RAJANKUMAR MANCHANDA, MUMBAI V. DCIT 8(2), MUMBAI

ITA 4919/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4119 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 25-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANU KRISHNA AGGARWALADDL
• Assessee Lawyers: BEHARILAL
• Keywords: Gift; Deemed owner of house property; Opportunity of being heard; Principle of natural justice; Additional evidence
• Section: 143(3)

Judgement Text

D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 4919 /MUM/2014 ( / ASSESSMENT YEAR : 2010-11) SHRI RAJANKUMAR MANCHANDA PLOT NO 16,SUMILA , 10 TH ROAD, JVPD SCHEME, JUHU MUMBAI 400 049. / V. DEPUTY COMM. OF INCOME TAX 8(2), MUMBAI. ./ PAN : AAEPM1846Q ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI BEHARI LAL REVENUE BY : SHRI ANU KRISHNA AGGARWAL,ADDL. CIT / DATE OF HEARING : 09-2-2016 / DATE OF PRONOUNCEMENT : 21-04-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 4919/MUM/2014, IS DIRECTED AGAINST THE ORDER DATED 23-04-2014 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 17, MUMBAI (HEREINAFTER CA LLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2010-11, THE APPELLATE PROCEEDINGS BEFORE THE CIT(A) ARISING FROM THE ASSESSMENT ORDER DATED 01-03-2013 PASSED B Y THE ASSESSING OFFICER(HEREINAFTER CALLED THE AO) U/S 143(3) OF THE INCOME TAX ACT,1961(HEREINAFTER CALLED THE ACT). ITA 4919/MUM/2014 2 2. THE GROUNDS RAISED BY THE ASSESSEE IN THE MEMO O F APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- THE GROUNDS OF APPEAL HEREUNDER ARE WITHOUT PREJU DICE TO ONE ANOTHER; 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE HONBLE CIT(A) HAS ERRED IN A. HE HAS ERRED IN UPHOLDING THE ACTION OF THE AO TO COMP UTE THE INCOME FROM HOUSE PROPERTY DISREGARDING THE FACT TH AT THE SAID PROPERTY WAS NOT IN HABITABLE CONDITION. B. UPHOLDING THE ACTION OF THE AO TO COMPUTE ANNUAL VALU E OF VACANT PROPERTY BY APPLYING 8.5% OF THE COST OF THE SA ID PROPERTY, REASON ASSIGNED BY HIM FOR DOING THE SAME ARE WRONG AND INSUFFICIENT. HE OUGHT TO HAVE CONSIDERED THE ANNU AL VALUE BASED ON MUNICIPAL RATABLE VALUE. C. HE HAS FURTHER ERRED IN CONCLUDING THAT APPELLANT HAS NEITHER MADE ANY SUBMISSION BEFORE THE AO NOR MADE ANY APPLI CATION U/R 46A BEFORE HIM, DISREGARDING THE FACT THAT ALL THE SUBMISSION & MATERIAL WHERE PLACED BEFORE THE ASSESSING OFFICER . 2) THE ORDER PASSED BY THE HONBLE CIT IS DEVOID OF AN Y MERIT, ARBITRARY, UNCALLED FOR AND BAD IN LAW, THE APPELLAN T BE GIVEN SUCH RELIEF OR RELIEFS AS PRAYED FOR. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL AND DERIVES INCOME FROM TRADING AND INVESTMENT IN SHARE S AND SECURITIES. 4.DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 1 43(3) READ WITH SECTION 143(2) OF THE ACT, IT WAS OBSERVED BY THE AO THAT T HE ASSESSEE HAS SHOWN FIXED ASSETS WHICH INTER-ALIA COMPRISED OF RESIDENT IAL PROPERTY AT JUHU AND RESIDENTIAL PROPERTY AT KRIPANIDHI, WHICH WERE NO T USED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THE FLAT AT JUHU IS SEL F OCCUPIED AND FLAT AT KRIPANIDHI WAS VACANT DURING THE YEAR AND THE ASSES SEE HAS NOT OFFERED ANY INCOME IN RESPECT OF VACANT FLAT IN THE COMPUTATION OF INCOME . THE ASSESSEE WAS ASKED TO EXPLAIN THAT WHY FLAT AT KRIPANIDHI WHICH WAS VACANT DURING ITA 4919/MUM/2014 3 THE YEAR BE NOT TREATED AS DEEMED LET OUT PROPERTY AS PER ACT AND ADDED TO THE TOTAL INCOME. THE ASSESSEE DID NOT GAVE SUBMISSIONS BEFORE THE AO. THE AO TREATED THE SAID FLAT AT KRIPANIDHI WHICH WAS VAC ANT DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2010-11 AS DEEMED L ET OUT PROPERTY. THE AO RELIED UPON THE ORDERS OF THE TRIBUNAL, MUMBAI IN T HE ITO V. CHEM MECH PRIVATE LIMITED REPORTED IN (2002) 83 ITD 427(MUM.) AND COMPUTED 8.5% OF THE BOOK VALUE OF THE VACANT PROPERTY APPEARING IN BOOKS AS ANNUAL VALUE FOR THE PURPOSES OF SECTION 23(1) OF THE ACT AND COMPUT ED RS.24,42,973/- AS ANNUAL VALUE OF THE SAID FLAT. THE AO ALLOWED STAND ARD DEDUCTION U/S 24(A) OF THE ACT AND COMPUTED RS.17,10,081/- AS INCOME FROM HOUSE PROPERTY OF THE ASSESSEE WITH RESPECT TO KRIPANIDHI FLAT, VIDE AS SESSMENT ORDERS DATED 01-03- 2013 PASSED BY THE AO U/S. 143(3) OF THE ACT. 4. AGGRIEVED BY THE ASSESSMENT ORDERS DATED 01-03-2 013 PASSED U/S. 143(3) OF THE ACT BY THE AO, THE ASSESSEE CARRIED THE MATT ER IN FIRST APPEAL BEFORE THE CIT(A). 5. THE ASSESSEE SUBMITTED BEFORE THE CIT(A) THAT PR OPERTY BEING FLAT AT JUHU IS SELF OCCUPIED FLAT . THE PROPERTY BEING FLAT NO. 31, KRIPANIDHI AT JVPD SCHEME, MUMBAI WAS LYING VACANT FOR THE ENTIRE YEAR . THE ASSESSEE SUBMITTED THAT HE MADE SUBMISSIONS BEF ORE THE AO THAT THE ASSESSEE GOT THE POSSESSION OF THE FLAT IN JUNE 200 8 AND THE SAID FLAT WAS NOT IN HABITABLE CONDITION AND THE FURNITURE WORK WAS G OING ON IN THE SAID FLAT WHICH WAS INCOMPLETE TILL 31.03.2010 AND ALSO CONTI NUED UP-TO 31.03.2011. THE FLAT WAS PURCHASED WITH INTENTION TO GIFT TO HI S SON FOR HIS RESIDENCE. SINCE THE FLAT WAS NOT IN HABITABLE CONDITION AND FURNITURE WORK WAS GOING ON, HIS SON COULD NOT OCCUPY THE SAME. THE ASSESSEE SUBMITTED THAT THE AO HAS STATED IN THE ASSESSMENT ORDER THAT THE ASSESSE E HAS NOT SUBMITTED ANY REPLY AND THE AO TREATED THE SAID FLAT AT KRIPANID HI WHICH WAS VACANT DURING ITA 4919/MUM/2014 4 THE YEAR AS DEEMED LET OUT PROPERTY AND COMPUTED 8. 5% OF THE BOOK VALUE OF THE VACANT PROPERTY APPEARING IN BOOKS AS ANNUAL VA LUE FOR THE PURPOSES OF SECTION 23(1) OF THE ACT AND COMPUTED RS.24,42,973/ - AS ANNUAL VALUE OF THE SAID FLAT. THE AO ALLOWED STANDARD DEDUCTION U/S 24 (A) OF THE ACT AND COMPUTED RS.17,10,081/- AS INCOME FROM HOUSE PROPER TY OF THE ASSESSEE WITH RESPECT TO KRIPANIDHI FLAT . THE ASSESSEE SUBMITT ED BEFORE THE CIT(A) THAT DURING THE YEAR, THE FLAT WAS NOT IN HABITABLE COND ITION AS THE WORK WAS BEING CARRIED OUT I.E. BASIC FURNITURE AND FITTINGS, CIVI L WORKS, ELECTRICAL FITTINGS , PLUMBING WORK, INTERIOR WORK ETC AND THAT THE SUBST ANTIAL WORK HAS BEEN CARRIED OUT DURING THE YEAR UNDER CONSIDERATION. TH E ASSESSEE SUBMITTED THAT OUT OF TOTAL EXPENDITURE OF RS.51,20,576/- , THE AS SESSEE HAS MADE ADDITION OF RS.28,80,325/- DURING THE YEAR UNDER CONSIDERATION TOWARDS SAID WORK OF THE FLAT AND BALANCE AMOUNT WAS SPENT IN NEXT YEAR. THE ASSESSEE SUBMITTED THAT PROPERTY WAS NOT IN HABITABLE CONDITIONS AND HENCE THERE ARISES NO QUESTION OF LETTING OUT THE SAME. THE ASSESSEE SUBMITTED THA T CLAIM OF THE ASSESSEE IN PRECEDING ASSESSMENT YEAR 2009-10 HAS BEEN ACCEPTED BY THE REVENUE VIDE ASSESSMENT ORDERS FARMED U/S 143(3) OF THE ACT BY T HE REVENUE FOR ASSESSMENT YEAR 2009-10 AND NO ANNUAL VALUE WAS CHA RGED. THE ASSESSEE RELIED UPON THE DECISION OF TRIBUNAL , MUMBAI IN TH E CASE OF BHAWANJI KUNVERJI HARIA V. DCIT AND THE DECISION OF TRIBUNAL , AMRITSAR IN THE CASE OF SHYAM SUNDER BEHL V. ACIT 99 TTJ (ASR.) 1147. THE CIT(A) HELD THAT THE ASSESSEE HAS NOT MADE ANY APPLICATION UNDER RULE 46A OF THE INCOME TAX RULES, 1962 FOR ADMISSION OF ANY ADDITIONAL EVIDENCE AND ORDER OF THE AO WAS CONFIRMED/SUSTAINED BY THE CIT(A) VIDE ORDERS DATED 23.04.2014. 6. AGGRIEVED BY THE ORDERS DATED 23.04.2014 OF THE CIT(A), THE ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL. ITA 4919/MUM/2014 5 7. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE ASSESSEE OWNS ONE RESIDENTIAL FLAT AT JUHU WHICH IS SELF OCCUPIED. THE ASSESSEE PURCHASED IN JUNE 2008 ANOTHER RESIDENTIAL FLAT AT KRIPANIDHI AT JVPD SCHEME,MUMBAI WHICH WAS NOT HABITABLE . THE SAID NEW RESIDENTIAL FLAT AT KRIPANIDHI WAS LYING VACANT DURING THE YEAR UNDER APPEAL AND THE F URNITURE AND FIXTURE, CIVIL WORKS, ELECTRICAL FITTING, PLUMBING WORK, INTERIOR WORK ETC WAS GOING ON IN THIS FLAT DURING THE PREVIOUS YEAR RELEVANT TO THE ASSES SMENT YEAR AND ALSO IN SUBSEQUENT YEAR. THE SAID FACT WAS BROUGHT TO THE N OTICE OF THE AO AND THE CIT(A) AND EVIDENCES WERE SUBMITTED WHICH ARE NOT C ONSIDERED BY THE AUTHORITIES BELOW AND THE SAID FLAT IS TREATED AS D EEMED TO BE LET OUT AND ALV IS COMPUTED AND INCOME FROM HOUSE PROPERTY IS BROUG HT TO TAX . THE LD COUNSEL SUBMITTED THAT THE FLAT WAS NOT HABITABLE A ND HENCE THE SAME WAS NOT IN A POSITION TO BE LET OUT. THE ASSESSEE PURCH ASED THE SAID FLAT FOR THE PURPOSES OF RESIDENCE OF HIS SON. THE ASSESSEES CO UNSEL DREW OUR ATTENTION TO THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW W HEREBY IT WAS STATED THAT THE FLAT WAS NOT HABITABLE AND SUMMARY OF EXPENSES BEING INCURRED DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR TOWAR DS FURNITURE AND FIXTURE, CIVIL AND ELECTRICAL WORKS ETC BY WAY OF LEDGER ACC OUNT WERE SUBMITTED, WHICH ARE PLACED AT PAPER BOOK FILED WITH THE TRIBUNAL AN D ALSO PURCHASE AGREEMENT FOR BUYING THE SAID FLAT IN JUNE 2008.THE ASSESSEE ALSO SUBMITTED THAT DURING THE ASSESSMENT YEAR 2009-10, THE REVENUE DID NOT MADE ANY ADDITION TO INCOME OF THE ASSESSEE TOWARDS THE DEEMED LET OU T FLAT AT KRIPANIDHI IN THE ASSESSMENT FRAMED U/S 143(3) OF THE ACT , VIDE ORDE RS DATED 05-12-2011, WHICH IS PLACED IN PAPER BOOK FILED BY THE ASSESSEE WITH THE TRIBUNAL. THE ASSESSEE RELIED UPON DECISION OF THE TRIBUNAL , MUM BAI IN THE CASE OF BHAWANJI KUNVERJI HARIA V. DCIT IN ITA 4032/MUM/200 9 AND DECISION OF TRIBUNAL, AMRITSAR IN THE CASE OF SHYAM SUNDER BEH L V. ACIT 99 TTJ (AMR.) 1147. THE LD. COUNSEL SUBMITTED THAT MUNICIPAL RATE ABLE VALUE OF THE FLAT AT KRIPANIDHI IS RS.59,460/- PER MONTH (RS.7,13,520/ - PER ANNUM) WHICH SHOULD , WITHOUT PREJUDICE, BE ADOPTED AS ALV OF TH E FLAT AND STANDARD ITA 4919/MUM/2014 6 DEDUCTION @30% BE ALLOWED TO THE ASSESSEE FROM THE ABOVE FIGURE, THE SAID COMPUTATION OF RATEABLE VALUE BY MUNICIPAL CORPORAT ION OF THE SAID FLAT IS PLACED AT PAGE 45 PAPER BOOK FILED WITH THE TRIBUNA L.THE ASSESSEE SUBMITTED THAT THIS WAS ALSO BROUGHT TO THE NOTICE OF THE CIT (A). THE ASSESSEE RELIED UPON THE DECISION OF DCIT V. SHRIPAL S MORAKHIA IN ITA NO. 4620 & 4621 /MUM/1996 ; (2006) 7 SOT 0609(MUM.TRIB.). 8. THE LD. DR RELIED ON THE ORDERS OF THE AUTHORITI ES BELOW. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD INCLUDING THE CASE LAWS RELIED UPON BY BOTH THE PAR TIES. WE HAVE OBSERVED THAT THE ASSESSEE IS OWNER OF TWO RESIDENTIAL FLATS . THE RESIDENTIAL FLAT AT JUHU IS SELF OCCUPIED RESIDENTIAL FLAT . THE PROP ERTY BEING FLAT NO. 31, KRIPANIDHI AT JVPD SCHEME, MUMBAI WAS LYING VACANT FOR THE ENTIRE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDER ATION AND THE REVENUE HAS DEEMED THE SAID RESIDENTIAL FLAT AT KRIPANIDHI TO BE LET OUT PROPERTY AND COMPUTED ALV BASED ON 8.5% OF THE BOOK VALUE OF THE SAID FLAT WHICH IS NOW UNDER CHALLENGE BEFORE THE TRIBUNAL . THE ASSESSEE PURCHASED THE KRIPANIDHI FLAT IN JUNE 2008 AND GOT THE POSSESSION OF THE FLA T IN JUNE 2008 (DOCUMENT FOR PURCHASE PLACED IN PAPER BOOK FILED WITH THE TR IBUNAL) AND IT IS CONTENDED THAT THE FLAT WAS NOT IN HABITABLE CONDITION AND TH E FURNITURE ,CIVIL, PLUMBING , ELECTRICAL , INTERIOR WORK ETC. WAS GOING ON IN THE SAID FLAT WHICH WAS INCOMPLETE TILL 31.03.2010 AND ALSO CONTINUED UP-TO 31.03.2011. IT IS CLAIMED BY THE ASSESSEE THAT THE ASSESSEE MADE SUBMISSIONS BEFORE THE AUTHORITIES BELOW AND ALSO SUBMITTED EVIDENCES THAT THE FLAT WA S NOT IN A HABITABLE CONDITIONS AND THE WORK WAS GOING ON IN THE SAID RE SIDENTIAL FLAT WHICH WERE NOT CONSIDERED BY THE AO AND ALSO BY THE CIT(A). TH E ASSESSEE SUBMITTED THAT PROPERTY WAS NOT IN HABITABLE CONDITIONS AND HENCE THERE ARISES NO QUESTION OF LETTING OUT THE SAME. WHETHER THE FLAT WAS HABIT ABLE OR NOT DURING THE IMPUGNED ASSESSMENT YEAR IS A QUESTION OF FACT AND CAN BE DETERMINED ONLY ITA 4919/MUM/2014 7 AFTER APPRECIATION OF EVIDENCES FOR WHICH THE AUTHO RITIES BELOW MAY NEED TO MAKE NECESSARY ENQUIRIES TO APPRECIATE THE ENTIRE F ACTUAL MATRIX. THE COMPUTATION OF ALV IS TO BE BASED ON THE PROVISIONS OF SECTION 23 OF THE ACT AND HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. TIP TOP TYPOGRAPHY (2014) 48 TAXMANN.COM 191 (BOM.) HAS LAID DOWN THE GUIDELINES WITH RESPECT THERE-TO. IN OUR CONSIDERED VIEW INTEREST OF JUSTIC E WILL BE BEST SERVED IF THE ORDERS OF THE AUTHORITIES BELOW ARE SET-ASIDE AND I SSUE IS RESTORED TO THE FILE OF THE AO FOR DE-NOVO DETERMINATION AFTER CONSIDERING THE EVIDENCES AND EXPLANATION SUBMITTED BY THE ASSESSEE IN HIS DEFENS E ON MERITS. NEEDLESS TO SAY PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD WILL BE PROVIDED BY THE AO TO THE ASSESSEE IN ACCORDANCE WITH THE PRINCIPLE S OF NATURAL JUSTICE IN ACCORDANCE WITH LAW. WE ORDER ACCORDINGLY. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IN ITA N0. 4919/MUM/2014 FOR THE ASSESSMENT YEAR 2010-11 IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST APRIL, 2016. # $% &' 21-04-2016. ( ) SD/- SD/- (AMIT SHUKLA) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 21 ST APRIL, 2016. [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS ITA 4919/MUM/2014 8 !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI B BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI