ARUN KUMAR NAHAR, MUMBAI V. ITO CIR 11(1)(1), MUMBAI

ITA 6113/MUM/2010

• Counselvise Citation: 611319914 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 09-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K B MENON
• Keywords: Deemed owner of house property; Deemed to accrue or arise in india; Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: MUMBAI BEFORE SHRI G.E. VEERBHADRAPPA, PRESIDENT AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.6113/MUM/2010 (ASSESSMENT YEAR: 2004-05) SHRI ARUN KUMAR NAHAR, 194/195, JOLLY MAKER APARTMENT NO.3, CUFFE PARADE, COLABA, MUMBAI -400 005 ....... APPELLANT VS INCOME TAX OFFICER, CIRCLE -11(1)(1), MUMBAI ..... RESPONDENT PAN: AAEPN 8841 J APPELLANT BY: NONE RESPONDENT BY: SHRI P.K.B. MENON DATE OF HEARING: 24.11.2011 DATE OF PRONOUNCEMENT: 30.11.2011 O R D E R PER R.S. PADVEKAR, JM IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE IMPU GNED ORDER OF THE LD. CIT (A) -3, MUMBAI DATED 14.05.2010 FOR THE A.Y. 2004-05 IN WHICH PENALTY OF ` 53,700/- LEVIED BY THE A.O. WAS CONFIRMED. THE ASSESSEE HAS TAKEN THE FOLLOWING EFFECTIVE GROUNDS: - (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT (A) ERRED IN LEVYING PENALTY U/S.271(1)(C) OF THE I.T. ACT, 1961 AMOUNTING TO ` 53,700/. THE SAME MAY, THEREFORE BE DELETED IN FULL. (B) THE LEARNED CIT (A) OUGHT TO HAVE APPRECIAT ED THAT, THE PENALTY WAS LEVIED ON THE DEEMED INCOME CHARGED TO TAX AND THAT THE ASSESSEE HAD NO MALAFIDE INTENTION TO EVADE TAX OR CONCEAL ANY INCOME. HE THEREFORE ERRED IN I NITIATING PENALTY PROCEEDINGS AGAINST THE ASSESSEE. ITA 6113/MUM/2010 SHRI ARUN KUMAR NAHAR 2 (C) THE LEARNED CIT (A) OUGHT TO HAVE APPRECIAT ED THAT, THE SAID ASSETS ON WHICH DEEMED LET OUT RENT WAS CHARGE D AND TREATED AS INCOME DURING THE ASSESSMENT PROCEEDINGS WERE OFFERED FOR WEALTH TAX AT THE TIME OF FILING OF THE RETURN. 2. THE FACTS IN BRIEF ARE AS UNDER. THE ASSESSEE I S AN INDIVIDUAL. THE RETURN FILED BY THE ASSESSEE WAS SELECTED FOR S CRUTINY AND ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT. T HE A.O. HAS OBSERVED THAT AS PER THE DETAILS FILED BY THE ASSES SEE, THERE WERE 22 IMMOVABLE PROPERTIES ON RECORD AND ASSESSEE HAD NOT OFFERED ANY INCOME FROM THE HOUSE PROPERTY. THE A.O. SOUGHT TH E EXPLANATION OF THE ASSESSEE WHY THE INCOME FROM THE HOUSE PROPERTY WAS NOT DECLARED. AS PER THE FACTS RECORDED BY THE A.O. THE ASSESSEE HAS PURCHASED DIFFERENT FLATS IN SECTOR-13, ROHINI, DEL HI. THE ASSESSEE HAD ALSO ONE HOUSE BEARING NO.16, BLOCK-D, VASANT V IHAR, DELHI WHICH WAS SELF-OCCUPIED PROPERTY. THE A.O., THEREF ORE, PROCEEDED TO DETERMINE THE FAIR RENTAL VALUE (ALV) OF THE FOUR F LATS BEING 331, 333, 334 & 123 AT PLOT NO.28, SECTOR-13, ROHINI, DELHI. THE A.O. CONSIDERED THE COST OF ACQUISITION OF THE SAID FLAT S WHICH WAS WORKED OUT AT ` 22,37,555/- AND A.O. WORKED OUT THE NOTIONAL ALV A T ` 1,79,004/- WHICH WAS 8% OF THE COST OF ACQUISITION. THE A.O. MADE THE ADDITION AND ALSO INITIATED THE PENALTY PROCEED INGS U/S.271(1)(C) OF THE ACT ON THE REASON THAT THE ASSESSEE HAS CONCEAL ED THE PARTICULARS OF INCOME. THE A.O. LEVIED THE PENALTY OF ` 53,700/-. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE THE LD. CIT (A) BUT WITHOUT ANY SUCCESS. NOW, THE ASSESSEE IS IN APPEAL BEFORE US. 3. WHEN THE MATTER WAS CALLED FOR THE HEARING, NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. THE LD. D.R. FOR THE RE VENUE WAS PRESENT. WE FIND THAT THE NOTICE OF HEARING WAS SENT TO THE ASSESSEE BY RPAD. UNDER THE CIRCUMSTANCES, WE PROCEEDED TO DECIDE THE APPEAL ON MERIT AFTER HEARING THE LD. D.R. 4. THE ONLY BASIS FOR LEVY OF THE PENALTY U/S.271(1 )(C) BY THE A.O. IS THAT THE ASSESSEE WAS HAVING FOUR FLATS IN DELHI ON WHICH THE ASSESSEE SHOULD HAVE DECLARED THE RENTAL INCOME AS PER SEC.2 3(1)(A) OF THE ACT. ITA 6113/MUM/2010 SHRI ARUN KUMAR NAHAR 3 IT IS NOT DISPUTED IN THIS CASE THAT NONE OF THE FL ATS HAVE BEEN LET OUT AND THE ASSESSEE HAS NOT RECEIVED ANY RENT. NOTHIN G HAS BEEN BROUGHT ON RECORD BY THE A.O. THAT WHEN THE ASSESSE E HAS ACQUIRED THOSE FLATS DURING THE FINANCIAL YEAR RELEVANT TO T HE A.Y. 2004-05 TO CONSIDERED ENTIRE YEAR FOR DETERMINING NOTIONAL ALV . WE FURTHER FIND THAT THE A.O. HAS CONSIDERED THE TOTAL INVESTMENT M ADE BY THE ASSESSEE FOR THE PURPOSE OF ESTIMATING FAIR RENT. THE SAID METHOD ITSELF IS A DEBATABLE ONE. MOREOVER, WE FIND THAT IT IS ONLY THE NOTIONAL RENTAL VALUE DETERMINED U/S.23(1)(A). IN OUR OPINIO N, THIS IS NOT THE CASE WHERE A PENAL CONSEQUENCES SHOULD FOLLOW U/S.2 71(1)(C) OF THE ACT. THERE IS NO JUSTIFICATION TO SUSTAIN THE PENA LTY LEVIED BY THE A.O. WE, ACCORDINGLY, DELETE THE SAME. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30TH NOVEMBER , 2011. SD/- SD/- ( G.E. VEERBHADRAPPA ) PRESIDENT ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE : 30TH NOVEMBER, 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) -3, MUMBAI. 4) THE CIT-11, MUMBAI. 5) THE D.R. A BENCH, MUMBAI . BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN ITA 6113/MUM/2010 SHRI ARUN KUMAR NAHAR 4 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 24.11.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 25.11.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER