TAPAN KUMARDAS PROP OF M/S. NILADRI EXPORTS, MUMBAI V. ITO 21(3)(2), MUMBAI

ITA 6544/MUM/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3969 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 22-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JIT ENDRA YADAVDR
• Keywords: Unexplained expenditure; Salary income; Deemed to accrue or arise in india
• Section: 69

Judgement Text

1 ITA NO. 6544/MUM/2009 IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC MUMBAI MUMBAI BENCH SMC MUMBAI MUMBAI BENCH SMC MUMBAI MUMBAI BENCH SMC MUMBAI BEFORE SHRI R K PANDA, A BEFORE SHRI R K PANDA, A BEFORE SHRI R K PANDA, A BEFORE SHRI R K PANDA, ACCOUNTANT CCOUNTANT CCOUNTANT CCOUNTANT M M M M EMBER EMBER EMBER EMBER ITA NO. ITA NO. ITA NO. ITA NO. 6544/MUM/2009 6544/MUM/2009 6544/MUM/2009 6544/MUM/2009 (ASSESSMENT YEAR 2005-06) MR TAPAN KUMAR DAS PROP OF M/S NILADRI EXPORTS B/4064 OBEROI GARDEN ESTATE CHANDIVALI ANDHERI (E) MUMBAI 72 VS THE INCOME TAX OFFICER WARD 21(3)(2), MUMBAI (APPELLANT) (RESPONDENT) PAN PAN PAN PAN AAIPD7406P AAIPD7406P AAIPD7406P AAIPD7406P ASSESSEE BY: SHRI SATISH R MODY REVENUE BY: SHRI JITENDRA YADAV/DR O R D E R O R D E R O R D E R O R D E R PER R K PANDA: PER R K PANDA: PER R K PANDA: PER R K PANDA: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 16.10.2007 OF THE CIT(A)32 MUMBAI RELATING TO ASSESS MENT YEAR 2005-06. 2 IN GROUNDS OF APPEAL NO.1 THE ASSESSEE HAS CHAL LENGED THE ORDER OF THE CIT(A) IN CONFIRMING THE DISALLOWANCE OF 50% OF INTER EST ON HOUSING LOAN OF ` 37,917/- MADE BY THE ASSESSING OFFICER. 2.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE H AD SHOWN LOSS FROM HOUSE PROPERTY AT ` 76,834/-. THE ASSESSING OFFICER NOTED THAT THE PROPE RTY UNDER CONSIDERATION WAS PURCHASED BY THE ASSESSEE JOINTLY WITH HIS WIFE MRS RANJAN DAS. THE ASSESSEES SHARE IN THAT PROPERTY IS 50%. THEREFO RE, THE INTEREST ON HOUSING LOAN HAS TO BE DIVIDED BETWEEN HIS WIFE AND HIMSELF A T THE RATE OF 50% EACH. HE, ACCORDINGLY, ALLOWED ONLY ` 37,917/- BEING INTEREST ON HOUSING LOAN ATTRIBUTABLE TO THE ASSESSEE AND DISALLOWED THE BALANCE 50% OF ` 37,017/-. 2.2 BEFORE THE CIT(A), IT WAS SUBMITTED THAT DUE TO FINA NCIAL HARDSHIP FACED BY SMT RANJAN DAS, SHE COULD NOT MAKE THE HOUSING LOAN I NSTALMENTS AND THUS, FAILED TO CLAIM THE DEDUCTION FROM HER INCOME. HOWEVER, THE C IT(A) WAS NOT SATISFIED WITH 2 ITA NO. 6544/MUM/2009 THE EXPLANATION GIVEN BY THE ASSESSEE AND UPHELD THE D ISALLOWANCE MADE BY THE ASSESSING OFFICER. WHILE DOING SO, HE OBSERVED THAT FINANCIAL HARDSHIP OF CO-OWNER CANNOT BE THE REASON TO CLAIM THE ENTIRE DEDUCTION BY TH E ASSESSEE. 3 AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASSESSE E IS IN APPEAL HERE BEFORE THE TRIBUNAL. 4 THE LD COUNSEL FOR THE ASSESSEE RELIED ON THE SUBMI SSIONS MADE BEFORE THE CIT(A) WHEREAS THE LD DR RELIED ON THE ORDER OF THE CIT(A). 5 AFTER HEARING BOTH THE SIDE, I DO NOT FIND ANY INF IRMITY IN THE ORDER OF THE CIT(A). ADMITTEDLY, THE ASSESSEE IS HAVING 50% SHARE IN THE PROPERTY AND THE BALANCE 50% SHARE IS OWNED BY HIS WIFE. THEREFORE, THE ASSESSEE IS ENTITLED TO CLAIM INTEREST EXPENDITURE FROM THE TOTAL INCOME ONLY TO T HE EXTENT OF HIS SHARE IN THE PROPERTY AND NOT THE FULL AMOUNT. I, THEREFORE, UPHO LD THE ORDER OF THE CIT(A) ON THIS ISSUE. THE GROUND RAISED BY THE ASSESSEE IS ACC ORDINGLY DISMISSED. 6 IN GROUNDS OF APPEAL NO.2, THE ASSESSEE HAS CHALL ENGED THE ORDER OF THE CIT(A) IN UPHOLDING THE ESTIMATION OF INCOME FROM HO USE PROPERTY AMOUNTING TO ` 4,200/- BY THE ASSESSING OFFICER FROM A PROPERTY W HICH IS DISPUTED IN NATURE. 6.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE O WNED TWO HOUSE PROPERTIES JOINTLY WITH HIS WIFE. ONE IS USED FOR SELF OCCUPATI ON AND THE OTHER ONE IS LET OUT PROPERTY. THE ANNUAL RATABLE VALUE (ALV) OF OTHER PR OPERTY IS STATED TO BE AT ` 12,000/-. THEREFORE, ACCORDING TO THE ASSESSING OFF ICER, THE 50% OF THE ASSESSEES SHARE COMES TO ` 6000/-. AFTER CONSIDERING THE DEDUCTION U/S 24 FOR REPAIRS AT THE RATE OF 30%, THE ASSESSING OFFICER ADDED THE NET BALA NCE AMOUNT OF ` 4200/- TO THE TOTAL INCOME OF THE ASSESSEE. 6.2 BEFORE THE CIT(A), IT WAS SUBMITTED THAT THE SAID PR OPERTY WAS HYPOTHETICATED TO SBI, BORIVALI (EAST) BRANCH. SINCE THE SAME WAS SEALED AND DISPUTED BY THE BANKER, THEREFORE, NOTIONAL RENT OF ` 4,200/- SHOULD NOT BE CONSIDERED. HOWEVER, THE CIT(A) WAS NOT SATISFIED WIT H THE ARGUMENTS ADVANCED BY THE ASSESSEE AND UPHELD THE ORDER OF THE ASSESSING OF FICER. WHILE DOING SO, HE 3 ITA NO. 6544/MUM/2009 OBSERVED THAT WHAT IS REQUIRED FOR A DEEMED INCOME IS OWNERSHIP OF THE SECOND PROPERTY, WHICH IS NOT DOUBTED IN THE PRESENT CASE. TH E ALV HAS ALSO NOT BEEN DISPUTED; THEREFORE, THERE IS NO SUBSTANCE IN THE ARGU MENT OF THE ASSESSEE. 7 AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASSESSE E IS IN APPEAL HERE BEFORE THE TRIBUNAL. 8 I HAVE CONSIDERED THE RIVAL ARGUMENTS ADVANCED BY B OTH THE PARTIES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE IS THE OWNER OF THIS PROPERTY ALONG WITH HIS W IFE IN ADDITION TO THE SELF OCCUPIED HOUSE PROPERTY HELD BY HIM JOINTLY WITH HIS WIFE. THE ALV OF THE PROPERTY AT ` 12,000/- IS ALSO NOT IN DISPUTE. THEREFORE, ACTION OF THE ASSESSING OFFICER IN BRINGING TO TAX 50% OF THE ALV AFTER GIVING THE DEDUCTION U/S 24, IN MY OPINION IS JUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. I DO NOT FIND ANY FORCE IN THE SUBMISSIONS OF THE LD COUNSEL FOR THE ASS ESSEE THAT THE HOUSE IS USED FOR BUSINESS AND THAT IT HAS BEEN HYPOTHETICATED TO SBI AND THAT IT IS A DISPUTED PROPERTY. THE CIT(A) HAS CORRECTLY GIVEN A FINDING THAT WHAT IS REQUIRED FOR A DEEMED INCOME IS OWNERSHIP OF THE PROPERTY, WHOSE AL V IS NOT IN DISPUTE. IN THIS VIEW OF THE MATTER, THE ORDER OF THE CIT(A) IS UPHELD. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY DISMISSED. 9 IN THE GROUNDS OF APPEAL NO.3 THE ASSESSEE HAS CH ALLENGED THE ORDER OF THE CIT(A) IN CONFIRMING THE ADDITION OF ` 86,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SALARY PAID BY THE ASSESSEE TO HIS WIFE. 10 AFTER HEARING BOTH THE PARTIES, I FIND THE ASSESSEE HAS SHOWN SALARY PAYMENT TO HIS WIFE MRS RANJAN DAS AT ` 2,22,000/- WHEREAS THE WIFE OF THE ASSESSEE HAD SHOWN SALARY AT ` 1,36,000/- AND AFTER CLAIMING STANDARD DEDUCTION U/S 16(I) OF ` 30,000/- SHE HAD DECLARED THE NET SALARY INCOME OF ` 1,06,000/-. IN THE ABSENCE OF SATISFACTORY EXPLANATION, THE ASSESSING OFFICER DISALLOWED THE BAL ANCE AMOUNT OF ` . 86,000/- AS UNEXPLAINED EXPENDITURE U/S 69 OF THE ACT, WHICH WAS UPHELD BY THE CIT(A). 11 AT THE TIME OF HEARING, THE LD COUNSEL FOR THE ASSESS EE FILED FORM 16 AND SUBMITTED THAT THE ASSESSEE FIRM HAD PAID AN AMOUNT OF ` . 2,22,000/- AS SALARY TO 4 ITA NO. 6544/MUM/2009 MRS RANJAN DAS, WHO AFTER CLAIMING DEDUCTION U/S 10 A T ` 86,000/- AND AFTER CLAIMING STANDARD DEDUCTION OF ` 30,000/- HAS DECLARED SALARY INCOME OF ` 1,06,000/-. THE ASSESSING OFFICER AND THE CIT(A) HA VE NOT CORRECTLY APPRECIATED THE FACTS; THEREFORE, THE MATTER MAY BE SENT BACK TO THE F ILE OF THE ASSESSING OFFICER FOR VERIFICATION. 11.1 THE LD DR, ON THE OTHER HAND, SUBMITTED THAT NO DETAI LS OF EXEMPTION OF ` 86,000/- U/S 10 HAS BEEN FURNISHED BY THE LD COUN SEL FOR THE ASSESSEE, NO EXPLANATION WHATSOEVER WAS GIVEN BEFORE THE ASSESSING OFFICER OR BEFORE CIT(A) FOR THE DISCREPANCY IN THE SALARY SHOWN BY THE ASSESSEE AND THE INCOME DECLARED BY THE RECIPIENT, WHO IN THE INSTANT CASE IS NONE ELSE T HE WIFE OF THE ASSESSEE. SINCE NOTHING HAS BEEN BROUGHT ON RECORD TO SUBSTANTIATE THE NATURE OF EXEMPTION U/S 10, THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER AND UPHELD BY THE CIT(A) SHOULD BE UPHELD AND THE MATTER NEED NOT BE RESTORED B ACK TO THE FILE OF THE ASSESSING OFFICER. 12 I HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOTH TH E PARTIES AND PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND ALSO PERUSED THE FORM 16 FILED ON BEHALF OF MRS RANJAN DAS. FROM THE COPY OF FORM 16, IT IS SEEN THAT SHRI TAPAN T DAS, WHO IS THE PROPRIETOR OF M/S NILADRI EXPORTS AND WHO ALSO HAPPENS TO BE THE HUSBAND OF MRS RANJAN DAS HAS SIGNED THE FORM 16. A T NO POINT OF TIME, THE ASSESSEE HAD EXPLAINED THE NATURE OF EXEMPTION U/S 10 EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE CIT(A). EVEN BEFORE ME ALSO, THE LD COUNSEL FOR THE ASSESSEE EXPRESSED HIS INABILITY TO GIVE THE DETAILS OF EXEMPTIO N OF ` 86,000/- U/S 10 AND SUBMITTED THAT THE MATTER MAY BE RESTORED TO THE FILE OF THE A SSESSING OFFICER FOR VERIFICATION. I CANNOT ACCEPT THIS TYPE OF EVASIVE ARGU MENTS OF THE LD COUNSEL FOR THE ASSESSEE. IF THE ASSESSEE IS UNABLE TO GIVE THE DETAILS OF EXEM PTION U/S 10 AMOUNTING TO ` 86,000/- BEFORE THE ASSESSING OFFICER, BEFORE THE C IT(A) AND EVEN BEFORE ME AT THE TIME OF HEARING OF THIS APPEAL, THERE IS NO POINT IN RESTORING THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WHICH W ILL ONLY PROLONG THE PROCESS OF LITIGATION AND NO PURPOSE WILL BE SERVED. SINCE TH E ASSESSEE FAILED TO DISCHARGE ITS ONUS LAY UPON IT, THEREFORE, I DO NOT FIND ANY IN FIRMITY IN THE ORDER OF THE CIT(A) 5 ITA NO. 6544/MUM/2009 AND ACCORDINGLY, UPHOLD THE SAME. THE GROUND RAISE D BY THE ASSESSEE IS ACCORDINGLY DISMISSED. 13 IN THE GROUNDS OF APPEAL NO.4, THE ASSESSEE HAS CHALLENGED THE ORDER OF THE CIT(A) IN CONFIRMING THE DISALLOWANCE OF `. 30,390/- ON ACCOUNT OF BUSINESS PROMOTION, ` 7,947/- OUT OF TELEPHONE AND FAX EXPENSES AND ` 679/- OUT OF MISCELLANEOUS EXPENSES. 14 AFTER HEARING BOTH THE SIDES, I FIND THE ASSESSING OFFICER DISALLOWED ` 60,780/- ON ACCOUNT OF BUSINESS PROMOTION EXPENSES; ` 10,148/- OUT OF COURIER & POSTAGE EXPENSES, ` 15,894/- OUT OF TELEPHONE AND FAX EXPENSES AND ` 1,358/- OUT OF MISCELLANEOUS EXPENSES ON ADHOC BASIS BEING 20% OF THE EXPENSES CLAIMED FOR WANT OF FULL DETAILS. 14.1 IN APPEAL, THE CIT(A) RESTRICTED THE DISALLOWANCE OUT OF BUSINESS PROMOTION AT ` 30,390/-, DELETED THE ENTIRE COURIER AND POSTAGE EXPE NSES. OUT OF DISALLOWANCE OF TELEPHONE AND FAX AND MISCELLANEOUS EXPENSE 20% BY TH E ASSESSING OFFICER, HE RESTRICTED THE DISALLOWANCE TO 10% AND SUSTAINED DISALL OWANCE OF ` 7,947/- OUT OF TELEPHONE AND FAX EXPENSES AND ` 679/- OUT OF MISCELLANEOUS EXPENSES. 15 AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASSES SEE IS IN APPEAL BEFORE THE TRIBUNAL. 16 AFTER HEARING BOTH THE SIDES, I FIND THE ORDER OF THE CIT(A) IS JUST AND PROPER. ADMITTEDLY, THE ASSESSEE COULD NOT PRODUCE THE FULL DETA ILS TO SUBSTANTIATE THE GENUINENESS OF THE EXPENSES FOR WHICH THE ASSESSING OFFICER DISALLOWED 20% OF THE ABOVE EXPENSES. I FIND THE CIT(A) HAS ALREADY GIVEN A REASONABLE RELIEF AND HAS COMPLETELY DELETED THE DISALLOWANCE ON ACCOUNT OF COUR IER AND POSTAGE EXPENSES. SINCE HE HAS RESTRICTED THE DISALLOWANCE ONLY TO 10% OF THE TOTAL EXPENDITURE AS AGAINST 20% MADE BY THE ASSESSING OFFICER, THEREFORE, I DO NOT FIND ANY INFIRMITY IN HIS ORDER AND ACCORDINGLY, UPHOLD THE SAME. THE GR OUND RAISED BY THE ASSESSEE IS ACCORDINGLY DISMISSED. 6 ITA NO. 6544/MUM/2009 17 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THE 4 TH , DAY OF NOV 2010. SD/- ( R K PANDA ) ( R K PANDA ) ( R K PANDA ) ( R K PANDA ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED: 4 TH ,NOV 2010 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI