Sh. Surinder Kumar Singla, Patiala V. ITO, W-3, Patiala

ITA 383/CHANDI/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8684 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 27-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: RAKESH KAJLA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH B, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.383/CHD/2018 ASSESSMENT YEAR: 2013-14 SH. SURINDER KUMAR SINGLA VS. THE ITO PROP. M/S PANCHAM GARMENTS WARD-3 DHARAMPURA BAZAR PATIALA PATIALA PAN NO. AIFPS7285Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. RAKESH KAJLA REVENUE BY : SH. MANJIT SINGH DATE OF HEARING : 19/09/2018 DATE OF PRONOUNCEMENT : 17.12.2018 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(A) (HEREINAFTER R EFERRED TO AS CIT(A)) DT. 01/01/2018. 2. VIDE GROUND NO. 1, THE ASSESSEE IN THIS APPEAL HAS AGITATED THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS . 3,50,000/- OUT OF THE TOTAL DISALLOWANCE OF RS. 4,85,000/- MADE BY THE ASSESSIN G OFFICER IN RESPECT OF COST OF IMPROVEMENT CLAIMED BY THE ASSESSEE IN RESPECT OF C APITAL GAINS RETURNED ON ACCOUNT OF SALE OF THE PROPERTY. 3. THE ASSESSEE CLAIMED THAT THE AFORESAID AMOUNT O F RS. 4,85,000/- WAS PAID BY HIM AS PAGRI(PREMIUM) TO THE THREE TENANTS FOR V ACATION OF THE PROPERTY WHICH SINCE LONG WAS OCCUPIED BY THEM. 2 4. THE LD. ASSESSING OFFICER DISALLOWED THE ENTIRE CLAIM OF THE ASSESSEE IN RESPECT OF THE PREMIUM / COMPENSATION PAID BY THE A SSESSEE TO THE TENANTS FOR VACATION OF THE PROPERTY. HOWEVER, THE LD. CIT(A) A LLOWED THE AMOUNT WHICH WAS PAID THROUGH CHEQUE AMOUNTING TO RS. 1,35,000/- AND CONFIRMED THE REMAINING DISALLOWANCE AMOUNTING TO RS. 3,50,000/-. THE ASSESSEE, THUS HAS CAME IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTION OF THE PARTIE S AND HAVE ALSO GONE THROUGH THE RECORD. THE ASSESSEE BEFORE THE LOWER A UTHORITIES HAD CLAIMED THAT THREE TENANTS NAMELY SHRI BRIJ MOHAN SINGH, SHRI RA JINDER PAL SINGH AND SHRI UPKAR SINGH WERE IN POSSESSION OF THE PROPERTY. THE ASSES SEE TO PROVE HIS CASE PRODUCED THE COPY OF THE ASSESSMENT REGISTER OF MUN ICIPAL CORPORATION, PATIALA WHEREIN THE NAME OF THE THREE TENANTS ALONGWITH ANN UAL RENTS ASSESSED WERE DULY MENTIONED. APART FROM THAT, THE ASSESSEE ALSO TENDERED THE AFFIDAVIT OF ALL THE THREE TENANTS WHO CONFIRMED THAT THEY HAVE VACA TED THE PROPERTY BEFORE THE SALE OF THE SAME BY THE ASSESSEE . HOWEVER THE ASSESSING OFFICER MADE THE IMPUGNED DISALLOWANCE OBSERVING THAT THE ASSESSEE H AS NOT PRODUCED THE EVIDENCE OF PAYMENT OF THE AFORESAID AMOUNT. 6. IT IS IN THE COMMON KNOWLEDGE THAT AS PER THE LA W OF THE LAND, THE PROPERTY IN THE POSSESSION OF THE TENANTS CANNOT BE VACATED AT THE WHIMS AND WISHES OF THE OWNER BUT UNDER SOME EXCEPTIONAL CIRC UMSTANCES SUCH AS PERSONAL NEED ETC. IT IS ALSO A COMMON KNOWLEDGE TH AT GENERALLY SOME PREMIUM / COMPENSATION AMOUNT IS PAID BY PROPERTY O WNER TO THE TENANTS FOR VACATION OF THE PROPERTY. IN THIS CASE, THE ASSESSE E BEFORE SALE OF THE PROPERTY HAD GOT THE PROPERTY VACATED FROM THREE TENANTS AND HAS ALSO GIVEN THE BIFURCATION OF THE AMOUNT GIVEN TO EACH OF THE TENA NT. OUT OF THE TOTAL EXPENDITURE CLAIMED RS. 4,85,000/-, AN AMOUNT OF RS . 1,35,000/- WAS PAID THROUGH CHEQUE. UNDER THE CIRCUMSTANCES, WHEN THE A SSESSEE HAS PROVED 3 BEYOND DOUBT THAT THREE TENANTS WERE IN POSSESSION OF THE PROPERTY AND THE ASESSEE GOT THE PROPERTY VACATED FROM THEM AND THEN SOLD THE PROPERTY IN QUESTION THEN IN THE ABSENCE OF ANY OTHER EVIDENCE WHICH CAN BE SAID TO HAVE PROMPTED THE TENANTS TO VACATE THE PROPERTY, THE RE ASONABLE PRESUMPTION WOULD BE THAT THE ASSESSEE MIGHT HAVE PAID SOME PRE MIUM / COMPENSATION TO THE TENANTS. THE TOTAL AMOUNT PAID BY THE ASSESSEE HAS BEEN CLAIMED AT RS.4,85,000/- OUT OF WHICH RS. 1,35,000/- HAS BEEN PAID THROUGH CHEQUE. IN OUR VIEW, THE INTEREST OF JUSTICE WOULD BE WELL SERVED IF SUM OF RS. 3,00,000/- IS FURTHER ALLOWED TO THE ASSESSEE AS EXPENDITURE INCURRED FOR GETTING VACATED THE PROPERTY. THEREFORE, OUT OF THE ADDITION OF RS. 3, 50,000/- SUSTAINED BY THE CIT(A), THE ASSESSEE IS ACCORDINGLY ALLOWED RELIEF OF RS. 3 ,00,000/- AND THE ADDITION TO THE EXTENT OF RS. 50,000/- ONLY IS CONFIRMED ON THI S ISSUE. 7. SECOND EFFECTIVE GROUND TAKEN BY THE ASSESSEE IS REGARDING THE DENIAL OF CLAIM OF EXPENDITURE OF RS. 1,95,000/- ON ACCOUNT O F RENOVATION AND CLAIMED AS COST OF IMPROVEMENT. 8. THE LOWER AUTHORITIES DISALLOWED THE AFORESAID C LAIM OBSERVING THAT THE ASSESSEE COULD NOT PRODUCE BILLS / VOUCHERS IN THIS RESPECT. HOWEVER THE PLEA OF THE ASSESSEE IS THAT RENOVATION WAS DONE SIX YEARS BACK FROM THE DATE OF SALE AND HENCE THE ASSESSEE COULD NOT PRODUCE THE BILLS / VOUCHERS DUE TO SO MUCH LAPSE OF TIME, WHICH EVEN WAS PRACTICALLY NOT POSSI BLE. 9. IT IS TO BE NOTED THAT THE ASSESSEE HAS CLAIMED EXPENDITURE RS. 14,000/- TOWARDS STATUTORY FEES SUCH AS ON ACCOUNT OF IMPRO VED MAP AND WATER CHARGES ETC. OUT OF THE REMAINING AMOUNT OF RS. 1,8 1,000/-, WE DEEM IT FIT TO ALLOW THE SUM OF RS. 1,00,000/- TOWARDS COST OF IMP ROVEMENT AND HENCE THE DISALLOWANCE ON THIS ISSUE IS RESTRICT TO RS. 81,00 0/- ONLY. 10. IN THE THIRD GROUND OF APPEAL THE ASSESSEE HAS AGITATED THE DISALLOWANCE OF RS. 50,000/- CLAIMED AS COMMISSION PAID FOR PROC URING THE DEAL OF THE SALE OF 4 PROPERTY. NEITHER THE ASSESSEE COULD PRODUCE ANY E VIDENCE IN THIS REGARD NOR IT SEEMS TO BE JUSTIFIED, HENCE, GROUND NO. 3 IS H EREBY DISMISSED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 17.12.2018 AG COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR