Shri Kalpeshbhai Kantibhai Patel, Surat V. The ACIT.,Circle-2, Surat

ITA 67/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62997 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 09-08-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 07-01-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T SHANKAR
• Assessee Lawyers: J P SHAH
• Keywords: Unexplained cash credit; Gift
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD D BENCH BEFORE: SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT ME MBER I.T.A. NO.67/AHD/2009 A. Y.2005-06 SHRI KALPESHBHAI KANTIBHAI PATEL, AMANNA BUNGLOW, MAHADEV NAGAR, MAJURA GATE, SURAT PAN-ABCPP9335L APPELLANT VS. THE ACIT, CIRCLE-2 SURAT RESPONDENT DEPARTMENT BY : SHRI T. SHANKAR, SR. D.R. ASSESSEE BY : SHRI J.P. SHAH, A.R. DATE OF HEARING : 09.08.2012 DATE OF PRONOUNCEMENT : 28.09.2012 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF LD. CITII, SURAT DATED 31.10.2008. 2. GROUND NO.I READS AS UNDER:- THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.1,91,763/- MADE BY DISALLOWING D EDUCTION U/S 24 OF THE ACT ON SERVICE CHARGES RECEIPTS ON THE GROUND T HAT SERVICE CHARGES ARE NOT INCOME FROM HOUSE PROPERTY BUT INCOME FR OM OTHER SOURCES DISREGARDING THE FACTS OF COMPULSION TO IN CUR EXPENSES FOR PROVIDING SERVICES. THE ADDITION SHOULD BE DELETED . I.T.A. NO.67/AHD/2009 A. Y.2005-06 2 3. THE FACTS IN RESPECT OF THIS ADDITION, AS THEY E MERGED FROM THE ORDER OF LD. CIT(A) ARE AS UNDER:- THE ASSESSEE HAD SHOWN RENTAL INCOME FROM SEVEN PR OPERTIES WHICH THE AO HAS LISTED OUT AT PARA-8, PAGE-4 OF THE ASSE SSMENT ORDER. FROM THE SECURITY OF THE AGREEMENT WITH THE ABN AMR O BANK THE AO NOTICED THAT THE ASSESSEE HAD RECEIVED RS.26,900.64 AS RENT PER MONTH AND RS.19,985.33 AS SERVICE CHARGES. WHILE A LLOWING DEDUCTION U/S 24 OF THE ACT ON THE RENTAL INCOME OF RS.3,22,8 08, THE AO ASKED THE ASSESSEE TO EXPLAIN WHY A SIMILAR CLAIM AGAINST THE SERVICE CHARGES OF RS.2,39,824 SHOULD NOT BE DISALLOWED. A LLEGEDLY, THE ASSESSEE FAILED TO FURNISH ANY EXPLANATION. SIMILA RLY, THE ASSESSEE ALSO RECEIVED BOTH RENT AND SERVICE CHARGES FROM TH E KARNATAKA BANK. THE RENT WAS OF RS.6,750 WHILE THE SERVICE CHARGE W AS OF RS.8,250 PER MONTH. WHILE ALLOWING THE DEDUCTION U/S 24 OF THE ACT ON THE ANNUAL RENTAL INCOME OF RS.81,000 THE A.O. DISALLOWED SIMI LAR DEDUCTION ON THE SERVICE CHARGES OF RS.99,000. IN THE SAME MANN ER, THE AO WORKED OUT THE SERVICE CHARGES RECEIVED FROM THE TENANTS O F THE REMAINING PROPERTIES. THE SERVICE CHARGES RECEIVED FROM THE TENANT OF ALL THE PROPERTIES WAS AS UNDER:- ABN AMRO BANK (19985.33 X 12) = RS.2,39,824 KARNATAKA BANK (8250 X 12) = RS. 99,000 RADIAL TELE SOLUTION = RS. 93,500 PRESS ENTERPRISE = RS. 56,000 DREAM LOANZ = RS. 40,000 INFO EDGE (INDIA) . LTD. = RS.1,29,887 THE DEDUCTION U/S 24 ON SUCH RECEIPTS WORKED OUT TO RS.1,91,763 WHICH THE AO DECLINED TO ALLOW. AFTER TAKING INTO CONSIDERATION THE SUBMISSIONS OF THE ASSESSEE LD. CIT(A) CONFIRMED THE ACTION OF THE A.O. 4. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD WE FIND THAT THE ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE AND AGAINS T THE REVENUE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSE SSMENT YEAR 2006-07 IN ITA NO.2008/AHD/2009 WHEREIN FOLLOWING WAS HELD:- AGGRIEVED, THE ASSESSEE IS NOW IN APPEAL BEFORE US . WE HAVE HEARD BOTH THE PARTIES AND CONSIDERED THEIR RIVAL SUBMISS IONS. WE HAVE I.T.A. NO.67/AHD/2009 A. Y.2005-06 3 DECIDED SIMILAR ISSUE IN THE CASE OF SMT. CHANCHALB EN K PATEL IN ITA NO.68/AHD/2009 FOR A.Y. 2005-06. THE RELEVANT OBSE RVATION OF THE SAID ORDER IS REPRODUCED HEREINBELOW:- 4. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A), TH E ASSESSEE IS NOW IN APPEAL BEFORE US. WE HAVE HEARD THE RIVAL SUBMI SSIONS AND PERUSED THE MATERIAL ON RECORD. THE ONLY ISSUE INVOLVED IN DISALLOWANCE OF RS.1,23,538/- MADE BY THE AO BEING NOT ELIGIBLE FOR DEDUCTION U/S 24 OF THE ACT. ADMITTEDLY IN THIS CASE THE AGREEMENT EXECUTED WITH ABN AMRO BANK IN KARNATAKA BANK BY THE ASSESSEE IT IS C ONTEMPLATED THAT THE LESSEE WILL PAY A SUM OF RS.11000/- P.M. AS SER VICE CHARGES AND RENT OF RS.9000/-. THE LEARNED AR SUBMITTED THAT T HE SERVICE CHARGES IS NOTHING BUT THE RENTAL INCOME AND IN SUBSTANCE T HE SAME MAY BE TREATED AS INCOME FROM THE HOUSE PROPERTY. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE SUBMISSIONS MADE BY THE LEARNED AR. WE ARE NOT INCLINED TO ACCEPT THE CONTENTION OF THE LEARNED AR SINCE THE AMOUNT RECEIVED ON ACCOUNT OF SERVICE CHARGES F ALLS UNDER THE HEAD INCOME FROM OTHER SOURCES. THE SCHEME OF TH E ACT CONTEMPLATES DIFFERENT HEADS OF INCOME. THEREFORE, INCOME SPECIFIED UNDER ONE HEAD CANNOT BE TEATED INCOME OF ANOTHER H EAD. THE INCOME RECEIVED AS SERVICE CHARGES CAN NOT BE TREATED AS I NCOME FROM HOUSE PROPERTY AS SUCH SAME IS NOT PERMISSIBLE UNDER LAW. SINCE THE SERVICE CHARGES ARE NOT INCOME FROM HOUSE PROPERTY, ON SUCH AMOUNT DEDUCTION PRESCRIBED U/S 24 OF THE ACT WOULD NOT BE AVAILABLE. IN VIEW OF THIS MATTER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) AND THE SAME IS HEREBY UPHELD. FOLLOWING THE AFORESAID ORDER, WE UPHOLD THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE AND GROUND NO.1 RAISED BY THE ASSESSEE IS DISMISSED. FOLLOWING THE ABOVE, THIS GROUND OF THE ASSESSEE IS ALLOWED. 5. GROUND NO.II READS AS UNDER:- THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.19,000/- FOR THE PERIOD OF WHICH PROPERTY WAS VACANT. THE ADDITION OF RS.19,000/- SHOULD BE DELE TED. 6. THE A.O., WHILE MAKING THIS ADDITION HAS OBSERVE D AS UNDER:- PRESS ENTERPRISE:- IT IS FURTHER PERUSED FROM THE RENT AGREEMENTS THAT THE ASSESSEE HAS RECEIVED RENT FROM PRESS ENTERPRISE AMOUNTING TO RS . 42000/-. I.T.A. NO.67/AHD/2009 A. Y.2005-06 4 AS PER THE AGREEMENTS SUBMITTED BY THE ASSESSEE THE AMOUNT OF PRESS ENTERPRISES IS THE AMOUNT OF SERVICE CHARGES RECEIV ED AND NOT RENT. THE AGREEMENT ITSELF IS FOR SERVICE CHARGE AGREEMENT AN D NOT RENT AGREEMENT. MOREOVER, THE AGREEMENT IS MADE FROM 1-8 -2004 FOR SERVICE CHARGES @ RS. 7,000/- PER MONTH, THEREFORE, THE INCOME SHOULD BE OF RS. 56,000/- (7,000X 8 MONTHS). HOWEVER, THE ASSESSEE HAS SHOWN INCOME OF RS. 42,000/- THAT TOO AS RENT AND C LAIMED DEDUCTION U/S. 24 BEING 30% OF RS. 42,000/- WHICH IS NOT A AL LOWABLE DEDUCTION FOR INCOME FROM SERVICE CHARGE. I, THEREFORE ADD TH E AMOUNT OF RS. 14,000/- TO THE TOTAL INCOME AND DISALLOW THE CLAIM OF 30% REPAIRS FROM THE SAID RS. 56,000/-. DREAM LOANZ :- THE ASSESSEE HAS SHOWN INCOME OF RENT FROM DREAM LO ANZ OF RS. 35,000/-. AS PER THE AGREEMENTS SUBMITTED BY THE AS SESSEE THE AMOUNT OF DREAM LOANZ IS THE AMOUNT OF SERVICE CHARGES REC EIVED AND NOT RENT. THE AGREEMENT ITSELF IS SERVICE CHARGES AGREEMENT A ND NOT RENT AGREEMENT. MOREOVER, THE AGREEMENT IS MADE FROM 1-8 -2004 FOR SERVICE CHARGES OF RS. 5,000/- PER MONTH, THEREFORE , THE INCOME SHOULD BE OF RS. 40,000/- (5,000X 8 MONTHS). HOWEVER, THE ASSESSEE HAS SHOWN INCOME OF RS. 35,000/- THAT TOO AS RENT AND C LAIMED DEDUCTION U/S. 24 BEING 30% OF RS. 35,000/- WHICH IS NOT ALLO WABLE DEDUCTION FROM SERVICE CHARGES. THEREFORE, I ADD THE AMOUNT O F RS.5,000/- TO THE TOTAL INCOME AND DISALLOW THE CLAIM OF 30% REPAIRS FROM THE SAID RS.35,000/-. IN APPEAL THIS ACTION OF THE A.O. WAS CONFIRMED BY LD. CIT(A). 7. AT THE TIME OF HEARING NOTHING SUBSTANTIAL WAS A RGUED BEFORE US TO DEVIATE US FROM THE FINDING OF THE LOWER AUTHORITIES AND TH EREFORE, THE ORDER PASSED BY THEM IS HEREBY CONFIRMED. 8. GROUND NO.III READS AS UNDER:- THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.10,00,000/- U/S 68 OF THE ACT ON ACCOUNT OF NRI GIFT RECEIVED FROM BROTHER OF ASSESSEES MOTHER DISREGAR DING THE EVIDENCES OF (I) IDENTITY, (II) GENUINENESS (III) CREDITWORTH INESS AND (IV) BLOOD RELATIONS OR DONOR ESTABLISHED BEFORE THE A.O. THE ADDITION OF RS.10,00,000/- SHOULD THEREFORE, BE DELETED. I.T.A. NO.67/AHD/2009 A. Y.2005-06 5 9. THE A.O., WHILE MAKING THE ADDITION OF RS.10,00, 000/- TO THE INCOME OF THE ASSESSEE HAS OBSERVED AS UNDER:- UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT (NRI GIF T):- ON THE PERUSAL OF THE COPY OF ACCOUNT FILED ALONG W ITH THE RETURN OF INCOME IT IS NOTICED THAT THE ASSESSEE HAS SHOWN NR I GIFT OF RS.10,00,000/- RECEIVED FROM KANAIYALAL T. PATEL. THE ASSESSEE WAS REQUESTED TO FURNISH DETAILS OF THE SAID GIFT VIDE QUESTIONNAIRE DATED 10-4-2007. DURING THE COURSE OF ASSESSMENT PROCEED INGS THE ASSESSEE WAS ALSO REQUESTED TO PROVE THE IDENTITY, CREDITWORTHINESS OF THE DONOR AND GENUINENESS OF THE TRANSACTION. IN R ESPONSE THE LD. A.R. FILED A GIFT DECLARATION ON PLAIN PAPER SIGNED BY KANAIYALAL T PATEL WHEREIN IT IS STATED THAT HE HAS MADE A GFIFT OF RS .10 LAKHS TO HIS NEPHEW, (SISTERS SON) THROUGH NRE ACCOUNT NO.10715 WITH BANK OF BARODA. SINCE, THE GIFT DEED ASSERTED BLOOD RELATI ONSHIP BETWEEN THE NRI AND THE ASSESSEE, THE A.R. WAS REQUESTED TO FUR NISH COPIES OF PASSPORT OF THE ASSESSEES MOTHER AND THE NRI ALONG WITH HER PAN CARD/ RATION CARD GIVING DETAILS OF THE FATHERS NA ME SO THAT THE BLOOD RELATIONSHIP COULD BE PROVED. THE LD. A.R. VIDE LE TTER DATED 24.12.07 FILED A COPY OF THE PASSPORT OF MR. PATEL AND THE M OTHER OF THE ASSESSEE SMT. CHANCHALBEN PATEL. HOWEVER, IN THE S AID COPIES, THE LAST PAGE OF THE PASSPORTS WHEREIN NAME OF THE FATH ER IS REFLECTED WAS CONSPICUOUSLY ABSENT. ANOTHER OPPORTUNITY WAS GIVEN TO PRODUCE THE RELEVA NT DOCUMENTARY EVIDENCES FOR FULFILLMENT OF THE CONDITIONS LAID DO WN IN SECTION 56(V) OF THE ACT AND ADMISSIBILITY OF THE SAID GIFT. HOWEVE R, NO DETAILS WERE FILED. A FINAL OPPORTUNITY WAS GIVEN VIDE SHOW CAU SE LETTER DATED 24.12.07 TO FURNISH THE BASIC DOCUMENTARY EVIDENCES TO PROVE THE ALLEGED BLOOD RELATIONSHIP AND IN THE EVENT OF FAIL URE, TO SHOWCAUSE AS TO WHY THE ALLEGED GIFT SHOULD NOT BE ADDED TO THE ASSESSEES INCOME. THE DETAILS WERE REQUESTED TO BE FILED BY 28.12.07. NOBODY ATTENDED NOR ANY WRITTEN SUBMISSIONS WERE FILED. IN THE CIR CUMSTANCES, IT IS EVIDENT THAT THERE IS NO BLOOD RELATIONSHIP BETWEEN THE ASSESSEE AND THE PERSON FROM WHOM THE CHEQUE OF RS.10 LAKHS IS R ECEIVED, THUS, THE CONDITIONS LAID DOWN U/S 56(2)(V) OF THE ACT REMAIN S TO BE SATISFIED. THEREFORE, THE SAID AMOUNT OF RS.10 LAKHS IS ADDED TO THE ASSESSEES INCOME. LD. CIT(A) HAS CONFIRMED THIS ACTION OF THE A.O. 10. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD, WE FIND THAT MATTER IS REQUIRED TO BE SENT BACK TO THE FILE OF THE A.O. IN VIEW OF ITATS ORDER IN THE CASE I.T.A. NO.67/AHD/2009 A. Y.2005-06 6 OF ASSESSEES MOTHER SMT. CHANCHALBEN PATEL IN ITA NO.2007/AHD/2009 FOR THE ASSESSMENT YEAR 2006-07 WHEREBY ON SIMILAR FACTS MA TTER HAS BEEN RESTORED BACK TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION. WE HOLD ACCORDINGLY. 11. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 28.09.2012 SD/- SD/- (ANIL CHATURVEDI) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY N.K. CHAUDHARY, SR. P.S. COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD 6. THE GUARD FILE BY ORDER AR,ITAT,AHMEDABAD