ITO, W-4, Chandigarh V. Sant Ram Sharma, Panchkula

ITA 392/CHANDI/2018

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9761 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 02-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Depreciation; Income from undisclosed sources; Additional evidence; Assessment record
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH B, CHANDIGARH BEFORE MS.DIVA SINGH, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.392/CHD/2018 (ASSESSMENT YEAR : 20131-4) THE INCOME TAX OFFICER, VS. SH.SANT RAM SHARMA, WARD 4, H.NO.883, SECTOR 8, PANCHKULA. PANCHKULA. PAN: AMPPS1995K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AKHILESH GUPTA, SR. DR RESPONDENT BY : SHRI T.N. SINGLA, CA DATE OF HEARING : 27.06.2018 DATE OF PRONOUNCEMENT : 24 .09.2018 ORDER PER ANNAPURNA GUPTA, A.M . : THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)[HEREINAFTER REFERRED TO AS LD.CIT(APPEAL S)], PANCHKULA DATED 23.1.2018 RELATING TO ASSESSMENT YE AR 2013-14. 2. GROUND NO.1 RAISED BY THE REVENUE READS AS UNDER : I. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) IS RIGHT IN APPLYING THE N.P. RA TE OF 16.49% (4,70,790/-) TO GROSS RECEIPTS OF RS.28,55,0 00/- DECLARED BY THE APPELLANT FROM BUSINESS OF MARRIAGE PALACE. 3. BRIEFLY FACTS RELATING TO THE CASE ARE THAT THE ASSESSEE HAD FILED RETURN OF INCOME SHOWING INCOME FROM RENT OF COMMERCIAL COMPLEX AND AGRICULTURAL INCOME. DURING ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD DEPOSITED CASH OF RS.53,04,500/- I N HIS ITA NO.392/CHD/2018 A.Y. 2013-14 2 BANK ACCOUNT ON DIFFERENT DATES.WHEN CONFRONTED WIT H THE SAME THE ASSESSEE CONTENDED THE SOURCE OF THE CASH DEPOSITED TO THE FOLLOWING: RENTAL INCOME RS.9,00,000/- AGRICULTURAL INCOME RS.4,50,000/- HIRING INCOME FROM RUNNING BUSINESS OF MARRIAGE PLACE RS.28,55,000/- INNOVA CAR SOLD RS.8,25,000/- 4. VIS A VIS THE CASH RECEIVED OF RS.25,55,000/- TH E ASSESSEE STATED THAT HE HAD A MARRIAGE PALACE AT PI NJORE FROM WHERE HE WAS RECEIVING INCOME IN CASH AND THAT THE CASH OF RS.28,55,000/- WAS RECEIVED THROUGH M/S GUP TA TENT HOUSE, PINJORE ON ACCOUNT OF LEASE OF ACCOMMOD ATION FOR MARRIAGE/CEREMONIES FUNCTIONS. THE RECEIPT FRO M M/S GUPTA TENT HOUSE, PINJORE FOR GIVING THE IMPUGNED C ASH WAS ALSO FURNISHED BY THE ASSESSEE. THE ASSESSING OFFIC ER ASKED THE ASSESSEE TO FURNISH DETAILS OF RECEIPTS OF CASH ALONGWITH DOCUMENTARY EVIDENCES WHICH THE ASSESSEE FAILED TO DO SO. AS A CONSEQUENCE, THE ASSESSING OFFICER TREATED THE CASH DEPOSITED AS INCOME FROM UNDISCLOSED SOURCES AND AD DED THE SAME TO THE INCOME OF THE ASSESSEE. 5. DURING APPELLATE PROCEEDINGS, THE ASSESSEE SUBMI TTED DETAILED EXPLANATION WHICH IS REPRODUCED AT PARA 4 ..1 OF THE CIT(APPEALS)S ORDER, ALONGWITH CONFIRMATIONS FROM M/S GUPTA TENT HOUSE, PINJORE REGARDING PAYMENT OF THE SAME MADE BY HIM. THE ASSESSEE ALSO CONTENDED THAT IN TH E SUCCEEDING YEAR I.E. ASSESSMENT YEAR 2014-15 RECEIP TS FROM MARRIAGE PALACE, PINJORE HAD BEEN TREATED AS BUSINE SS ITA NO.392/CHD/2018 A.Y. 2013-14 3 INCOME, AGAINST WHICH EXPENSES HAD BEEN ALLOWED BY THE DEPARTMENT. THE CONFIRMATION SUBMITTED BY THE ASSES SEE AS ADDITIONAL EVIDENCE WAS SENT TO THE ASSESSING OFFIC ER CALLING FOR A REPORT FROM HIM, WHO POINTED OUT INFIRMITIES IN THE SAME STATING THAT THE ASSESSEE HAD PROVIDED A BILL/QUOTATION FROM M/S GUPTA TENT HOUSE, PINJORE W HICH DID NOT MENTION THE DATE OF THE SAME, NOR ANY REFER ENCE NUMBER. IN RESPONSE, THE ASSESSEE CONTENDED THAT TH E ASSESSING OFFICER HAD MISAPPRECIATED THE EVIDENCE F ILED, WHICH WAS NOT A BILL BUT WAS IN FACT CONFIRMATION O F RS.28.52 LACS PAID BY HIM FOR LEASING OUT THE MARRI AGE PREMISES OWNED BY THE ASSESSEE. THE ASSESSEE FURTHE R CONTENDED THAT HE WAS RUNNING THE BUSINESS OF GIVIN G MARRIAGE PALACE AT PINJORE ON HIRE SINCE 2011 AND H AD EVEN TAKEN VEHICLES FOR THE SAID BUSINESS AND THAT THE I NCOME FROM LEASING OUT OF THE PREMISES HAD BEEN DECLARED DURING ASSESSMENT YEARS 2011-12 AND 2012-13 ALSO, CLAIMING EXPENSES FOR ELECTRICITY, DEPRECIATION, SALARIES, E TC. AGAINST THE SAME. THE ASSESSEE WAS, THEREFORE, ASKED TO PRO DUCE COMPLETE DETAILS OF THE AFOREMENTIONED BUSINESS AND JUSTIFY ITS CLAIM. THE ASSESSEE FURNISHED DETAILS OF THE EX PENSES INCURRED BUT COULD NOT GIVE DETAILS OF RECEIPTS WIT H DOCUMENTARY EVIDENCE. IT WAS ALSO NOTED THAT SEVERA L OTHER DISCREPANCIES WERE ALSO NOTED ALONGWITH THE FACT TH AT THE ASSESSEE HAD EXPRESSED ITS INABILITY TO FURNISH THE RECEIPT BOOK FOR BOOKING OF VENUE AND CARS. THUS THE CIT(AP PEALS) ISSUED A NOTICE TO THE ASSESSEE ASKING THE ASSESSEE TO SHOW CAUSE AS TO WHY IN THE ABSENCE OF MAINTAINING OF PR OPER ITA NO.392/CHD/2018 A.Y. 2013-14 4 BOOKS OF ACCOUNT, THE BOOKS OF ACCOUNT BE NOT REJEC TED AND THE INCOME ESTIMATED ON COMPARABLE BASIS. NO REPLY WAS FILED BY THE ASSESSEE TO THE SHOW CAUSE NOTICE, BUT THE ASSESSEE LATER ON SUBMITTED AND AGREED TO THE INCOM E OF THE MARRIAGE PALACE BEING CONSIDERED ON ESTIMATE BASIS AND SUBMITTED THE ASSESSMENT ORDER IN THE CASE OF M/S A KM RESORTS, ZIRAKPUR AS A COMPARABLE CASE WHEREIN THE NET PROFIT ON MARRIAGE PALACE BUSINESS HAD BEEN ESTIMAT ED AT 16.49%. THE LD.CIT(APPEALS) AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE HELD THAT CONSIDER ING THE FACT THAT IN PRECEDING YEARS AND EVEN IN SUCCEEDING YEARS, THE ASSESSEES INCOME FROM LETTING OUT OF MARRIAGE PREMISES OWNED BY IT HAD BEEN ASSESSED AS BUSINESS INCOME AN D THE ASSESSING OFFICER HAD MISCONSTRUED THE CONFIRMATION FILED BY THE ASSESSEE ON ACCOUNT OF RECEIPT OF INCOME FRO M LETTING OUT OF MARRIAGE VENUE DURING THE YEAR AS A BILL, NO ADDITION ON ACCOUNT OF RECEIPT FROM LETTING OUT OF THE MARRI AGE VENUE OF RS.28.52 LACS WAS TO BE MADE AS INCOME FROM UNDI SCLOSED SOURCE. HOWEVER, THE LD.CIT(APPEALS) HELD THAT IN T HE ABSENCE OF PROPER BOOKS OF ACCOUNT, THE BOOKS OUGHT TO BE REJECTED. HE THEREAFTER APPLIED A NET PROFIT RATE O F 16.49% ON THE GROSS RECEIPTS EARNED BY THE ASSESSEE FROM T HE LETTING OUT OF THE MARRIAGE VENUE, ACCEPTING THE CO MPARABLE CASE SUBMITTED BY THE ASSESSEE FOR THE SAME, AND CO MPUTED THE INCOME AT RS.4,70,790/-. THE ASSESSEE HAVING SH OWN A NET INCOME OF RS.94,568/- FROM THE SAID BUSINESS, THE SAME WAS REDUCED FROM THE NET PROFIT COMPUTED BY TH E ITA NO.392/CHD/2018 A.Y. 2013-14 5 CIT(APPEALS) AND ADDITION MADE OF THE BALANCE AMOUN T AMOUNTING TO RS.3,76,222/-. 6. BEFORE US, AS PER THE GROUND RAISED, THE REVENUE HAS CHALLENGED THE ESTIMATION OF THE PROFITS OF THE ASS ESSEE @ 16.49% OF THE GROSS RECEIPTS. THE LD.DR HOWEVER MAD E NO SUBMISSIONS VIS A VIS THE CORRECTNESS OF THE G.P RA TE APPLIED BUT IN FACT CONTESTED THE FINDING OF THE CI T(A) THAT THE RECEIPTS CAN BE ATTRIBUTED TO ITS INCOME FROM L ETTING OUT OF MARRIAGE PALACE. THE LD. DR RELIED UPON THE ORD ER OF THE ASSESSING OFFICER STATING THAT THE ASSESSEE HAD FAI LED TO GIVE THE DETAILS OF THE CASH RECEIVED FROM M/S GUPT A TENT HOUSE, PINJORE TO THE TUNE OF RS.28.55 LACS AND EV EN THE DOCUMENTARY EVIDENCE FILED WAS ONLY A BILL OR QUOTA TION FROM GUPTA TENT HOUSE WHICH NEITHER CARRIED ANY DAT E OR REFERENCE NUMBER AND THE TELEPHONE NO. WAS ALSO STR UCK OFF. LD.DR THEREFORE STATED THAT THE CIT(A) HAD ERRED IN TREATING THE CASH RECEIVED AS BUSINESS INCOME OF THE ASSESSE E AND THE ASSESSEE HAVING FAILED TO EXPLAIN THE SOURCE OF THE SAME ,IT HAD BEEN RIGHTLY TREATED AS INCOME FROM UNDISCL OSED SOURCES BY THE AO. 7. THE LD. COUNSEL FOR ASSESSEE, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE CIT(APPEALS). 8. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIE S AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BEL OW. WE HAVE ALSO GONE THROUGH THE FINDINGS OF THE LD.CIT(A PPEALS) DELETING THE DISALLOWANCE MADE ON ACCOUNT OF UNEXPL AINED CASH CREDITS AND RESTRICTING THE SAME TO THE ESTIMA TED NET ITA NO.392/CHD/2018 A.Y. 2013-14 6 PROFIT EARNED. THE LD.CIT(APPEALS) AT PARA 4.6 OF H IS ORDER, WE FIND, HAS OBSERVED AS UNDER: 4.6 I HAVE GONE THROUGH THE FACTS OF THE CASE, WRITTEN SUBMISSION FILED BY THE APPELLANT, REMAND REPORT OF THE AO, REJOINDER FILED BY THE APPELLANT AND THE ASSESSMENT RECORD. I FIND THAT IN EARLIER YEARS, A.Y.2011-12 & A.Y.2012-13 APPELLANT HAD DECLARED NET INCOME FROM M ARRIAGE PALACE WHICH WAS ACCEPTED AS BUSINESS INCOME AS RET URNED BY APPELLANT. IN THE PRESENT YEAR, THE WHOLE OF CASH RECEIP TS ON ACCOUNT OF GIVING THE MARRIAGE PALACE TO M/S GUPTA TE NT HOUSE FOR BOOKINGS OF CEREMONIES, WHICH WERE DEPOSITE D BY THE APPELLANT IN HIS BANK ACCOUNT, HAVE BEEN ADDED TO INCOME OF APPELLANT WITHOUT ALLOWING ANY EXPENDITURE ON ACCOUN T OF ELECTRICITY, SALARY, REPAIR & MAINTENANCE, INTEREST & DEPRECIATION ETC. CLAIMED AGAINST RECEIPTS FOR RUNNING OF MARRIAGE PALACE. THE APPELLANT HAS ALSO FILED A CON FIRMATION FROM M/S GUPTA TENT HOUSE REGARDING PAYMENT OF HIRE CHARGES OF RS.28,52,000/- DURING 01.04.2012 TO 30.03 .2013 FROM