Sh. Rajesh Jain, New Delhi V. ACIT, New Delhi

ITA 3845/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96989 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 07-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 02-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S AGAINST DIFFERENT S PASSED
• Keywords: Principle of natural justice; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC - II , NEW DELHI BEFORE SHRI H.S.SIDHU, JUDICIAL MEMBER ITA NO. 3845 /DEL/2014 ASSESSMENT YEAR : 2009 - 10 ITA NO. 3846 /DEL/2014 ASSESSMENT YEAR : 2009 - 10 ORDER THESE TWO APPEALS ARE FILED BY THE ASSESSEES AGAINST THE DIFFERENT ORDERS PASSED BY THE LD CIT(A), IV, NEW DELHI DATED 21.05.2014 FOR THE ASSESSMENT YEAR 2009 - 10. 2. THE ASSESSEE S HA VE RAISED IDENTICAL GROUNDS IN BOTH THE SE APPEAL S . FOR THE SAKE OF CONVENIENCE COMMON GROUNDS RAISED BY SHRI RAJESH JAIN IN ITA NO.3845/DEL/2014 IS REPRODUCED AS UNDER: - 1. THAT THE ORDER PASSED BY THE LD ASSESSING OFFICER AND CONFIRMED BY THE LD CIT(A) IS NOT ONLY BAD IN LAW BUT ALSO AGAINST THE FACT O F THE CASE. 2. THAT THE LD CIT(A) IS ERRED UNDER THE LAW WHILE CONFIRMING THE ORDER OF AO IN RESPECT TO DENIAL OF STANDARD DEDUCTION OF 30% U/S 24(1) OF THE ACT OUT OF RAJESH JAIN, C/O. PRAKASH K. PRAKASH, B - 1, SAGAR APARTMENTS, 6, TILAK MARG, PAN:AADPJ4042Q VS. ACIT, CENTRAL CIRCLE - 3, NEW DELHI (APPELLANT) (RESPONDENT) RACHNA JAIN, C/O. PRAKASH K. PRAKASH, B - 1, SAGAR APARTMENTS, 6, TILAK MARG, PAN:AADPJ4042Q VS. ACIT, CENTRAL CIRCLE - 3, NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SAUBHAGYA AGARWAL, AD SH. MANOJ SABHARWAL, CA RESPONDENT BY : SH. ROBIN RAWAL, SR. DR DATE OF HEARING : 07.07.2015 DATE OF PRONOUNCEMENT : 13. 08.2015 PAGE 2 OF 5 INCOME FROM HOUSE PROPERTY AS ADMITTED BY THE AO IN THE IMPUGNED ASSESSMENT ORDER. 3 . THAT THE LD CIT(A) IS ERRED UNDER THE LAW WHILE CONFIRMING THE ORDER OF AO IN RESPECT TO DISALLOWANCE OF CLAIM OF THE INTEREST OF RS.4,77,360/ - U/S 24(B) FROM INCOME FROM HOUSE PROPERTY IN SPITE OF DIRECT NEXUS OF BORROWED CAPITAL BEING INVESTED IN THE H OUSE PROPERTY. 3. SINCE THE ISSUES IN THESE TWO APPEALS ARE COMMON , THEREFORE, FOR THE SAKE OF CONVENIENCE , I AM DISPOSING OFF THESE APPEAL S BY PASSING A CONSOLIDATED ORDER. 4. THE FACTS AS NARRATED BY THE REVENUE AUTHORITIES ARE NOT DISPUTED BY BOTH THE PARTIES, SO, THERE IS NO NEED TO REPEAT THE SAME FOR THE SAKE OF CONVENIENCE. 5. AT THE TIME OF HEARING THE LD COUNSEL FOR THE ASSESSEE STATED THAT THE REVENUE AUTHORITIES HAVE PASSED THE OR DER S AGAINST THE PRINCIPLE OF NATURAL JUSTICE AND WITHOUT PROVIDING SUFFICIENT OPPORTUNITY TO THE ASSESSEE FOR SUBSTANTIATING THEIR CLAIM BEFORE THEM. HE FURTHER STATED THAT THE ASSESSEE IS ENTITLED FOR STANDARD DEDUCTION OF RENT AL INCOME AS WELL AS INTEREST U/S 24(1) AND 21(B) OF THE INCOME TAX ACT, 1961. ASSESSEE S HAVE PRODUCED SUFFICIENT DOCUMENTARY EVIDENCE S BEFORE THE REVENUE AUTHORITIES BUT THE SAME HAS NOT BEEN PROPER LY CONSIDERED BY THE REVENUE AUTHORITIES AND REJECTED THE C LAIM OF THE ASSESSEE. HE FURTHER STATED THAT SHRI DHANANJAY RANA A CLOSE FAMILY FRIEND HAS TAKEN THE PROPERTY ON RENT ON TEMPORARY LEASE BASIS WITHOUT ENTERING INTO THE FORMAL RENT AGREEMENT. BUT HE HAS FILED HIS CONFIRMATION/ AFFIDAVIT CORROBORATING THE S AME BEFORE THE LD FIRST APPELLATE AUTHORITY WHICH IS NOT PROPERTY APPRECIATED BY THE LD CIT(A) AND DENIED THE STANDARD D EDUCTION U/S 24( 1 ) OF THE ACT AS WELL AS THE EXPENDITURE U/S 57( III ) OF THE ACT. HE STATED THAT THE ASSESSEE IS IN POSSESSION OF ALL THE DOCUMENTARY EVIDENCE SUPPORTING THE CLAIM OF THE ASSESSEE AND HE REQUESTED THAT THE ADDITIONS IN DISPUTE MAY BE DELETED AND THE APPEALS OF THE ASSESSEES MAY BE ACCEPTED. 6. THE LD DR STRONGLY OPPOSED THE REQUESTS OF THE ASSESSEE AND STATED THAT THE ASSESS EE HAS NOT SUBSTANTIAT ED THEIR CLAIMS BY PRODUCING RELEVANT DOCUMENTARY EVIDENCE S BEFORE THE REVENUE AUTHORITIES, THEREFORE THE APPEAL FILED BY THE ASSESSEES MAY BE DISMISSED. PAGE 3 OF 5 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORD AVAILABLE WITH ME, I AM OF THE CONSIDERED VIEW THAT THE ASSESSEE S HAVE SHOWN RENTAL INCOME OF RS.56,000/ - EACH CL A IMED INTEREST ON RS.77,360/ - U/S 24(B) OF THE ACT AND ALSO CLAIMED STANDARD DEDUCTION U/S 24(1) OF THE ACT. THE AO ASKED THE ASSESSEE S TO FILE RENT DEED FOR SUBSTANTIATING THEIR CLAIM BUT THE ASSESSEE S FAILED TO PRODUCE THE SAME BEFORE THE REVENUE AUTHORITIES. BU T AT THE APPELLATE LEVEL ASSESSEE FILED AN APPLICATION UNDER RULE 46A(1)(C) OF THE ACT FOR ADDITIONAL EVIDENCE AND FILED A CONFIRMATION OBTAINED FROM THE TENANT SHRI DHANANJAY RANA , CONFIRMED THE TENANCY AGREEMENT BETWEEN HIM AND THE ASSESSEE S BECAUSE THE ASSESSEE COULD NOT FURNISH THE SAME BEFORE THE AO. BUT THE LD FIRST APPELLATE AUTHORITY REJECTED THE SAME BY HOLDING THAT SHRI DHANANJAY RANA WAS NOT PERSONALLY APPEAR BEFORE THE AO AND THE ASSESSEE HAS ALSO NOT FILED ANY DOCUMENTARY EVIDENCE FOR SUBSTANTIATING THEIR CLAIM ON RENT FOR THE PERIOD OF SEVEN MONTHS 01.09.2008 TO 30.03.2009. THE LD FIRST APPELLATE AUTHORITY HAS ALSO HELD THAT THE AFFIDAVIT OF SHRI DAHANANJAY RANA COULD NOT BE RELIED UPON IN VIEW OF THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SHRI KRISHNA VS. CIT 142 ITR 618. SIMILARLY, KEEPING IN VIEW THE AFORESAID FACTS THE REVENUE AUTHORITY HAS REJECTED THE STANDARD DEDUCTION TO THE ASSESSEE U/S 24(1) OF THE ACT . I HAVE THOROUGHLY GONE THROUGH THE ORDERS PASSED BY THE REVENUE AUTHORITY ALONG WITH THE CONTENTIONS OF THE ASSESSEE , I AM OF THE CONSIDERED VIEW THAT AS PER THE FACTS NARRATED BY THE LD CIT(A) IN PARA 6.1 AT PAGE 2 OF THE IMPUGNED ORDER THAT THE ASSESSEE HAS SHOWN RENTAL INCOME OF RS.56,000/ - AND CLAIMED INTEREST OF RS.4,77,360/ - U/S 24(B) OF THE IT ACT AND ALSO CLAIMED STANDARD DEDUCTION U/S 24(1) OF THE ACT. THE AO HAS ALSO IN THE ASSESSMENT ORDER AT PARA 3 AT PAGE 3 STATED THAT THE ASSESSEE HAS DECLARED RENTAL INCOME OF RS.56,000/ - FROM HOUSE PROPERTY AND CLAIMED STANDARD DEDUCTION AND EXPENDITURE OF INTEREST. THE AO HIMSELF ACCEPTED THE INCOME FROM HOUSE PROPERTY OF RS.56,000/ - OF THE ASSESSEE AND DID NOT ALLOW THE STANDARD DEDUCTION AND THE EXPENDITURE O F INTEREST BEING UN - ADMISSIBLE IN THE COMPUTATION OF INCOME AT PAGE 3 OF THE ASSESSMENT ORDER. THE AO HAS ALSO ASSESSED THE INCOME OF THE ASSESSEE AS INCOME FROM HOUSE PROPERTY AMOUNTING TO RS.56,000/ - AND DISALLOW THE OTHER DEDUCTION DUE TO NON FILING OF DOCUMENTARY EVIDENCE. KEEPING IN PAGE 4 OF 5 VIEW THE FACTS AND CIRCUMSTANCES NARRATED ABOVE I AM OF THE CONSIDERED VIEW THAT THE PROVISION OF SECTION 24(A) OF THE ACT THE ASSESSEE S ARE ENTITLED FOR STANDARD DEDUCTION IF THE INCOME CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY HAS BEEN COMPUTED BY THE ASSESSEE AND ACCEPTED BY THE AO. IN THE PRESENT APPEALS BOTH THE ASSESSEES ARE HUSBAND AND WIFE AND FILED RETURN OF INCOME DECLARING INCOME FROM HOUSE PROPERTY OF RS.56,000/ - WHICH HAS BEEN ACCEPTED BY THE AO AS INCOME FROM HOUSE PROPERTY. ACCORDING TO THE PROVISION OF SECTION 24(A) BOTH THE ASSESSEES ARE ENTITLED FOR STANDARD DEDUCTION OF A SUM OF 30% OF THE ANNUAL VALUE. THEREFORE DIRECTION IS ISSUED TO THE AO TO ALLOW THE STANDARD DEDUCTION TO BOTH THE ASSESSEES U/S 24 ( A) OF THE ACT RESULTING THE ISSUES INVOLVED IN GROUND 2 IS ALLOWED. 8. AS REGARDS TO THE ISSUE INVOLVED IN GROUND NO.3 IS REGARDING DISALLOWANCE OF INTEREST OF RS.4,77,360/ - U/S 24(B) FROM INCOME FROM HOUSE PROPERTY , BORROWED CAPITAL BEING INVESTED IN THE HOUSE PROPERTY. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE I AM OF THE CONSIDERED VIEW THAT ACCORDING TO THE PROVISIONS SECTION 24(B) OF THE ACT WHERE PROPERTY IS ACQUIRED, CO NSTRUCTED, REPAIRS, RENEWED OR RE - CONSTRUCTED WITH BORROWED CAPITAL, THE AMOUNT OF ANY INTEREST PAYABLE ON SUCH CAPITAL , THE ASSESSEE IS ENTITLED FOR DEDUCTION FROM THE INCOME FROM THE HOUSE PROPERTY. IN THIS CASE BOTH THE ASSESSEES HAVE FILED DOCUMENTARY EVIDENCES BEFORE THE REVENUE AUTHORITIES BUT THE SAME HAS NOT PROPERLY BEEN CONSIDERED BY THE AUTHORITIES BELOW IN PARA 6.5 AT PAGE 8 OF THE IMPUGNED ORDER, THE LD FIRST APPELLATE AUTHORITY HAS REJECTED THE CLAIM OF THE ASSESSEE WITHOUT GOING INTO THE FACTS OF THE CASE AND BY WRONGLY HOLDING THAT THE RENT INCOME SHOWN BY THE ASSESSEE IS LIABLE TO BE ASSESSED AS INCOME FROM OTHER SOURCES WHEREAS THE AO HAS ASSESSED THE INCOME OF THE ASSESSEE FROM HOUSE PROPERTY HIMSELF BECAUSE THE ASSESSEE HAS ALSO FILED RETU RN OF INCOME FROM HOUSE PROPERTY . MEANING THE LD FIRST APPELLATE AUTHORITY HAS NOT GONE THROUGH THE FACTS OF THE CASE AND WRONGLY REJECTED THE CLAIM OF THE ASSESSEE. SECONDLY , THE LD FIRST APPELLATE AUTHORITY HELD THAT THE QUESTION OF ALLOWANCE OF DEDUCTIO N U/S 24(B) ON ACCOUNT OF INTEREST HAS ALSO BEEN REJECTED DEPENDENT UPON THE FINDING ON THE STANDARD DEDUCTION U/S 24(1) OF THE ACT. I AM OF THE VIEW THAT THE DEDUCTION U/S 24(1) OF THE IT ACT WHICH I HAVE MENTIONED ABOVE PAGE 5 OF 5 AND DEDUCTION U/S 24(B) OF THE ACT ARE BOTH INDEPENDENT AND DEPENDS UPON THE FACTS OF THE EACH CASE. AS IN THE PRESENT CASE THE ASSESSEE HAS SHOWN THE RENTAL INCOME IN THEIR RETURN AND THE AO ACCEPTED THE SAME AS INCOME FROM HOUSE PROPERTY. THEREFORE, THE ASSESSEES ARE ENTITLED FOR STANDAR D DEDUCTION U/S 24(A) OF THE ACT. SECONDLY , AS REGARD TO DEDUCTION U/S 24(B) OF THE ACT THE ASSESSEE S HAVE TO ESTABLISH THAT LO AN HAS BEEN TAKEN FOR ACQUIRING THE PROPERTY OR RECONSTRUCT THE PROPERTY IN DISPUTE WITH BORROWED CAPITAL. THIS BURDENED UPON THE ASSESSEE TO PROVE THESE CONDITIONS PRESCRIBED U/S 24(B) OF THE ACT. IN MY VIEW IN THE INTEREST OF JUSTICE THE ASSESSEES ARE ENTITLED FOR OPPORTUNITY TO ESTABLISH THEIR CLAIM BEFORE THE AO FOR THE DEDUCTION CLAIMED BY THEM U/S 24(B) OF THE ACT. THIS ISSUE IS SET ASIDE TO THE FILE OF AO TO DECIDE THE SAME FRESH UNDER THE LAW AFTER GIVING OPPORTUNITY TO THE ASSESSEE FOR SUBSTANTIATING THEIR CLAIM BEFORE HIM. 9. IN THE RESULT APPEALS FILED BY THE ASSESSEES ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ISSUES I NVOLVED IN GROUND NOS.1 AND 4 ARE GENERAL IN NATURE THEREFORE NEED NOT TO ADJUDICATE . THE ISSUE INVOLVED I N GROUND 2 IS ALLOWED AND ISSUE INVOLVED IN GROUND 3 IS SET ASIDE TO THE AO. ORDER PRONOUNCED IN THE OPEN COURT ON 1 3 T H AUGUST , 2015 . - S D / - ( H.S.SIDHU ) ACCOUNTANT MEMBER DATED: 1 3 T H AUGUST, 2015 AKK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR