KARISHMA V. KHANNA, MUMBAI V. ACIT CIR 15(3), MUMBAI

ITA 4314/MUM/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3458 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 16-07-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHRAVAN KUMAR
• Keywords: Salary income; Opportunity of being heard; Deemed dividend; Condonation of delay
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI RAJENDRA SINGH,(AM) ITA NO.4314/MUM/2009 ASSESSMENT YEAR : 2004-05 KARISHMA V. KHANNA 368/105, MANJU BUILDING SHARE-E-PUNJAB COLONY MAHAKALI CAVES ROAD, ANDHERI(E) MUMBAI-93. ..( APPELLANT ) P.A. NO. (AKSPK 1701 A) VS. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 15(3) MUMBAI. ..( RESPONDENT ) APPELLANT BY : SHR I VIJAY MEHTA RESPONDENT BY : SHRI SHRAVAN KUMAR O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 18.3.2009 PASSED BY THE LD. CIT(A) FOR TH E ASSESSMENT YEAR 2004-05. 2. IT WAS OBSERVED THAT THE APPEAL FILED BY THE ASSESSEE IS DELAYED BY 39 DAYS. 3. THE ASSESSEE FILED AN APPLICATION FOR CONDONATION OF D ELAY ALONGWITH AFFIDAVIT OF THE ASSESSEE STATING INTERALIA THAT HER FATHER SHRI MUNIR KARMALLY ENGINEER, RESIDENT OF GOA WAS NOT KEEP ING WELL AT GOA. HE WAS BROUGHT BY THE ASSESSEE TO MUMBAI IN JANUARY 2009 AND AFTER ITA NO.4314/M/09 A.Y:04-05 2 UNDERGOING ANGIOPLASTY AT LEELAVATI HOSPITAL, MUMBAI, BYE-PASS SURGERY WAS ALSO DONE AT THE SAME HOSPITAL IN THE MONTH OF FEBRUARY 2009. THEREAFTER, HE WAS TAKEN TO HIS PERMANENT PLACE OF RESIDENCE AT GOA IN THE 1 ST WEEK OF APRIL 2009 WHERE THE ASSESSEE HAD TO REMAIN WITH HIM FOR GIVING HELP AND ASSISTANCE. IT WAS FURTHE R STATED THAT WHEN SHE CAME BACK TO MUMBAI IN THE SECOND WEEK OF JULY 2009 SHE CAME TO KNOW THE RECEIPT OF THE ORDER PASSED BY THE LD. CIT(A) DATED 18.3.2009 WHICH WAS RECEIVED IN HER ABSENCE ON 8.4.2009. IMMEDIATELY THEREAFTER, NECESSARY STEPS WERE TAKEN FOR F ILING THE SECOND APPEAL BEFORE THE TRIBUNAL WHICH WAS FILED ON 16 .7.2009. THE DELAY OF 39 DAYS IN FILING OF THE APPEAL WAS NOT CAUSED DUE TO ANY MALAFIDE OR DELIBERATE ACT, THEREFORE, THE SAME MAY B E CONDONED. IN SUPPORT, THE ASSESSEE HAS ALSO FILED MEDICAL PAPERS OF THE HOSPITAL. THE RELIANCE WAS ALSO PLACED ON THE FOLLOWING DECISIONS : - 1. COLLECTOR, LAND ACQUISITION VS. MST. KATIJI & ORS. (167 ITR 471), 2. N. BALAKRISHNAN VS. M. RAMAMURTHY (1978) 7 SCC 123, 3. GUPTA RICE MILLS VS. CST [91 STC 208 (ALL.)], 4. SONERAO SADASHIVRAO PATIL & ANR. VS. GODAWARIBAI [199 9 (2)MH.L.J. 273], 5. BABURAO DEORAO WANKHEDE VS. SEWA SAHAKARI SANSTHA AND ANR. [1989 (2) BOM. C.R. 15], 6. VENKATADRI TRADERS LTD. VS. CIT (248 ITR 681), AND 7. VEEDABAI ALIAS VAIJAYANATABAI BABURAO PATIL VS. SHANT ARAM BABURAO PATIL AND OTHERS (2002) 253 ITR 798 (SC) 4. ON THE OTHER HAND THE LD. DR DID NOT SERIOUSLY OBJ ECT TO THE CONDONATION OF DELAY. 5. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RIVAL P ARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE ARE OF T HE OPINION THAT IT HAS BEEN CONSISTENTLY HELD BY THE HON'BLE APEX COURT TH AT IN THE MATTER OF CONDONATION OF DELAY A LIBERAL AND PRAGMAT IC VIEW SHOULD BE ITA NO.4314/M/09 A.Y:04-05 3 TAKEN. THE REASONS GIVEN BY THE ASSESSEE FOR THE DELAY A PPEARS TO BE SUFFICIENT CAUSE AND, ACCORDINGLY, THE DELAY IS CONDONED. 6. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE A N INDIVIDUAL DERIVES INCOME FROM SALARY AND HOUSE PROPER TY, FILED RETURN DECLARING TOTAL INCOME OF RS.2,94,417/-. DURING THE COURSE OF ASSESSMENT PROCEEDING IT WAS INTERALIA OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD PURCHASED OFFICE PREMISES ALON GWITH SHRI VISHAL KHANNA AND SHRI RAJESH C. MEHTA AND GIVEN THE SAME ON HIRE TO HER COMPANY M/S. IDEALTIK PROMOTIONS PVT. LTD. WHERE SH E IS A DIRECTOR. SHE HAS SHOWN HER SHARE AS 1/3 RD BUT IN REALITY NEITHER IN THE AGREEMENT FOR PURCHASE NOR IN THE AGREEMENT FOR RENT IS SIGNED BY SHRI VISHAL KHANNA ANYWHERE. IN THE ABSENCE, THE ASSESSING OFF ICER HAS TAKEN THE ASSESSEE'S SHARE AS 2/3 RD AND THEREFORE, WORKED OUT THE INVESTMENT AT RS.9,86,000/- ( 4,93,000 X 2) AND ADDE D THE SAME U/S.69 OF THE INCOME TAX ACT 1961, (THE ACT) IN THE HA NDS OF THE ASSESSEE. APART FROM THIS, THE ASSESSING OFFICER ALSO NOTED T HAT THE RENT AGREEMENT DATED SEPT. 2003 FOR OFFICE PREMISES WI TH THE COMPANY IS NOT SIGNED BY SHRI VISHAL KHANNA, THEREFORE, HE HAS TAKEN THE RENT OF THE PROPERTY AT RS.30,000/- P.M. FROM SEPT. TO MA RCH 2004 TOTALLING TO RS.2,10,000/- AND AFTER ALLOWING 30% DEDUCTION WOR KED OUT NET INCOME FROM HOUSE PROPERTY RS.1,47,000/- AND ADDED TO THE INCOME OF THE ASSESSEE AND ACCORDINGLY COMPLETED THE ASSESSMENT AT AN INCOME OF RS.14,43,154/- VIDE ORDER DATED 5.12.2006 PASSED U/ S.143(3) OF THE ACT. 7. ON APPEAL, BEFORE THE LD. CIT(A) THE ASSESSEE HAS FI LED A PAPER BOOK . THE LD. CIT(A) REMANDED THE MATTER TO THE A SSESSING OFFICER. IN RESPONSE, THE ASSESSING OFFICER SUBMITTED THE DETAILED R EMAND ITA NO.4314/M/09 A.Y:04-05 4 REPORT DATED 3.12.2008. THE LD. CIT(A) AFTER CONSID ERING THE REMAND REPORT OF THE ASSESSING OFFICER AND THE ASSESSEE'S SUBMISSION CONFIRMED BOTH THE ADDITIONS MADE BY THE ASSESSING OFFICE R. APART FROM THIS HE HAS ALSO ENHANCED THE ASSESSEE'S INCOME BY RS.18, 600/- BEING UNEXPLAINED DEPOSIT IN THE COMPANYS ACCOUNT. 8. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US. 9. GROUND NO.1, 2 AND 7 ARE GENERAL IN NATURE AND I N THE ABSENCE OF ANY SPECIFIC PLEA THE SAME ARE, THEREFORE, REJECTED. 10. GROUND NO.3, 4, 5 AND 6 ARE AGAINST THE SUSTENANCE OF ADDITION OF RS.9,86,000/- MADE BY THE ASSESSING OFFICER U/S.69 / 2( 22)E, ADDITION U/S.68/69 RS.18,600/- AND ADDITION UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 11. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE AT THE OUTSET SUBMITS THAT THE ASSESSEE IS A DIRECTOR OF THE COMPAN Y BUT NOT A SHARE HOLDER OF THE COMPANY. HE FURTHER SUBMITS THAT THE ASSESSING OFFICER IN HIS REMAND REPORT, PART OF WHICH HAS BEEN RE PRODUCED BY THE LD. CIT(A) IN PARA 3.3 OF HIS ORDER, ACCEPTED THAT ON VERIFICATION OF THE AGREEMENT IT IS SEEN THAT THE ABOVE MENTIONED PROPERT Y IS JOINTLY OWNED BY THE ASSESSEE ALONGWITH TWO OTHER CO-OWNERS I.E. SHRI VISHAL KHANNA AND SHRI RAJESH C. MEHTA AND THE ASSESSEE'S SHARE I S 1/3 RD OUT OF TOTAL. HE FURTHER SUBMITS THAT IN PARA 2 OF THE RE MAND REPORT THE ASSESSING OFFICER HAS ACCEPTED THAT SHRI VISHAL KHANNA IS SEPA RATE ENTITY, SEPARATELY ASSESSED TO TAX AND, THEREFORE, CLUBBI NG OF HIS INCOME WITH THE ASSESSEE'S INCOME IS NOT PERMISSIBLE UNDER T HE ACT. HE FURTHER SUBMITS THAT IN PARA-3 OF THE REMAND REPORT THE ASSESSING OFFICER HAS ALSO ACCEPTED THAT THE LEAVE AND LICENCE AGREE MENT CLEARLY ITA NO.4314/M/09 A.Y:04-05 5 STATES THAT M/S. IDEALTIK PROMOTIONS P. LTD. WILL PAY R S.45,000/- I.E. RS.15,000/- TO EACH OF THE THREE CO-OWNERS EVERY MONTH, EVEN THOUGH THE AGREEMENT WAS NOT SIGNED BY SHRI VISHAL KHANNA IT CANNOT BE SAID THAT THE ASSESSEE HAS RECEIVED 2/3 RD SHARE OUT OF THE RENTAL INCOME. SINCE THE ASSESSEE HAS FILED COPY OF HER ACCOUNT IN THE BOOK S OF THE COMPANY AS PER WHICH THE ASSESSEE HAS RECEIVED RENTAL INCOME OF RS.15,000/- ONLY PER MONTH IN RESPECT OF THIS PROPERT Y. THE ASSESSEE IS THEREFORE, ENTITLED TO A RELIEF ON THIS GROUND ALSO . HE FURTHER SUBMITS THAT IN PARA-4 OF THE REMAND REPORT THE ASSESSING OFFICE R HAS POINTED OUT THAT CERTAIN SUMS WERE DEBITED BY THE COMPANY IN TH E ACCOUNT OF THE ASSESSEE. FROM THE SAID COPY OF ACCOUNT THE ASSESSING OFFICE R OBSERVED THAT THE TOTAL PURCHASE PRICE OF THE PROPERTY OF RS.13.00 LACS HAS BEEN PAID BY THE COMPANY TO THE DIRECTORS, THEREFOR E, THE ABOVE AMOUNT SHOULD BE ASSESSED AS DEEMED DIVIDEND U/S.2(22)(E) OF THE ACT. HE FURTHER SUBMITS THAT THE ASSESSING OFFICER HAS ALSO POINTED OUT THAT THE ASSESSEE HAS DEPOSITED RS.18,600/- AS CASH IN THE COM PANYS ACCOUNT, THE SOURCE OF WHICH HAS NOT BEEN EXPLAINED, THE REFORE, THE SAME MAY BE ADDED U/S.69 OF THE ACT. IN THE LIGHT OF THE ABOVE HE SUBMITS THAT SINCE THE ASSESSING OFFICER HAS ACCEPTED IN HIS RE MAND REPORT THE ADDITION OF RS.9,86,000/- MADE U/S.69 AND ADDITION IN THE INCOME FROM HOUSE PROPERTY IN RESPECT OF OTHER CO-OWNER BE DELETED. WITH REGARD TO THE APPLICATION OF PROVISION OF SEC.2(22 )(E) OF THE ACT AND THE ADDITION OF RS.18,600/- MADE UNDER SECTION 68/ 69 OF THE ACT, HE SUBMITS THAT SINCE PROPER OPPORTUNITY WAS NOT PROVIDE D, THEREFORE, THE ISSUES MAY BE SET ASIDE TO THE FILE OF THE ASSESSING O FFICER. 12. ON THE OTHER HAND LD. DR WHILE RELYING ON THE O RDER OF THE ASSESSING OFFICER AND THE LD. CIT(A) SUBMITS THAT HE HAS NO OBJECTION IF THE ISSUES ARE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER . ITA NO.4314/M/09 A.Y:04-05 6 13. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND THAT IN THE REMAND REPORT THE ASSESSING OFFICER HAS ACCEPTED THAT THE A SSESSEE'S SHARE IN THE PROPERTY JOINTLY PURCHASED BY THE ASSESSEE AL ONG WITH TWO OTHER CO-OWNERS I.E. S/SHRI VISHAL KHANNA AND RAJESH C . MEHTA IS 1/3 RD OUT OF THE TOTAL. THEREFORE, ACCORDING TO THE REMAND REPORT THE ASSESSEE IS REQUIRED TO PROVE THE SOURCE OF INVESTMENT OF 1 /3 RD OF HIS SHARE AND NOT 2/3 RD SHARE AS HELD BY THE ASSESSING OFFICER. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS ALSO OBSERVED THA T IT IS PRESUMED THAT THE ENTIRE AMOUNT OF RS.13.00 LACS HAS BEE N PAID BY CASH AND IT IS NOT REFLECTED IN THE COPY OF BANK PASS BOO K SUBMITTED. HE ALSO OBSERVED IN THE REMAND REPORT THAT THE ASSESSEE H AS RENTAL INCOME OF RS.15,000/- P.M. IN RESPECT OF THE PROPERTY, THEREFORE, THE ASSESSEE IS ENTITLED TO A RELIEF ON THIS GROUND ALSO. THE ASSESSING OFFICER IN THE REMAND REPORT HAS ALSO DISCUSSED THE COPY OF ASSESSEE'S ACCOUNT IN THE BOOKS OF M/S. IDEALTIK PROMOTIONS P. LTD. WHEREIN THE ASSESSING OFFICER HAS POINTED OUT THAT CERTAIN SUMS WERE DEB ITED BY THE COMPANY IN THE ACCOUNT OF THE ASSESSEE, THEREFORE IT IS A CASE OF SEC.2(22)(E) OF THE ACT. HE ALSO OBSERVED THAT IN THE COMP ANYS ACCOUNT THE ASSESSEE HAS DEPOSITED RS.18,600/- THE SOURCE OF WHICH HAS NOT BEEN EXPLAINED, THEREFORE, THE SAME MAY BE AD DED UNDER SECTION 69 OF THE ACT. 14. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCE S OF THE CASE AND KEEPING IN VIEW THAT SOME NEW ISSUES HAVE BEEN P OINTED OUT IN THE REMAND REPORT, WE ARE OF THE VIEW THAT ALL T HE ISSUES NEED PROPER VERIFICATION AT THE END OF THE ASSESSING OFFICER W HICH HAS NOT BEEN DONE IN THIS CASE WHILE MAKING ORIGINAL ASSESSMENT, T HEREFORE, WE CONSIDER IT FAIR AND REASONABLE THAT IN THE INTEREST OF JUSTICE THE ENTIRE MATTER SHOULD GO BACK TO THE FILE OF THE ASSESSING OFFICER AND ITA NO.4314/M/09 A.Y:04-05 7 ACCORDINGLY WE SET ASIDE THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER WHO SHALL EXAMINE THE SAME AFRESH IN THE LIGHT OF OUR OBSERVATIONS HEREINABOVE AND ACCORDING TO LAW AFTER PRO VIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GROUNDS TAKEN BY THE ASSESSEE ARE THEREFORE, PARTLY ALLOWED FOR STATISTICAL PURPOSES. 15. IN THE RESULT, ASSESSEE'S APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23.12.2010. SD/- SD/- (RAJENDRA SINGH) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 23.12.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.