Shri Sashi Kumar Mohta, Ahmedabad V. The Income Tax Officer,Ward-3(4), Ahmedabad

MA 15/AHD/2016

• Counselvise Citation: [2017] 124 COUNSELVISE.COM (IT) 5498 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-05-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-11-2016
• Assessment Year: 1995-1996
• Appeal Filed On: 08-02-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI SASHI KUMAR MOHTA, DHUN HOUSE, MISSION ROAD, BHADRA, AHMEDABAD PAN: AAAPM0059K (APPELLANT) VS THE ITO, WARD 3(4), AHMEDABAD (RESPONDENT) REVENUE BY : S H RI JAMES KURIAN, SR. D . R. ASSESSEE BY: S H RI URVASHI SODHAN , A.R. DATE OF HEARING : 31 - 03 - 2 017 DATE OF PRONOUNCEMENT : 15 - 05 - 2 017 / ORDER P ER : AMARJ IT SINGH, ACCOUNTANT MEMBER : - THE ASSESSEE HAS FILED TWO MISCELLANEOUS APPLICATIONS BEARING NOS. 15 TO 16/AHD/2016 AGAINST THE ORDER OF THE ITAT B BENCH ITA NOS. 159 TO 160/AHD/2004 DATED 30 - 04 - 2015 FOR THE ASSESSMENT YEAR 1995 - 96 & 1996 - 97. M.A. NOS. 15 & 16/AHD/20 16 (IN I T A NO S . 159 & 160 / A HD/20 04) A Y 1995 - 9 6 & 1996 - 97 M.A. NO. 15 & 16/AHD/2016 (ITA NOS.159 & 160/AH D/2004) PAGE NO SHRI SASHI KUMAR MOHTA VS. ITO 2 2 . AS T HE FACTS IN THESE TWO M.AS ARE SIMILAR, SO, WE TAKE M.A. NO. 15/AHD/2016 AS THE LEAD CASE AND DECIDE BOTH OF THEM FOR THE SAKE OF CONVENIENCE AS UNDER. M.A. NO. 15/AHD/2016 3. THE ASSESSEE HAS SUBMITTED AS FOLLOWS IN THE MISC. APPLICATION: - 1. THE PR ESENT APPLICATION IS FILED BY THE APPLICANT/APPELLANT ABOVE NAMED FOR SETTING ASIDE THE ORDER DATED 30/04/2015 PASSED BY THIS HON'BLE ITAT PARTLY ALLOWING FOR STATISTICAL PURPOSES APPEAL FILED BY THE APPLICANT (ORIGINAL APPELLANT). IT IS MOST RESPECTFULLY SUBMITTED THAT IN THE SAID ORDER OF THE HON'BLE ITAT, THERE ARE ERRORS APPARENT ON THE RECORD. 2. HON'BLE BENCH AFTER NOTING FINDING OF ID. CIT (A) & SUBMISSIONS OF THE COUNSEL OF THE APPLICANT ON TAXABILITY OF RENTAL INCOME ON THE BASIS OF FAMILY ARRAN GEMENT ADJUDICATED IN PARA 9 ON PAGE 5 OF THE ORDER AS UNDER - '9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AND AFTER CONSIDERING THE SAME, IN THE PRESENT CASE WE ARE OF THE VIEW THAT THE ENTIRE RENTAL INCOME HAS TO BE TAXED IN THE HANDS OF THE ASSESSEE HOWEVER CONSIDERING THE ASSESSEE'S SUBMISSION THAT THE SHARE OF RENTAL INCOME HAS ALREADY BEEN OFFERED TO TAX AND HAS BEEN ACCEPTED BY THE DEPARTMENT IN THE HANDS OF THE RESPECTIVE PERSONS AND CONSIDERING THE SAME AMOUNT AGAIN IN THE HANDS OF THE ASSESSEE WOULD AMOUNT TO DOUBLE TAXATION OF THE SAME INCOME, WE ARE OF THE VIEW THAT THE AFORESAID SUBMISSION OF THE ASSESSEE NEEDS TO BE RE - EXAMINED AT THE END OF A.O. WE THEREFORE RESTORE THE ISSUE TO THE FILE OF A.O. TO EXAMINE THE A FORESAID CONTENTION OF ASSESSEE. IN CASE THE CONTENTION OF THE ASSESSEE IS FOUND CORRECT, THEN THE TAXABILITY OF THE SAID INCOME IN THE HANDS OF OTHER CO - OWNERS NEED TO BE DEALT IN ACCORDANCE WITH LAW. WE ALSO DIRECT THE ASSESSEE TO FILE THE NECESSARY DETA ILS AS SOON AS POSSIBLE BEFORE THE A.O. SO THAT HE MAY TAKE LEGAL VIEW IN FACTS AND CIRCUMSTANCES OF CASE. A.O. IS DIRECTED ACCORDINGLY.' M.A. NO. 15 & 16/AHD/2016 (ITA NOS.159 & 160/AH D/2004) PAGE NO SHRI SASHI KUMAR MOHTA VS. ITO 3 3. IT IS RESPECTFULLY SUBMITTED THAT THERE ARE FOLLOWING ERRORS APPARENT IN THE IMPUGNED ORDER OF THE HON'BLE BENCH (I) ERRED IN NOT APPRECIATING & ADJUDICATING GROUND # 2 (CONCISE GROUNDS) CHALLENGING ACTION OF ID. CIT (A) TREATIN G FAMILY ARRANGEMENT AS INVALID. (II) ERRED IN HOLDING THAT THE ENTIRE RENTAL INCOME TO BE TAXED IN THE HANDS OF THE APPLICANT WITHOUT ANY REFERENCE TO FAMILY ARRANGEMENT IN THE YEAR 1988 SUB DIVIDING PROPERTY AMONGST IMMEDIATE FAMILY OF THE APPLICANT (III) FACTUALLY ERRED IN OBSERVING THAT SHARE OF RENTAL INCOME IS OFFERED BY ALL THE 10 ENTITIES IN THEIR RESPECTIVE INCOME - TAX RETURNS D ESPITE NOTING IN PARA 6 THAT IN 1988 THE SUB - DIVISION WAS IN FAVOUR OF WIFE AND TWO MINOR CHILDREN WHO DISCLOSED RENT RECEIPTS IN RESPECTIVE HANDS AND FURTHER SUB - DIVISION IN 1990 AS PER FAMILY ARRANGEMENT AGREEMENT WAS CLAIMED FROM A Y 1997/98. (IV) ERRE D IN RESTORING THE ISSUE TO THE FILE OF AO HOLDING THAT CONTENTION OF DOUBLE TAXATION RAISED BY THE APPLICANT NEEDED RE - EXAMINATION BY AO SINCE SHARE OF RENTAL INCOME BY 1 0 PERSONS HAVING ALREADY BEEN OFFERED TO TAX AND ACCEPTED BY THE DEPARTMENT, WHEREAS AO HAS CLEARLY NOTED IN THE ORDER THAT SUB - DIVISION AS PER AGREEMENT OF 1 990 AMONGST 1 0 PERSONS (LARGER FAMILY) IS EFFECTED FROM A Y 1997/98 NOT PERTINENT TO THE YEAR UNDER CONSIDERATION. 4. IT IS HEREBY SUBMITTED THAT HON'BLE BENCH APPARENTLY WHILE DRAFTING THE ORDER MIXED UP FAMILY AGREEMENT OF 1 990 BETWEEN 1 0 PERSONS SHARING RENTAL INCOME FROM A Y 1997/98 WITH THE FACTS OF THE YEAR UNDER APPEAL. HON'BLE BENCH ERRED TO HOLD THE APPLICANT LIABLE TO ENTIRE RENTAL INCOME & FURTHER ERRED IN SETTING AS IDE THE ISSUE TO THE FILE OF AO TO EXAMINE THE CONTENTION OF DOUBLE TAXATION. THEREFORE THERE IS AN ERROR APPARENT ON RECORD IN THE ORDER OF THE HON'BLE BENCH IN AS MUCH AS THE BASIS ON WHICH ENTIRE RENTAL INCOME IS HELD TO BE TAXED IN THE HANDS OF THE APP LICANT AS WELL ISSUE OF DOUBLE TAXATION IS FACTUALLY INCORRECT AND FALLACIOUS NOT APPLICABLE TO THE YEAR UNDER CONSIDERATION THAT REQUIRES TO BE MODIFIED. M.A. NO. 15 & 16/AHD/2016 (ITA NOS.159 & 160/AH D/2004) PAGE NO SHRI SASHI KUMAR MOHTA VS. ITO 4 5. THE APPLICANT THEREFORE, RESPECTFULLY SUBMITS THAT IN THE LARGER INTEREST OF JUSTICE THE HON'BL E TRIBUNAL BE PLEASED TO ACCEPT THE PRAYER OF THE APPLICANT AND PASS APPROPRIATE ORDERS. 4. WE HAVE PERUSED THE FACTS REPORTED IN THE MISC. APPLICATION BY THE APPLICANT. WE NOTICED THAT IN THIS CASE THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT U/S. 147 OF THE ACT BY ISSUING OF NOTICE U/S. 148 OF THE ACT FOR THE FOLLOWING ASSESSMENT YEARS. (I) ASSESSMENT YEAR 1995 - 96 (II) ASSESSMENT YEAR 1996 - 97 (III) ASSESSMENT YEAR 1997 - 98 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT T H E AS SESSEE HAD PURCHASED A PROPERTY AT 8, SHREE MADHA INDUSTRIAL ESTATE LTD PANDURANG SLDHAKAR MARG, WORLI, MUMBAI ADMEASURING 1500 SQ. FT IN 1975. THE ASSESSEE COULD NOT PRODUCE THE EVIDENCE S IN SUPPORT OF PURCHASE OF THIS PROPERTY. THE ASSESSEE CLAIMED THAT IN THE YEAR 1988 W.E.F. 01.04.1988 VIDE ORAL AGREEMENT SUB - DIVISION OF THE PROPERTY WAS MADE IN FAVOUR OF THREE OTHER PERSONS (HIS WIFE AND TWO MINOR CHILDREN ONLY). THE REAFTER , THE ASSESSEE CLAIMED THAT FURTHER SUB - DIVISION OF THE PROPERTY WAS MADE TH R O U G H THE FAMILY AGREEMENT ON 26 - 02 - 199 0 . IN THIS CONNECTION T HE ASSESSING OFFICER NOTICED THAT ASSESSEE HAD GIVEN EFFECT TO ALL THE ABO V E STA T ED SUB - DIVISION IN THE RETURN OF INCOME FILED ON 1997 - 98. THE ASSESSING OFFICER STATED THAT THE ASSESSEE COULD NOT SUBSTANTIATE THAT WH Y TH E EFFECT OF SUB - D I VISIO N OF PROPERTY WAS GIVEN IN THE ASSESSMENT YEAR 1997 - 98 AGAINST THE CLAIM THAT DIVISION WAS CARRIED M.A. NO. 15 & 16/AHD/2016 (ITA NOS.159 & 160/AH D/2004) PAGE NO SHRI SASHI KUMAR MOHTA VS. ITO 5 OUT WAY BACK IN 1988 AND 1990. ON THE BASIS OF THESE FACTS T HE ASSESSING OFFICER CONCLUDED THAT THE A SSE SSE AT HIS OWN SUB - DIVIDED THE PROPERTY WITH A CLEAR MOTIVE TO DISTRIBUTE THE RENTAL INCOME IN THE HANDS OF THE WIFE AND TWO MINOR CHILDREN, THERE FORE , HE ATTRACTED THE PROVISION OF SECTION 64 IN THE CASE OF THE ASSESSEE. THE ASSESSING OFFICER STATED T HAT O N THE BASIS OF SUCH DIVISION THE ASSESSEE HAD DIVERTED RENTAL INCOME OF RS. 10 , 0170/ - AND RS. 1 , 85 , 470/ - RESPECTIVELY OUT OF TOTAL GROSS RENT RECEIVED FOR ASSESSMENT YEAR 1995 - 96 AND 1996 - 97 . THE ASSESSEE HAS ALLEGED TO HAVE DONE THE PARTI TI ON IN THE YEAR 1990 B UT HE HAD DECLARED THESES FACTS BEFORE THE ASSESSING OFFICER FOR THE FIRST TIME DURING THE ASSESSMENT YEAR 1997 - 98. THE LD. CIT(A) HAS FOUND THAT BEFORE THE ASSESSING OFFICER, THE ASSESSEE CLAIMED THAT THE PROPERTY UNDER CONSIDERATION WAS BEL ONGED TO THEIR JOINT FAMILY, HOWEVER, THE ASSESSING OFFICER CONSIDERED THAT THE PROPERTY BELONGED TO THE ASSSESEE IN HIS INDIVIDUAL CAPACITY. HE ALSO STATED THAT CLAIM OF SUB - DIVISION OF THE PROPERTY IN THE YEAR 1988 AND 1990 WAS NOT SHOWN IN THE RETURN OF INCOME EARLIER TO ASSESSMENT YEAR 1997 - 98. BECAUSE OF THESE FACTS IT WAS ALLEGED THAT SO CALLED FA M ILY ARRANGEMENT WAS EXECUTED BY THE ASSESSEE TO DIVERT THE RENTAL INCOME W ITH A MOTI V E TO REDUCE HIS TAX LIABILITY DURING THE ASSESSMENT YEAR 1997 - 98. THE LD. CIT(A) AT PARA 4.2 OF HIS ORDER EXAMINED THE CLAIM OF THE OWNERSHIP OF THE PROPERTY AND FOUND THAT AN AGREEMENT WAS EXECUTED O N 30 - 06 - 1975 BETWEEN SHRI MADHU INDUSTRIAL ESTATE P. LTD ON THE ONE PART AND SHASHI KUMAR MOHTA TRUST ON THE OTHER PART. THE LD. CIT(A) PROVED THAT THE DEAL OF THE PROPERTY WAS NEITHER DONE BY THE FATHER OF THE ASSESSEE M.A. NO. 15 & 16/AHD/2016 (ITA NOS.159 & 160/AH D/2004) PAGE NO SHRI SASHI KUMAR MOHTA VS. ITO 6 NOR BY THE ASSESSEE HIMSELF BUT THE DEAL WA S BETWEEN THE SELLER COMPANY AND SHASHIKUMAR MOHTA TRUST. 4.1 ALL THESE POINTS AND FACTS PROVED THAT THERE WAS A LOT OF INCONSISTENCIES FOUND IN THE STAND TAKEN BY T H E ASSESSEE BEFORE THE ASSESSING OFFICER AS WELL AS CIT(A). THE LD. CIT(A) NOTICED THAT IT HA D BEEN CONFIRMED FOR T HE FIRST TIME THA T THE PROPERTY W A S ACQUIRED IN THE NAME OF SH. SHASHIKUMAR MOHTA TRU ST AND THE TRUST HAD ONLY ONE BENEFICIARY SHRI SHASHIKUMAR MOHTA T HE ASSESSEE. THE LD. CIT(A) AFTER CON SIDERING THESE FACTS HELD THAT T H E MOTIVE BEHIND THE SO CALLED PARTITION OF THE PROPERTY IN THE YEAR 1998 AND 1990 BELONGING TO THE TRUST W A S VOID - AB - INITIO BECAUSE THE TRUST WAS NOT A PARTY TO THE SO CALLED FAMILY ARRANGEMENT. 4.2 IN THE LIGHT OF THE ABOVE STATED FACTS , W E FIND THAT THE CO - ORDINATE BENCH OF THE ITAT AFTER CONSIDERING THE FINDINGS AS PER THE ORDERS OF THE ASSESSING OFFICER AND THE CIT (A) HAD OBSERVED AS UNDER: - 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AND AFTER CONSIDERING THE SAME, IN THE PRESENT CASE WE ARE OF THE VIEW THAT THE ENTIRE RENTAL INCOME HAS TO BE TAXED IN THE HANDS OF THE ASSESSEE HOWEVER CONSIDERING THE ASSESSEE S SUBMISSION THAT THE SHARE OF RENTAL INCOME HAS ALREADY BEEN OFFERED TO TAX AND HAS BEEN ACCEPTED BY THE DEPARTMENT IN THE HANDS OF THE RESPECTIVE PERSONS AND CONSIDERING THE SAME AMOUNT AGAIN IN THE HANDS OF THE ASSESSEE WOULD AM OUNT TO DOUBLE TAXATION OF THE SAME INCOME, WE ARE OF THE VIEW THAT THE AFORESAID SUBMISSION OF ASSESSEE NEEDS TO BE RE - EXAMINED AT THE END OF A.O. WE THEREFORE RESTORE THE ISSUE TO THE FILE OF A.O TO EXAMINE THE AFORESAID CONTENTION OF ASSESSEE. IN CASE THE CONTENTION OF THE ASSESSEE IS FOUND CORRECT, THEN THE TAXABILITY OF THE SAID INCOME IN THE HANDS OF OTHER CO - OWNERS NEED TO M.A. NO. 15 & 16/AHD/2016 (ITA NOS.159 & 160/AH D/2004) PAGE NO SHRI SASHI KUMAR MOHTA VS. ITO 7 BE DEALT IN ACCORDANCE WITH LAW. WE ALSO DIRECT THE ASSESSEE TO FILE THE NECESSARY DETAILS AS SOON AS POSSIBLE BEFORE THE A.O SO THAT HE MAY TAKE LEGAL VIEW IN FACTS AND CIRCUMSTANCES OF CASE. A.O IS DIRECTED ACCORDINGLY. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AS PER RECORDS. WE FIND THAT IT IS VERY COGENT AND CLEAR FROM THE ORDER OF THE ITAT IN THE CASE OF THE ASSESSEE THAT THE RENTAL INCOME HAS TO BE TAXED IN THE HAND OF THE ASSESSEE BUT ON THE REQUEST OF THE ASSES SEE THE MATTER WAS RESTORED TO T H E ASSESSING OFFICER FOR NECESSARY VERIFICATION AND EXAMINATION AND THE TAXABILITY OF THE SAID INCO ME IN THE HANDS OF OTHER CO - OWNERS NEED TO BE DEALT IN ACCORDANCE WITH LAW AND TO TAKE LEGAL VIEW AS PER FACTS AND CIRCUMSTANCES OF CASE . WE CONSIDERED THAT ABOVE DIRECTIONS WERE ISSUED BY THE COORDINATE BENCH OF THE ITAT ON THE REQUEST OF THE ASSESSE E IN SPITE OF THE FACT THAT A NUMBER OF INCONSISTENCIES FOUND IN THE STAND TAKEN BY THE ASSESSEE AS E LABORATED ABOVE AND PROVED BY THE ASSESSING OFFICER AND THE LD. CIT(A) IN THEIR ORDER . WE CONSIDERED THAT UNDER THESE CIRCUMSTANCES IT IS NOT FEASIBLE TO ALLOW THE MISC. APPLICATION OF THE ASSSESSEE BECAUSE ALL THE IN CONSISTENCIES IN THE SO CALLED FAMILY ARRANGEMENT IN THE YEAR 1988 AND 1990 ARE REQUIRED TO BE EXAMIN ED ALONG WITH THE CONTENTION OF THE ASSESSEE AND RELATED SUPPORTING MATERIAL. THERE FORE, KEEPING IN VIEW THE DIRECTION OF THE ITAT BENCH FRAMED ON THE BASIS OF APPELLATE PROCEEDINGS AFTER TAKING INTO CONSIDERATION THE CONTENTIONS OF THE ASSESSEE, AND FINDINGS OF THE ASSESSING OFFICER AND THE LD. CIT(A) , W E FIND THAT THERE IS NO MERIT IN THE MISC. APPLICATION OF THE ASSESSEE, THEREFORE, THE SAME IS DISMISSED . M.A. NO. 15 & 16/AHD/2016 (ITA NOS.159 & 160/AH D/2004) PAGE NO SHRI SASHI KUMAR MOHTA VS. ITO 8 6. IN THE RESULT, BOTH THE MAS OF THE ASSESSEE ARE DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 15 - 05 - 201 7 SD/ - SD/ - ( S.S. GODARA ) ( AMARJIT SINGH ) JUDICIAL M EMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 15 /05 /2017 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,