ANAND J. JAIN, MUMBAI V. DCIT CC 6(4), MUMBAI

ITA 6716/MUM/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 7417 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 28-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MICHAEL JERALDLD
• Keywords: Principle of natural justice; Question of law
• Section: 143(3); 201; 22

Judgement Text

SHRI ANAND J. JAIN ITA NO.6716/MUM/2018 ASSESSMENT YEAR :2015-16 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI , , BEFORE HONBLE SHRI AMARJIT SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ ITA NO. 6716/MUM/2018 ( / ASSESSMENT YEAR: 2015-16) SHRI ANAND J. JAIN 82, MAKER CHAMBERS-III NARIMAN POINT MUMBAI 400 021 / VS. DCIT - CIRCLE 6 ( 4 ) 19 TH FLOOR, AIR INDIA BUILDING MUMBAI 400 021 ! ./ ./PAN/GIR NO. AABPJ-1890-J ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) ASSESSEE BY : SHRI ANUJ KISNADWALA, LD. AR REVENUE BY : SHRI MICHAEL JERALD-LD. DR / DATE OF HEARING : 21/10/2020 / DATE OF PRONOUNCEMENT : 18/01/2021 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR (AY) 2015- 2016 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOM E TAX (APPEALS)- 54, MUMBAI, APPEAL NO. CIT(A)-54/IT-10469/DCCC-6(4) /2017-18 DATED 24/08/2018 ON FOLLOWING GROUNDS: - 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED ON CONFIRMING THE ANNUAL LETTING VALUE (ALV) OF THE PR EMISES OWNED BY THE APPELLANT AT CENTRAL GARDEN COMPLEX, CHUNABHATTI, MUMBAI AT RS.6 4,57,488/- INSTEAD OF RS.3,75,506/- OFFERED BY THE APPELLANT BASED ON THE MUNICIPAL RAT EABLE VALUE OF THE SAID PREMISES. SHRI ANAND J. JAIN ITA NO.6716/MUM/2018 ASSESSMENT YEAR :2015-16 2 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE AFORESAID PREMISES WERE VACANT THROUGHOUT THE PREVIOUS YEAR AND ACCORDINGLY THE AP PELLANT HAS RIGHTLY ADOPTED THE MUNICIPAL RATEABLE VALUE FOR THE PURPOSE OF DETERMI NING INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 3. THE ORDER PASSED BY THE LEARNED CIT(A) IS ILLEGA L, BAD IN LAW, ULTRA VIRES AND CONTRARY TO THE PROVISIONS OF LAW AND FACTS AND IS PASSED WI THOUT APPLICATION OF MIND AND IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. AS EVIDENT, THE SOLE ISSUE THAT FALL FOR OUR CONSID ERATION IS DETERMINATION OF ANNUAL RENTAL VALUE (ARV) OF CERTAIN FLATS HELD BY THE ASSESSEE DURING THE YEAR. 2. THE LEARNED AUTHORIZED REPRESENTATIVE FOR ASSESS EE (AR), AT THE OUTSET, SUBMITTED THAT SIMILAR ISSUE AROSE IN PRECE DING AYS 2013-14 & 2014-15 IN CASE OF ASSESSEE AND HIS OTHER FAMILY ME MBERS WHEREIN VIDE ITA NOS.6836/MUM/2017 & OTHERS, ORDER DATED 27/02/2 019, THE TRIBUNAL ACCEPTED THE MUNICIPAL RATEABLE VALUE (MRV) AS ANNU AL LETTING VALUE (ALV). THE COPY OF THE ORDER HAS BEEN PLACED ON REC ORD. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF LOWER AUT HORITIES. IN THE ABOVE BACKGROUND, OUR ADJUDICATION TO THE SUBJECT MATTER OF APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 3. THE MATERIAL FACTS ARE THAT AN ASSESSMENT WAS FR AMED U/S 143(3) ON 27/12/2017 FOR THE YEAR UNDER CONSIDERATION WHER EIN THE INCOME WAS DETERMINED AT RS.199.31 LACS AFTER CERTAIN ADJUSTME NTS AS AGAINST RETURNED INCOME OF RS.156.73 LACS FILED BY THE ASSE SSEE ON 30/08/2015. IT SO TRANSPIRED THAT THE ASSESSEE OWNED 19 FLATS A T CENTRAL GARDEN COMPLEX (TOWER NO.5) OUT OF WHICH 7 FLATS WERE LYIN G VACANT DURING THE YEAR WHEREAS REMAINING FLATS WERE LET OUT. THE ASSE SSEE OFFERED AGGREGATE INCOME AGAINST THE VACANT FLATS AT RS.1.2 6 LACS ON THE BASIS OF MUNICIPAL RATEABLE VALUE. HOWEVER, LD. AO, APPLY ING THE PROVISIONS OF SHRI ANAND J. JAIN ITA NO.6716/MUM/2018 ASSESSMENT YEAR :2015-16 3 SEC. 23(1)(A) OPINED THAT THE ANNUAL VALUE SHALL BE DEEMED TO BE THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPE CTED TO LET OUT FROM YEAR TO YEAR. THEREFORE, THE MUNICIPAL VALUE WAS NO T TO BE TAKEN AS FAIR ALV OF THE PROPERTY. APPLYING THE AVERAGE RATE PER SQUARE METER AT WHICH OTHER 12 FLATS WERE LET OUT BY THE ASSESSEE, LD. AO WORKED OUT ALV OF THESE 7 FLATS AS RS.64.57 LACS. AFTER REDUCI NG MUNICIPAL TAXES & STATUTORY DEDUCTION OF 30%, THE NET ALV CAME TO BE RS.43.83 LACS. SINCE THE ASSESSEE HAD ALREADY OFFERED ALV OF RS.1. 26 LACS, THE DIFFERENTIAL AMOUNT OF RS.42.57 LACS WAS FURTHER AD DED TO THE INCOME OF THE ASSESSEE. 4. BEFORE LD. CIT(A), THE ASSESSEE INTER-ALIA RELIE D UPON FAVORABLE DECISION OF HONBLE BOMBAY HIGH COURT IN CIT V/S TIP TOP TYPOGRAPHY (48 TAXMANN.COM 191) AND ALSO DREW ATTENTION TO THE FAVORABLE ORDERS OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AYS 2009 -10 & 2010-11 WHEREIN LD. AO WAS DIRECTED TO ADOPT THE MUNICIPAL RATEABLE VALUE AS THE ALV OF THE VACANT FLATS HELD BY THE ASSESSEE. S IMILAR VIEW WAS STATED TO BE TAKEN BY PREDECESSOR CIT(A) FOR AYS 2012-13 T O 2014-15. HOWEVER, LD. CIT(A) DISTINGUISHED THE FACTS OF THIS YEAR BY NOTICING THAT OUT OF 19 FLATS HELD BY THE ASSESSEE, 12 FLATS WERE ACTUALLY LET OUT AND 7 FLATS REMAINED VACANT DURING THE YEAR. THE ASSESSEE OFFERED ACTUAL RENT RECEIVED IN RESPECT OF 12 FLATS WHICH WERE LET OUT WHEREAS IT ADOPTED MUNICIPAL RATEABLE VALUE WITH RESPECT TO REMAINING 7 FLATS. IN THE EARLIER YEARS, LD. AO DID NOT MAKE ANY PROPER INQUIRY TO ES TIMATE THE RENTAL INCOME BUT SINCE IN THIS YEAR 12 FLATS WERE ACTUALL Y LET OUT, THE SAME WOULD GIVE A CLEAR INDICATION OF THE RATE AT WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO BE LET OUT. THEREFORE, TH E ESTIMATION SO MADE SHRI ANAND J. JAIN ITA NO.6716/MUM/2018 ASSESSMENT YEAR :2015-16 4 BY LD. AO WAS CONFIRMED. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. UPON CAREFUL CONSIDERATION, WE FIND THE ISSUE OF DETERMINATION OF ALV WAS SUBJECT MATTER OF CROSS-APPEALS FOR AYS 201 3-14 & 2014-15 BEFORE THIS TRIBUNAL IN ASSESSEES OWN CASE VIDE IT A NOS.NOS.6836/MUM/2017 & OTHERS, ORDER DATED 27/02/2 019 WHEREIN THE BENCH TOOK NOTE OF EARLIER DECISION OF TRIBUNAL IN AY 2012-13, ITA NO.3887 & 3665/MUM/2017. IN THE DECISION FOR AY 201 2-13, THE CO- ORDINATE BENCH AFTER CONSIDERING THE RELEVANT PROVI SIONS OF ACT AND ALSO BY FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH CO URT IN M/S TIP TOP TYPOGRAPHY (2014) 368 ITR 330 AND ALSO IN MONI KUMAR SUBBA (2011) 333 ITR 38 , UPHELD THE DETERMINATION OF ALV ON THE BASIS OF MUNICIPAL RATEABLE VALUE. THE BENCH WHILE ADJUDICAT ING APPEALS FOR AYS 2013-14 & 2014-15 FURTHER OBSERVED THAT: - 6. WE FURTHER NOTICED THAT THE HONBLE BOMBAY HIGH COURT IN INCOME TAX APPEAL NO.1285 OF 2015 IN THE CASE OF LAXMI JAIN HAS CONSI DERED THE ISSUE OF DETERMINATION AT ALV OF HOUSE PROPERTY ON THE BASIS OF MUNICIPAL RATEABLE VALUE AND BY FOLLOWING ITS EARLIER DECISION IN THE CASE OF SM T. SMITABEN N. AMBANI, DISMISSED THE APPEAL FILED BY THE REVENUE. FURTHER, THE HONB LE JURISDICTIONAL HIGH COURT IN THE CASE OF PR. CIT VS SHRI HARISH JAIN (INCOME TAX APP EAL NO.1438 OF 2016) AN ASSOCIATE OF THE ASSESSEE HAS CONSIDERED IDENTICAL QUESTION OF LAW IN THE LIGHT OF PROVISIONS OF SECTION 22 AND 23 OF THE ACT AND BY F OLLOWING ITS EARLIER DECISION IN THE CASE OF SMT. SMITABEN N. AMBANI (SUPRA) HELD AS UND ER. THE RELEVANT PORTION OF THE ORDER IN THE CASE OF SHRI HARISH JAIN (SUPRA) IS RE PRODUCED HEREUNDER:- 6 WE, HOWEVER, NOTICE THAT THE TRIBUNAL HAS TAKEN N OTE OF THE CONTENTS OF THE EMAIL AND FOUND THAT, THE SAME DO NOT SHOW ANY EVID ENCE OF CASH PAYMENT AND IN FACT, REFERENCE TO THE DATES WHEN SUCH PAYME NTS WERE ALLEGEDLY MADE, WOULD TAKE THE CASE OF THE ASSESSEE OUT OF THE CURR ENT ASSESSMENT YEAR. THE TRIBUNAL FURTHER NOTED THAT THE LOOSE DOCUMENTS/PAP ERS WERE NOT FOUND FROM THE POSSESSION OF THE ASSESSEE, NOR THE SAME WERE S INGED BY THE ASSESSEE. 7 WE, THEREFORE, FIND THAT THE ENTIRE ISSUE IS BASE D ON APPRECIATION OF FACTS ON RECORD. THE TRIBUNAL HAS ASSESSED THE EVIDENCE TO C OME TO THE CONCLUSION THAT, THERE WAS NO EVIDENCE IN POSSESSION OF THE AS SESSING OFFICER TO MAKE ADDITIONS. SIGNIFICANTLY, THE TRIBUNAL NOTICED SEVE RAL INCONSISTENCIES IN THE CONTENTS OF THE EMAIL AND FOUND THAT THE LOOSE DOCU MENTS/PAPERS WERE NOT FOUND FROM THE POSSESSION OF THE ASSESSEE, NOR THEY WERE SIGNED BY THE SHRI ANAND J. JAIN ITA NO.6716/MUM/2018 ASSESSMENT YEAR :2015-16 5 ASSESSEE AND FINALLY THE PURCHASER OF THE LAND, WAS NOT EXAMINED BY THE ASSESSING OFFICER. WE DO NOT FIND ANY QUESTION OF L AW ARISING. 8 QUESTION (B) RELATES TO THE ADDITIONS MADE BY THE ASSESSING OFFICER BY REVERSING THE RATEABLE VALUE OF THE PROPERTY OWNED BY THE ASSESSEE WHICH WAS VACANT. WHILE COMPLYING THE TAXABILITY OF DEEME D RENTAL INCOME IN TERMS OF SECTIONS 22 AND 23 OF THE ACT, THE ASSESSING OFF ICER DISCARDED THE RATEABLE VALUE FIXED BY THE MUNICIPAL CORPORATION FOR ASSESS ING THE TAX ON SUCH PROPERTIES AND SUBSTITUTED THE SAME WITH MARKET RAT E AS PREVAILING IN THE AREA, AS ESTIMATED BY HIM AFTER COLLECTING DATA WIT H RESPECT TO THE SAME. THE TRIBUNAL, HOWEVER, DELETED ADDITION ON THE GROUND T HAT IN CASE OF VACANT PROPERTY, THE TAX ON RENTAL INCOME IN TERMS OF SECT ION 23 OF THE ACT CAN BE CALCULATED ONLY ON THE BASIS OF RATEABLE VALUE ASSE SSED BY THE MUNICIPAL CORPORATION. 9 WE FIND THAT THIS VIEW OF THE TRIBUNAL IS SUPPORT ED BY DECISION OF THIS COURT BY ORDER DATED 16TH APRIL, 2018 PASSED IN INCOME TA X APPEAL NO.1285 OF 2015. THE COURT WHILE DISMISSING THE REVENUE'S APPE AL, RELIED ON THE DECISION OF THIS COURT IN CASE OF SMT. SMITABEN N. AMBANI V/S. COMMISSIONER OF WEALTH TAX REPORTED IN 323 ITR 104. IN SUCH DECI SION, THIS COURT WAS CONSIDERING A SIMILAR QUESTION IN CONTEXT OF VALUIN G THE SELF-OCCUPIED PROPERTY, FOR THE PURPOSE OF WEALTH TAX OF THE ASSESSEE. THE PROVISIONS FOR ASSESSING THE VALUE OF THE PROPERTY WERE SIMILAR TO THOSE APP LICABLE IN CASE OF ASSESSEE'S ANNUAL RATEABLE VALUE IN TERMS OF SECTIO N 23 OF THE ACT. THIS QUESTION IS, THEREFORE, NOT ENTERTAINED. 7. IN THIS VIEW OF MATTER AND CONSISTENT WITH VIE W TAKEN BY THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE FOR THE AY 2012-13, WHICH WAS I N TURN FOLLOWED THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE, WE ARE OF THE VIEW THAT THERE IS NO ERROR IN THE FINDING OF THE LD. CIT(A) IN DETERMINING THE ALV OF HOUSE PROPERTY ON THE BASIS OF MUNICIPAL RATEABLE VALUE. HENCE, WE ARE INCLINED TO UPHELD THE FINDING OF THE LD. CIT(A) AND DISMISSED THE APP EAL FILED BY THE REVENUE. IT IS QUITE EVIDENT THAT THE CONSISTENT VIEW OF THE TRIBUNAL IN ALL THE EARLIER YEARS IS THAT MUNICIPAL RATEABLE VALUE WAS TO BE TA KEN AS ANNUAL RENTAL VALUE. NOTHING IS ON RECORD TO DEMONSTRATE THAT THE ANY OF THE AFORESAID ADJUDICATION HAS SUBSEQUENTLY BEEN REVERSED IN ANY MANNER. THEREFORE, THE DISTINCTION OF FACTS AS MADE BY LD. CIT(A) WAS NOT TO BE ACCEPTED. RESPECTFULLY FOLLOWING THE CONSISTENT VIEW OF TRIBU NAL IN EARLIER YEARS IN ASSESSEES OWN CASE, WE DIRECT LD. AO TO ADOPT THE MRV AS ANNUAL LETTING VALUE. THE GROUND, THUS RAISED, STAND ALLOW ED. NO ARGUMENTS HAVE BEEN ADVANCED WITH RESPECT TO GROUND NO.3 AND THEREFORE, THE SAME STANDS DISMISSED. SHRI ANAND J. JAIN ITA NO.6716/MUM/2018 ASSESSMENT YEAR :2015-16 6 6. RESULTANTLY, THE APPEAL STANDS PARTLY ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN OPEN COURT ON 18 TH JANUARY, 2021. SD/- SD/- (AMARJIT SINGH) (MAN OJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 18/01/2021 SR.PS, JAISY VARGHESE ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. ,-$. , . , / DR, ITAT, MUMBAI 6. -/01 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.