GOVIND AGARWAL, MUMBAI V. A.C.I.T. CENTRAL CIRCLE-32, MUMBAI

ITA 3392/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75392 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 04-12-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 28-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRITAM SINGH
• Assessee Lawyers: DEVENDRA MEHTA
• Keywords: Depreciation; Opportunity of being heard; Earning of tax free income; Cost of acquisition; Valuation report; Revised return
• Section: 143(3); 14A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ./I.T.A. NO.3392/M/2011 (AY: 2008 - 2009 ) SHRI GOVIND AGARWAL, 377 - B, FIRST FLOOR, JAGANNATH SHANKER SETH MARG, CHIRABAZAR, MUMBAI 400 002. / VS. ACIT, CENTRAL CIRCLE - 32, MUMBAI. ./ PAN : ADOPA 4038 K ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI DEVENDRA MEHTA / RESPONDENT BY : SHRI PRITAM SINGH, DR / DATE OF HEARING : 20.12.2013 / DATE OF PRONOUNCEMENT : 15 .1.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 28.04.2011 IS AGAINST THE ORDER OF CIT (A) - 41, MUMBAI DATED 28.3.2011 FOR THE ASSESSMENT YEAR 2008 - 2009. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1.0. THE ORDER PASSED BY THE CIT (A) PAR TLY CONFIRMING THE ASSESSMENT ORDER U/S 143(3) OF THE ACT, IS BOTH BAD IN LAW AND BAD IN FACTS. 1.1. THE AO ERRED IN LAW AS WELL AS IN FACTS IN NOT CONSIDERING THE REVISED RETURN OF INCOME FILED BY THE ASSESSEE. 2.0. THE LD CIT (A) ERRED IN CONFIRMING THE ADDIT ION OF UNDISCLOSED INCOME OF RS. 65,00,000/ - MADE BY THE AO ON ACCOUNT OF DIFFERENCE IN VALUE OF JEWELRY AS ON THE DATE OF SEARCH AND VALUE OF JEWELERY AS PER WEALTH TAX RETURNS OF THE ASSESSEE AND HIS FAMILY MEMBERS RELEVANT FOR THE ASSESSMENT YEAR 2006 - 2007 AND 2007 - 2008. 3.0. THE LD CIT (A) ERRED IN DIRECTING THE ASSESSING OFFICER TO RE - COMPUTE THE DISALL OWANCE U/S 14A OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THE FACTS THAT (A) THE PERSONAL BOOKS OF ACCOUNTS OF THE ASSESSEE WERE SEPARATELY MAINTAINED FROM THE BOOKS OF ACCOUNT OF HIS BUSINESS (B) NO EXPENDITURE WHATSOEVER WAS INCURRED BY THE ASSESS EE (C) NO DEDUCTION WAS CLAIMED BY HIM WHILE COMPUTING THE TOTAL INCOME AND (D) THE ASSESSING OFFICER DID NOT COMPUTE THE DISALLOWANCE U/S 14A BY APPLYING RULE - 8D OF THE INCOME TAX RULES, 1962. 4.0. THE LD CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS. 3, 00,000/ - MADE BY THE AO ON ACCOUNT OF ESTIMATED ANNUAL RENT OF ASSESSEES FLAT AT MAROL MAROSHI ROAD, ANDHERI (E), MUMBAI WITHOUT CONSIDERING THE FACT THAT THE SAID FLAT WAS USED BY THE ASSESSEE FOR HIS BUSINESS PURPOSES. 2 5.0. THE LD CIT (A) ERRED IN CONFI RMING THE DISALLOWANCE OF RS. 5,960/ - MADE BY THE AO ON ACCOUNT OF PROPERTY MAINTENANCE EXPENSES WITHOUT CONSIDERING THE FACT THAT NO SUCH EXPENDITURE WAS INCURRED BY THE ASSESSEE AND CLAIMED AS A DEDUCTION. IN DOING SO, HE WAS NOT CORRECT IN STATING THAT THE ASSESSEE DID NOT PRESS FOR THE GROUND OF APPEAL. 