Yadvinder Singh Bains, Chandigarh V. DCIT, Chandigarh

ITA 623/CHANDI/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81108 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 24-12-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 13-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 623/CHD/2014 ASSESSMENT YEAR: 2010-11 SHRI YADVINDER SINGH BAINS, V THE DCIT, HOUSE NO. 22, CIRCLE 1(1), SECTOR 11-A, CHANDIGARH. CHANDIGARH. PAN: ABGPB7491P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINEET AGGAR WAL RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 24.12.2014 DATE OF PRONOUNCEMENT : 31.12.2014 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. CIT(APPEALS) CHANDIGARH DATED 28.03.2014 FOR ASSESS MENT YEAR 2010-11. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND CON SIDERED THE MATERIAL AVAILABLE ON RECORD. 3. ON GROUND NOS. 1 & 2 THE ASSESSEE CHALLENGED THE ADDITION OF RS. 2,15,064/- ON ACCOUNT OF SERVICE TA X PAID ON RENTAL INCOME AND THE ASSESSEE IN THE ALTERNATE CON TENTION, CLAIMED THAT IF ADDITION IS MADE FROM INCOME FROM H OUSE PROPERTY, THEREFORE DEDUCTION OF 30% UNDER SECTION 24(A) OF THE 2 ACT SHALL HAVE TO BE GIVEN TO THE ASSESSEE. THE AS SESSING OFFICER NOTICED THAT ASSESSEE HAD DECLARED RENTAL I NCOME FROM IDBI BANK OF ONLY RS. 8,49,679/- WHEREAS IT WAS RS. 8,68,216/- AS PER FORM NO. 26AS AND SO HE ASSESSED THE DIFFERENCE OF THE RENTAL INCOME ( INCLUDED IN THE A DDITION MADE OF RS. 3,30,061/- ). THE ASSESSEE'S COUNSEL HAS SU BMITTED THAT DIFFERENCE IS DUE TO SERVICE TAX DEDUCTED @ RS. 618 0/- PER MONTH ON RENTAL INCOME OF RS. 60,000/- PER MONTH FO R THREE MONTHS. THE SERVICE TAX IS NOT ALLOWABLE AS DEDUCT ION OUT OF THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPER TY AND SO THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY LD. CIT(APPEALS) AND ADDITION OF RS. 18,540/- WAS CONFI RMED. 3(I) SIMILARLY, THE ASSESSING OFFICER MADE ADDITION OF RS. 1,96,524/- ON ACCOUNT OF RENT RECEIVED FROM KOTAK M AHINDRA BANK AND ICICI PRU LIFE. THE ASSESSING OFFICER NOT ICED THAT THERE WAS A DIFFERENCE IN THE RENT RECEIVED FROM KO TAK MAHINDRA BANK AND ICICI PRU LIFE AS DECLARED IN THE RETURN OF INCOME AND AS PER FORM NO. 26AS, TO THE TUNE OF RS. 1,96,524/- AND SO HE MADE THE ADDITION OF THIS AMOUNT. IT WAS HELD THAT SERVICE TAX IS NOT ALLOWABLE AS A DEDUCTION OUT OF THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE CONTENTION OF THE ASSESSEE WAS REJECTED AND APPEAL OF THE ASSE SSEE ON THIS GROUND WAS DISMISSED. 4. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THESE GROUNDS OF APPEAL OF THE ASSESSE E. SECTION 24 OF THE INCOME TAX ACT PROVIDES DEDUCTION FROM IN COME FROM HOUSE PROPERTY AND PROVIDES DEDUCTION, MAINLY A SUM EQUAL TO 3 30% OF THE ANNUAL VALUE AND WHERE THE PROPERTY HAS BEEN ACQUIRED, CONSTRUCTED, REPAIRED, RENEWED OR RE-CONS TRUCTED WITH BORROWED CAPITAL, THE AMOUNT OF ANY INTEREST P AYABLE ON SUCH CAPITAL. THE ASSESSEE, HOWEVER CLAIMED THAT S ERVICE TAX MAY BE DEDUCTED OUT OF THE RENTAL INCOME WHICH IS N OT PERMISSIBLE UNDER THE LAW AS NO PROVISION IS PROVID ED FOR DEDUCTION OF THE SERVICE TAX FOR DEDUCTION ON SUCH ACCOUNT. IN THE ABSENCE OF ANY SPECIFIC PROVISION UNDER THE LAW , CLAIM OF ASSESSEE FOR DEDUCTION OF SERVICE TAX FROM THE RENT AL INCOME CANNOT BE ALLOWED. WE RELY UPON DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS H.G. GUPTA & SONS 149 ITR 253 . HOWEVER, THE CLAIM OF ASSESSEE FOR DEDUCTION UNDER SECTION 24(A) IS PERMISSIBLE BECAUSE WHEN THE ASSESSING OFF ICER DID NOT ALLOW DEDUCTION OF THE SERVICE TAX FROM THE RENTAL INCOME WOULD MEAN THAT INCOME IS ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THEREFORE, THEREAFTER INCOME IS A DDED OF RS. 2,15,064/- ON ACCOUNT OF SERVICE TAX PAID ON RENTAL INCOME, THE ASSESSEE WOULD BE ENTITLED FOR DEDUCTION OF A SUM E QUAL TO 30% OF THE ANNUAL VALUE. THE ORDERS OF THE AUTHORITIES BELOW ARE, THEREFORE, MODIFIED TO THAT EXTENT AND ASSESSING OF FICER IS DIRECTED TO ALLOW DEDUCTION ON THE AFORESAID ADDITI ON IN FAVOUR OF THE ASSESSEE AS PER SECTION 24(A) OF THE INCOME TAX ACT. 5. IN THE RESULT, GROUND OF APPEAL NOS. 1 & 2 OF TH E APPEAL OF THE ASSESSEE ARE PARTLY ALLOWED, AS INDICATED ABOVE . 6. ON GROUND NO. 3, ASSESSEE CHALLENGED THE ADDITIO N OF RS. 6 LACS UNDER SECTION 68 OF THE ACT ON ACCOUNT OF CA SH DEPOSITED IN THE BANK ON 12.06.2009. THE ASSESSING OFFICER N OTICED CASH 4 DEPOSIT OF RS. 6 LACS IN THE BANK ACCOUNT OF THE AS SESSEE IN ICICI BANK, SECTOR 9, CHANDIGARH ON 12.06.2009. TH E ASSESSING OFFICER ASKED THE ASSESSEE ABOUT THE SOUR CE OF THE CASH DEPOSIT AND THE ASSESSEE HAD FILED A CASH-FLOW STATEMENT TO EXPLAIN THE CASH DEPOSIT. THE ASSESSING OFFICER NOTICED THAT THE TIME PERIOD BETWEEN THE WITHDRAWAL AND DEPOSIT WAS MORE THAN SIX MONTHS AND THE ASSESSEE HAD FAILED TO PROD UCE ANY SATISFACTORY REASON FOR THE SAME. ADDITION OF RS. 6 LACS WAS MADE UNDER SECTION 69A OF THE ACT. THE ASSESSEE SU BMITTED BEFORE LD. CIT(APPEALS) THAT THERE IS NO PROVISION IN THE INCOME TAX ACT AND ANY LEGAL RULING WHICH SPECIFIES CERTAI N TIME LIMIT FOR CASH RETENTION. THE LD. CIT(APPEALS), HOWEVER, DISMISSED APPEAL OF THE ASSESSEE. HIS FINDINGS IN PARA 9.3 T O 9.3.2 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER : 9.3 I HAVE CONSIDERED THE SUBMISSION OF THE LD. COU NSEL. THE CASH WITHDRAWALS MADE BY THE APPELLANT FROM HIS VARIOUS BANK ACCOUNTS ARE AS UNDER : 08.07.2008 RS. 4,00,000/- 14.07.2008 RS. 11,00,000/- 21.07.2008 RS. 2,00,000/- AUGUST,2008 RS. 7,50,000/- SEPTEMBER,2008 RS. 5,00,000/- OCTOBER,2008 RS. 12,00,000/- MARCH,2009 RS. 25,000/- 9.3.1 THE CASH DEPOSITS MADE BY THE APPELLANT IN HI S VARIOUS BANK ACCOUNTS ARE AS UNDER : 18.10.2008 RS. 18,50,000/- 12.06.2009 RS. 6,00,000/- 9.3.2 THE CLAIM OF THE APPELLANT IS THAT THE DEPOSIT MADE IS OUT OF WITHDRAWALS MADE EARLIER, BUT IT IS SEEN THAT THE APPELLANT HAD MADE HUGE WITHDRAWALS IN SOME OF THE MONTHS, WHICH MUST HAVE OBVIOUSLY BEEN UTILIZED FOR G IVING ADVANCES OR FOR MAKING SOME INVESTMENT. IN FACT, T HE APPELLANT HAS NOT MADE ANY WITHDRAWAL AFTER OCTOBER , 2008 EXCEPT OF RS. 25,000/- IN MARCH, 2009. THE TIME GA P BETWEEN 5 DEPOSIT OF RS. 6,00,000/-AND WITHDRAWAL IS MORE THAN SE VEN MONTHS AND IN TODAY'S ERA OF WITHDRAWALS TH ROUGH ATM AND ELECTRONIC TRANSFERS, NOBODY KEEPS HUGE CASH AT HOME. THE ARGUMENT OF THE LD. COUNSEL THAT THE APPELLANT IS A HIGH INCOME PERSON DOES NOT HOLD WATER FOR THE SAME REASO N. FURTHER, THE CONTENTION OF THE LD. COUNSEL IS NOT R ELEVANT, SINCE THE APPELLANT HAS TO SATISFACTORILY EXPLAIN T HE SOURCE OF THE CREDIT ENTRIES AND IN THE INSTANT CASE THE SOUR CE OF DEPOSIT OF RS. 6,00,000/- IS NOT SO EXPLAINED. IN VIEW OF THIS DISCUSSION, THE ADDITION MADE BY THE ASSESSING OFFICER IS ACCORD INGLY CONFIRMED. GROUND OF APPEAL NO. 6 IS DISMISSED. 7. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE. THE ASSES SEE HAS NOT EXPLAINED TO THE SATISFACTION OF THE AUTHORITIES BE LOW THE SOURCE OF THE CASH DEPOSITED IN THE BANK ACCOUNT ON 12.06. 2009. THE LD. CIT(APPEALS) HAS QUOTED IN THE ORDER WITHDRAWAL S MADE BY THE ASSESSEE FROM VARIOUS BANKS AND PRIOR TO THE DE POSIT IN THE BANK ACCOUNT, THERE WAS A MEAGER WITHDRAWAL OF RS. 25,000/- IN MARCH, 2009. PRIOR TO THAT, THERE WERE HEAVY WI THDRAWALS FROM BANK AND IT IS NOT EXPLAINED AS TO WHERE THE A SSESSEE HAS INVESTED THESE WITHDRAWALS. THE SMALL WITHDRAWAL OF RS. 25,000/- IN MARCH,2009 PRIOR TO MAKING DEPOSIT IN T HE BANK ACCOUNT ON 12.06.2009 CLEARLY CAST A SHADOW OF DOUB T IN THE EXPLANATION OF THE ASSESSEE THAT ASSESSEE WAS HAVIN G SUFFICIENT CASH WITHDRAWALS FROM THE BANK ACCOUNT TO MAKE THE DEPOSIT IN THE BANK ACCOUNT. THE LD. CIT(APPEALS) WAS, THEREF ORE, JUSTIFIED IN DECIDING THE ISSUE AGAINST THE ASSESSE E. 8. THE LD. COUNSEL FOR THE ASSESSEE ALSO REFERRED T O THE CASH- FLOW STATEMENT REFERRED TO IN THE ASSESSMENT ORDER BUT HE WAS NOT ABLE TO ANSWER SATISFACTORILY AS TO WHEN HUGE C ASH WERE WITHDRAWN FROM DIFFERENT BANK ACCOUNTS, WHAT FOR AS SESSEE WAS WAITING FOR MAKING DEPOSIT IN THE BANK ACCOUNT WHIC H IS UNDER 6 CONSIDERATION. THE LAST WITHDRAWAL, AS IS NOTED BY THE LD. CIT(APPEALS), THEREFORE CLEARLY JUSTIFY THE FINDING S OF AUTHORITIES BELOW THAT ASSESSEE IS NOT ABLE TO PROV E THE SOURCE OF THE CASH DEPOSIT IN THE BANK ACCOUNT ON 12.06.20 09. THIS GROUND HAS, THEREFORE, NO MERIT AND IS ACCORDINGLY DISMISSED. 9. IN GROUND NOS. 4 AND 5, ASSESSEE CHALLENGED LEVY OF THE INTEREST WHICH IS CONSEQUENTIAL AND MANDATORY AND L EVY OF THE PENALTY IS DIFFERENT PROCEEDING AND ARE ACCORDINGLY , DISMISSED. 10. NO OTHER POINT IS ARGUED OR PRESSED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST DECEMBER,2014. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: .DECEMBER,2014. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH