Smt. Rekha Devi, New Delhi V. DCIT, New Delhi

ITA 3947/DEL/2016

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6615 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 06-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Capital asset; Principle of natural justice
• Section: 143(3); 201

Judgement Text

1 ITA NO. 3947/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI R. K. PANDA ACCOUNTANT MEM BER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A. NO. 3947/DEL/2016 (A.Y 2012-13) (THROUGH VIDEO CONFER ENCING) REKAH DEVI C/O. M/S RRA TAX INDIA, D-28, SOUTH EXTENSION, PART-1 NEW DELHI AANPD0639P (APPELLANT) VS DCIT CENTRAL CIRCLE-32 NEW DELHI (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 21/05/2016 PASSED BY CIT(A)-30, NEW DELHI FOR ASSESSMENT YEAR 2012-13. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTAN CES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRM ING THE ACTION OF LD. AO IN MAKING ADDITION OF RS.2,52,99,100/- ON AC COUNT OF ALLEGED CAPITAL GAIN AND THAT TOO WITHOUT OBSERVING THE PRI NCIPLES OF NATURAL JUSTICE. APPELLANT BY SH. (DR) RAKESH GUPTA, ADV RESPONDENT BY SH. SHIV SWAROOP SINGH, SR. DR DATE OF HEARING 29.07.2021 DATE OF PRONOUNCEMENT 09.09.2021 2 ITA NO. 3947/DEL/2016 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, AC TION OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADDITI ON OF RS.2,52,99,100/- ON ACCOUNT OF ALLEGED CAPITAL GAIN IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADDITION OF RS.L,68,000/- ON ACCOUNT O F DEEMED RENT RECEIVED AND THAT TOO WITHOUT OBSERVING THE PRINCIP LES OF NATURAL JUSTICE. 4. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, AC TION OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADDITI ON OF RS.L,68,000/- ON ACCOUNT OF DEEMED RENT RECEIVED IS BAD IN LAW AN D AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN CHARGING INTEREST U/S 234A 234B, 234C AND 234 D OF INCOME TAX ACT, 1961. 3. THE ASSESSEE IS AN INDIVIDUAL FILED HER RETURN O F INCOME FOR ASSESSMENT YEAR 2012-13 DECLARING INCOME OF RS. 5,747/- ASSESS MENT ORDER U/ 143(3) WAS COMPLETED VIDE ORDER DATED 25/3/2013 AT TOTAL I NCOME OF RS. 2,54,72,850/- THEREBY MAKING ADDITIONS ON ACCOUNT O F LONG TERM CAPITAL GAIN AMOUNTING TO RS.2,52,99,100/- AND DEEMED RENT RECEIVED AMOUNTING TO RS. 1,68,000/-. 3 ITA NO. 3947/DEL/2016 4. BEING AGGRIEVED BY THE PENALTY ORDER, THE ASSESS EE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE ASS ESSEE. 5. THE LD. AR SUBMITTED THAT THE ASSESSEE HAD MORTG AGED THE PROPERTY WITH INDIAN OVER SEAS BANK AS A GUARANTOR AGAINST THE LO AN TAKEN BY VIKAS CHAIN COMPANY PVT. LTD. FROM THE SAID BANK. THE VIKAS CHA IN COMPANY PVT. LTD. BECAME NPA. THE INDIAN OVER SEAS BANK FORFEITED TH E SAME PROPERTY AND DISPOSED OF THE PROPERTY. THUS, THE ASSESSEE NEVER SOLD OR TRANSFERRED THE PROPERTY AND, THEREFORE, THE PROVISIONS OF SECTION 2(47) (V) OF THE INCOME TAX ACT AND SECTION 53A OF THE TRANSFER OF PROPERTY ACT , 1982 ARE NOT APPLICABLE TO THE ASSESSEE. THE LD. AR FURTHER SUBMITTED THAT TH E POSSESSION OF THE SAID PROPERTY WAS WITH M/S VIKAS CHAIN COMPANY SINCE FIN ANCIAL YEAR 2010-11 AND THE SALE CONSIDERATION WAS RECEIVED IN THE FINA NCIAL YEAR 2011-12 WHERE AS THE SALE DEED WAS EXECUTED IN FINANCIAL YEAR 201 2-13. THUS, THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER AS WELL AS CIT (A) IGNORED ALL THESE RELEVANT FACTS. AS REGARDS GROUND NO. 3 & 4, THE LD. AR SUB MITTED THAT THERE WAS A DISPUTE GOING ON WITH M/S VIKAS CHAIN COMPANY PVT. LTD. IN 2010 AND THE MATTER WENT TO SENIOR CIVIL COURT TEESHAZARI, DELHI . HENCE, THERE IS NO RENTAL INCOME DURING THE YEAR UNDER CONSIDERATION. ALTHOU GH, FINALLY THE DISPUTE WAS SETTLED AND THE FINAL RENT WAS FIXED AT RS.7,810/- PER MONTH. THE LD. AR SUBMITTED THAT AS AND WHEN THE RENT IS RECEIVED, TH E ASSESSEE WILL OFFER THE SAME TO TAX WITH THE AUTHORITIES. 6. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. AS REGARDS GROUND NO. 1 & 2, FROM THE EVI DENCES PRODUCED BEFORE THE ASSESSING OFFICER AND THE CIT(A) AS WELL AS BEFORE US, IT EMERGES THAT THE ASSESSEE NEVER RECEIVED ANY AMOUNT. THE PROPERTY NO . 2501, GALI NO. 8, CAROL BAGH, NEW DELHI BELONGING TO THE ASSESSEE WAS MORTG AGED IN THE BANK (INDIAN OVERSEAS BANK, JANPATH, NEW DELHI) AS GUARANTOR AGA INST THE LOAN TAKEN BY M/S VIKAS CHAIN COMPANY PVT. LTD. FROM THE SAID BAN K. THE BANK ENFORCED 4 ITA NO. 3947/DEL/2016 THE RECOVERY OF LOAN AGAINST M/S VIKAS CHAIN COMPAN Y PVT. LTD. BY SALE OF THE PROPERTY MORTGAGED WITH IT. THE INDIAN OVERSEAS BA NK FORFEITED THE SAID PROPERTY AND SOLD THE SAID PROPERTY UNDER SARFAESI ACT, 2002 BY THE BANK AND OUT OF TOTAL SALE CONSIDERATION OF RS. 2,60,00, 000/- NOTHING WAS GIVEN TO THE ASSESSEE AS THE BANK HAS AN OVERRIDING TITLE OV ER THE PROPERTY. THUS, THE ENTIRE SALE PROCEEDS WERE ADJUSTED AGAINST THE LOAN TAKEN BY M/S VIKAS CHAIN COMPANY PVT. LTD. SINCE THE ASSESSEE LOST HER PROP ERTY WITHOUT ANY CONSIDERATION, THE ASSESSEE HAS SHOWN THE SAME AS B AD DEBTS TO THE EXTENT OF THE COST OF THE SAID PROPERTY. THUS, THE SAID AMOU NT CANNOT BE CONSIDERED AS LONG TERM CAPITAL GAIN IN THE HANDS OF THE ASSESSEE . THE LD. AR RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF CI T VS. BALBIR SINGH MAINI (2017) 86 TAXMANN.COM 94 (SC) WHICH IS APT IN ASSES SEES CASE, AS IN THE SAID CASE ALSO THE INCOME FROM CAPITAL GAIN ON A TRANSAC TION WHICH NEVER MATERIALIZED WAS TREATED AS HYPOTHETICAL INCOME AND THE HONBLE SUPREME COURT HELD THAT THERE WAS NO PROFIT OR GAINS AROSE FROM THE TRANSFER OF CAPITAL ASSET SO AS TO ATTRACT SECTION 45 & SECTION 46. TH US, GROUND NO. 1 & 2 OF THE ASSESSEES APPEAL ARE ALLOWED. AS REGARDS GROUND N O. 3 & 4, THE RENTAL INCOME HAS NOT BEEN RECEIVED BY THE ASSESSEE IN THE PRESEN T ASSESSMENT YEAR. THE PART OF PROPERTY SITUATED AT DELHI WAS ON RENT TO M/S SH RI CHAIN COMPANY PVT. LTD. SINCE 2004 ONWARDS. THE DISPUTE STARTED BETWEEN THE ASSESSEE (OWNER) AND M/S SHRI CHAIN COMPANY PVT. LTD. (TENANT) IN 2010 A ND THE MATTER WENT IN THE COURT OF SENIOR CIVIL COURT TEESHAZARI, DELHI. SIN CE THEN, THE SAID COMPANY DID NOT PAY ANY RENT TO THE ASSESSEE. THEREFORE, T HE ASSESSEE HAS NOT SHOWN RENTAL INCOME IN THE PRESENT ASSESSMENT YEAR IN THE COMPUTATION OF INCOME. THE DISPUTE WAS SETTLED AND FINAL RENT WAS FIXED AT RS. 7,810/- PER MONTH AND THE LD. AR SUBMITTED THAT THE SAME WILL BE SHOWN IN HER INCOME TAX RETURN AS AND WHEN THE SAID AMOUNT WILL BE RECEIVED. THEREFOR E, WE DIRECT THE ASSESSEE TO OFFER THE SAME TO REVENUE AUTHORITIES WHEN IT WILL BE RECEIVED. WE FURTHER DIRECT THE ASSESSING OFFICER TO VERIFY THE SAME AS PER THE INCOME TAX STATUTE. THUS, GROUND NO. 3 & 4 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. AS REGARDS GROUND NO. 5, THE SAME IS CONSEQUENTIAL, HENCE NOT ADJUDIC ATED AT THIS JUNCTURE. 5 ITA NO. 3947/DEL/2016 4. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 09 TH DAY OF SEPTEMBER, 2021. SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED : 09/09/2021 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 6 ITA NO. 3947/DEL/2016