HITESH J PARIKH, MUMBAI V. ITO 5(1)(1), MUMBAI

ITA 7218/MUM/2012

• Counselvise Citation: 721819914 RSA 2012
• Duration Of Justice: 1 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 03-06-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 05-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PITAMBER DAS
• Assessee Lawyers: BIREN GABHAW ALA
• Keywords: Capital asset; Additional evidence; Surrender of tenancy right
• Section: 54; 11; 54F

Judgement Text

, ,, , ,P ,P,P ,P , INCOME TAX APPELLATE TRIBUNAL,MUMBAI - H BENCH. , ! ! ! ! ' ' ' ' , ,, , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & VIVEK VAR MA,JUDICIAL MEMBER /. ITA NO.7218/MUM/2012, # # # # $ $ $ $ / ASSESSMENT YEAR-2009-10 HITESH J. PARIKH, 501, MITTAL CASTLE, 5 TH FLOOR, 796 MAHALAXMI TEMPLE LANE, BHULABHAI DESAI ROAD, MUMBAI VS ITO 5(1)(1) ROOM NO. 525, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 PAN: AABPP5220E ( %& / APPELLANT) ( '(%& / RESPONDENT) #)* #)* #)* #)* + + + + / ASSESSEE BY : SHRI BIREN GABHAWALA , + / REVENUE BY : SHRI PITAMBER DAS # # # # , ,, , *- *- *- *- / DATE OF HEARING : 05-06-2014 ./$ , *- / DATE OF PRONOUNCEMENT : 18-06-2014 # # # # , 1961 , ,, , 254 )1( *0* *0* *0* *0* 1 1 1 1 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM # # # # : CHALLENGING THE ORDER DATED 03.10.2012 OF THE CIT(A )-9, MUMBAI, ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1.1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOLDING THE FINDING OF THE ASSESSING OFFICER THAT THE SUM OF RS. 40,00,000/- RECEIVED BY YOUR APPELLANT ON TRANSFER OF TENANCY RIGHT IN THE RESIDENTIAL FLAT NO. 2A IN AZAD BUILDING AT OOMER PARK, BHULABHAI DESAI ROAD, MUMBAI 400 026 IS TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES, CITING LACK OF PROOF O F ACQUISITION OF A CAPITAL ASSET IN THE FORM OF TENANCY RIGHTS AND IN HOLDING THAT THE SAID RECEIPT IS NOT A CAPITAL GAIN. 1.2.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN IGNORING THE EVIDENCE S SUCH AS YOUR APPELLANT HOLDING A RATION CARD, MTNL PHONE CONNECTION AND ELECTRICITY CONNECT ION OF THE SAID TENANTED PREMISES AND INSISTING THAT ONLY A TENANCY AGREEMENT WOULD PROVE THAT YOUR APPELLANT WAS HOLDING TENANCY RIGHT IN THE SAID PROPERTY. ALSO IGNORING THE STAMPED DOC UMENT ENTERED INTO BY THE APPELLANT AND THIRD PARTY FOR TRANSFER OF TENANCY RIGHT WITH PERMISSION OF LANDLORD. 1.3.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN REJECTING THE EVIDENC E SUCH AS RATION CARD, TELEPHONE BILL OR ELECTRICITY BILL HOLDING THAT THESE DID NOT EXIST S PECIFICALLY ON 1.4.1990 WITHOUT APPRECIATING THAT THEY EXISTED ON ACCOUNT OF TENANCY FOR A PERIOD OF 15 YEARS. 1.4.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN REFUSING TO ACCEPT TH AT THE RECEIPT OF RS. 40,00,000/- IS ON ACCOUNT OF SALE OF TENANCY RIGHT IN THE TENANTED PROPERTY O BSERVING THAT THE AGREEMENT ENTERED INTO FOR THE SAME WAS NOT DULY AUTHENTICATED AND REGISTERED AND ALSO THERE WAS NO CIVIL SUITS OR INDEPENDENT EVIDENCE IN SUPPORT OF THE GRANT OF THE AWARD FOR T HE AMOUNT ON ACCOUNT OF SURRENDER OF TENANCY RIGHT BY YOUR APPELLANT IGNORING THE AGREEMENT ON S TAMP PAPER ENTERED INTO BY YOUR APPELLANT WITH THE PURCHASERS OF TENANTED PREMISES. 2.1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE ACTION OF THE LEARNED ASSESSING OFFICER IN REJECTING YOUR APPELLANTS CLAIM FOR DEDUCTION U/S 54F OF THE I.T. ACT HOLDING THAT YOUR APPELLANT OWNED MORE THAN ONE HOUSE PROPERTY OTHER THAN THE NEW ASS ET AS ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET. 2 ITA NO. 7218/MUM/2012 HITESH J. PARIKH 2.2.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN FAILING TO APPRECIATE THAT WHAT IS APPEARING IN THE BALANCE SHEET OF YOUR APPELLANT FOR A.Y. 2009-10 WAS ONLY AN ADVANCE OF RS. 24,01,000/- PAID TOWARDS BOOKING OF FLAT TO TRISHUL CORPORATION WHICH WAS UNDER CONSTRU CTION AND HAD NOT BEEN COMPLETED AS ON 3 1.3.2009 AND HENCE IT COULD NOT BE REGARDED AS A RE SIDENTIAL HOUSE AS ENVISAGED IN THE PROVISO (A) TO SEC. 54F OF THE I.T. ACT AS THE INCOME FROM THE SAME IS NOT CHARGEABLE TO INCOME FROM HOUSE PROPERTY. 2.3.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN FAILING TO APPRECIATE THAT YOUR APPELLANT THOUGH PAID THE SUM OF RS. 24,01,000/- OUT OF THE TOTAL CONSIDERATION TO THE B UILDER FOR THE FLAT IN PATEL HEIGHTS THE CONSTRUCTION WAS NOT COMPLETE AND THE PURCHASE DEED WAS NOT REGISTERED IN HIS NAME AND HAS NOT RECEIVED POSSESSION TILL 3 1.3.2009 AND THE SALE AG REEMENT IN FAVOUR OF THE APPELLANT WAS EXECUTED ONLY ON 03.11.2009 AND POSSESSION WAS GIVEN ON 03.1 2.2009 AND HENCE THE APPELLANT CANNOT BE SAID TO BE OWNING MORE THAN ONE HOUSE AS ON 3 1.3.2 009. 3.YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY OF THE ABOVE GROUNDS OF APPEAL OR MAKE A FRESH GROUND/GROUNDS OF APPEAL ON OR BEFORE THE D ATE OF HEARING. 2 .ASSESSEE,AN INDIVIDUAL,HAD FILED ITS RETURN OF INC OME ON 16.10.2009 DECLARING TOTAL INCOME OF RS.98,280/-.ASSESSING OFFICER(AO)COMPLETED THE ASSE SSMENT ON 16.12.2011,U/S.143(3)OF THE ACT, DETERMINING HIS INCOME AT RS. 41.24 LAKHS. 3 .DURING THE COURSE OF ASSESSMENT PROCEEDINGS,AO FOU ND THAT ASSESSEE HAD CLAIMED DEDUCTION U/S. 54 OF THE ACT,THAT HE HAD SHOWN LONG TERM CAPITAL G AIN(LTCG) OF RS.40,00,000/ON SALE OF TENANCY RIGHTS.HE CALLED FOR THE DETAILS IN THIS RE GARD.ASSESSEE STATED THAT HE HAD ACQUIRED TENANCY RIGHTS SINCE 01.04.1990,THAT SAME WERE SOLD ON 05.0 4.2008 FOR RS. 40 LAKHS,THAG COST OF TENANCY RIGHT WAS NIL.THE AO FURTHER FOUND THAT THE ASSESSE E HAD CLAIMED DEDUCTION U/S. 54 OF THE ACT AGAINST THE PURCHASE OF A FLAT JOINTLY WITH HIS MOT HER.HE DIRECTED THE ASSESSEE TO FURNISH DOCUMEN -TARY PROOF TO PROVE THAT ASSESSEE HAD ACQUIRED THE TENANCY RIGHT ON 01.04.1990 ALONG WITH THE AGREEMENT.HE ALSO DIRECTED THE ASSESSEE TO PRODUCE THE PROOF OF EXCHANGE OF RS. 80 LAKHS. AS PER THE AO,ASSESSEE HAD NOT PRODUCED ANY AGREEMENT FOR PURCHASE OF TENANCY RIGHTS,THAT ONLY PROOF PRODUCED BY IT WAS A COPY OF RATION CARD ISSUED ON 16.03.2003,THAT A COPY OF ELECTRICITY BILL FOR THE PERIOD 06.10.1993 TO 07.12.1993 WAS ALSO PRODUCED.A O VIDE HIS LETTER DATED 28.09.2011 FURTHER ASKED THE ASSESSEE TO PRODUCE PROOF OF RELINQUISHME NT OF TENANCY RIGHTS TO ASCERTAIN THE TOTAL AMOUNT OF CONSIDERATION RECEIVED.IN RESPONSE TO THE SAME,AS PER THE AO,THE ASSESSEE PRODUCED A COPY OF ORDINARY RECEIPT OF RS. 80 LAKHS TOWARDS TH E TOTAL CONSIDERATION FOR TRANSFER OF TENANCY RIGHT.AO HELD THAT ASSESSEE WAS UNABLE TO PRODUCE E VIDENCE OF ACQUISITION OF TENANCY RIGHTS,THAT IN ABSENCE OF PROOF THAT THE ASSESSEE HAD ACQUIRED A C APITAL ASSET A SUM OF RS. 40 LAKHS HAD TO BE TREATED AS INCOME FROM OTHER SOURCES.HE ALSO DENIED DEDUCTION CLAIMED BY THE ASSESSEE U/S. 54 OF THE ACT. 4 . ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APP ELLATE AUTHORITY (FAA).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDE R, FAA HELD THAT ASSESSEE HAD FAILED TO FURNISH TENANCY AGREEMENT OR LEAVE AND LICENSE AGREEMENT DA TED 01.04.1999, THAT THERE WAS NO RATION CARD OR PROOF OF ANY MTNL CONNECTION/LPG OR ELECTRICITY CONNECTION IN THE NAME OF THE ASSESSEE FOR THE YEAR 1991-92,THAT ZEROX COPY OF MTNL BILL WAS F ILED FOR THE YEAR 1993 ONLY.FINALLY,HE UPHELD THE ORDER OF THE AO.HE ALSO HELD THAT THE ASSESSEE WAS NOT ENTITLED TO CLAIM DEDUCTION U/S.54 OF THE ACT. ASSESSEE HAS CHALLENGED THE ORDER OF THE FAA,BEFORE US.HE HAS ALSO FILED AN APPLICATION FOR ADMITTING FOLLOWING ADDITIONAL EVIDENCES: 1. PHOTOCOPY OF RENT RECEIPTS IN THE NAMES OF MRS. MAH ILA J. PARIKH AND MR. HITESH J. PARIKH FOR PERIOD FROM 1998 TO 2003 (15 RENT RECEIPTS). 3 ITA NO. 7218/MUM/2012 HITESH J. PARIKH 2. PHOTOCOPY OF CERTIFICATE FROM LANDLORD- RAVILAL H. SANGHVI TRUST THAT MRS. MAHILA J. PARIKH AND MR. HITESH J. PARIKH WERE TENANTS FROM A PRIL 1990 TO MARCH 2007. 3. PHOTOCOPY OF RATION CARD OF MR. HITESH J. PARIKH. 4. PHOTOCOPIES OF SOME ELECTRICITY BILLS IN THE NAME O F MRS. MAHILA J. PARIKH FOR THE PERIOD FROM 2002 TO 2007. 5. PHOTOCOPY OF MNTL BILL FOR THE PERIOD 1.4.1993 TO 1 0.05.1993. 6. PHOTOCOPY OF PASSPORT OF MR. HITESH J. PARIKH ISSUE D ON 1.2.2000 SHOWING RESIDENTIAL ADDRESS AS THAT OF THE TENANTED PREMISES. 5. IT WAS ARGUED BEFORE US, ASSESSEE WAS HOLDING TENAN CY RIGHT OF A FLAT, THAT AFTER SELLING THE TENANCY RIGHTS OF THE OLD PROPERTY HE HAD SHIFTED T O NEW PLACE,THAT ALL THE PAPERS RELATED WITH OLD PROPERTY WERE DESTROYED AS SAME WERE THOUGHT TO BE OF NO USE,THAT BY THE TIME ASSESSMENT PROCEEDING STARTED HE HAD ALMOST DESTROYED ALL THE PAPERS,THAT ONLY AFTER THE ORDER OF THE AO AND FAA HE TRIED TO COLLECT NECESSARY DOCUMENTS FROM VA RIOUS GOVT.AGENCIES,THAT HE OBTAINED A CERTIFICATE FROM THE HIS OLD LAND LORD,THAT PAPERS SUBMITTED BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE TRIBUNAL WOULD PROVE THE STAND TAKEN BY THE ASS ESSEE,THAT SAME SHOULD BE ADMITTED.DEPARTMENTAL REPRESENTATIVE(DR)STATED THAT THE ASSESSEE HAD TWO OCCASIONS TO PRODUCE THE EVIDENCES,THAT HE DID NOT AVAIL THOSE OPPORTUNI TIES, THAT EVIDENCES PRODUCED BY THE ASSESSEE SHOULD NOT BE ADMITTED. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE COURTS ARE OF THE VIEW THAT THE LANGUAGE OF RULE 29 OF THE INCOME-TAX (APPELLATE TRIBUNAL) RULES, 1963, PROHIBITS THE PARTIES TO PRODUCE ADDITIONAL EVIDENC E. IT IS ONLY WHEN THE TRIBUNAL REQUIRES SUCH ADDITIONAL EVIDENCE IN THE FORM OF ANY DOCUMENT OR AFFIDAVIT OR EXAMINATION OF A WITNESS OR THROUGH A WITNESS THAT IT CAN CALL FOR THE SAME OR DIRECT ANY AFFIDAVIT TO BE FILED. ADDITIONAL EVIDENCES CAN BE FILED IN THE FOLLOWING CIRCUMSTANCES (I) WHEN THE TRIBUNAL FEELS THAT IT IS NECESSARY TO ENABLE IT TO PASS ORDERS ; OR (II) ANY SUBSTANTIAL CAUSE ; OR (III) WHERE THE INCOME-TAX AUTHORITIES DID NOT P ROVIDE SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO ADDUCE EVIDENCE. BUT,THE DISCRETION LIES WITH THE TRIBUNAL TO ADMIT ADDITIONAL EVIDENCE IN THE INTEREST OF JUSTICE ONCE THE TRIBUNAL AFFIRMS THE OPINION THAT DOING SO WOUL D BE NECESSARY FOR PROPER ADJUDICATION OF THE MATTER.FOR THIS AN APPLICATION HAS TO BE FILED BY O NE OF THE PARTIES TO THE APPEAL AND IT NEED NOT TO BE A SUO-MOTU ACTION OF THE TRIBUNAL. RULE 29 IS MA DE ENABLING THE TRIBUNAL TO ADMIT THE ADDITIONAL EVIDENCE IN ITS DISCRETION IF THE TRIBUN AL HOLDS THE VIEW THAT SUCH ADDITIONAL EVIDENCE WOULD BE NECESSARY TO DO SUBSTANTIAL JUSTICE IN THE MATTER. ONCE IT IS FOUND THAT THE PARTY INTENDING TO LEAD EVIDENCE BEFORE THE TRIBUNAL FOR THE FIRST TIME WAS PREVENTED BY SUFFICIENT CAUSE FROM LEADING SUCH AN EVIDENCE AND THAT THIS EVIDENCE WOU LD HAVE A MATERIAL BEARING ON THE ISSUE WHICH NEEDS TO BE DECIDED BY THE TRIBUNAL AND THE ENDS OF JUSTICE DEMAND ADMISSION OF SUCH AN EVIDENCE,THE TRIBUNAL CAN PASS AN ORDER TO THAT EFF ECT. IN THE CASE UNDER CONSIDERATION THE ASSESSEE HAD LE FT THE PREMISES AND SHIFTED TO A NEW PLACE.SO,A PLACE LIKE MUMBAI WHERE THERE IS ACUTE SHORTAGE OF SPACE,IT IS NATURAL THAT NO ONE WOULD LIKE TO KEEP OLD RECORDS.EVEN THEN THE ASSESSEE TRIED TO CO LLECT INFORMATION FROM GOVERNMENT AGENCIES BY FILING APPLICATIONS UNDER THE RTI ACT.THUS,NECESSAR Y DETAILS CAME IN TO HIS POSSESSION AFTER THE ASSESSMENT ORDER AND THE ORDER OF THE FAA WERE PASS ED.AS THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FOR NOT ADDUCING THE EVIDENCES BEF ORE THE DEPARTMENTAL AUTHORITIES BY A REASON - ABLE CAUSE,THEREFORE,IN THE INTEREST OF JUSTICE WE ARE ADMITTING ADDITIONAL EVIDENCES PRODUCED BY THE ASSESSEE BEFORE US FOR THE FIRST TIME.WE ARE OF THE OPINION THAT THE EVIDENCES PRODUCED BEFORE US,WILL HAVE DIRECT BEARING ON THE ISSUE TO BE DECI DED BY US.SO,WE ARE REMITTING BACK THE MATTER TO THE FILE OF THE AO FOR FRESH ADJUDICATION,AS HE HAD NO OCCASION TO GO THROUGH THE DOCUMENT 4 ITA NO. 7218/MUM/2012 HITESH J. PARIKH PRODUCED BEFORE US.HE IS DIRECTED TO AFFORD A REASO NABLE OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE PASSING ORDER AND DECIDE THE ISSUE OF TENANC Y RIGHT AFTER CONSIDERING THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE. FIRST EFFECTIVE GROUND OF APPEAL IS DECIDED IN FAVO UR OF THE ASSESSEE,IN PART. 7. SECOND EFFECTIVE GROUND OF APPEAL IS ABOUT THE DEDU CTION U/S.54F OF THE ACT CLAIMED BY THE ASSESSEE AND DENIED BY THE REVENUE AUTHORITIES.AS T HE OUTCOME OF THE FIRST ISSUE WOULD HAVE BEARING ON THE SECOND GROUND OF APPEAL,SO,WE ARE OF THE OPINION THAT IN THE INTEREST OF JUSTICE,MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION.HE IS DIRECTED TO TAKE A DECISION ABOUT THE CLAIM MADE BY THE ASSESSE E U/S.54F OF THE ACT,AFTER HE ADJUDICATES THE ISSUE OF TENANCY,AS INDICATED ABOVE.GROUND NO.2 IS ALLOWED FOR STATISTICAL PURPOSES. AS A RESULT,APPEAL F ILED BY THE ASSESSEE STANDS PARTLY ALLOWED. 2*3 #)* 4 5 , 0 1*3 6 , * 78. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JUNE,2014 . 1 , ./$ : ;# 18 TWU TWUTWU TWU , 201 4 / , 0 < SD/- SD/- ( ' ' ' ' / VIVEK VARMA) ( / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, ;# /DATE: 18 TH JUNE,2014. SK 1 1 1 1 , ,, , '*' '*' '*' '*' ='$* ='$* ='$* ='$* / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / %& 2. RESPONDENT / '(%& 3. THE CONCERNED CIT (A) / > ? , 4. THE CONCERNED CIT / > ? 5. DR H BENCH, ITAT, MUMBAI / '@0 '*# ,P ,P ,P ,P , . . . 6. GUARD FILE/ 0 2 ('* ('* ('* ('* '* '*'* '* //TRUE COPY// 1# / BY ORDER, A / 7 DY./ASST. REGISTRAR , /ITAT, MUMBAI