Sh. Naresh Kumar anand HUF, Jalandhar V. The Dy. Commissioner of Income-tax, Jalandhar

ITA 368/ASR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8872 (ITAT-AMRITSAR)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-02-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 07-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SHARDA
• Assessee Lawyers: SSH PREM SINGH; GUNJEET SINGH AD VS
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR (SMC) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NO.368(ASR)/2015 ASSESSMENT YEAR:2006-07 PAN: AADHN0422N SH. NARESH KUMAR ANAND, HUF VS. DY. COMMR. OF INCOM E TAX, JALANDHAR. R-IV, JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY:S/SH/ PREM SINGH & GUNJEET SINGH, AD VS. RESPONDENT BY: SH. R.K.SHARDA, DR DATE OF HEARING: 01/02/2016 DATE OF PRONOUNCEMENT: 04/02/2016 ORDER THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2006-07, AGAINST THE ORDER DATED14.10.2013, PASSED BY THE LD . CIT(A), JALANDHAR. THE ASSESSEE AS RAISED THE FOLLOWING GROUNDS OF APP EAL: 1. THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE TH AT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE AO HAS ERRED IN LAW AND ON FACTS IN FRAMING IMPUGNED ASSESSMENT U/S 143(3)/ 147 OF THE I.T. ACT, 1961. 2. THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THA T THE AO EXCEEDED IS JURISDICTION BY ISSUING NOTICE U/S 148. 3. THAT THE AO HAS WRONGLY DETERMINED THE INCOME AT RS.14,14,030/-. 4. THAT THE AUTHORITY BELOW HAS WRONGLY ASSESSED RENTA L INCOME AS INCOME FROM OTHER SOURCES AND DISALLOWED DEDUCTI ON U/S 24(A) WHICH WAS ALLOWABLE IN LAW. 5. THAT THE WRITTEN SUBMISSIONS SHOULD HAVE BEEN CONSI DERED IN PROPER CONTEXT. ITA NO.368(ASR)/2015 AY: 2006-07 2 6. THAT THE PENALTY PROCEEDINGS HAVE WRONGLY BEEN I NITIATED. 7. THAT INTEREST U/S 234D HAS WRONGLY BEEN CHARGED AND IS CHALLENGED. 8. THAT INTEREST U/S 244 SHOULD HAVE NOT BEEN WITHD RAWN. 9. THAT ORDER OF AUTHORITY IS ARBITRARY, ILLEGAL AN D IS CHALLENGED. 10. THAT PENALTY PROCEEDINGS U/S 271(1)(C) HAVE WRO NGLY BEEN CHARGED. 11. THAT ORDER IS AGAINST LAW AND FACTS OF THE CASE . 12. THAT PROPER OPPORTUNITY SHOULD HAVE BEEN ALLOWE D. 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS STATED AT THE BAR THAT GROUND NOS. 1 & 2 ARE NOT PRESSED. REJECTED AS NOT PRESSED. 3. GROUND NOS. 5, 6, 7 AND 9 TO 12 ARE GENERAL. 4. APROPOS GROUND NOS. 3 & 4, THE FACTS ARE THAT T HE ASSESSEE HUF HAD FILED ITS ORIGINAL RETURN OF INCOME FOR THE YEA R UNDER CONSIDERATION ON 21.03.2007 DECLARING AN INCOME OF RS.9,26,790/-. TH E AO NOTICED THAT IN THE STATEMENT OF INCOME FILED WITH THE RETURN OF IN COME, THE ASSESSEE HUF HAD, INTER-ALIA, DECLARED LEASE RENTAL INCOME O F RS.14,00,000/- FROM LARSON AND TOUBRO LIMITED, BEING LEASE RENT FROM L AND AND ALSO RS.32,400/- FROM C-54, DDA FRIEND COLONY, NEW DELHI AND INTEREST INCOME OF RS.23,448/- AND FROM THE TOTAL LEASE REN TAL INCOME OF RS.14,32,400/-, THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.4,17,145/- (BEING 30% OF NET ANNUAL VALUE OF RS.13,90,485/- AF TER DEDUCTION OF HOUSE TAX OF RS.41,915/- U/S 24(A) OF THE ACT. TH E AO OBSERVED THAT ITA NO.368(ASR)/2015 AY: 2006-07 3 DEDUCTION U/S 24(A) OF THE ACT WAS NOT ADMISSIBLE T O THE ASSESSEE HUF ON LEASE RENTAL INCOME OF RS.14,00,000/- IN VIEW OF THE PROVISIONS OF SECTION 22 OF THE ACT, AS LEASE RENTAL INCOME OF VA CANT LAND IS NOT CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM HOUS E PROPERTY, BUT IT IS CHARGEABLE UNDER THE HEAD INCOME FROM OTHER SOU RCES. THE AO WAS OF THE OPINION THAT THE ASSESSEE HUF HAD THUS CLAIM ED WRONG DEDUCTION OF RS.4,17,145/- U/S 24(A) OF THE ACT AND HAS ALSO DECLARED THE TAXABLE INCOME UNDER THE WRONG HEAD. HE, THEREFORE, REOPENE D THE CASE OF THE ASSESSEE HUF FOR MAKING REASSESSMENT AND ISSUED NOT ICE U/S 148 OF THE ACT AFTER RECORDING THE REASONS. NOTICE U/S 148 OF THE ACT WAS SERVED UPON THE ASSESSEE ON 10.02.2009, IN RESPONSE TO WHI CH, THE ASSESSEE HUF FILED THE RETURN OF INCOME DECLARING THE SAME I NCOME OF RS.9,26,790/- UNDER THE SAME HEAD. THE ASSESSEMENT WAS COMPLETED BY THE AO U/S 143(3) READ WITH SECTION 147 OF THE ACT ON 24.12.2009 AT AN ASSESSED INCOME OF RS.14,14,030/-. WHILE FRAMING TH E RE-ASSESSMENT, THE AO TREATED THE LEASE RENTAL INCOME DECLARED BY THE ASSESSEE HUF AS INCOME FROM OTHER SOURCES, AS AGAINST INCOME FROM H OUSE PROPERTY DECLARED BY THE ASSESSEE HUF IN THE RETURN OF INCOM E. 5. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED VI DE WRITTEN SUBMISSIONS THAT THE AO HAD COMPLETED THE ASSESSME NT ON THE BASIS OF WRONG INFORMATION PROVIDED BY THE TENANT, M/S. LARS ON & TOUBRO LIMITED, AS THEY HAD SUBMITTED THAT NO BUILDING W AS GIVEN TO THEM ON RENT BY THE ASSESSEE AND THAT THE LEASE RENTALS WER E BEING PAID IN ITA NO.368(ASR)/2015 AY: 2006-07 4 RESPECT OF OPEN PLOT OF LAND. THE ASSESSEE REQUESTE D THE AO TO SUMMON THE TENANT AT THEIR COST TO KNOW THE TRUE STATE OF AFFAIRS. THE LD. CIT(A) ASKED THE ASSESSEE TO FILE A COPY OF THE LEASE AGRE EMENT ENTERED INTO BETWEEN THE ASSESSEE AND M/S. LARSON & TOUBRO LIMIT ED, AS ALSO THE COPY OF SALE DEED IN RESPECT OF THE PROPERTY FROM W HICH LEASE RENTALS WERE BEING RECEIVED. 6. VIDE THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRME D THE AOS ORDER, OBSERVING AS FOLLOWS: 5.4. FROM THE TERMS AND CONDITIONS OF THE LEASE AGREEMEN T DATED 01.09.2005, IT IS VERY MUCH CLEAR THAT THE PROPERTY UNDER REFERENCE WHICH HAS BEEN GIVEN ON LEASE IS ONLY 6020 SQ. M. O UT OF TOTAL PROPERTY MEASURING 15500 SQ. M AND THAT TOO IS AN O PEN PLOT OF LAND AS IS CLEARLY MENTIONED IN THE TERMS AND CONDITIONS OF THE LEASE AGREEMENT. IN THESE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED OPINION THAT THE AO IS FULLY JUS TIFIED IN ASSESSING THE LEASE RENTAL INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES AS THE LEASE RENTALS OF OPEN PLOT F LAND IS NOT ASS ESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IN THE RESULT, G ROUNDS OF APPEAL NO. 3 & 4 TAKEN BY THE ASSESSEE HUF ARE DISMISSED. 7. THE LD. COUNSEL FOR THE ASSESSEE STATED BEFORE THIS BENCH THAT THE STAND OF THE ASSESSEE THAT THE ASSESSMENT ORDER, AS CONFIRMED BY THE LD. CIT(A), IS BASED ON WRONG INFORMATION PROVIDED BY T HE ASSESSEES TENANT M/S. LARSON & TOUBRO LIMITED, AS IS AMPLY SUPPORTED BY THE LETTER DATED 10.11.2015 FROM THE DCIT, CIRCLE-IV, JALANDHAR TO T HE ASSESSEE FOR THE AY 2008-09 AND LETTER DATED 05.09.2015 (APB-41) ADD RESSED BY LARFARGE INDIA PVT. LTD., ( EARLIER KNOWN AS LARSON & TOUBRO LIMITED ) TO THE DCIT, CIRCLE-IV, JALANDHAR. IT HAS BEEN SUBMITTED THAT LA FARGE INDIA PVT. LIMITED, I.E., THE ERSTWHILE M/S. LARSON & TOUBRO L IMITED, THE AFOREW- ITA NO.368(ASR)/2015 AY: 2006-07 5 MENTIONED TENANT OF THE ASSESSEE HAVE, VIDE THEIR L ETTER (SUPRA) DATED 05.08.2015, IN RESPONSE TO THE LETTER BEARING REFER ENCE DCIT/C- IV/JAL/2015-16/438, WHEREBY THE DEPARTMENT HAD SOUG HT CLARIFICATION FROM LAFARGE INDIA PVT. LIMITED, HAS STATED THAT WH EREAS THE AGREEMENT IS ONLY FOR LAND LEASE, HOWEVER, IN PART OF THE LAND, THERE IS A PERMANENT BUILDING SITUATED WHICH IS USED FOR SMALL STORAGE A S PER MUTUAL UNDERSTANDING. IT HAS FURTHER BEEN STATED THAT THE PHOTOGRAPHS OF THE BUILDING ARE CORRECT. THE LD. COUNSEL FOR THE ASSES SEE HAS DRAWN OUR ATTENTION TO THE FACT THAT THIS LETTER OF LAFARGE I NDIA PVT. LIMITED (ERSTWHILE LARSON & TOUBRO LIMITED, THE TENANT OF T HE ASSESSEE), HAS BEEN PUT TO THE ASSESSEE BY THE AO VIDE THE AFORESAID LE TTER DATED 10.11.2015, IN THE ASSESSMENT PROCEEDINGS FOR THE AY 2008-09, N OTING THAT AS PER THE REPLY DATED 05.09.2015 (SUPRA) OF LAFARGE INDIA PVT . LIMITED, THEY HAVE ADMITTED THAT A BUILDING EXISTS IN PART OF THE LAND , AND THAT WHEREAS, THE AGREEMENT IS ONLY FOR LAND LEASE. THE LD. COUNSEL F OR THE ASSESSEE HAS POINTED OUT THAT THIS BEING SO, THE VERY BASIS OF THE FINDINGS RECORDED BY THE TAXING AUTHORITIES IN THIS REGARD FOR THE YEAR UNDER CONSIDERATION, I.E. 2006-07, BECOME AUTOMATICALLY NULLIFIED. ATTENTION HAS ALSO BEEN DRAWN TO APB 7 TO 9, WHICH ARE STATED TO BE COPIES OF THE PHOTOGRAPHS SUBMITTED BEFORE THE AO, DEPICTING THE BUILDING QU A WHICH THE RENTAL WAS EARNED. IT IS POINTED OUT THAT THESE ARE THE VE RY SAME PHOTOGRAPHS WHICH LAFARGE INDIA PVT. LIMITED, IN THEIR REPLY (S UPRA), HAVE STATED TO BE OF THE BUILDING IN QUESTION. ITA NO.368(ASR)/2015 AY: 2006-07 6 8. THE LD. DR, ON THE OTHER HAND, WHILE RELYING ON THE IMPUGNED ORDER, HAS SUBMITTED THAT THE ASSESSEE SEEKS TO PLA CE RELIANCE ON FRESH EVIDENCE, WHICH OUGHT NOT TO BE DONE AT THIS STAGE. 9. HAVING HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL PLACED ON RECORD, I FIND THAT THE ASSESSMENT FOR TH E YEAR UNDER CONSIDERATION WAS MADE VIDE ORDER DATED 24.12.2009. THE ORDER UNDER APPEAL IS DATED 14.10.2013. BOTH THE TAXING AUTHORI TIES HAVE DECIDED AGAINST THE ASSESSEE ON THE BASIS THAT AS PER THE LEASE AGREEMENT, THERE DOES NOT EXIST ANY BUILDING ON THE LAND LEASED OUT. PER-CONTRA, AS PER THE AFORESAID LETTERS OF 05.09.2015 AND 10.11.2015 OF L AFARGE INDIA PVT. LTD., (ERSTWHILE LARSON AND TOUBRO LIMITED, THE TENANT OF THE ASSESSEE) AND THE ASSESSEES AO, IT NOW STANDS ADMITTED BY THE AS SESSEES TENANT THAT THERE DOES EXIST A BUILDING ON THE LAND IN QUESTION AND THUS, IT IS THIS BUILDING ALONGWITH THE LAND, WHICH WAS LEASED OUT TO THE SAID TENANT BY THE ASSESSEE, THOUGH THE LEASE AGREEMENT WAS QUA T HE LAND. THE BUILDING IS USED FOR CEMENT STORAGE AS PER MUTUAL UNDERSTANDING. M/S. LAFARGE INDIA PVT. LIMITED HAS ALSO ADMITTED THAT THE PHOTOGRAPHS OF THE BUILDING ARE CORRECT. 10. IN THIS VIEW OF THE MATTER, SINCE THESE DOCUMEN TS AND PHOTOGRAPHS GO TO THE ROOT OF THE DISPUTE, THEY ARE NECESSARY TO BE TAKEN INTO CONSIDERATION. ACCORDINGLY, THESE DOCUMENTS ARE AD MITTED IN EVIDENCE. NOW, SINCE THE ORDERS OF THE TAXING AUTHORITIES FOU ND AS THEIR BASIS, THE FACT THAT AS PER LEASE AGREEMENT, THERE WAS NO BUIL DING IN EXISTENCE ON ITA NO.368(ASR)/2015 AY: 2006-07 7 THE LAND AND THE ERSTWHILE M/S. LARSON AND TOUBRO L IMITED, NOW, M/S. LAFARGE INDIA PVT. LIMITED, HAVE ADMITTED OF THE BU ILDING EXISTING ON THE LAND IN QUESTION, I DEEM IT APPROPRIATE TO REMIT TH IS MATTER TO THE FILE OF THE AO TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW ON TAKING INTO CONSIDERATION THE AFORESAID MATERIAL. THE ASSESSEE SHALL BE AFFORDED DUE AND ADEQUATE OPPORTUNITY TO SUPPORT ITS CASE. THE ASSESSEE, NO DOUBT, SHALL COOPERATE IN THE FRESH PROCEEDINGS BEFORE THE AO. ORDERED ACCORDINGLY. 11. GROUND NOS. 8, 9 & 10 ARE CONSEQUENTIAL. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 04/02/201 6 SD/- (A.D. JAIN) JUDICIAL MEMBER DATED: 04/02/2016 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE:SH. NARESH KUMAR ANAND HUF, JALANDH AR. 2. THE DCIT, R-IV, JALANDHAR. 3. THE CIT(A), BATHINDA 4. THE CIT, BATHINDA.. 5. THE SR. DR, ITAT, ASR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR.