DILIP SAMBHAJI SHIRODKAR, MUMBAI V. ITO WD 18(2)(1), MUMBAI

ITA 8899/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3434 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 06-05-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 21-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SACHIN ROMANI
• Keywords: Opportunity of being heard; Surrender of tenancy right
• Section: 54F; 69; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 8899 /MUM/2010 ASSESSMENT YEAR: 2006-07 DILIP SAMBHAJI SHIRODKAR A-141, RAMGIRI PARADISE, GOKHALE ROAD, DADAR (WEST), MUMBAI 400 028 PAN: AJCPS 9140 C VS. ITO WD 18(2) (1) PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI 400 012 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI JITENDRA JAIN & SACHIN ROMANI RESPONDENT BY : SHRI RAJARSHI DWIVEDY DATE OF HEARING : 06.05.2013 DATE OF PRONOUNCEMENT : 12.06.2013 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LD.CIT(A) -29, MUMBAI DATED 31.08.2010 FOR THE ASSE SSMENT YEAR 2006-07. 2. GROUND NO.1 OF THE APPEAL RELATES TO ADDITION OF RS.50,34,897/- MADE BY THE AO U/S 69 OF THE INCOME TAX ACT AND THE SAME CONFIR MED BY THE LD.CIT(A). 2.1 BRIEFLY STATED, THE ASSESSEE, AN INDIVIDUAL ENG AGED IN THE OCCUPATION OF GOLDSMITH, IN HIS RETURN OF INCOME HAD DECLARED A T OTAL INCOME AT RS.79,890/-. THE AO, IN ASSESSMENT FRAMED U/S 143(3), FOUND THAT DUR ING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD PURCHASED A PROPERTY WORTH RS.50,34,897/-. THE AO TREATED THIS IMPUGNED INVESTMENT AS UNEXPLAINED AND THEREBY MADE AN ADDITION OF RS.50,34,897/- U/S 69 OF THE ACT AS THE ASSESSEE HA D NOT FURNISHED THE SOURCE OF THE SAID INVESTMENT. ON APPEAL, THE LD.CIT(A) CONFIRMED THE ACTION OF THE AO. AGGRIEVED BY THE IMPUGNED ORDER, THE ASSESSEE HAS RAISED THIS GROUND IN THE APPEAL BEFORE US. ITA NO. 8899 /MUM/2010 DILIP SAMBHAJI SHIRODKAR ASSESSMENT YEAR: 2006-07 2 2.2 BEFORE US, THE LD. AR OF THE ASSESSEE HAS STATE D THAT THE ASSESSEE HAS ACQUIRED TENANCY RIGHT PER AGREEMENT DATED 09.04.20 01, IN BLOCK NO. 6, ADMSURING 530 SQ. FT. I.E. 49.32 SQ. MTRS. (RESIDENTIAL) IN T HE BUILDING KNOWN AS MOGHE BHAVAN, DADAR, BY PAYING A SUM OF RS.4,00,000/- TO ONE MR. BALKRISHNA GOVIND RATNAPARKHI AND MRS. USHA RATNAKAR RATNAPARKHI. THEREAFTER, PUR SUANT TO THE AGREEMENT DATED 07.10.2005, THE ASSESSEE HAS BEEN ALLOTTED FLAT NO. A-14, IN RAMGIRI PARADISE (RESIDENTIAL) ADMEASURING 585 SQ.FT. CARPET AREA IN LIEU OF SURRENDER OF THEIR TENANCY RIGHT IN THE BUILDING MOGHE BHAVAN. THE VALUE OF TH E FLAT ALLOTTED IN LIEU OF SURRENDER OF TENANCY RIGHT IS RS.50,34,897/- AS PER THE VALUA TION DONE BY THE STAMP DUTY AUTHORITIES, WHILE REGISTERING THE AGREEMENT. AS T HE NEW FLAT IN RAMGIRI PARADISE HAS BEEN ALLOTTED IN LIEU OF SURRENDER OF TENANCY RIGHT IN MOHGE BHAVAN, THE MARKET VALUE OF THE NEW FLAT SO ALLOTTED IS THE CONSIDERAT ION IN RESPECT OF SURRENDER OF THESE TENANCY RIGHTS. AS THE CONSIDERATION ON THE SURREND ER OF THESE TENANCY RIGHTS VALUED AT RS.50,34,897/- STOOD FULLY INVESTED IN A RESIDEN TIAL FLAT, THE LONG TERM CAPITAL GAIN ARISING ON THE SAID TRANSACTION IS NOT CHARGEA BLE TO TAX U/S. 54F OF THE INCOME TAX ACT. ON THE OTHER HAND, THE LD. AR RELIED ON TH E FINDINGS OF THE AO AND THE LD.CIT(A) IN SUPPORT OF THE FACT THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THAT HE HAS RECEIVED THE FLAT BY VIRTUE OF SURRENDER OF TEN ANCY RIGHTS. 2.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON THI S GROUND AND PERUSED THE MATERIAL ON RECORD. THE FLAT AGREEMENT DATED 07 TH OCTOBER, 2005 BETWEEN THE PROMOTER MS. RAMGIRI DEVELOPERS AND THE ASSESSEE CL EARLY INDICATES THAT THE ASSESSEE HAS BEEN IN OCCUPATION OF THE PREMISES ADM EASURING CARPET AREA 49.23 SQ MTS. 530 SQ.FT. ON GROUND FLOOR AND THE DEVELOPER A GREED TO ACCOMMODATE THE ASSESSEE IN THE NEW BUILDING AT FLOOR NO. 14 ADMEAS URING 585 SQ. FT. CARPET AREA TO BE CONSTRUCTED UPON THE SAID PROPERTY IN CONSIDERAT ION OF THE ASSESSEE AGREEING TO VACATE THE PREMISES IN HIS POSSESSION AND SURRENDER ING THE TENANCY RIGHTS IN RESPECT OF THE TENANTED PREMISES HELD BY HIM IN FAVOUR OF T HE DEVELOPER. THIS INDICATES THAT THE FLAT IN RAMGIRI PARADISE HAS BEEN ACQUIRED BY T HE ASSESSEE IN LIEU OF SURRENDER OF HIS TENANCY RIGHT IN THE BUILDING MOGHE BHAVAN. THE PERUSAL OF THE AGREEMENT DATED 09.04.2001 BETWEEN MR. BALKRISHNA GOVIND RATNAPARKH I, MRS. USHA RATNAKAR RATNAPARKHI (TENANTS), THE ASSESSEE (ASSIGNEE) AND THE BUILDERS ALSO SUGGEST THAT ITA NO. 8899 /MUM/2010 DILIP SAMBHAJI SHIRODKAR ASSESSMENT YEAR: 2006-07 3 THE TENANTS TRANSFERRED THE TENANCY RIGHTS IN RESP ECT OF THE SAID PROPERTY TO THE ASSESSEE FOR A CONSIDERATION OF RS.4,00,000/-. WHEN THE FACTS BEING SO, FIRSTLY THE LOWER AUTHORITIES ARE NOT JUSTIFIED TO OBSERVE THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVIDE ANY DOCUMENTARY PROOF TO ESTABLISH THAT THE ASSESSEE HAS BEEN A TENANT IN THE SAID BUILDING. SECONDLY, AS REGARDS THE REASONI NG OF THE LD.CIT(A) THAT THE ACQUISITION VALUE OF RS.4,00,000/- HAS NOT BEEN PAI D BY THE ASSESSEE, WE FIND MERIT IN THE CONTENTION OF THE LD.AR THAT THE SAME HAS BE EN BY WAY OF CONSTRUCTIVE PAYMENT PAID BY THE BUILDER ON BEHALF OF THE ASSESS EE WHICH IS NOT A NEW PRACTICE OF THE DEVELOPERS IN BUSINESS OF CONSTRUCTION INDUSTRY . THIRDLY, REGARDING THE FINDING OF THE LOWER AUTHORITIES AS TO THE DISPROPORTIONATE VA LUES BETWEEN THE CONSIDERATION FOR RELINQUISHMENT OF RIGHTS BY THE OLD TENANT (RS.4,00 ,000/-) AND THE MARKET VALUE OF THE FLAT (MORE THAN 50 LACS), WE ARE OF THE OPINION THAT IT IS BEYOND THE PURVIEW OF THE LOWER AUTHORITIES TO SUSPECT A TRANSACTION SOLE LY ON THE GROUND OF ADEQUACY/ INADEQUACY OF CONSIDERATION IN THE ABSENCE OF ANY O THER CORROBORATING EVIDENCE AND THEREBY MAKING ANY ADVERSE INFERENCES. MOREOVER, TH E VALUE AS ADOPTED BY AO IS BASED ON THE VALUATION DETERMINED BY THE STAMP DUTY AUTHORITIES WHILE REGISTERING THE AGREEMENT DATED 07.10.2005. 2.4 IN VIEW OF THE AFOREMENTIONED DISCUSSIONS, WE A RE OF THE VIEW THAT THE AUTHORITIES BELOW HAVE DONE/CONFIRMED THE IMPUGNED ADDITION WITHOUT BRINGING ANY POSITIVE MATERIAL TO HOLD THAT THE INVESTMENT IN TH E FLAT IN RAMGIRI PARADISE IS MADE BY THE ASSESSEE OUT OF HIS UNEXPLAINED INCOME. MERE SUSPICION WITHOUT EVIDENCE ON RECORD CANNOT BE BASIS FOR MAKING AN ADDITION TO IN COME U/S 69 OF THE ACT. THE ADDITION IS, THEREFORE, ENTIRELY ON A PRESUMPTIVE B ASIS WHICH IS PURELY BASED ON SURMISES. THUS, THE IMPUGNED ADDICTION MADE U/S 69 IS DELETED. ACCORDINGLY, GROUND NO. 1 IS ALLOWED. 3. GROUND NO.2 RELATES TO THE ADDITION OF RS.5,64,5 00/- MADE BY THE AO AND THE SAME CONFIRMED BY THE LD.CIT(A) TO THE TUNE OF RS.5 ,17,500/- U/S 68 OF THE I.T. ACT. 3.1 BRIEFLY STATED, THE AO ON FINDING VARIOUS BANK DEPOSITS AMOUNTING TO RS.5,64,500/- ADDED THE SAME AS UNEXPLAINED CASH CR EDIT U/S 68 OF THE IT ACT AS THE ASSESSEE HAD NOT PROVIDED AN ACCEPTABLE EXPLANATION OR CORROBORATIVE EVIDENCE TO ITA NO. 8899 /MUM/2010 DILIP SAMBHAJI SHIRODKAR ASSESSMENT YEAR: 2006-07 4 SUBSTANTIATE HIS CLAIM THAT THE SAID CREDITS WERE O N ACCOUNT OF SECURITY DEPOSIT IN CASH FROM EMPLOYEES & JOB WORKERS. ON APPEAL, THE L D.CIT(A) , WHILE FINDING THAT RS.15,500/- IN THE BANK OF MAHARASHTRA AND RS.31,50 0/- IN COSMOS CO.OP BANK ARE PETTY CASH ARISING FROM TOTAL CASH WITHDRAWAL OF RS .1,30,000/- DELETED THE SAME AND CONFIRMED THE REST RS.5,17,500/-. AGGRIEVED BY THE IMPUGNED ORDER, THE ASSESSEE HAS RAISED THIS GROUND IN THE APPEAL BEFORE US. 3.2 BEFORE US, THE LD. AR OF THE ASSESSEE PLEADED F OR ONE MORE OPPORTUNITY TO PROVIDE THE NECESSARY DETAILS OF RECONCILIATION BEF ORE THE AO. HOWEVER, ON THE OTHER HAND THE LD. DR HAS STATED THAT RELIEF HAS ALREADY BEEN GIVEN BY THE LD.CIT(A) AND IS A CLOSED MATTER AS OF NOW AND CONTENDED THAT NO NEED TO GIVE ANY MORE OPPORTUNITY TO THE ASSESSEE. 3.3 WE HAVE HEARD BOTH THE PARTIES ON THIS GROUND A ND PERUSED THE MATERIAL ON RECORD. IT IS OBSERVED THAT DURING THE ASSESSMENT P ROCEEDINGS, THE ASSESSEE HAS REPLIED THE QUERY REGARDING SOURCE/EXPLANATION IN R ESPECT OF CASH CREDITS. BY SIMPLY RECORDING THAT THE EXPLANATION GIVEN BY THE ASSESSE E IS NOT ACCEPTABLE AS NO CORROBORATIVE EVIDENCE HAS BEEN FURNISHED TO SUBSTA NTIATE HIS CLAIM, THE IMPUGNED ADDITION IS MADE BY THE AO. CONSIDERING THE FACTS A ND CIRCUMSTANCES OF THE CASE IN TOTO, WE ARE OF THE OPINION THAT IT WOULD BE JUST A ND PROPER TO SET ASIDE THIS GROUND TO THE FILE OF THE AO TO DECIDE THE MATTER AFRESH A FTER GIVING ONE MORE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE TO PLACE ALL THE RECORD S AND MATERIALS IN SUPPORT OF HIS CLAIM. WE ORDER AND DIRECT ACCORDINGLY. GROUND NO. 2 IS ALLOWED FOR STATISTICAL PURPOSE. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12TH DAY OF JUNE, 2013. SD/- SD/- (P.M.JAGTAP) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 12.06.2013. *SRIVASTAVA ITA NO. 8899 /MUM/2010 DILIP SAMBHAJI SHIRODKAR ASSESSMENT YEAR: 2006-07 5 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR D BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.