MARRIAGE PALACE DURING THE YEAR IN CASH. IN THE REMAND REPORT, THE AO IS FOUND TO BE UNDER A MIS-IMPRESSION T HAT THE CONFIRMATION FROM GUPTA TENT HOUSE WAS A BILL/ QUOTATIO N. I FIND THAT, IN SUBSEQUENT ASSESSMENT YEAR 2014-15, THE AO HAS TREATED RECEIPTS FROM MARRIAGE PALACE AS BUSINES S INCOME AFTER MAKING AN ADDITION OF RS.1 LAKH TO NET INCOME RETURNED. THUS IN THE PRESENT YEAR, THE AO WAS NOT CORRECT IN TREATING THE WHOLE OF THE GROSS RECEIPTS OF MARR IAGE PALACE BUSINESS RECEIVED FROM M/S GUPTA TENT HOUSE AS INCOME FROM UNDISCLOSED SOURCES AND NET INCOME FROM THE BUSINESS OF MARRIAGE PALACE HAS TO BE BROUGHT TO TAX AFTER CONSI DERING THE EXPENSES ON RUNNING THE MARRIAGE PALACE. THEREFORE AS DISCUSSED IN PRECEDING PARAGRAPHS 4.4 & 4.5, SINCE THE APPELLANT WAS FOUND TO BE NOT MAINTAI NING COMPLETE & PROPER BOOKS OF ACCOUNT FOR THE BUSINESS OF HIRING OF MARRIAGE PALACE, I AM SATISFIED THAT BOOKS OF ACCOUN T ARE NOT COMPLETE AND CORRECTLY MAINTAINED AND THEREFORE THE BOOKS OF ACCOUNT OF THE APPELLANT IN RESPECT OF THIS BUSINES S ARE REJECTED U/S 145(3) OF THE I.T.ACT. AS REGARDS THE ESTIMATIO N OF N.P. RATE TO BE APPLIED IN THE CASE OF APPELLANT UNDER THE PRO VISIONS OF SECTION 144, THE COMPARABLE CASE GIVEN BY THE APPELL ANT HAS BEEN FOUND TO BE ACCEPTABLE AND REASONABLE HAVING R EGARD TO NATURE OF BUSINESS AND TURNOVER DECLARED. THEREFORE N.P. RATE OF 16.49 %, AS AGREED BY THE APPELLANT, IS APPLIED TO GROSS RECEIPTS OF RS.28,55,000/- DECLARED BY APPELLANT FRO M BUSINESS OF MARRIAGE PALACE AND NET PROFIT THEREBY C OMES TO RS.4,70,790/- AS AGAINST RS.94,5687- DECLARED BY APPELLANT. THEREFORE AN ADDITION OF RS.3,76,222/- I S MADE TO THE RETURNED INCOME OF APPELLANT IN PLACE OF ADDITIO N OF TOTAL RECEIPTS AT RS.28,55,000/- AS MADE BY AO. ALL THE E XPENSES LIKE REPAIR & MAINTENANCE, INTEREST, SALARY, DEPRECATI ON ARE DEEMED TO HAVE BEEN ALLOWED AND NO DEDUCTION IN RES PECT OF ANY EXPENSES IS ALLOWED SEPARATELY. THE AO IS DIREC TED TO TAKE NECESSARY ACTION. THIS GROUND OF APPEAL IS PARTLY ALLOW ED. ITA NO.392/CHD/2018 A.Y. 2013-14 7 9. WE FIND THAT THE CIT(APPEALS) HAS GIVEN CATEGORI CAL FINDINGS OF FACT THAT THE ASSESSEE HAD RETURNED BUS INESS INCOME FROM LETTING OUT ITS MARRIAGE VENUE IN THE E ARLIER YEARS I.E. ASSESSMENT YEARS 2011-12 AND 2012-13 AND ALSO IN THE SUBSEQUENT YEAR I.E. ASSESSMENT YEAR 2014-15 , WHICH HAD BEEN ACCEPTED BY THE DEPARTMENT ALSO AFTER GIVI NG ALLOWANCE OF EXPENDITURE INCURRED AGAINST THE SAME. THE SAID FACT HAS NOT BEEN CONTROVERTED BY THE REVENUE BEFORE US. IT IS EVIDENT THEREFORE THAT IT WAS A FACT ESTA BLISHED AND ACCEPTED ON RECORD BY THE DEPARTMENT ALSO THAT THE ASSESSEE WAS IN THE BUSINESS OF RUNNING A MARRIAGE PALACE. T HE LD.CIT(APPEALS) HAS ALSO STATED IN THE IMPUGNED ORD ER THAT A CONFIRMATION FROM M/S GUPTA TENT HOUSE, PINJORE REGARDING PAYMENT OF HIRE CHARGES OF RS.28.52 LACS HAD BEEN FILED BY THE ASSESSEE WHICH HAD BEEN MISAPPREC IATED BY THE ASSESSING OFFICER AS BEING A BILL GIVEN BY M /S GUPTA TENT HOUSE, PINJORE TO THE ASSESSEE. THE REVENUE HA S NOT CONTROVERTED THE SAME BEFORE US. IN VIEW OF THE SAM E, WE FIND THAT IT HAS BEEN CLEARLY ESTABLISHED THAT THE ASSESSEE WAS RUNNING A MARRIAGE PALACE AND HAD RECEIVED THE SAID CASH ON ACCOUNT OF THE SAME. WE THEREFORE SEE NO R EASON TO DISAGREE WITH THE FINDINGS OF LD.CIT(APPEALS) THAT THE IMPUGNED RECEIPTS TANTAMOUNTED TO BUSINESS RECEIPTS OF THE ASSESSEE FROM THE LETTING OUT OF ITS MARRIAGE VENUE . WE FURTHER FIND THAT THE LD.CIT(APPEALS) AFTER REJECTI NG THE BOOKS OF ACCOUNT OF THE ASSESSEE HAD APPLIED A NET PROFIT RATE OF 16.49% FOR THE PURPOSE OF ESTIMATING THE IN COME OF THE ASSESSEE ON THE BASIS OF THE COMPARABLE CASE OF M/S ITA NO.392/CHD/2018 A.Y. 2013-14 8 AKM RESORTS, ZIRAKPUR, WHICH WAS ALSO IN THE BUSINE SS OF MARRIAGE PALACE BUSINESS. BEFORE US, THE LD. DR HAS NEITHER POINTED OUT AS TO HOW M/S AKM RESORTS, ZIRAKPUR WAS NOT A COMPARABLE CASE, NOR HAS FILED ANY COMPARABLE CASES BEFORE US TO CONTROVERT THE FINDINGS OF THE LD.CIT(APPEALS ). IN THE ABSENCE OF THE ABOVE, WE SEE NO REASON TO DISTURB T HE FINDINGS OF THE CIT(APPEALS) BY ACCEPTING M/S AKM R ESORTS, ZIRAKPUR AS A COMPARABLE CASE AND APPLYING NET RATE OF 16.49% TO THE GROSS RECEIPTS OF THE ASSESSEE FOR TH E PURPOSE OF DETERMINING ITS TAXABLE INCOME FROM THE BUSINESS OF LETTING OUT OF MARRIAGE VENUE. IN VIEW OF THE ABOVE , GROUND NO.1 RAISED BY THE REVENUE IS DISMISSED. 10. GROUND NO.2 RAISED BY THE REVENUE READS AS UNDE R: 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD.C1T(A) IS RIGHT IN DELETING THE ADDITI ON OF RS.8,25,000/- IN THE ABSENCE OF DOCUMENTARY EVIDENCE. 11. THE ABOVE GROUND RELATES TO ADDITION MADE ON AC COUNT OF INCOME FROM UNDISCLOSED SOURCES AND THE FACT REL ATING TO THE SAME ARE THAT DURING ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD RECEI VED RS.8,25,000/- IN CASH ON SALE OF HIS INNOVA CAR. IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE BEING FURNISHED BY THE ASSESSEE TO PROVE THE SAME, THE ASSESSING OFFIC ER TREATED THE CASH RECEIVED AS INCOME FROM UNDISCLOSE D SOURCES AND ADDED THE SAME TO THE INCOME OF THE ASS ESSEE. 12. BEFORE THE LD.CIT(APPEALS), THE ASSESSEE CONTEN DED THAT IT HAD FURNISHED AFFIDAVIT OF THE PURCHASER OF THE SAID CAR BEFORE THE ASSESSING OFFICER, WHO HAD NOT CONSI DERED ITA NO.392/CHD/2018 A.Y. 2013-14 9 THE SAME. THE SAID EVIDENCE WAS FURNISHED BEFORE TH E LD.CIT(APPEALS) ALSO. THE LD.CIT(APPEALS) FORWARDED THE EVIDENCE TO THE ASSESSING OFFICER WHO STATED THAT T HE AFFIDAVIT THOUGH WAS DULY SIGNED AND ATTESTED, BUT DID NOT MENTION THE PRICE AT WHICH THE CAR HAD BEEN SOLD. H E FURTHER STATED THAT NO REGISTRATION CERTIFICATE OF THE CAR HAD BEEN SHOWN BY THE ASSESSEE AND THAT EVEN THE WEBSIT E OF THE RTO OFFICE SHOWED THE CAR STILL REGISTERED IN T HE NAME OF THE ASSESSEE. THE ASSESSING OFFICER, THEREFORE, STA TED THAT THE DOCUMENTARY EVIDENCE FURNISHED BY THE ASSESSEE WAS NOT ACCEPTABLE. IN RESPONSE, THE ASSESSEE FURNISHED COPY OF NOC ISSUED BY THE RTA IN THE NAME OF THE PURCHASER AND POINTED OUT THAT IT CLEARLY PROVED THE TRANSFER OF OWNERSHIP OF THE CAR FROM THE ASSESSEE TO THE PRESENT OWNER A ND THAT ALL THE OBSERVATIONS OF THE ASSESSING OFFICER IN TH IS REGARD WERE BASELESS. THE LD.CIT(APPEALS) CONSIDERING THE EVIDENCE SUBMITTED BY THE ASSESSEE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER HOLDING AT PARA 6.4 OF HIS ORDER AS UNDER: 6.4 I HAVE GONE THROUGH THE FACTS OF THE CASE, WRITTEN SUBMISSION FILED BY THE APPELLANT, REMAND REPORT OF THE AO, REJOINDER FILED BY THE APPELLANT AND ASSESSMENT RECORD. IT IS SEEN THAT APPELLANT HAS SHOWN SALE OF INNOVA AMOUNTING TO RS.8.25 LAC IN INCOME & EXPENDITURE ACCOUNT OF MARRIAGE PALACE HIRING BUSINESS AS REDUCED FROM THE TOTAL VALUE OF FIXED ASSETS ON WHICH DEPRECIATION HA S BEEN CLAIMED. FURTHER THE NOC HAS BEEN ISSUED BY ROAD TRANSPORT AUTHORITY, PANCHKULA, DATED 17.05.2012 IN THE NAME OF PURCHASER. THE PURCHASER'S AFFIDAVIT HAS ALSO BEEN PLACED ON RECORD BY THE APPELLANT. THEREFORE NO ADDITION IS CALLED FOR ON THIS ACCOUNT AND ADDITION MADE BY AO IS ORDERED TO BE DELETED. THIS GROUND OF APPEAL IS ALLOWED. 13. BEFORE US, THE LD. DR RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND THE LD. COUNSEL FOR ASSESSEE RELIED ITA NO.392/CHD/2018 A.Y. 2013-14 10 UPON THE FINDINGS OF THE CIT(APPEALS) AND SUBMISSIO NS MADE BEFORE HIM. 14. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTI ES. WE FIND NO MERIT IN THE PRESENT GROUND RAISED BY THE R EVENUE. THE LD.CIT(APPEALS) HAS GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE HAS PROVED THE SOURCE OF CASH DEPOSITED TO THE EXTENT OF RS.8.25 LACS AS BEING FROM SALE OF CAR OW NED BY IT, BY REFLECTING THE SAID TRANSACTION IN ITS BOOKS OF ACCOUNTS BY REDUCING THE SALE AMOUNT RECEIVED FROM THE VALUE OF THE CAR AS REFLECTED IN THE FIXED ASSET IN THE BALANCE SHEET AND FURTHER BY FURNISHING THE NOC ISSUED BY THE ROAD TR ANSPORT AUTHORITY, PANCHKULA IN THE NAME OF PURCHASER ALONG WITH PURCHASERS AFFIDAVIT CONFIRMING THE PURCHASE OF CA R FOR THE IMPUGNED AMOUNT FROM THE ASSESSEE. THE LD. DR HAS N OT BEEN ABLE TO CONROVERT ANY OF THE ABOVE FACTUAL FIN DINGS OF THE LD.CIT(APPEALS). IN VIEW OF THE SAME, WE FIND N O REASON TO DIFFER FROM THE ORDER OF THE CIT(APPEALS) IN HOL DING THE IMPUGNED SUM AS HAVING BEEN DULY EXPLAINED AND THER EBY DELETING THE ADDITION MADE BY THE ASSESSING OFFICER HOLDING THE SAME AS UNEXPLAINED CASH RECEIPTS. GROUND NO.2 RAISED BY THE REVENUE IS, THEREFORE, DISMISSED. 15. GROUND NO.3 RAISED BY THE REVENUE READS AS UNDE R: 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD.C1T(A) IS RIGHT IN HOLDING THAT THE REGISTRATION/EXECUTION OF LEASE DEED IS NOT MANDATOR Y AND ALLOWED THE DEDUCTION AMOUNTING RS.2,70,000/- CLAIMED U/S 24 OF THE INCOME TAX ACT 1961. 16. THE ABOVE GROUND RELATES TO DISALLOWANCE OF DED UCTION CLAIMED U/S 24 OF THE INCOME TAX ACT, 1961 ON ACCOU NT OF ITA NO.392/CHD/2018 A.Y. 2013-14 11 DEDUCTION TO THE EXTENT OF 30% OF THE ANNUAL VALUE OF THE INCOME FROM HOUSE PROPERTY ASSESSABLE AS SUCH. 17. BRIEFLY STATED, DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD ATTRIBUTED CASH DEPOSITED IN THE BANK ACCOUNT TO THE EXTENT OF RS.9 LACS TO THE RENTAL INCOME EARNED BY IT. ON BEING ASKED TO FURNISH RENT AGREEM ENT, THE ASSESSEE EXPRESSED HIS INABILITY TO DO SO, ON ACCOU NT OF WHICH THE ASSESSING OFFICER DISALLOWED DEDUCTION CL AIMED AGAINST THE SAID RENTAL INCOME U/S 24 OF THE ACT, T O THE EXTENT OF 30% OF THE SAME, AMOUNTING TO RS.2,70,000 /-. 18. DURING APPELLATE PROCEEDINGS, THE ASSESSEE REI TERATED ITS CONTENTION THAT THE SAID INCOME PERTAINED TO TH E RENTAL INCOME RECEIVED FROM SHOPS OWNED BY THE ASSESSEE AT PINJORE. COPIES OF THE RENT AGREEMENT WITH THE TENA NTS OF THE SHOP WERE FURNISHED. THE LD.CIT(APPEALS) FORWAR DED THE SAME TO THE ASSESSING OFFICER FOR HIS COMMENTS. THE ASSESSING OFFICER IN HIS REPLY STATED THAT SINCE TH E AGREEMENTS WERE NOT ATTESTED OR CERTIFIED BY ANY LO CAL AUTHORITY/TEHSIL, THE GENUINENESS OF THE AGREEMENT WAS IN QUESTION AND THUS COULD NOT BE ACCEPTED AS ADDITION AL EVIDENCE. THE ASSESSING OFFICER FURTHER STATED THAT NO LEASE DEED HAS BEEN EXECUTED BY THE ASSESSEE SINCE AS PER THE ASSESSEES OWN SUBMISSION THE PROPERTY HAD BEEN LET OUT IN THE PAST YEARS ALSO. TO THIS THE ASSESSEE CONTENDED THAT HE HAD LET OUT THE PROPERTY FOR 11 MONTHS ONLY BY EXE CUTING RENT AGREEMENT IN THIS REGARD AND SINCE THE PERIOD OF LETTING OUT DID NOT EXCEED 12 MONTHS, THERE WAS NO REQUIREM ENT TO ITA NO.392/CHD/2018 A.Y. 2013-14 12 EXECUTE A LEASE DEED. FURTHER THE ASSESSEE CONTENDE D THAT MERELY BECAUSE THE RENT AGREEMENT WAS NOT REGISTERE D OR NO LEASE DEED WAS EXECUTED, THE ASSESSEE COULD NOT BE PENALIZED FOR THE SAME. THE LD.CIT(APPEALS) AFTER CONSIDERING THE ASSESSEES SUBMISSIONS DELETED THE DISALLOWANCE MADE ON FINDING THAT THE RENTAL INCOME FROM SHOPS IN PINJORE HAD BEEN REGULARLY SHOWN IN THE RE TURNS OF INCOME FILED BY THE ASSESSEE IN THE PAST ALSO AND F URTHER THAT IN ASSESSMENT YEARS 2010-11 AND 2014-15 THE ASSESSMENT U/S 143(3) HAD BEEN COMPLETED ACCEPTING THE RENTAL INCOME AS INCOME FROM HOUSE PROPERTY. THE RE LEVANT FINDINGS OF THE LD.CIT(APPEALS) AT APRA 5.4 OF THIS ORDER ARE AS UNDER: 5.4 I HAVE GONE THROUGH THE FACTS OF THE CASE, WRITTEN SUBMISSION FILED BY THE APPELLANT, REMAND REPORT O F THE AO, REJOINDER FILED BY THE APPELLANT AND ASSESSMENT RECORD. I FIND THAT RENT OF SHOPS IN PINJORE HAS BEEN REGULARLY SHOWN IN RETURNS OF INCOME FILED BY A PPELLANT IN THE PAST. OWNERSHIP OF SHOPS/SHOWROOMS BY APPELLANT A T PINJORE IS ALSO NOT DISPUTED BY THE AO. DURING A.Y.2 010-11 ASSESSMENT U/S 143(3) WAS COMPLETED AND RENTAL INCO ME FROM SHOPS AT PINJORE WAS ASSESSED AS INCOME FROM HOUSE PR OPERTY. EVEN IN A.Y.2014-15 DURING ASSESSMENT MADE U/S 143( 3) THE RENTAL INCOME RECEIVED FROM SHOPS AT PINJORE WAS AS SESSED AS INCOME FROM HOUSE PROPERTY. I ALSO FIND MERIT IN TH E SUBMISSION OF THE APPELLANT THAT REGISTRATION EXECUTION OF LEASE DEED IS NOT MANDATORY AND ABSENCE OF THE SAME AND THE AOS CONTE NTION THAT RENT AGREEMENTS FILED WERE NOT CERTIFIED BY LO CAL AUTHORITY, CANNOT DISPROVE THE RENTAL INCOME EARNED BY THE APP ELLANT FOR WHICH RENT AGREEMENTS FOR 11 MONTHS PERIOD WITH TEN ANTS HAVE BEEN DULY FURNISHED AS EVIDENCE. I ALSO FIND THAT A O HAS NOT BROUGHT OUT ANY INDEPENDENT MATERIAL ON RECORD TO C ONTROVERT THE CLAIM OF APPELLANT. THUS THE ACTION OF THE AO IN NOT CONSIDERING THE RENTAL INCOME AS INCOME FROM HOUSE P ROPERTY AND INSTEAD TREATING THE SAME AS INCOME FROM OTHER SOURCES IS NOT FOUND TO BE CORRECT AND REASONABLE. THE RENTAL INCOME RETURNED AT RS. 6,30,000/- BY THE APPELLANT IS TO B E ASSESSED AS INCOME FROM HOUSE PROPERTY AFTER ALLOWING THE DUE DEDUCTION U/S 24 AMOUNTING TO RS.2,70,000/- TO THE TOTAL RENT RECEIPTS OF RS.9 LAKH AS CLAIMED BY THE APPELLANT. THE ADDITION OF RS.2,70,000/- MADE ON THIS ACCOUNT TO THE TOTA L INCOME OF ITA NO.392/CHD/2018 A.Y. 2013-14 13 THE APPELLANT IS THEREFORE ORDERED TO BE DELETED. THIS GROUND OF APPEAL IS ALLOWED. 19. BEFORE US, THE LD. DR RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND THE LD. COUNSEL FOR ASSESSEE RELIED UPON THE FINDINGS OF THE CIT(APPEALS) AND SUBMISSIO NS MADE BEFORE HIM. 20. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND NO MERIT IN THE GROUND RAISED BY THE REVENUE. THE LD.CIT(APPEALS), WE FIND, HAS GIVEN CATEGORICAL FIN DINGS OF FACT THAT THE RENTAL INCOME FROM SHOPS OWNED BY THE ASSESSEE IN PINJORE HAS BEEN ASSESSED TO TAX AS SUC H IN THE PRECEDING YEAR I.E. ASSESSMENT YEAR 2010-11 AND THE SUCCEEDING YEAR I.E. ASSESSMENT YEAR 2014-15. THERE FORE, IT IS AN ACCEPTED FACT THAT THE ASSESSEE WAS OWNER OF SHOPS AT PINJORE WHICH IT HAD GIVEN ON RENT. EVEN RENT AGREE MENT HAS BEEN FILED BY THE ASSESSEE. THEREFORE THERE WAS NO REASON TO DISBELIEVE THE CLAIM OF THE ASSESSEE THAT THE RECEI PT PERTAINED TO RENTAL INCOME, ESPECIALLY IN THE ABSEN CE OF ANYTHING TO THE CONTRARY BROUGHT ON RECORD BY THE R EVENUE. WE AGREE WITH THE LD.CIT(APPEALS) THAT THE RECEIPTS ATTRIBUTED TO THE SAME DURING THE IMPUGNED YEAR BY THE ASSESSEE, COULD NOT BE REJECTED MERELY FOR THE REAS ON THAT THE RENT AGREEMENTS WERE NOT REGISTERED OR NO LEASE DEED WAS EXECUTED. WE THEREFORE UPHOLD THE ORDER OF THE CIT(A) TREATING THE RECEIPT OF RS.90,000/- AS RENTAL INCOM E OF THE ASSESSEE AND ALLOWING STATUTORY DEDUCTION OF 30% TH EREOF AMOUNTING TO RS.27,000/-, AS CLAIMED BY THE ASSESSE E, ITA NO.392/CHD/2018 A.Y. 2013-14 14 THEREBY DELETING THE DISALLOWANCE OF THE SAME MADE BY THE AO . IN VIEW OF THE ABOVE, THE GROUND OF APPEAL NO.3 RAI SED BY THE REVENUE IS DISMISSED. 21. IN EFFECT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 24 TH SEPTEMBER, 2018 *RATI*/PK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH