ITO, New Delhi V. Sh. Kashimiri Lal, New Delhi

ITA 3331/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3656 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 05-05-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 24-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEVENDRA SINGH
• Assessee Lawyers: M L MUTNEJA
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH D DELHI ] BEFORE SHRI C. L. SETHI, JM AND SHRI K. D. RANJAN, AM I. T. APPEAL NO. 3331 (DEL) OF 2009. ASSESSMENT YEAR : 2006-07. THE INCOME-TAX OFFICER, SHRI KASHMIRI LAL, W A R D : 36 (1), VS. F 6, VIJAY CHOWK, N E W D E L H I. LAXMI NAGAR, D E L H I 92. PAN / GIR NO. ABD PL 7200 R. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI M. L. MUTNEJA, C. A.; DEPARTMENT BY : SHRI DEVENDRA SINGH, SR. D.R. ; O R D E R. PER K. D. RANJAN, AM : THIS APPEAL BY THE REVENUE FOR ASSESSMENT YEAR 2006 -07 ARISES OUT OF THE ORDER OF THE LD. CIT (APPEALS)-XXVII, NEW DELHI. 2. THE GROUNDS OF APPEAL, RAISED BY THE REVENUE, AR E REPRODUCED AS UNDER :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.21,87,286/- MA DE BY THE AO ON ACCOUNT OF PROPORTIONATE VALUE OF PROPERTY NOT SHOWN IN THE BA LANCE SHEET; 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.6,89,929/- MAD E BY THE AO ON ACCOUNT OF BANK BALANCES NOT SHOWN IN THE BALANCE SHEET; 2 I. T. APPEAL NO. 3331 (DEL) OF 2009. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.3,72,798/- MAD E BY THE AO ON ACCOUNT OF DIFFERENCE OF HOUSE PROPERTY INCOME; 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.3,54,781/- MAD E BY THE AO ON ACCOUNT OF LOW DRAWINGS; 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.11,205/- MADE BY THE AO ON ACCOUNT OF BANK INTEREST NOT SHOWN IN THE RETURN. 3. THE FIRST ISSUE FOR CONSIDERATION RELATES TO DEL ETING THE ADDITION OF RS.21,87,286/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PROPORTIONATE V ALUE OF PROPERTY, NOT SHOWN IN THE BALANCE- SHEET. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT IN THE BALANCE-SHEET THE PROPERTY BEARING NO F.6 VIJAY CHO WK, LAKSHMI NAGAR MEASURING 53 SQ. YDS. WAS SHOWN AT RS.7,88,613.20. PROPERTY NO.F.6 AND F. 7 CONSISTED OF 200 SQ. YDS AS PER THE AGREEMENT WITH NIRC. THE ASSESSING OFFICER, THEREFO RE, TREATED THE PROPORTIONATE VALUE OF 147 SQ. YDS. AT RS.21,87,286/-. 3. ON APPEAL BEFORE THE LD. CIT(A), IT WAS SUBMITTE D THAT PROPERTY NO.F.6 AND F.7 WAS OWNED BY FOUR PERSONS. SHRI KASHMIRI LAL HAD SHOWN THE COST OF THE PROPERTY AT RS.7,88,630/-. THE BALANCE OF PROPERTY MEASURING 147 SQ. YDS. WAS OWNED BY OTHER THREE PARTNERS, VALUE THEREOF HAD BEEN DECLARED IN THEIR RETURNS. THEREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION IN THE HANDS OF SHRI KASHMIRI LAL. THE LD. CIT(A) NOTED THAT NO AMOUNT WAS INVESTED BY THE ASSESSEE IN THE PROPERTY DURING THE YEAR UNDER CONSIDERATION. THE DETAILS OF PROPERTY PURCHASED BY CO-OWNERS HAD BEEN FURNISHED ALONG WITH THE RELEVANT DOCUMENTS. THE LD. CIT(A), THEREFORE, HELD THAT SINCE THE PROPERTY WAS JOINTLY OWNED WITH OTHER THREE PERSONS, NO ADDITION COULD BE MADE U/S 69 IN THE YEAR UNDER CON SIDERATION. 4. BEFORE US, THE LD. A.R. OF THE ASSESSEE SUPPORTE D THE ORDER OF THE LD. CIT(A) AND THE REVENUE SUPPORTED THE ORDER OF ASSESSING OFFICER. 3 I. T. APPEAL NO. 3331 (DEL) OF 2009. 5. WE HAVE HEARD BOTH THE PARTIES. THERE IS NO DISP UTE ABOUT THE FACT THAT PROPERTY NO. F.6 AND F.7 AT LAKSHMI NAGAR IS OWNED BY FOUR PERSONS I NCLUDING THE ASSESSEE. UNDER SECTION 26 OF THE INCOME-TAX ACT, WHERE PROPERTY CONSISTING OF BU ILDINGS AND LAND APPURTENANT THERETO IS OWNED BY TWO OR MORE PERSONS AND THEIR RESPECTIVE S HARES ARE DEFINED AND ASCERTAINABLE, SUCH PERSONS SHALL NOT, IN RESPECT OF SUCH PROPERTY, BE ASSESSED AS AN ASSOCIATION OF PERSONS, BUT THE SHARE OF EACH SUCH PERSON IN THE INCOME FROM THE PR OPERTY, AS COMPUTED IN ACCORDANCE WITH SECTIONS 22 TO 25 SHALL BE INCLUDED IN HIS TOTAL IN COME. IT IS ALSO A FACT THAT OTHER CO-OWNERS OF THE PROPERTY IN THE YEAR UNDER CONSIDERATION HAD DECLAR ED RESPECTIVE SHARES IN THEIR RETURNS OF INCOME WHICH HAD BEEN ACCEPTED BY THE DEPARTMENT. THEREFOR E, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION IN RESPECT OF THE BALANCE PROPE RTY AT RS.21,87,286/- IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, IN OUR CONSIDERED OPINION, T HE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION. 6. THE NEXT ISSUE FOR CONSIDERATION RELATES TO DELE TING THE ADDITION OFRS.6,89,929/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BANK BALANCES NOT SHOWN IN THE BALANCE-SHEET. THE ASSESSING OFFICER NOTED THAT THE BANK STATEMENT OF ACCOUNT NOS.SB 216 AND SB NO.481 WITH JAIN CO-OPERATIVE BANK; AND ORIENTAL BANK OF COMMER CE, WERE IN THE NAME OF SHRI KASHMIRI LAL IN HIS INDIVIDUAL CAPACITY. THESE BALANCES WERE NOT INCLUDED IN THE STATEMENT OF AFFAIRS FILED BY THE ASSESSEE. THE ASSESSING OFFICER, THEREFORE, MADE ADDITION OF RS.6,89,929/-. 7. BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT M/S KASHMIRI LAL HAD BANK BALANCE OF RS.6,89,929/- AS ON 31/3/2006. M/S KASHMIRI LAL HA D RS.96,740.42 WITH THE ORIENTAL BANK OF COMMERCE AT LAKSHMI NAGAR AND RS.5,93,188.53 WITH J AIN CO-OPERATIVE BANK LTD. AT LAKSHMI NAGAR. SH. KASHMIRI LAL HAD NOTHING TO DO WITH THE ACCOUNTS AS THE SAME BELONGED TO FOUR CO- OWNERS. THE CAPITAL ACCOUNT OF EACH CO-OWNER IS REF LECTED IN THE BALANCE-SHEET OF CO-OWNERS AND SAME WAS SHOWN BY EACH CO-OWNER IN THEIR RESPECTIVE PERSONAL BALANCE-SHEET. SHRI KASHMIRI LAL HAD CAPITAL OF RS.1,67,702.10 IN THE ENTIRE FUNDS O F CO-OWNERSHIP WHICH WAS SHOWN IN HIS PERSONAL BALANCE-SHEET. THE REST OF THE AMOUNT WAS SHOWN BY OTHER CO-OWNERS IN THEIR BALANCE- 4 I. T. APPEAL NO. 3331 (DEL) OF 2009. SHEETS. THE LD. CIT(A) ON EXAMINATION OF FACTS FOUN D THE CONTENTION OF THE ASSESSEE TO BE CORRECT. HE ACCORDINGLY DELETED THE ADDITION IN THE HANDS OF THE ASSESSEE. 8. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE HAVE GONE THROUGH THE CO-OWNERSHIP ARRANGEMENT, ACC ORDING TO WHICH PROPERTY NO.F.6 AND F.7 ARE OWNED BY CO-OWNERSHIP. M/S KASHMIRI LAL OWNS TH E BANK BALANCES WITH ORIENTAL BANK OF COMMERCE AND JAIN CO-OPERATIVE BANK, WHICH IS EVIDE NT FROM THE BALANCE-SHEET OF M/S KASHMIRI LAL AS ON 31/3/2006. THEREFORE, NO ADDITIO N IN THE HANDS OF KASHMIRI LAL, INDIVIDUAL COULD BE MADE IN RESPECT OF FUNDS OWNED BY THE CO-O WNERSHIP CONCERN. ACCORDINGLY, IN OUR CONSIDERED OPINION, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. HENCE NO INTERFERENCE IS CALLED FOR. 9. THE NEXT ISSUE FOR CONSIDERATION RELATES TO DELE TING THE ADDITION OF RS.3,72,798/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DIFFERENCE OF P ROPERTY INCOME. THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT HAD TAKEN THE TOTAL TAXABLE R ENTAL INCOME AT RS.5,31,693/- OF M/S KASHMIRI LAL AS THE INCOME OF SHRI KASHMIRI LAL, I NDIVIDUAL ON THE GROUNDS THAT THE TDS CERTIFICATE HAD ONLY ONE NAME OF KASHMIRI LAL, WITH OUT DISTRIBUTING THE SAME TO ALL THE FOUR CO- OWNERS. IT WAS EXPLAINED BEFORE LD CIT(A) THAT IT W AS COMPULSION FOR THE ASSESSEE TO HAVE ONLY ONE NAME IN THE RENT AGREEMENT. THE CLAIM ON TDS WA S ASSIGNED TO SHRI KASHMIRI LAL AS PER CLAUSE 9 OF CO-OWNERSHIP DEED. SHRI KASHMIRI LAL WA S AUTHORIZED TO ADJUST THE TDS WITH HIS PERSONAL INCOME-TAX LIABILITY OR GET CREDIT OR REFU ND OF THE SAME FROM INCOME-TAX DEPARTMENT. SINCE THE RENTAL INCOME WAS OWNED BY CO-OWNERSHIP C ONCERN, THE LD. CIT(A) WAS OF THE VIEW THAT ONLY SHARE OF INCOME OF SHRI KASHMIRI LAL COUL D BE ASSESSED IN HIS HANDS AND NOT THE ENTIRE INCOME FROM HOUSE PROPERTY. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD CAREFULLY. FROM THE FACTS STATED ABOVE, IT IS CLEAR THAT PROPERTY WAS JOINTLY OWNED BY FOUR CO-OWNERS. THE INCOME OF CO-OWNERS IS TO BE ASSESSED IN THEIR HANDS AS PER PROVISIONS OF SECTION 26 OF THE ACT. SINCE THE PROPERTY IS 5 I. T. APPEAL NO. 3331 (DEL) OF 2009. OWNED BY FOUR PERSONS, WHICH IS ASSESSABLE AS PER S CHEME OF SECTION 26, THE ENTIRE INCOME CANNOT BE ASSESSED IN THE HANDS OF SHRI KASHMIRI LAL. ACCO RDINGLY, WE ARE OF THE CONSIDERED OPINION THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE A DDITION. HENCE, NO INTERFERENCE IS CALLED FOR. 11. THE NEXT ISSUE FOR CONSIDERATION RELATES TO DEL ETING THE ADDITION OF RS.3,54,781/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LOW WITHDRAWALS . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED CERTAIN DR AWINGS FROM JAIN CO-OPERATIVE AND ORIENTAL BANK OF COMMERCE. THE ASSESSING OFFICER ALSO NOTED THAT THE PAYMENT OF ELECTRICITY FOR TWO MONTHS WAS AT RS.45,956/-. HE ESTIMATED THE ELECTRI CITY PAYMENT AT RS.50,000/- FOR BALANCE OF 10 MONTHS. THE ASSESSING OFFICER FURTHER FOUND THAT TE LEPHONE BILL FOR TWO MONTHS WAS RS.3,787/-. HE ESTIMATED THE TELEPHONE EXPENSES AT RS. 10,000/- FOR BALANCE OF THE PERIOD. HE ALSO ESTIMATED THE HOUSEHOLD DRAWINGS FOR 12 MONTHS @RS.10,000/- P ER MONTH TOTALING TO RS.1,20,000/-. THUS, TOTAL DRAWINGS WERE WORKED OUT AT RS.5,39,761/-. OU T OF THIS, THE AMOUNT DECLARED AS WITHDRAWALS IN THE BALANCE-SHEET AT RS.1,84,980/- WAS DEDUCTED AND THE BALANCE AMOUNT OF RS.3,54,781/- WAS ADDED. 12. ON APPEAL, IT WAS SUBMITTED THAT ALL THE DEPOSI TS AND WITHDRAWALS TO/FROM THE BANKS WERE DEBITED OR CREDITED TO THE RESPECTIVE HEADS TO WHIC H THEY PERTAINED. COPIES OF ACCOUNTS OF M/S KASHMIRI LAL WAS FILED BEFORE THE LD. CIT(A). IT WA S SUBMITTED THAT THERE WAS NO QUESTION OF ANY DRAWINGS ADJUSTMENTS BY THE CO-OWNERS FROM THE BANK ACCOUNTS AS IT WAS AN ACCOUNT OF ALL THE CO-OWNERS JOINTLY AND DID NOT PERTAIN TO ANY INDIVI DUAL. THEREFORE, THERE WAS NO QUESTION OF ANY DRAWING FROM THIS CO-OWNERSHIP ACCOUNT TO BE TREATE D AS INCOME OF THE ASSESSEE. IT WAS ALSO SUBMITTED THAT THE ASSESSEE WAS HAVING HIS OWN INCO ME AND EXPENDITURE ACCOUNT. THE AMOUNT WAS WITHDRAWN FROM THIS ACCOUNT. THE ASSESSEE HAD S EVEN FAMILY MEMBERS AND TOTAL DRAWINGS OF THE FAMILY WERE AT RS.3,27,859/-. THE ASSESSEE SUBM ITTED BALANCE SHEETS IN SUPPORT OF HIS CLAIM THAT DRAWINGS WERE MADE BY THE FAMILY MEMBERS. THE LD. CIT(A), ON THE BASIS OF THE EVIDENCE PLACED BEFORE HIM CAME TO THE CONCLUSION THAT NO AD DITION WAS WARRANTED ON ACCOUNT OF LOW WITHDRAWALS. HE ACCORDINGLY DELETED THE ADDITION. 6 I. T. APPEAL NO. 3331 (DEL) OF 2009. 13. WE HAVE HEARD BOTH THE PARTIES. FROM THE ASSESS MENT ORDER, WE FIND THAT THE ASSESSING OFFICER WITHOUT EXAMINING THE CASE ESTIMATED THE AD DITION. HE HAS TAKEN THE DRAWINGS FROM CO- OWNERSHIP BANK ACCOUNT AS PART OF WITHDRAWALS. THE LD. CIT(A), ON THE OTHER HAND, HAS GONE THROUGH THE MATERIAL PLACED BEFORE HIM AND WITHDRAW AL MADE BY DIFFERENT FAMILY MEMBERS FOR MEETING THE HOUSEHOLD EXPENSES. THE TOTAL DRAWINGS OF FAMILY ARE AT RS.3,37,859/-. THE LD. CIT(A) HAS FOUND THESE WITHDRAWALS AS REASONABLE. K EEPING IN VIEW THE ABOVE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICER HAD NOT MADE OUT ANY CASE FOR LOW WITHDRAWAL. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) DELETING THE ADDITION. 14. THE LAST ISSUE FOR CONSIDERATION RELATES TO DEL ETING THE ADDITION OF RS.11,205/- ON ACCOUNT OF BANK INTEREST. THE ASSESSING OFFICER MADE ADDITI ON OF RS.11,205/- AS INTEREST INCOME BY TAKING THE TOTAL INCOME OF SHRI KASHMIRI LAL AS TOT AL INTEREST INCOME OF SHRI KISHORI LAL, THE ASSESSEE. THE CO-OWNERSHIP AT TOTAL INCOME FROM BAN K INTEREST OF RS.15,687/- AND THE SHARE OF CO- OWNER SHRI KISHORI LAL WAS AT RS.4,482/- WHICH HAS BEEN ACCOUNTED FOR BY THE ASSESSEE IN HIS RETURN OF INCOME. THE LD. CIT(A) ALSO NOTED THAT OT HER CO-OWNERS HAVE ALSO SHOWN FROM INCOME FROM BANK INTEREST IN THEIR RESPECTIVE RETURNS. SIN CE THE ASSESSING OFFICER HAD TAKEN THE ENTIRE INTEREST INCOME OF M/S KISHORI LAL AS INCOME OF THE ASSESSEE AND OTHER CO-OWNERS HAVE TAKEN THEIR SHARES AS INCOME IN THEIR RETURNS, THE LD. CI T(A) DELETED THE ADDITION. 15. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. FROM THE FACTS NARRATED ABOVE, IT IS CLEAR THAT THE ASSE SSING OFFICER HAS TREATED THE ENTIRE INTEREST INCOME OF CO-OWNERSHIP ACCOUNT AS INCOME OF THE ASS ESSEE WHICH, IN OUR OPINION, IS NOT JUSTIFIED. THEREFORE, THE LD. CIT(A) IS CORRECT IN DELETING TH E ADDITION. 7 I. T. APPEAL NO. 3331 (DEL) OF 2009. 16. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON : 09 TH JULY, 2010 . SD/- SD/- (C.L.SETHI) (K.D.RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 09 TH JULY, 2010. PSP COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR