MANISH SAWANT, MUMBAI V. ITO 8(2)(4), MUMBAI

ITA 794/MUM/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9749 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 08-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 30-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Keywords: Unexplained cash credit; Gift; Depreciation
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.794 /MUM/2013 (ASSESSMENT YEAR: 2009-10) SHRI MANISH SWANT VS. INCOME TAX OFFICER - 8(2)(4) D/5, MUKUND NAGAR CHS LTD. MAROL PIPE LINE, ANDHERI (E) MUMBAI 400059 MUMBAI PAN ANZPS4423R APPELLANT RESPONDENT APPELLANT BY: NONE RESPONDENT BY: SHRI SUMAN KUMAR DATE OF HEARING: 12.09.2017 DATE OF PRONOUNCEMENT: 14.09.2017 O R D E R PER P.K. BANSAL, VICE PRESIDENT THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-17, MUMBAI DATED 07.01.2013 FOR A.Y. 2009-10 . 2. NONE APPEARED ON BEHALF OF THE ASSESSEE EVENTHOUGH NOTICE HAS BEEN SENT THROUGH REGISTERED A.D. THE CASE HAS ALREADY B EEN FIXED AT SEVERAL TIMES FROM 20.04.2014 AND NOTICES WERE SENT TO THE ASSESSEE THROUGH REGISTERED A.D. BUT NONE APPEARED ON BEHALF OF THE ASSESSEE. WE, THEREFORE, DECIDED TO DISPOSE OFF THE APPEAL AFTER HEARING THE LEARNED D.R. 3. IN THIS APPEAL ASSESSEE HAS TAKEN THE FOLLOWING EF FECTIVE GROUNDS OF APPEAL: - 1. THE LEARNED CIT(A) (17) ERRED IN LAW AND IN FA CT BY DISMISSING APPEAL OF THE APPELLANT OF RS.1,50,000/- DISALLOWIN G INTEREST PAID ON ACQUISITION OF SELF OCCUPIED PROPERTY. 2. THE LEARNED CIT(A) (17) ERRED IN LAW AND IN FACT BY DISMISSING THE APPEAL OF THE APPELLANT OF RS.1,51,242/- DISALLOWIN G EXPENSES CLAIMED BY THE APPELLANT. ITA NO. 794/MUM/2013 SHRI MANISH SWANT 2 3. THE LEARNED CIT(A) (17) ERRED IN LAW AND IN FACT BY DISMISSING THE APPEAL OF THE APPELLANT OF RS.7,40,000/- TOWARDS GI FT RECEIVED FROM MOTHER IN LAW. 4. GROUND NO. 1 RELATES TO DISALLOWANCE OF INTEREST P AID ON ACQUISITION OF THE SELF OCCUPIES PROPERTY AMOUNTING TO ` 1,50,000/-. THE BRIEF FACTS OF THE CASE ARE THAT THE AO NOTED THAT THE ASSESSEE HA S SHOWN LOSS OF ` 1,50,000/- BEING INTEREST PAID ON BORROWED CAPITAL UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE ASSESSEE HAS SHOWN THE ANNUAL VALUE OF THE SELF OCCUPIED PROPERTY AT NIL. WHEN ASKED THE A SSESSEE SUBMITTED THAT HE HAD BOOKED THE FLAT IN GOREGAON PROJECT OF M/S. OBERIO CONSTRUCTION P. LTD. SOLD THE SAME WITHOUT TAKING POSSESSION. THE A O, THEREFORE, TOOK THE VIEW THAT SINCE THE ASSESSEE HAS NOT TAKEN POSSESSI ON, THE ANNUAL VALUE UNDER SECTION 22 DOES NOT ARISE AND HE THEREFORE DI SALLOWED THE INTEREST AMOUNTING TO ` 1,50,000/- PAID ON ACQUISITION OF THE SELF OCCUPIED PROPERTY. 5. AFTER HEARING THE LEARNED D.R. WE NOTED THAT IT IS A CASE WHERE THE ASSESSEE HAS PAID INTEREST IN RESPECT OF A FLAT WHI CH THE ASSESSEE HAS NEVER TAKEN POSSESSION AND ULTIMATELY SOLD IT WITHOUT TAK ING POSSESSION. WITHOUT TAKING POSSESSION, IN OUR OPINION, THE PROPERTY CAN NOT BE REGARDED TO BE SELF OCCUPIED PROPERTY AND THE ANNUAL VALUE OF THE SAME CANNOT ARISE. WE, THEREFORE, DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER OF THE CIT(A) CONFIRMING THE ORDER OF THE AO. ACCORDINGLY GROUND NO. 1 STANDS DISMISSED. 6. GROUND NO. 2 RELATES TO THE DISALLOWANCE OF A SUM OF ` 1,51,242/- RELATING TO THE EXPENSES CLAIMED BY THE ASSESSEE. T HE AO NOTED THAT THE ASSESSEE HAS CLAIMED THE FOLLOWING EXPENSES AGAINST THE HIRE CHARGES: - BANK CHARGES ` 2,771/- DEPRECIATION ` 1,06,271/- LEGAL AND PROFESSIONAL FEES ` 42,201/- THE ASSESSEE HAS RECEIVED CAR HIRE CHARGES FROM CI TY LIMOZINE INDIA LTD. THROUGH VARIOUS AGREEMENTS ENTERED INTO BETWEEN THE CITY LIMOZINE INDIA ITA NO. 794/MUM/2013 SHRI MANISH SWANT 3 LTD. AND THE ASSESSEE FOR LEASING OF MOTOR VEHICLES . THE AO DID NOT ALLOW THE DEPRECIATION AND OTHER EXPENSES CLAIMED BY THE ASSESSEE OUT OF THESE LEASE CHARGES. BEFORE THE CIT(A) THE ASSESSEE HAS F ILED THE AGREEMENT DATED 23.08.2004 WHEREIN, AS OBSERVED BY THE CIT(A), IT I S MENTIONED THAT THE CITY LIMOZINE INDIA LTD. WOULD TAKE ONLY HIRED VEHI CLES FROM THE ASSESSEE FOR WHICH THE ASSESSEE HAS PAID A SUM OF ` 51,896/- TOWARDS INSURANCE AND RTO REGISTRATION AND ` 1,52,552/- TOWARDS MARGIN MONEY. THERE WAS ANOTHER AGREEMENT WITH THE SAME COMPANY DATED 15.12 .2004 HAVING MORE OR LESS THE SAME DETAILS. SUBSEQUENTLY A THIRD AGRE EMENT WAS ENTERED INTO BY THE ASSESSEE WITH THE SAME COMPANY DATED 10.03.2 005 CONTAINING SIMILAR DETAILS AND PAYMENT OF ` 53,859/- TOWARDS INSURANCE AND RTO REGISTRATION CHARGES AND ` 1,60,589/- TOWARDS MARGIN MONEY. THE CIT(A) DID NOT ACCEPT THESE EVIDENCES AS THESE WERE NOT AV AILABLE WITH THE AO AND THEREFORE THE CIT(A) CONFIRMED THE ACTION OF THE AO DISALLOWING DEPRECIATION. 7. AFTER HEARING THE LEARNED D.R. AND GOING THROUGH TH E ORDERS OF THE TAX AUTHORITIES BELOW WE RESTORE THIS ISSUE TO THE FILE OF THE AO WITH THE DIRECTION THAT THE ASSESSEE SHALL FILE COPIES OF AL L THESE AGREEMENTS DATED 23.08.2004, 15.12.2004 AND 10.03.2005 BEFORE THE AO WHICH HE HAS FILED BEFORE THE CIT(A) TO PROVE THAT THE ASSESSEE HAS PU RCHASED VEHICLES BY TAKEN FINANCE FROM M/S. CITY LIMOZINE INDIA LTD. SO THAT THE OWNERSHIP OF THE VEHICLES MAY BE PROVED. WE DIRECT THE AO TO ALL OW THE DEPRECIATION TO THE ASSESSEE IN THE CASE HE SATISFIES WITH THE EVID ENCES THAT THE ASSESSEE HAS PURCHASED THESE VEHICLES BY TAKING FINANCE FROM M/S. CITY LIMOZINE INDIA LTD. OR OTHERWISE. THUS, THIS GROUND IS ALLOW ED FOR STATISTICAL PURPOSES. 8. GROUND NO. 3 RELATES TO SUSTAINING OF ADDITION OF ` 7,40,000/- TOWARDS GIFT RECEIVED FROM FATHER IN LAW. THE AO NOTED THAT THE ASSESSEE HAD CREDITED A SUM OF ` 7,40,000/- IN HIS CAPITAL ACCOUNT. WHEN THE ASSESS EE WAS ASKED TO PROVE THE GENUINENESS OF THE SAID GIFT THE ASSESSEE EXPLAINED THAT HIS FATHER IN LAW, WHO HAS GIVEN THE GIFT, EXP IRED AND HE FILED THE DEATH CERTIFICATE. IN THIS REGARD THE AO, IN THE ABSENCE OF ANY OTHER PROOF, TREATED ITA NO. 794/MUM/2013 SHRI MANISH SWANT 4 THE GIFT TO BE UNEXPLAINED CASH CREDIT AND MADE ADD ITION UNDER SECTION 68 OF THE INCOME TAX ACT. WHEN THE MATTER WENT BEFORE THE CIT(A), WE NOTED, THE ASSESSEE HAS SUBMITTED COPY OF THE BANK STATEME NT, GIFT DECLARATION OF ` 7,40,000/- FROM SMT. SHARDADEVI S. VARSHNEYA, MOTHE R IN LAW OF THE ASSESSEE AS WELL AS COPY OF BANK STATEMENT PROVING PAYMENT MADE TO THE ASSESSEE. THE CIT(A) DID NOT ACCEPT THESE EVIDENCES AS THE ASSESSEE HAS NOT FILED ANY APPLICATION FOR ADMISSION OF THE ADDI TIONAL EVIDENCES UNDER RULE 46A OF THE INCOME TAX ACT AND UPHELD THE SAID ADDITION. 9. AFTER HEARING THE LEARNED D.R. AND GOING THROUGH TH E ORDERS OF THE TAX AUTHORITIES BELOW WE NOTED THAT IT IS A FACT THAT T HE FATHER IN LAW OF THE ASSESSEE WHO HAS GIVEN A GIFT HAS EXPIRED. THE ASSE SSEE HAS FILED THE DEATH CERTIFICATE, COPY OF THE GIFT DECLARATION AS WELL A S COPY OF THE BANK STATEMENT OF SMT. SHARDADEVI VARSHNEYA WHO WAS THE MOTHER IN LAW OF THE ASSESSEE BEFORE THE CIT(A). THE CIT(A) CONFIRMED TH E ADDITION BY NOT ACCEPTING THESE EVIDENCES AS THEY WERE NOT IN ACCOR DANCE WITH RULE 46A. WE, THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY TO BOTH THE PARTIES SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THIS ISSU E TO THE FILE OF THE AO WITH THE DIRECTION THAT THE AO SHALL REDECIDE THE ISSUE. THE ASSESSEE IS ALSO DIRECTED TO ADDUCE ALL THE EVIDENCES BEFORE THE AO TO PROVE THE GENUINENESS OF THE GIFT. THE ASSESSEE IS ALSO DIREC TED TO DISCHARGE THE ONUS OF WHATEVER RELIED UPON BY HIM UNDER SECTION 68 OF THE INCOME TAX ACT. THE AO IS ALSO DIRECTED TO GIVE A FINDING AFTER DIS CUSSING EACH OF THE EVIDENCE FILED BY THE ASSESSEE AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW. THUS, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOS ES. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH SEPTEMBER, 2017. SD/ - SD/ - (PAWAN SINGH) (P.K. BANSAL) JUDICIAL MEMBER VICE PRESIDENT MUMBAI, DATED: 14 TH SEPTEMBER, 2017 ITA NO. 794/MUM/2013 SHRI MANISH SWANT 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -17, MUMBAI 4. THE CIT - 8, MUMBAI 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.