6.0. THE LD CIT(A) ERRED IN CONFIRMING THE THAT TAXATION OF ADDITIONAL INCOME ON ACCOUNT OF ADVANCE GIVEN FOR PURCHASE OF LAND AND EXCESS STOCK SURRENDERED BY THE AO U/S 68B OF THE ACT DESPITE THE FACT THAT THE IMPUGNED ADDITIONAL INCOME WAS OFFERED BY THE ASSESSEE FOR TAXATION U/S 132(4) OF ACT. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME FOR THE AY 2008 - 09 ON 29.9.2008 AFTER THE SEARCH ACTION U/S 132 OF THE ACT ON 3.1.2008. RETURN INCOME IS RS 9.57 CR (ROUNDED OFF). SUBSEQUENTLY, THE SAME WAS REVISED ON 23.12.2009 AND THE REVISED RETURN INCOME IS RS 9.52 CR (ROUNDED OFF) CONSIDERING THE OMISSIONS AND MISTAKES W ITH R EGARD TO VAT, INTEREST INCOME AND TH E TDS CREDIT. REGULAR ASSESSMENT WAS MADE U/S 143(3) OF THE ACT AND THE ASSESSED INCOME IS RS 10.31 CR. AO MADE ADDITIONS ON ACCOUNT OF 1. UNDISCLOSED INVESTMENT IN JEWELLERY OF RS 65 LAKHS; DISALLOWANCE U/S 14A AMOUNTING TO RS 2,49,189; NOTIONAL RENT OF FLAT OF RS 3 LAKHS ETC. CIT(A) CONFIRMED THE SAID ADDITIONS. AGREED WITH THE SAME, THE ASSESSEE IS IN APPEAL BEFORE US WITH THE AFOREMENTIONED GROUNDS. 4. BEFORE US, SRI DEVENDRA MEHTA, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THE ASSESSEE IS NOT INTERESTED TO PRESS THE GROUND NO.1 AND 6 , THEREFORE THE SAME MAY BE DISMISSED AS NOT PRESSED. AFTER HEARING THE LD DR, THE SAID GROUND NO.1 AND 6 ARE DISMISSED AS NOT PRESSED. SIMILARLY , REFERRING TO GROUND 5 , LD COUNSEL DEMONSTRATED THAT THE ADDITION OF RS 5,960/ - IS UNCALLED FOR. IN THIS REGARD, LD COUNSEL MENTIONED THAT THE CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 5,960/ - MADE BY THE AO ON ACCOUNT OF PROPERTY MAINT ENANCE EXPENSES WITHOUT CONSIDERING THE FACT THAT NO SUCH EXPENDITURE WAS EVER INCURRED OR CLAIMED IN THE RETURN BY THE ASSESSEE AND CLAIMED AS A DEDUCTION IN THE P AND L ACCOUNT . IN DOING SO, HE WAS NOT CORRECT IN STATING THAT THE ASSESSEE DID NOT PRESS FOR THE GROUND OF APPEAL. ON PERU SAL OF THE FACTS AND THE ORDERS OF THE REVENUE, WE FIND MERIT IN THE ARGUMENTS OF LD COUNSEL FOR THE ASSESSEE. AFTER HEARING LD DR ON THIS ISSUE, WE ALLOW THE GROUND 5 OF THE ASSESSEE. NOW, WE SHALL TAKE UP THE REST OF THE ISSUES RAISED BEFORE US NAMELY I. UNDISCLOSED JEWELLARY OF RS 65 LAKHS; II. 3 DISALLOWANCE U/S S14A R W RULE 8D AMOUNTING TO RS 2,49,189; III. NOTIONAL RENT OF RS 3 LAKHS. ISSUE WISE ADJUDICATION IS RENDERED IN THE FOLLOWING PARAGRAPHS 5 . UNDISCLOSED JEWELLA RY OF RS 65 LAKHS: GROUND 2 IS RELEVANT HERE. REFERRING TO THE SAID GROUND , LD COUNSEL FOR THE ASSESSEE EXPLAINED RELEVANT FACTS AND STATED THAT THE ASSESSEE WAS SEARCHED ON 3.1.2008. DURING THE SEARCH PROCEEDINGS, THE JEWELLARY OF THE FAMILY OF THE ASSESS EE WAS VALUED BY THE GOVERNMENT APPROVED VALUER AND ANNEXURE J IS RELEVANT HERE. ON COMPARISON OF THE VALUES AVAILABLE ON THE W EALTH T AX RETURNS OF THE FAMILY MEMBERS, THEY ARRIVED AT THE DIFFERENCE OF RS 65 LAKHS. THERE IS NO DISPUTE ON THE QUANTITATIVE P ARTICULARS OF THE JEWELLARY ITEMS AND DIFFERENCE IS ONLY WITH REGARD TO THE VALUES OF THE ITEMS. BEFORE US, LD COUNSEL SUMMED UP FACTORS CONTRIBUTED TO THE SAID DIFFERENCE OF RS 65 LAKH AND DETAILS ARE: I) GOVT VALUER VALUED THE JEWELLARY CONSIDERING THE VALUE OF THE ITEMS AS ON THE DATE OF SEARCH AND THEY COMPARED WITH THE VALUE FIGURES OF THE ITEMS AS PER THE WT RETURNS AS ON 31.3.2006 AND 2007; II. THE JEWELLARY BELONGING TO HIS DAUGHTER IE RITU AGARWAL, WHO IS SEPARATELY ASSESSED TO TAX WAS INCLUDED DE SPITE REPEATED SUBMISSIONS DURING THE SEARCH ACTION; III. A SOLITAIRE DIAMOND RING OF 9.41 CTS WAS VALUED AT RS 50.08 LAKHS BY THE GOVERNMENT VALUERS IN THE SEARCH DESPITE THE EVIDENCES PRODUCED TO THEM DEMONSTRATING ITS ACTUAL COST PRICE IS ONLY RS 13, 64,450/ - . A COPY OF THE INVOICE DT 20 . 7.2004 OF YASH CORPORATION WAS FILED BEFORE US. AS PER THE LD C OUNSEL, IF THE ABOVE SUBMISSIONS AND THE EVIDENCES ARE CONSIDERED, THE VALUE OF JEWELLERY FOUND DURING SEARCH AS PER THE ANNEXURE J COMES TO ONLY RS. 1, 93,30,570 / - AGAINST THE FIGURE OF RS. 2,33,79,285/ - DETERMINED BY THE GOVERNMENT VALUERS ERRONEOUSLY. BRINGING OUR ATTENTION TO THE RECONCILIATION CHART FILED BY THE ASSESSEE, LD COUNSEL SUBMITTED THAT THE THERE IS NO DISCREPANCY BOTH IN THE LIST OF THE IT EMS AS WELL AS THE VALUE IF THE VALUATION IS DONE PROPERLY. REFERRING TO THE STATEMENT U/S 132(4) OF THE ACT GIVEN DURING THE SEARCH ACTION, LD COUNSEL MENTIONED ABOUT THE LIKELY PRESSURES AND UNDUE INFLUENCES ON THE ASSESSEE DURING THE SEARCH ACTION AND P LEADED FOR APPRECIATION OF THE FACTS. HE ALSO RELIED ON VARIOUS JUDICIAL PRONOUNCEMENTS IN SUPPORT OF THE DELETION OF THE ADDITION MADE BY THE AO MERELY BASED ON THE ESTIMATED VALUATION REPORTS OF THE GOVERNMENT VALUERS AS WELL AS THE ERRONEOUS VALUATIONS AND COMPUTATIONS. 4 6. ON THE OTHER HAND, LD DR FOR THE R EVENUE FILED A SUMMARY CHART AND RELIED HEAVILY ON THE ORDERS OF THE AO AND THE CIT (A). LD DR BROUGHT TO OUR ATTENTION THE FACT OF ASSESSEES ADMISSION OF RS 65 LAKHS AND REITERATION OF THE SAME BY F ILING A AFFIRMATION LETTER DT 4.2.2008. FURTHER, REFERRING TO THE IMPUGNED ORDER OF THE CIT(A), LD DR MENTIONED THAT THE ASSESSEE DID NOT SUBMIT THE IMPUGNED INVOICE DT 20.7.2004 OF M/S YASH CORPORATION EVIDENCE OF COST OF THE SOLITAIRE DIAMOND RING IS ON LY RS 13, 64,450/ - AND NOT RS 50.08 LAKHS AS VALUED BY THE GOVERNMENT VALUER. 7. DURING THE REBUTTAL TIME, LD COUNSEL RECALLED THE SETTLED PREPOSITION ON THE ISSUE THAT THE ACTUAL INVESTMENT IN THE JEWELLARY SHALL ONLY BE ADDED IN THE YEAR OF INVESTMENT. H E FAIRLY MENTIONED THAT THE MATTER MAY BE REMANDED TO THE FILES OF THE AO FOR PROPER APPRECIATION OF THE ENTRIES IN THE RELEVANT WT RETURNS AS WELL AS FOR ESTABLISHING THE BONAFIDE OF THE SAID INVOICE DT 20.7.2004. WE CANNOT COMPREHEND AS TO HOW THE SAID I NVOICE IS NOT PRODUCED BY THE ASSESSEE OR CONSIDERED BY THE AO WHEN THE SAME IS DATED BACK TO YEAR 2004. IN OUR OPINION, THE SAME CANNOT BE BRUSHED ASIDE BY THE REVENUE JUST BECAUSE THE ASSESSEE GAVE DISCLOSURE OF RS 65 LAKHS U/S 132(4) OF THE ACT AND AFFI RMED SUBSEQUENTLY. IT IS THE DUTY OF THE AO TO MAKE FAIR AND PROP ER ASSESSMENT U/S 143(3) OF THE ACT AND TO BE CARRIED BY THE DISPUTED STATEMENTS AND AFFIRMATION LETTERS. IN OUR OPINION, IT IS IN THE INTEREST OF THE ADMINISTRATION OF JUSTICE, THE EVIDENCES FURNISHED AT SOME STAGES SHOULD NOT BE IGNORED. THEREFORE , LD COUNSEL SEEKS DIRECTIONS OF THE BENCH TO THE AO TO CONSIDER THE ASSESSEES EXPLANATION CAREFULLY AND TO RE - ADJUDICATE THE ISSUE. ON HEARING THE SUBMISSIONS AND PRAYER OF THE LD COUNSEL FOR THE ASSESSEE FOR REMANDING THE MATTER TO THE FILES OF THE AO AS WELL AS THE NO OBJECTION FROM THE LD DR, WE REMAND THE MATTER TO THE FILES OF AO TO RE - ADJUDICATE THE ISSUE AFRESH AFTER PROVIDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. AO IS D IRECTED TO CONSIDER THE RELEVANT WT RETURNS PROPERLY AND EXAMINE THE M FOR DETAILS OF THE PARTICULARS OF COST OF INVESTMENT IN EACH OF THE ITEM OF THE JEWELLERY BEFORE MAKING ADDITION IN THE YEAR UNDER CONSIDERATION . FURTHER, ON THE DISPUTED ISSUE OF THE IM PUGNED SOLITAIRE DI A MOND RING, WE DIRECT THE AO TO EXAMINE THE IMPUGNED INVOICE DATED 20.7.2004 AND ACCEPT THE COST OF THE SAME AT RS 13, 64,450/ - IN PLACE OF RS 50.08 LAKHS WHEN THE ASSESSEE DEMONSTRATES THE BONAFIDE OF THE S A ID INVOICE. WE DO NOT APPRE CIATE 5 THE MAKING ADDITION MERELY BASED ON THE STATEMENTS AND THE LETTERS AND NOT ON THE BASIS OF THE EVIDENCES. WHY SHOULD THE DIAMOND RING OR OTHER ITEMS OF JE WELLARY WHICH ARE DISCLOSED IN RETURNS BE ADDED AS THE UNDISCLOSED INVESTMENT OF THE ASSESSE E THAT TO ADOPTING THE MARKET VALUE AS ON THE DATE OF SEARCH WHEN THEIR DATE OF ACQUISITION AND COST OF ACQUISITION ARE KNOWN IN THE SAID RETURNS? HOW THESE ADDITIONS ARE SUSTAINABLE IN LAW WHEN THE SAID ADDITIONS ARE MERELY BASED ON THE STATEMENT/DISCLOS URES U/S 132(4) OF THE ACT AND NOT SUPPORTED BY THE INCRIMINATING DOCUMENTS EVIDENCING THE ELEMENT OF UNACCOUNTEDNESS OF THE ITEMS OF JEWELLERY? IN OUR OPINION CITED JUDGMENTS IN GENERAL AND THE JUDGMENT OF THE ALLAHABAD HC IN THE CASE OF B M KANODIA 185 I TR 333 IN PARTICULAR SHOULD HELP THE ASSESSEE IN THIS ISSUE. IN THE SET ASIDE PROCEEDINGS, AO SHALL GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUND NO.2 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8 . GROUND NO.3 RELATES TO THE DISALLOWANCE U/S 14A OF THE ACT. IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE EARNED AN EXEMPT INCOME OF RS 12,45,898/ - . ON NOTICING THAT THE ASSESSEE DEBITED INTEREST EXPENDITURE OF RS 14.84 LAKHS, AO APPLIED TH E FORMULA ENVISAGED IN THE RULE 8 OF THE IT RULES R W SECTION 14 A OF THE ACT. ASSESSEES SUBMISSIONS THAT THE ASSESSEE HAD ADEQUATE INTEREST FUNDS FOR INVESTMENT IN THE EXEMPT INCOME YIELDING ASSETS, WAS NOT APPRECIATED. AO QUANTIFIED THE DISALLOWANCE AT RS 2,49,189/ - U/S 14A R W R 8D. RELYING ON THE JURISDICTIONAL HC JUDGMENT IN THE CASE OF GODREJ & BOYCE MAN. CO LTD 328 ITR 81, CIT(A) CONFIRMED THE SAID DISALLOWANCE. 9. BEFORE US, LD COUNSEL FILED VARIOUS DOCUMENTS TO SUGGEST THAT THE ASSESSEE MAINTAINS MIXED FUNDS AND NON INTEREST BEARING FUNDS ARE INVESTED IN THE SAID INVESTMENTS WHICH YIELDED THE IMPUGNED EXEMPT INCOME. HE MENTIONED THAT ASSESSEE HAS NOT INCURRED ANY EXPENDITURE FOR EARNING THE SAID EXEMPT INCOME. FURTHER, HE ASSERTED THAT THE ASS ESSEE HAS ADEQUATE FUNDS IN THE SYSTEM TO EXPLAIN THE INVESTMENTS INTO SHARES AS WELL AS THE INVESTMENTS MADE IN THE EARLIER YEARS. IN THIS REGARD, LD COUNSEL RELIED ON THE JUDGMENT OF THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RELIANCE UTILITIES & POWER LTD [2009] 313 ITR 340 FOR THE PROPOSITION THAT WHEN THE INTEREST FREE FUNDS ARE MORE THAN 6 BORROWED FUNDS, WHEN HYBRID FUNDS ARE MAINTAINED THE BENEFIT OF DOUBT THAT THE INTEREST FREE FUNDS HAVE GONE INTO THE INVESTMENTS, WHICH Y IELDED EXEMPT INCOME, SHOULD BE CONSIDERED IN FAVOUR OF THE ASSESSEE AND SOUGHT DIRECTION OF THE TRIBUNAL TO THE AO TO EXAMINE THE ISSUE AFRESH. ON THE OTHER HAND, LD DR RELIED ON THE OR DERS OF THE REVENUE AUTHORITIES AND STATED THAT THE INVOKING OF THE S AID PROVISIONS OF RULE 8D IS MANDATORY. 1 0 . WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. WE FIND THERE IS NO DISPUTE ON THE EARNING OF THE EXEMPT INCOME AND MAINTAINING OF MIXED FUNDS FOR INVESTMENT AND THE BUSINESS ACTIVITIES. ON HEARING THE SUBMISSIONS AS WELL AS THE PRAYER OF THE LD COUNSEL, WE FIND THERE IS FINDING OF FACT ON THE CLAIM OF THE ASSESSEE THAT THE ASSESSEE HAS EXCESS INTEREST FREE FUNDS ADEQUATE TO EARN THE IMPUGNED EXEMPT INCOME. THEREFORE, WE ARE OF THE CONSIDERED THE OPINION THAT THE M ATTER SHOULD BE REMANDED TO THE FILES OF THE AO TO RE - ADJUDICATE THE ISSUE AFRESH AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND GRANT RELIEF, IF ANY FOLLOWING THE BINDING JUDGMENT CITED ABOVE . ASSESSEE IS DIRECTED TO DEMONSTRA TE THAT THE CITED JUDGMENT APPLIES TO THE FACTS OF THE PRESENT CASE. ACCORDINGLY, GROUND NO.3 IS ALLOWED FOR STATISTICAL PURPOSES . 11 . GROUND NO.4 RELATES TO THE CONFIRMING OF THE ADDITION OF RS. 3,00,000/ - MADE BY THE AO ON ACCOUNT OF ESTIMATED ANNUAL RENT OF ASSESSEES FLAT AT MAROL MAROSHI ROAD, ANDHERI (E), MUMBAI. IT IS THE CLAIM OF THE ASSESSEE THAT THE SAID FLAT WAS USED BY THE ASSESSEE FOR HIS BUSINESS PURPOSES. ASSESSEE CLAIMS THAT THE SAID PLACE IS USED NOT ONLY FOR STORING THE BOOKS OF ACCOUN T OF THE ASSESSEE IE OFFICE USE BUT ALSO FOR THE RESIDENCE OF THE EMPLOYEE OF THE ASSESSEE IE SRI SURENDRA GOYAL, WHO ACTS AS A CUSTODIAN OF THE BOOKS AND ATTENDS TO THE BUSINESS DUTIES OF THE ASSESSEE. IT IS A FACT THAT DURING THE SEARCH ACTION, THE BOOK S OF ACCOUNTS WERE FOUND AT THE SAME PREMISES. ON THE OTHER HAND, REVENUE IS OF THE OPINION, THAT THIS PREMISES OF ASSESSEE IS NOT OCCUPIED BY THE ASSESSEE AND THEREFORE , PROVISIONS OF SECTION 23 OF THE ACT IS REQUIRED TO BE INVOKED AND THE ALV NEEDS TO BE COMPUTED. AO ACCORDINGLY, ADOPTED MONTHLY RENT OF RS 25,000/ - . DURING THE FIRST APPELLATE PROCEEDINGS, ASSESSEE REITERATED THE ABOVE SUBMISSIONS. IN ADDITION, ASSESSEE SUBMITTED THAT THE MONTHLY RENT OF SUM OF RS 25,000/ - IS ON HIGH SIDE. ASSESSEE 7 P LEADED FOR RATABLE VALUE OF RS 78,0 24/ - WHICH IS ARRIVED AT BASED ON THE MUNICIPAL TAXES OF RS 14,040 / - PAID IN RELATION TO THE SAID HOUSE PROPERTY. CIT(A) APPROVED THE AOS DECISION AND IGNORED THE SUBMISSIONS MADE WITHOUT PREJUDICE. AR RELIED ON VARIOUS D ECISIONS OF THE TRIBUNAL AND THE HIGHER JUDICIARY TO SUPPORT THE ARGUMENTS. ON THE OTHER HAND, LD DR RELIED ON THE ORDER OF THE AO . 1 2 . WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE OF ALV OF THE FLAT DETERMINED ON ESTIMATION BASIS. ON HEARING BOTH SIDES, WE ARE OF THE CONSIDERED OPINION THAT THE MATTER SHOULD BE REMANDED TO THE FILES OF THE AO FOR DETAILED EXAMINATION. AO NEEDS TO EXAMINE WHEN THE ASS ET WAS ACQUIRED BY THE ASSESSEE , HOW THE ASSET IS REFLECTED IN THE BOOKS OF ACCOUNTS FOR ALL TH E YEARS, HOW THE ASSET IS BEING USED OVER THE YEARS ETC. AO NEEDS TO CONSIDER THE FACTS JUDICIOUSLY AND DECIDE THE ISSUE AFRESH. IF THE BOOKS OF ACCOUNTS ARE FOUND DURING THE SEARCH ACTION , AT THE IMPUGNED FLAT, THAT SHOULD UNDISPUTEDLY INDICATE THAT THE P REMISES IS OF BUSINESS NATURE. IF THE BOOKS INDICATE THE DEPRECIABLE NATURE OF THE SAID PREMISES, BY FIGURING OUT FROM THE DEPRECIATION SCHEDULE, THE PROVISIONS OF SECTION 23 BECOMES IRRELEVANT. AS SUCH, IT IS A FACT THAT THE FLAT IS BEING USED BY THE EMPL OYEE OF THE ASSESSEE. THIS FACT SHOULD WEIGH ON THE SIDE OF THE ASSESSEE. AS SUCH, WE DISAPPROVE THE AOS METHOD OF ESTIMATING THE ALV @ RS. 3 LAKHS. W ITH THESE DIRECTION S, WE DIRECT THE AO TO ADJUDICATE THE ISSUE AFRESH. ACCORDINGLY, GROUND NO.4 IS ALL OWED AS ABOVE. 13 . IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . ORDER PRO NOUNCED IN THE OPEN COURT ON 1 5 T H DAY OF JANUARY, 2014. S D / - S D / - (DR. S.T.M. PAVALAN) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 15/1/2014 . . ./ OKK , SR. PS 8 / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI