME FROM PROPERTY, THE PURPOSE FOR WHICH IT IS USED IS MATERIAL. THE FOLLOWING AS PECTS NEED CONSIDERATION FOR DETERMINING THE ASSESSIBILITY OF ANNUAL VALUE O F PROPERTY UNDER THE HEAD INCOME FROM HOUSE PROPERTY. A) WHETHER USED FOR RESIDENTIAL PURPOSE OR FOR THE PUR POSE OF BUSINESS, PROFITS OF WHICH ARE CHARGEABLE TO TAX. I F USED FOR THE PURPOSE OF BUSINESS, THE VALUE OF SUCH PROPERT Y IS TO BE EXCLUDED FROM CHARGE UNDER THE HEAD INCOME FROM PRO PERTY. B) IF THE PROPERTY IS BOUGHT WITH THE INTENTION TO USE THE SAME FOR BUSINESS PURPOSES, BUT THE SAME IS LYING VACANT TILL THE SAME IS PUT TO USE FOR BUSINESS PURPOSES OR REPAIR / RENOVATION ARE UNDERTAKEN, BUT THE PROPERTY IS OTHE RWISE HABITABLE / FIT FOR USE, THE ANNUAL VALUE OF SUCH P ROPERTY IS TO BE INCLUDED IN THE HANDS OF ASSESSEE, TILL THE SAME IS PUT TO BUSINESS USE. C) WHERE THE PROPERTY IS RESIDENTIAL HOUSE, BUT BEING USED FOR THE PURPOSE OF BUSINESS I.E. A FLAT BOUGHT AND USED BY THE ASSESSEE AT A PLACE OTHER THAN WHERE HE RESIDES, US ED DURING HIS BUSINESS TRIPS IS BEING USED FOR THE PURPOSE OF BUSINESS AND THE ANNUAL VALUE OF SUCH PROPERTY IS TO BE EXCL UDED. D) WHERE THE PROPERTY IS IN OCCUPATION OF OWNER USED F OR THE PURPOSE OF RESIDENCE OF THE ASSESSEE, THEN VALUE OF SUCH PROPERTY IS TO BE TAKEN AT NIL. E) WHERE THE ASSESSEE OWNS MORE THAN ONE PROPERTY FOR HIS RESIDENTIAL USE, THEN ANNUAL VALUE OF ONE PROPERTY AT THE OPTION OF ASSESSEE IS TO BE TAKEN AT NIL AND ANNUAL VALUE OF 12 OTHER PROPERTIES ARE TO BE COMPUTED U/S 23(1) OF TH E ACT AND INCLUDED AS INCOME OF ASSESSEE. F) IF THE PROPERTIES ARE OWNED WITH THE INTENTION TO U SE FOR RESIDENCE, MERELY BECAUSE IT IS LYING VACANT OR THE RE IS NO INTENTION TO LET AND / OR IS HABITABLE, BUT IS UNDE RGOING REPAIRS / RENOVATION, THE OPTION TO ADOPT THE ANNUA L VALUE AT NIL, BEING IN RESIDENTIAL USE OF ASSESSEE, IS AVAIL ABLE IN RESPECT OF ONE PROPERTY AND ANNUAL VALUE OF OTHER P ROPERTIES ARE TO BE COMPUTED AND INCLUDED IN THE HAND OF THE ASSESSEE. G) AS THE INCOME FROM HOUSE PROPERTY IS TO BE CHARGED ON NOTIONAL BASIS AND HENCE THE STATUS OF THE EACH PRO PERTY IS TO BE VERIFIED INDEPENDENTLY IN EACH YEAR. H) WHERE THE PROPERTY IS NOT CAPABLE OF BEING LET, THE ANNUAL VALUE OF SUCH PROPERTY IS NOT INCLUDIBLE IN THE HAN DS OF THE OWNER OF THE PROPERTY. I) WHERE THE PROPERTY HAS NOT BEEN LET OUT THROUGHOUT THE YEAR AND WAS LYING VACANT, WHETHER THE ASSESSEE IS ENTIT LED TO VACANCY ALLOWANCE OR NOT. J) THE DETERMINATION OF ANNUAL LETTING VALUE OF THE PR OPERTY IN LINE WITH THE PROVISIONS OF SECTION 23(1) OF THE IN COME TAX ACT. 19. THE ABOVESAID PARAMETERS, WHEREVER APPLICABLE T O THE FACTS OF THE CASE HAVE TO BE FULFILLED IN ORDER TO DETERMINE THE CHARGEABILITY OF INCOME FROM HOUSE PROPERTY. TAX IS LEVIABLE ON THE NET AN NUAL VALUE OF THE PROPERTY AFTER ALLOWING PERMISSIBLE DEDUCTIONS U/S 24 OF THE INCOME TAX ACT. IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE FIND THAT THE COMPLETE PARTICULARS IN RESPECT OF THEIR USERS FROM YEAR TO YEAR OF VARIOUS PROPERTIES OWNED BY THE ASSESSEE NEEDS TO BE LOOKED INTO IN ORDER TO 13 DETERMINE THE FIRST THE CHARGEABILITY OF THE INCOME UNDER THE HEAD INCOME FROM PROPERTY AND THEREAFTER DETERMINATION OF ANNUA L LETTING VALUE OF THE PROPERTIES, VALUE OF WHICH IS TO BE INCLUDED IN THE HANDS OF THE ASSESSEE AS INCOME FOR THE YEARS IN WHICH ASSESSEE OWNS THE SAM E. FOR THE DETERMINATION OF ALV OF THE PROPERTIES IN QUESTION, THE DUTY OF THE ASSESSING OFFICER BEFORE COMING TO A CONCLUSION IS TO CONFRONT THE ASSESSEE WITH THE MATERIAL, WHICH FORMS BASIS FOR S AID DETERMINATION. IN THE FACTS OF THE PRESENT CASE, WE FIND THAT NO OPPO RTUNITY WAS PROVIDED TO THE ASSESSEE BY THE ASSESSING OFFICER BEFORE ADOPTI NG A PARTICULAR ALV TO THE RESPECTIVE PROPERTIES OWNED BY THE ASSESSEE. S UCH ADOPTION OF ALV OF THE VARIOUS PROPERTIES IS CHALLENGED BY THE ASSE SSEE AND WE ARE OF THE VIEW THAT THE ASSESSING OFFICER BEFORE COMPUTING T HE ANNUAL VALUE OF THE RESPECTIVE PROPERTIES SHOULD AFFORD A REASONABLE OP PORTUNITY OF HEARING TO THE ASSESSEE. FOLLOWING THE PRINCIPLES OF NATURA L JUSTICE, WE DEEM IT FIT TO RESTORE THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER TO DETERMINE THE NATURE OF THE PROPERTY, WHETHER ANNUAL VALUE OF SA ME IS INCLUDIBLE IN THE HANDS OF THE ASSESSEE IN LINE WITH OUR ORDER IN THE PARAS HEREINABOVE AND AFTER ALLOWING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW AND SETTLED LEGAL POSITION AND COMPUTE THE ANNUAL VALUE AS PER SECTION 23(1) OF TH E ACT.. THE COMMON GROUNDS OF APPEAL RAISED IN ITA NOS. 304 TO 324/CHD /2010 ARE ALLOWED FOR STATISTICAL PURPOSES. ITA NOS. 304 TO 310/CHD/2010 (SHRI MANDEEP JAIN) 20. COMMON ISSUE AS DISCUSSED ABOVE HAD BEEN RAISED IN THE PRESENT APPEALS BY THE ASSESSEE RELATING TO ASSESSMENT YEAR S 2001-02 TO 2004-05 IN ITA NOS. 304 TO 307/CHD/2010 AND THE SAME ARE A LLOWED FOR STATISTICAL 14 PURPOSES IN LINE WITH OUR ORDER IN THE PARAS HEREIN ABOVE. THE ASSESSEE HAS FURTHER RAISED SEPARATE AND DIFFERENT GROUNDS O F APPEAL IN INDIVIDUAL APPEALS, WHICH ARE DEALT WITH HEREIN UNDER:- . ITA NO. 304/CHD/2010 (MR MANDEEP JAIN) 21. THE GROUND RAISED BY THE ASSESSEE IS AS UNDER:- 1. THAT THE CIT(A) ERRED IN UPHOLD ADDITIONS OF RS. 33,430/- AS INCOME OF THE APPELLANT WHICH WAS A GIF T FROM A FRIEND IN SWEDEN ON THE OCCASION OF THE BIRT H OF FIRST CHILD PRETEXT OF FAILURE TO PROCURE THE DONOR WHICH WAS IMPOSSIBLE AND ILLEGAL DEMAND. 22. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATIO N HAD RECEIVED THE GIFT OF RS. 33,430/- FROM SHRI PRITINDER SANDHU LIV ING IN SEWDEN, WHO WAS A CLOSE FRIEND OF THE ASSESSEE. THE ASSESSEE HAD R ECEIVED THE SAID GIFT ON ENCASHMENT OF FOREIGN EXCHANGE WHICH WAS ENCHASED T HROUGH A FOREIGN EXCHANGE COMPANY. THE ASSESSEE WAS REQUISITIONED TO PRODUCE THE DONOR BY THE ASSESSING OFFICER AND IN THE ABSENCE OF HIS PRODUCTION, THE SAID GIFT WAS ADDED AS INCOME OF THE ASSESSEE. EVEN BE FORE THE CIT(A), THE ASSESSEE FAILED TO PROVE THE CREDITWORTHINESS OF TH E DONOR AND IN THE ABSENCE OF ANY OCCASION FOR MAKING THE GIFT, THE GE NUINENESS OF THE TRANSACTIONS AS PER THE CIT(A) WAS NOT PROVED. TH E ORDER OF ASSESSING OFFICER WAS ACCORDINGLY UPHELD. THE ASSESSEE BEFO RE US HAS FAILED TO ESTABLISH THE CREDITWORTHINESS OF THE DONOR OR THE GENUINENESS OF THE TRANSACTIONS. THE BASIS OF THE ASSESSEE UPON THE ENCASHMENT OF THE FOREIGN CHEQUE THROUGH BANKING CHANNELS DOES NOT ES TABLISH THE CASE OF THE ASSESSEE. THOUGH, WE FIND NO MERIT IN THE ORDE R OF ASSESSING OFFICER IN EMPHASIZING UPON THE PRODUCTION OF THE DONOR BUT THE ONUS IS UPON THE ASSESSEE TO ESTABLISH THE IDENTITY AND CAPACITY OF THE DONOR AND PROVE THE 15 GENUINENESS OF THE TRANSACTIONS. THE ASSESSEE HAS F AILED TO ESTABLISH THE SAME AND IN THE ABSENCE OF ANY EVIDENCE BEING PRODU CED BEFORE US, MERELY BECAUSE THE TRANSACTION IS ROUTED THROUGH BANKING C HANNELS IS NOT ENOUGH TO ALLOW THE CREDIT OF THE SAID ENTRY IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, WE CONFIRM THE ADDITION OF RS. 33,430/ -. ITA NO. 308/CHD/2010 (MR. MANDEEP JAIN ) 23. THE GROUNDS OF APPEAL RAISED IN ITA NO. 308/CHD/2010 (MR. MANDEEP JAIN ) ARE AS UNDER:- 1. THAT THE CIT(A) HAS ERRED TO UPHOLD THE ADDITIONS O F RS. 14,400.00 TO THE RETURNED INCOME ON ACCOUNT OF SHARE IN SCF NO. 26, SECTOR 22-D, CHANDIGARH FOR A PERIOD OF 4 MONTHS UPTO THE DATE OF FAMILY SETTLEME NT ON ILLEGAL APPLICATION OF A.L.V. 2. THAT THE PROPERTY IS BUSINESS PREMISES SETTLED IN F AVOUR OF YOUNGER BROTHER WHO HAD STARTED BUSINESS IN THE NAME OF M/S NIKKA MAL BABU RAM, THE JEWELLERY ARCADE . 3. THAT THE CONCEPT OF A .L.V TO BUSINESS PREMISES IS WITHOUT AUTHORITY OF LAW. ITA NOS. 309 & 310/CHD/2010 (MR. MANDEEP JAIN) 24. THE GROUNDS OF APPEAL RAISED IN ITA NOS. 309 & 310/CHD/2010 (MR. MANDEEP JAIN) ARE AS UNDER:- 1. THAT THE CIT(A) HAS ERRED TO UPHOLD THE ADDITION S OF RS. 2,27,000/- TO THE RETURNED INCOME ON ACCOUNT OF ANNUAL LETTING VALUE OF SCF NO. 17, SECTOR 22-D, CHANDIGARH, IN WHICH THE APPELLANT IS RUNNING HIS BUSINESS HOLDING 2/3 SHARE AND BEING MANAGING PARTN ER OF THE FIRM M/S NIKKA MAL BABU RAM & SONS. 2. THAT IT IS CONTRAVENTION OF THE SETTLED RULE OF LAW THAT A PARTNER PROVIDING BUSINESS PREMISES TO A FIRM IS EX EMPT FROM THE PROVISIONS OF SECTION 22 & 23 OF THE INCO ME TAX ACT. 16 3. THAT IN THE FACTS AND CIRCUMSTANCE OF THE CASE A .L.V. ADDED TO THE INCOME IS WITHOUT AUTHORITY OF THE LAW 25. THE ISSUES IN THE PRESENT APPEALS ARE IN RESPECT OF CHA RGEABILITY AND DETERMINATION OF ANNUAL VALUE OF ASSESSEES SHARE I N SCF NO. 26, SECTOR 22-D, CHANDIGARH IN ASSESSMENT YEAR 2005-06 AND HIS SHARE IN SCF NO. 70, SECTOR 22-D, CHANDIGARH IN ASSESSMENT YEARS 200 6-07 AND 2007-08. THE SECOND ISSUE IS WHETHER THE PREMISES OWNED BY T HE ASSESSEE BEING USED BY THE FIRM IN WHICH HE IS A PARTNER, COULD BE SAID TO BE IN BUSINESS USE. WHILE DECIDING THE ISSUE OF ADDITION ON ACCOU NT OF ANNUAL LETTING VALUE IN RESPECT OF VARIOUS PROPERTIES OWNED BY THE ASSESSEE, WHICH WAS THE COMMON ISSUE RAISED BY ASSESSEE AND HIS FAMILY MEMBERS IN MANY APPEALS, WE HAVE REMITTED THE ISSUE BACK TO THE FIL E OF THE ASSESSING OFFICER WITH DIRECTIONS TO DECIDE THE SAME IN ACCO RDANCE WITH LAW AND SETTLED LEGAL PROPOSITIONS. IN LINE WITH OUR DIREC TIONS IN PARAS HEREINABOVE, THE ISSUE IN THE PRESENT APPEALS I.E. ASSESSMENT YEARS 2005- 06 TO 2007-08 ARE ALSO REMITTED TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE SAME IN LINE WITH OUR DIRECTIONS AFTER A LLOWING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 26. IN THE RESULT, THE APPEALS IN ITA NOS. 304 TO 3 10/CHD/2010 ARE PARTLY ALLOWED. ITA NOS. 311 TO 317/CHD/2010 (SMT. VEENA JAIN) 27. THE COMMON ISSUE RAISED IN ALL THE APPEALS WAS REGARDING THE ASSESSABILITY OF ANNUAL VALUE OF THE PROPERTIES BOT H BUSINESS AND RESIDENTIAL OWNED BY THE ASSESSEE IN VARIOUS YEARS. IN LINE WITH OUR ORDERS IN THE PARAS HEREINABOVE ABOVE, THE ISSUE IS RESTORED BACK TO THE 17 FILE OF THE ASSESSING OFFICER TO DECIDE THE SAME A S PER OUR DIRECTIONS IN THE PARAS HEREINABOVE. A REASONABLE OPPORTUNITY OF HEARING SHALL BE AFFORDED TO THE ASSESSEE. THE GROUNDS OF APPEALS R AISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 28. IN THE RESULT, THE APPEALS IN ITA NOS. 311 TO 317 ARE THUS ALLOWED FOR STATISTICAL PURPOSES. ITA NOS. 318 TO 324/CHD/2010(SHRI KAMAL KANT JAIN) 29. THE COMMON ISSUE HAS BEEN RAISED IN THE PRESENT APPEALS BY THE ASSESSEE RELATING TO ASSESSMENT YEARS 2001-02 TO 20 07-08 AND THE SAME IS ALLOWED FOR STATISTICAL PURPOSES IN LINE WITH OUR O RDER IN THE PARAS HEREINABOVE. THE ASSESSEE HAS FURTHER RAISED SEPAR ATE AND DIFFERENT GROUNDS OF APPEAL IN INDIVIDUAL APPEALS, WHICH ARE DEALT WITH HEREINUNDER. ITA NO. 319/CHD/2010(SHRI KAMAL KANT JAIN) 30. THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS AS UNDER:- 1. THAT THE CIT(A) ERRED IN UPHOLD ADDITIONS OF RS. 1,86,083/- RECEIVED AS GIFT FROM REAL SISTER IN CAN ADA, ON LAME EXCUSE AND INCORRECT FACTS. 31. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD RECEIVED A GIFT OF R S. 1,86,083/- FROM SMT. SUBHASH JAIN AGGARWAL RESIDENT OF CANADA. THE PHOT OCOPY OF THE AFFIDAVIT SWORN AT OTTAWA, CANADA WAS FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN WHICH IT WAS DECLARED THA T GIFT OF US$ 4000 HAS BEEN MADE. THE STATEMENT OF THE ASSESSEE WAS RECORD ED ON 22.12.2008 IN WHICH THE ASSESSEE STATED THAT SMT. SUBHASH JAIN AG GARWAL WAS HIS REAL SISTER AND THE SAID GIFT WAS GIVEN AT THE OCCASION OF MARRIAGE OF HIS 18 DAUGHTER. THE ASSESSING OFFICER WAS OF THE VIEW THA T THE GIFT SHOULD HAVE BEEN GIVEN TO THE DAUGHTER AND NOT TO THE ASSESSEE. FURTHER, THE ASSESSING OFFICER OBSERVED THAT CAPACITY OF THE DONOR WAS NOT PROVED AND CONSEQUENTLY ADDITION OF RS. 1,86,083/- WAS MADE. THE ASSESSEE HAS FURNISHED ON RECORD AN AFFIDAVIT OF SMT. SUBHASH JA IN AGGARWAL WHICH IS ATTESTED ON 14.2.2009. IN THE SAID AFFIDAVIT, THE DONOR HAS STATED TO HAVE MADE THE SAID AFFIRMATION FOR THE THIRD TIME AS THE INCOME TAX OFFICER HAS DISBELIEVED THE EARLIER AFFIDAVIT. IN THE SAID AFFI DAVIT IT HAS BEEN AFFIRMED THAT THE SAID GIFT OF US$ 4000 WAS MADE ON 29.3.200 1 TO HIS ELDER BROTHER. THE DONOR FURTHER AFFIRMS THAT HER ANNUAL INCOME IS ABOUT US$ 96000 AND THE SOURCE OF INCOME WAS HER RENTAL INCOME IN CANAD A. 32. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PE RUSED THE RECORDS. THE ASSESSEE HAS RECEIVED THE AFORESAID GIFT FROM H IS SISTER WHO IS BASED IN CANADA. WE FIND NO MERIT IN THE ORDER OF ASSESS ING OFFICER IN REJECTING THE PLEA OF ASSESSEE ON THE SURMISE THAT THE GIFT W AS GIVEN TO THE BROTHER AND NOT TO HIS DAUGHTER. FURTHER, THE DONOR BY WAY OF AFFIDAVIT HAS ALSO AFFIRMED HER INCOME IN CANADA, OUT OF WHICH THE SAI D GIFT WAS MADE. IN THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE , WE SET ASIDE THE ORDER OF THE CIT(A) ON THIS ASPECT AND DIRECT THE ASSESSI NG OFFICER TO DELETE THE ADDITION OF RS. 1,86,083/-. THE GROUND NO.1 RAISED BY THE ASSESSEE IN ITA NO. 319/CHD/2010 IS THUS ALLOWED. ITA NO. 320/CHD/2010 (SHRI KAMAL KANT JAIN) 33 . THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS AS U NDER:- 1. THAT THE CIT(A) ERRED IN UPHOLD ADDITIONS OF GIF TS FROM FRIENDS WITHOUT AUTHORITY OF LAW WITH FULL DOCUMEN TARY EVIDENCE IN HAND TO PROVE THE SAME GENUINE. 19 34. DURING THE YEAR UNDER CONSIDERATION I.E FINANCI AL YEAR 2002-03, THE ASSESSEE HAD RECEIVED GIFT OF RS. 1 LAC FROM SHRI A MRIT DILAWARI AND ANOTHER GIFT OF US$11500 EQUIVALENT TO RS. 5,46,575 /- FROM SHRI CHARANJIT P.SINGH. THE STATEMENT OF THE ASSESSEE WAS RECORDE D ON 22.12.2008 AND THE ASSESSEE WAS UNABLE TO PROVIDE THE PRESENT/CURR ENT ADDRESSES OF BOTH THE PARTIES AND IN RESPECT OF OCCASION OF GIVING TH E GIFT IT WAS STATED BY THE ASSESSEE THAT HE WAS IN FINANCIAL CRISES AND TH E SAID GIFTS WERE GIVEN BY HIS FRIENDS. THE ASSESSING OFFICER IN VIEW THER EOF, AS THE ASSESSEE HAD FAILED TO SUBSTANTIATE HIS CLAIM IN RESPECT OF GIFT S, TREATED THE SAME AS INCOME FROM UNDISCLOSED SOURCES AMOUNTING TO RS. 6, 46,575/-. THE ASSESSING OFFICER ALSO PLACED RELIANCE ON THE RATI O LAID DOWN BY HON'BLE SUPREME COURT IN SUMITI DAYA VS. CIT 214 ITR 801 (S C). THE CIT(A) UPHELD THE ADDITION AS ASSESSEE HAD FAILED TO PROVI DE THEIR PRESENT ADDRESSES AND ALSO THE FINANCIAL CAPACITY OF THE SA ID DONORS WERE NOT PROVED. THE LEARNED AR FOR THE ASSESSEE POINTED OU T THAT THE ASSESSEE HAD PROVED THE IDENTITY OF THE SAID PERSONS AND HAD ALS O FILED THE CONFIRMATIONS FROM BOTH THE PARTIES. THE LEARNED DR PLACED RELIANCE ON THE ORDER OF THE CIT(A). 35. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. UNDER THE PROVISIONS OF THE INCOME TAX ACT, THE ASSESSEE HAS TO DISCHARGE HIS ONUS OF ESTABLISHING THE SOURCE OF ENTRIES IN HIS B ANK ACCOUNT OR BOOKS OF ACCOUNT. IN RESPECT OF TWO CREDITS RECEIVED DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE EXPLAINED TO HAVE RECEI VED THAT GIFT OF RS. 1 LAC FROM SHRI AMRIT DILWARI AND FURTHER RS. 5,46,5 75/- FROM SHRI CHARANJIT P.SINGH. THE ASSESSEE CLAIMED TO HAVE FIL ED CONFIRMATION IN RESPECT THEREOF. HOWEVER, DURING THE COURSE OF STA TEMENT RECORDED, THE 20 ASSESSEE WAS UNABLE TO PROVIDE THE PRESENT ADDRESS OF THE DONORS OR THEIR CREDIT WORTHINESS AND SATISFACTORILY EXPLAIN THE OC CASION ON WHICH THE GIFT WAS RECEIVED. 36. UNDER THE PROVISIONS OF SECTION 68 OF THE ACT, WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEAR, THE ONUS IS UPON THE ASSESSEE TO EXPLAIN THE NATURE AND SO URCE THEREOF. THE IDENTITY OF THE PERSONS, THE CREDITWORTHINESS OF TH E PERSONS WHO SOURCED THE SAID ENTRY AND THE GENUINENESS OF THE TRANSACTI ONS IS TO BE ESTABLISHED PRIMA-FACIE WITH EVIDENCE BY THE ASSESSEE AND IN CA SE OF HIS FAILURE TO DO SO, THE SAME UNDER THE PROVISIONS OF THE ACT IS INC LUDIBLE AS INCOME OF THE ASSESSEE. IN THE FACTS OF THE PRESENT CASE, WE FIN D THAT THAT ASSESSEE HAS FAILED TO DISCHARGE THE ONUS OF ESTABLISHING THE CR EDITWORTHINESS OF THE PERSONS AND EVEN PROVING THE GENUINENESS OF THE TRA NSACTIONS. THE ASSESSEE HAS FAILED TO SATISFY THE OCCASION FOR THE RECEIPT OF THE SAID GIFT. IN THE ABSENCE OF THE ONUS BEING DISCHARGED BY THE ASSESSEE, WE ARE IN CONFORMITY WITH THE ORDER OF THE ASSESSING OFFICER THAT THE SAID RECEIPT OF RS. 6,46,575/- IS TO BE INCLUDED AS INCOME FROM UND ISCLOSED SOURCES. THE GROUND NO.1 RAISED BY THE ASSESSEE IN ITA NO.320/CH ANDI/2010 IS THUS DISMISSED. 37. THE GROUND NO.2 RAISED BY THE ASSESSEE IS AS UN DER:- 2. THAT THE SAID AUTHORITY HAS ERRED IN UPHOLDING ADDI TION OF RS. 43,873/- SPENT ON REPAIR OF FLAT OUT OF WITHDRA WALS OF RS. 6,80,000/- BY THE COUPLE. 38. DURING THE COURSE OF SEARCH OPERATIONS AT THE R ESIDENTIAL PREMISES OF THE ASSESSEE TWO INVOICES OF EROSE INDUSTRIAL COMPA NY (P) LTD, NEHRU 21 PLACE, NEW DELHI WERE SEIZED AND ARE AVAILABLE AT P AGES 7 & 8 OF ANNEXURE A-1. THE SAID INVOICES REFLECTS RS. 30,83 1/- AND RS. 13,047/- PAYABLE BY THE ASSESSEE ON ACCOUNT OF GENERAL MAINT ENANCE CHARGES. THE EXPLANATION OF THE ASSESSEE WAS THAT THE SAID PAYME NTS PERTAIN TO MAINTENANCE OF THE MUKERJEE NAGAR FLAT IN OCTOBER, 2002 BUT THE SAME WERE CLAIMED NOT TO HAVE BEEN PAID. THE ASSESSING OFFICER WAS OF THE VIEW THAT SINCE THE PROPERTY WAS IN THE OCCUPATION OF THE ASSESSEE, THE SAID MAINTENANCE CHARGES MUST HAVE BEEN PAID AND AS THE SOURCES OF THE PAYMENTS OF THE SAME WAS NOT EXPLAINED, IT WAS ADDE D AS INCOME FROM UNDISCLOSED SOURCES. BEFORE THE CIT(A) THE SUBMISS ION OF THE ASSESSEE WAS THAT HE HAD WITHDRAWN RS. 2.40,000/- AND HIS WI FE HAD WITHDRAWN RS. 4,40,000/- DURING THE YEAR UNDER CONSIDERATION AND THE SOURCE OF THE PAYMENTS OF RS. 43,873/- STANDS EXPLAINED. THE CIT( A) UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER AS THE EXPL ANATION OF THE ASSESSEE WAS FOUND TO BE VAGUE AND UNCORROBORATED. FROM THE PERUSAL OF THE DETAILS, WE FIND THAT THE SEIZED PAPERS WERE IN CON NECTION WITH MAINTENANCE CHARGES PAYABLE. NO EVIDENCE HAS BEEN FOUND DURING THE COURSE OF SEARCH THAT THE SAID AMOUNTS HAD BEEN PAI D BY THE ASSESSEE AND IN THE ABSENCE OF THE SAME WE FIND NO MERIT IN THE ADDITION MADE ON THIS ACCOUNT. WE ACCORDINGLY DELETE THE ADDITION OF RS. 43,873/-. WE ACCORDINGLY ALLOW THE GROUND NO. 2 RAISED BY THE AS SESSEE. ITA NO. 323/CHD/2010 (SHRI KAMAL KANT JAIN) 39. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL:- 1. THAT THE CIT(A) ERRED IN UPHOLDING ILLEGAL ADDIT IONS OF RS. TEN LAKHS BASED ON A ROUGH HOUSEHOLD EXPENSES DIARY SEIZED ARBITRARILY. 22 40. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT DURING THE COURSE OF SEARCH OPERATION, A DIARY WAS SEIZED FROM THE RESID ENTIAL PREMISES OF THE ASSESSEE AND IS PLACED AT S.NO.4 OF ANNEXURE A. TH E ASSESSING OFFICER NOTED CERTAIN TRANSACTIONS CARRIED OUT IN CASH NOTE D IN THE SAID DIARY. THE NATURE AND DETAILS OF THE SAID ENTRIES WAS REQUISIT IONED BY THE ASSESSING OFFICER VIDE QUESTIONNAIRE DATED 19.9.2007, WHICH I S REPRODUCED AT PAGES 10 TO 12 OF THE APPELLATE ORDER UNDER PARA 7. THE EXPLANATION OF THE ASSESSEE IN THIS REGARD IS ALSO INCORPORATED IN THE APPELLATE ORDER AT PAGE 12 OF THE APPELLATE ORDER IN PARA 5.1. THE ASSESSI NG OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAD FAILED TO JUSTIFY THE NA TURE AND SOURCE OF TRANSACTION AND MADE AN ADDITION OF RS. 10 LACS U/S 69 OF THE INCOME TAX ACT. BEFORE THE CIT(A), THE PLEA OF THE ASSESSEE WAS THAT HIS ONLY SOURCE OF INCOME WAS AS PARTNER OF M/S NIKKA MAL BABU RAM & SONS. THE ASSESSEE EXPLAINED THE NATURE OF ENTRIES BEING DETA ILS OF HOUSE HOLD EXPENSES AND AMOUNT OF RS. 10 LACS ATTRIBUTED TO A KITTY RUN BY FEW FRIENDLY FAMILIES. THE CONTENTION OF THE ASSESSEE WAS THAT IN THE ABSENCE OF ANY OTHER EVIDENCE OR MATERIAL TO HOLD IT AS INV ESTMENT, THERE WAS NO JUSTIFICATION FOR THE AFORESAID ADDITION U/S 69 OF THE INCOME TAX ACT. THE SECOND PLEA PUT UP BY THE ASSESSEE WAS THAT IT HAD ONLY INCOME FROM THE FIRM AND CASH OF RS. 11 LACS HAD BEEN SURRENDER ED AS UNACCOUNTED INCOME, ON WHICH TAX WAS PAID AND IN ADDITION SURRE NDER OF 1.05 CRORES WAS MADE ON ACCOUNT OF UNACCOUNTED STOCK. THE ASS ESSEE PLEADED THAT THE UNACCOUNTED SALES AND CASH CREDITS BOTH COULD N OT BE ADDED AS INCOME, IN VIEW OF THE RATIO LAID DOWN BY THE CHANDIGARH BE NCH OF TRIBUNAL IN BANSAL RICE MILLS [ 245 ITR (AT) 36 (CHD)]. THE C IT(A) HELD THE EXPLANATION OF THE ASSESSEE IN RESPECT OF THE ENTRI ES IN THE SEIZED MATERIAL TO BE VAGUE AND UNCORROBORATED. THE CIT(A) FURTHE R HELD AS UNDER:- 23 AS PER THE PROVISIONS OF SECTION 132(4A) OF THE AC T, A PRESUMPTION CAN BE DRAWN THAT THE ARTICLES OR THING S WHICH ARE FOUND IN THE POSSESSION OF THE PERSON SEARCHED THAT THE CONTENTS OF THESE BOOKS OF ACCOUNT AND OTHER DOCUME NTS ARE TRUE. THOUGH IT IS A REBUTTABLE PRESUMPTION BUT TH E BURDEN LIES ON THE PERSON SEARCHED TO PROVE OTHERWISE THE ENTRIES MADE IN THESE SEIZED PAPERS FROM THE POSSESSION OF THE APPELLANT ARE FREE FROM ANY AMBIGUITY AND THE APPEL LANT HAS FAILED TO EXPLAIN THE ENTRIES THEREIN. IN THE CIRC UMSTANCES, THE ASSESSING OFFICER HAS RIGHTLY MADE THE ADDITIO N OF RS. 10 LACS AND THE SAME IS UPHELD. 41. WE ARE IN CONFORMITY WITH THE OBSERVATION OF TH E CIT(A) THAT UNDER THE PROVISIONS OF SECTION 132(4)(A) OF THE ACT, THO UGH THE PRESUMPTION OF THE ARTICLES OR THINGS FOUND IN THE POSSESSION OF T HE PERSON/S SEARCHED AND THE CONTENTS OF BOOKS OF ACCOUNT AND OTHER DOCUMENT S, TO BE TRUE, BUT THE SAME IS A REBUTTABLE PRESUMPTION AND THE BURDEN IS UPON THE ASSESSEE TO JUSTIFIABLY EXPLAIN THE SAME. IN THE FACTS AND CIR CUMSTANCES OF THE PRESENT CASE, THE ASSESSEE HAS FAILED TO EXPLAIN THE ENTRIE S IN THE SEIZED DOCUMENTS AND ACCORDINGLY THE ADDITION OF RS. 10 LACS AS INCO ME FROM UNDISCLOSED INCOME IS WARRANTED. HOWEVER, THE ASSESSEE HAS RAI SED AN ALTERNATIVE PLEA THAT IN VIEW OF SURRENDER OF CASH OF RS. 11 LACS IN ADDITION TO SURRENDER OF STOCK, NO ADDITION OF RS. 10 LACS IS WARRANTED IN T HE HANDS OF THE ASSESSEE. WE FIND THAT THE CIT(A) HAS FAILED TO ADDRESS THE I SSUE OF AVAILABILITY OF TELESCOPING TO THE ASSESSEE I.E. CASH ATTRIBUTABLE TO THE ENTRIES IN THE SEIZED DIARY AND CASH SURRENDERED BY THE ASSESSEE C ONSEQUENT TO THE SEARCH PROCEEDINGS. HOWEVER, ON THE PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW WE FIND THAT THE NECESSARY FACTUA L ASPECTS IN THIS REGARD ARE NOT AVAILABLE ON RECORD AND WE ARE UNABLE TO AD JUDICATE THE ISSUE WHETHER TELESCOPING IN THE CIRCUMSTANCES OF THE SUR RENDERED CASH WITH THE ADDITION MADE ON ACCOUNT OF INCOME FROM UNDISCLOSED SOURCES TOTALING RS. 10 LACS IS WARRANTED OR NOT ? IN THE INTEREST OF NATURAL JUSTICE, WE RESTORE THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER TO ADJUDICATE AFRESH. 24 HOWEVER, IN PRINCIPLE, WE UPHOLD THE ADDITION OF RS . 10 LACS AS INCOME FROM UNDISCLOSED SOURCES SUBJECT TO THE ASSESSING O FFICER DECIDING THE ISSUE OF ALLOWING TELESCOPING. ACCORDINGLY, THE GR OUND NO.1 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 324/CHD/2010 (SHRI KAMAL KANT JAIN) 42. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL:- 1. THAT THE CIT(A) ERRED IN UPHOLDING ADDITION OF RS. 50,000/- OUT OF TOTAL CASH OF RS. 1,57,630/- FOUND DURING SEARCH OF RESIDENCE MADE ARBITRARILY. 2. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE PENALTY IMPOSED U/S 271(1)(B) OF THE I.T. ACT BY AC IT, CENTRAL CIRCLE, PATIALA IGNORING THE REASONABLE CAU SE. HENCE RELIEF BE ALLOWED. 43. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT DURING THE COURSE OF SEARCH CASH OF RS. 1,72,630/- WAS FOUND WHICH WAS E XPLAINED TO BE THE CASH BELONGING TO ASSESSEE, HIS WIFE AND HIS DAUGHT ERS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AN AFFIDAVIT OF HIS DAUGH TER MS ASHU JAIN WAS FILED STATING THAT CASH OF RS. 1,57,630/- PERTAINS TO HER. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SAID PLEA OF THE ASSESSEE DID NOT MATCH WITH THE ORIGINAL STATEMENT RECORDED DURING THE SEA RCH. ACCORDINGLY, AN ADDITION OF RS. 50,000/- WAS MADE U/S 69A OF THE AC T. THE CIT(A) UPHELD THE SAID ADDITION. IN LINE WITH OUR DISCUSSION UN DER GROUND NO.1 IN ITA NO. 323/CHD/2010, WE ARE OF THE VIEW THAT THE SAID CASH OF RS. 50,000/- CAN BE CONSIDERED AS PART OF TELESCOPING WITH THE S URRENDER MADE BY THE ASSESSEE AND THE ISSUE IS ALSO REMITTED BACK TO THE FILE OF ASSESSING OFFICER TO LOOK INTO THE FACTUAL ASPECTS AND DECIDE THE ISSUE AFRESH. IN PRINCIPLE, THE ADDITION OF RS. 50,000/- IS UPHELD, SUBJECT TO THE ASSESSING OFFICER DECIDING THE ISSUE OF ALLOWING TELESCOPING. THE GROUND NO.1 RAISED BY THE ASSESSEE IS THUS ALLOWED FOR STATISTI CAL PURPOSES. 25 44. IN THE RESULT, THE APPEALS IN ITA NOS. 318 TO 3 24/CHD/2004 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF SEPTEMBER, 2010. SD/- SD/- (G.S.PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : SEPTEMBER, 2010 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR