SANDHAY SANJAY SATHAYE, MUMBAI V. ASST CIT WD 11(1)(2), MUMBAI

ITA 3504/MUM/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8786 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Assessment Year: 2012-2013
• Appeal Filed On: 12-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Deemed owner of house property; Opportunity of being heard; Deemed to accrue or arise in india; Cost of acquisition
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI PAWAN SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 3504/MUM/2017 ASSESSMENT YEAR: 2012 - 13 MRS. SANDHYA SANJAY SATHAYE, LEGAL HEIR FOR LATE MR. SANJAY SHARAD SATHAYE 27, VINAYAK, TEJPAL SCHEME ROAD NO.5, VILE PARLE (E), MUMBAI - 400057. VS. ASST. COMMISSIONER OF INCOME TAX, WARD 11(1)(2), MUMBAI, ROOM NO. 204, AAYAKAR BHAVAN, MAHARSHI KARVE ROAD, MUMBAI - 400020 PAN NO. AAIPS2909L APPELLANT RESPONDENT ITA NO. 3505/MUM/201 7 ASSESSMENT YEAR: 2012 - 13 MRS. SANDHYA SANJAY SATHAYE, 27, VINAYAK, TEJPAL SCHEME ROAD NO.5, VILE PARLE (E), MUMBAI - 400057. VS. ASST. COMMISSIONER OF INCOME TAX, WARD 11(1)(2), MUMBAI, ROOM NO. 204, AAYAKAR BHAVAN, MAHARSHI KARVE ROAD, MUMBAI - 400020 PAN NO. AAIPS2908M APPELLANT RESPONDENT ASSESSEE BY : MR. DINAR DAPTARI, AR REVENUE BY : MR. CHAUDHARI ARUN KUMAR SINGH , DR DATE OF HEARING : 19/11 /2018 DATE OF PRONOUNCEMENT: 27/12/2018 MRS. SANDHYA SANJAY SATHAYE ITA NOS. 3504 & 3505/MUM/2017 2 ORDER PER N.K. PRADHAN, A.M. THE CAPTIONED APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 18 , MUMBAI [IN SHORT CIT(A) ] AND ARISE OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961 (THE ACT). AS COMMON ISSUES ARE INVOLVED, WE ARE PROCEEDING TO DISPOSE THEM OFF THROUGH A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 3504/MUM/2017 ASSESSMENT YEAR: 2012 - 13 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A ) ERRED IN PASSING THE ORDER U/S 250 OF THE ACT WITHOUT APPRECIATING THE FACTS, SUBMISSIONS AND DOCU MENTS PLACED ON RECORD. WITHOUT PREJUDICE 2. THE LD. CIT(A) ERRED WHEN HE FAILED TO DECIDE ON ALL THE ISSUES RAISED BEFORE HIM BY THE APPELLANT AND INSTEAD PASSED THE ORDER ONLY ON SELECTED ISSUES. 3. THE LD. CIT(A) ERRED IN SUSTAINING THE AOS ACTION OF CONS IDERING OFFERED RENTS ON PROPERTY WEBSITES WITHOUT APPRECIATING THE FACT THAT THE PROPERTIES IDENTIFIED BY THE AO WERE NOT COMPARABLE WITH THE PROPERTIES OF THE APPELLANT. 4. THE LEARNED CIT(A) ERRED WHEN THE SUSTAINED ADDITION MADE BY THE AO ON THE ENTIRE V ALUE OF THE HOUSE PROPERTY SITUATED AT 316, BEN JONSON HOUSE, LONDON AS DEEMED RENT. 3. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2012 - 13 ON 29.03.2013 DECLARING MRS. SANDHYA SANJAY SATHAYE ITA NOS. 3504 & 3505/MUM/2017 3 TOTAL INCOME OF RS.9,43,25,677/ - . THE ASSESSEE HAD DECLARED INCOME FROM HOUSE PROPERTY OF RS.1,59,40,198/ - , INCOME FROM SHORT TERM CAPITAL GAINS OF RS.5,94,65,501/ - AND INCOME FROM OTHER SOURCES OF RS.24,35,460/ - . AFTER CLAIMING DEDUCTION OF RS.1,40,000/ - , THE ASSESSEE HAS OFFERED THE TOTAL INCOME OF RS.9,43,25,677/ - FOR TAXATION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAD OWNED 8 PROPERTIES DURING THE YEAR. HOWEVER, HE HAD NOT OFFERED ANY INCOME FROM HOUSE PROPERTY FROM ANY OF THE 8 OWNED PROPERTIES IN HIS RETURN OF INCOME. THE AO VIDE ORDER SHEET NOTING DATED 24.03.2015 ASKED THE ASSESSEE TO PRODUCE THE DETAILS OF THE ABOVE PROPERTIES AND SHOW CAUSE AS TO WHY THE SAID PROPERTIES SHOULD NOT BE TREATED AS DEEMED TO BE LET OUT AND THE RENT AT MARKET RATE SHOULD NOT BE TAXED AS INCOME FROM HOUSE PROPERTY. IN RESPONSE TO IT, THE ASSESSEE SUBMITTED BEFORE THE AO THAT HE WAS NOT IN A POSITION TO GIVE ANY DETAILS OF THE ABOVE PROPERTIES. IN ABSENCE OF THE BASIC DETAILS, TH E AO BROUGHT TO TAX THE RENT AT MARKET RATE AS INCOME FROM HOUSE PROPERTY BY TREATING THESE PROPERTIES AS DEEMED LET OUT EXCEPT THE PROPERTY AT LONDON, WHICH HAS BEEN SELECTED BY THE ASSE SSEE AS SELF - OCCUPIED PROPERTY. THE AO TOOK THE MARKET RATE OF THE PR OPERTY FROM THE WEBSITES AND DISCOUNTED THE MARKET RATE BY 20% TO ARRIVE AT THE MARKET RENT FOR FINANCIAL YEAR 2011 - 12. THUS THE AO MADE AN ADDITION OF RS.48,88,637/ - TO THE ASSESSEES TOTAL INCOME AS I NCOME FROM HOUSE PROPERTY. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) VIDE ORDER DATED 17.02.2017 HELD AS UNDER: MRS. SANDHYA SANJAY SATHAYE ITA NOS. 3504 & 3505/MUM/2017 4 1. THE A.O. HAS CALCULATED RENT FROM HOUSE PROPERTY AS PER THE INFORMATION AVAILABLE ON THE WEBSITE IN THE ABSENCE OF DETAILS REQUIRED TO BE FURNISHED BY THE APPELLANT. AS REGARDS THE OBJECTION OF THE APPELLANT ABOUT THE RELIANCE PLACED BY THE AO ON WEBSITE, I FIND THAT THE APPELLANT HAS FAILED TO DISCHARGE THE ONUS LYING UPON HIM TO FURNISH DERAILS OF ANY RENT UNDER THE HEAD INC OME FROM HOUSE PROPERTY IN SPITE OF OPPORTUNITIES GIVEN BY THE A.O. AND EVEN DURING THE APPELLATE PROCEEDINGS. MOREOVER, MERELY OBJECTING TO THE PROPERTIES RELIED UPON BY THE A.O. FOR ESTIMATING FAIR RENT ON THE BASIS OF INFORMATION FROM WEBSITE, THE APPEL LANT COULD NOT BE DEEMED TO HAVE COMPLIED WITH THE REQUIREMENT OF THE SHOW CAUSE NOTICE. THE APPELLANT HAS ALSO CLAIMED THAT THE APPELLANT IS ONLY A PART OWNER OF THE 8 PROPERTIES MENTIONED BY THE A.O. HOWEVER, IN THIS REGARD I FIND THAT NEITHER DURING THE ASSESSMENT PROCEEDINGS, NOR DURING THE APPELLATE PROCEEDINGS, NO DOCUMENTARY EVIDENCE LIKE BALANCE SHEET, BANK STATEMENT, AGREEMENT, ETC. IS PRODUCED TO PROVE THE PROPORTIONATE OWNERSHIP OF THE APPELLANT IN THE SAID PROPERTIES. THEREFORE, THE CONTENTION O F PROPORTIONATE OWNERSHIP IS UNPROVED TILL NOW. 2. HOWEVER, THE A.O. HAS CALCULATED DEEMED INCOME IN RESPECT OF PROPERTY NO. 1 SITUATED AT PARLE (E) UPTO NOVEMBER 2011. HOWEVER, THE AR OF THE APPELLANT POINTED OUT THAT THIS PROPERTY WAS NOT SOLD DURING NOV . 2011. I THEREFORE DIRECT THE A.O. TO CALCULATE DEEMED INCOME IN RESPECT OF PROPERTY NO. 1 FOR FULL YEAR INSTEAD OF 8 MONTHS. 3. MOREOVER, THE A.O. HAS CALCULATED DEEMED INCOME IN RESPECT OF PROPERTY NO.2 SITUATED AT PARLE (E) FOR FULL YEAR. HOWEVER, THE AR OF THE APPELLANT POINTED OUT THAT THIS PROPERTY WAS SOLD ON 02.11.2011. I THEREFORE DIRECT THE A.O. TO CALCULATE DEEMED INCOME IN RESPECT OF PROPERTY NO 2 FOR 8 INSTEAD OF FULL YEAR. 4. AS REGARDS THE OBJECTION OF THE APPELLANT TO THE ADOPTION OF FOREIG N EXCHANGE RATE IN RESPECT OF PROPERTIES SITUATED ABROAD, THE AO IS DIRECTED TO ADOPT CORRECT RATE OF FOREIGN EXCHANGE PREVAILING DURING THE YEAR UNDER MRS. SANDHYA SANJAY SATHAYE ITA NOS. 3504 & 3505/MUM/2017 5 APPEAL AS PER THE INFORMATION ON THE WEBSITE OF RBI AND MAKE NECESSARY CORRECTION, IF ANY. 5. MOREOVER, I ALSO FIND THAT THE AO HAS OVERLOOKED THE DEDUCTION U/S 24(A) 30% WHILE MAKING THE ADDITION. I THEREFORE, DIRECT THE AO TO ALLOW THE SAME AFTER MAKING ABOVE SAID CORRECTIONS TO THE DEEMED INCOME IN RESPECT OF PROPERTY NO. 1&2 SITUATED AT PAREL (EAST). I N VIEW OF THE ABOVE, I DIRECT THE AO TO RE - COMPUTE FAIR RENT AS ABOVE SAID AND GRANT DEDUCTION U/S 24(A) @ 30%. 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE FILES A CHART STATING THAT SR. NO. 1, 2 AND 5 OF THE TABLE AT 3.2 OF THE ASSESSMENT ORDER DATED 27.03.2015 ARE NOT BE ING CONTESTED IN THIS APPEAL. HOWEVER, THE LD. COUNSEL SUBMITS THAT IN RESPECT OF SR. NO. 3 AS REGARDS COMPARABILITY, THE PROPERTY IS LOCATED IN FOREST AREA AND IS NOWHERE CLOSE TO SHIVAJI PETH AND THE RATES PROVIDED ON PROPERTY WEBSITES ARE PROPOSED RATES AND NOT CONTRACTED RATES. REGARDING THE PROPERTY LOCATED AT SR. NO. 4, IT IS SUBMITTED IN RESPECT OF COMPARABILITY THAT THE PROPERTY IS LOCATED IN FOREST AREA A ND IS NOWHERE CLOSE TO BUND GARDEN AREA AND THE RATES PROVIDED ON PROPERTY WEBSITES ARE PROPOSED RATES AND NOT CONTRACTED RATES. IN RESPECT OF PROPERTY AT SR. NO. 6, IT IS STATED THAT THE COST OF ACQUISITION OF THE PROPERTY CANNOT BE CONSIDERED AS ITS FA IR RENT VALUE AND VALUATION IS REQUIRED TO BE MADE ON THE BASIS OF PREVAILING RENT DURING THE FINANCIAL YEAR 2011 - 12. RE GARDING PROPERTY AT SR. NO. 8 , IT IS STATED THAT THE RATES PROVIDED ON PROPERTY WEBSITES ARE PROPOSED RATES AND NOT CONTRACTED RATES A ND MRS. SANDHYA SANJAY SATHAYE ITA NOS. 3504 & 3505/MUM/2017 6 VALUATION IS REQUIRED TO BE MADE ON THE BASIS OF PREVAILING RENT DURING THE FINANCIAL YEAR 2011 - 12. 6. ON THE OTHER HAND THE LD. DR SUPPORTS THE ORDER PASSED BY THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS O N RECORD. WE FIND THAT THE ASSESSEE COULD NOT FILE THE DETAILS ABOUT THE PROPERTIES BEFORE THE AO. THEREFORE, THE AO HAD TO SEARCH FOR THE NECESSARY DETAILS FROM THE WEBSITE TO COMPLETE HIS ASSESSMENT. WE HAVE MENTIONED THE SUBMISSION OF THE LD. COUNSEL AT PARA 5 ABOVE. WE ARE OF THE CONSIDERED VIEW THAT IN RESPECT OF PROPERTIES AT SR. NO. 3,4,6 AND 8 , THE AO HAS TO EXAMINE THE COMPARABILITY, RATES, VALUATION ETC. FOR ARRIVING AT ITS TAXABILITY. THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTOR E THE MATTER TO THE FILE OF THE AO TO MAKE A DE NOVO ORDER IN RESPECT OF PROPERTIES AT SR. NO. 3,4,6, AND 8 , AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE DIRECT THE ASSESSEE TO FILE THE RELEVANT DOCUMENTS/EVIDENCE BEFORE THE AO. 8. FACTS BEING IDENTICAL, OUR DECISION IN ITA 3504/MUM/2017 APPLIES MUTATIS MUTANDIS TO ITA 3504/MUM/2017. 9. IN THE RESULT, THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT 27/12/2018. SD/ - SD/ - ( PAWAN SINGH ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 27/12/2018 RAHUL SHARMA, SR. P.S. MRS. SANDHYA SANJAY SATHAYE ITA NOS. 3504 & 3505/MUM/2017 7 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 . BY ORDER, //TRUE COPY// ( SR. PRIVATE SECRETARY ) ITAT, MUMBAI