PANKAJ KAYATHWAL, FARIDABAD V. ITO, WARD- 2(4), NOIDA

MA 482/DEL/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4984 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 8 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 14-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 05-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “FRIDAY-SMC” BENCH: NEW DELHI (THROUGH VIDEO CONFERENCING ) BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER M.A.No.-482/Del/2019 [In ITA No.742/Del/2018] [Assessment Year : 2014-15] Shri Pankaj Kayathwal, h.no.241, Sector-30, Faridabad, Haryana-121000. PAN-ALRPK8316M vs ITO, Ward-2(4), Noida. APPELLANT RESPONDENT Appellant by Sh. Pankaj Kayathwal, Assessee Respondent by Sh.Umesh Takyar, Sr.DR Date of Hearing 31.12.2021 Date of Pronouncement 15.03.2022 ORDER PER KUL BHARAT, JM : This Miscellaneous Application has been filed by the assessee seeking recalling of the order passed by the Tribunal in ITA No.742/Del/2018 pertaining to Assessment Year 2014-15 vide order dated 02.05.2019. 2. The assessee submitted that the Tribunal failed to take note of the binding precedents. He contended that the non-consideration of the binding precedents by the Tribunal tantamounts to mistake apparent from the record. The assessee further reiterated the submissions as made in the application. The relevant contents of the submissions are reproduced hereunder:- PARTICULARS OF MISTAKE SOUGHT TO BE RECTIFIED (A) NON CONSIDERATION OF BINDING DIVISION BENCH JUDGMENT 2 | P a g e 1. That, it is submitted with respect that the judgment under rectification deserves to be recalled since there is Non Consideration of a reported Division Bench Judgment of the Hon'ble ITAT in the case of Bajrang Prasad Ramdharani Vs Asst. Commissioner of Income Tax -14, Ahmedabad [60 SOT 66] - Copy Enclosed. 2. That, a perusal of the ratio laid down in the above referred judgment, would reveal that in IDENTICAL situation, as that of the instant assessee, while interpreting the provisions of Section 10(13A) of the Income Tax Act, the Hon'ble Tribunal in that case was pleased to observe as under:- 7. ..........Ld. CIT(A) confirmed the addition on the ground that the rent is paid by the assessee as a tenant to his wife who is a landlord and he found that the landlord and tenant are living together in the same house-property and the very fact that the landlord and tenant are staying together which indicates that the whole arrangement is of the nature of colourable device as pointed out by the AO. He observed that since it is evidently a colourable device, even though the amount purportedly paid as a rent will not quality for exemption u/s.10(13A). ...... Admittedly, the AO has given a finding of fact that the assessee and his wife are living together as a family. Therefore, it can be inferred that the house owned by Wife of the assessee is occupied by the assessee also and in remand report it has been submitted that the assessee has submitted the rent receipt(s) of Rs.15,000/- dated 3.7.2008 and Rs.1.65,000/- dated 31.3.2009 and stated that the payments have duly been paid through bank transfer entry. A verification of the said entry shows the transfer on the given dates but the receipts date and amount of Rs.1,65,000/- not reflecting as transfer Therefore in our considered opinion the assessee has fulfilled twin requirements of the provision, i.e. occupation of the house and the payment of rent. Under these circumstances, the assessee is entitled for exemption u/s.10(13A) of the Act. Since we have observed that 3 | P a g e the ld. CIT(A)'s chose not to make enhancement and disallow the relief u/s. 24 of the Act, therefore we cannot comment upon this aspect of the matter. In this view of the matter, we delete the addition and direct the AO to allow exemption u/s.10(13A) of the Act to the assessee. This ground is also allowed as indicated above. (B) NON CONSIDERATION OF JUDGMENT OF HIGH COURT 1. That the Hon'ble P&H High Court in the case of ITO Vs Justice M.S. Gujral [125 ITR 655] held that in case of an HUF property rent paid by the assessee to such HUF is eligible. Similar is the ratio in the case of CIT vs Justice S C Mittal 121 ITR 503. The test laid down in these judgments is that assessee should have occupied the house in question and paid rent. (C) NON CONSIDERATION OF CBDT Instruction/Circular [F No. 12/19/64-IT(AI) Dt.02.01.1967 1. That in the above referred Circular, the only condition imposed upon the Disbursing Officer, while examining the grant of exemption under Section 10(13A) of the Act, is in the following manner: .............. For the purpose of deduction of tax, therefore, the disbursing officer should ensure that the employee concerned has in fact incurred the expenditure on rent. The payment of rent should be verified through rent receipts in the case of all employees. 2. Hence there was no occasion for the AO/CIT(A) to have turned down the claim, once it is established that assessee has in-fact made payment of rent. Incidentally the Hon'ble Tribunal also does not disturb the following findings recorded at paragraph No. 5 "The assessee submitted that rent was paid to his wife who has shown the same as income in her return of income." 3. Hence the fact that Rent has been paid by the assessee, stood established beyond doubt and is not disputed. 4 | P a g e (D) Denial of Exemption results in Double Taxation 1. That the Hon'ble Tribunal has not disturbed a finding that Rent has been paid by the assessee to his wife and she has shown the same as taxable income in her Return of Income. 2. It is submitted that subject to the very kind pleasure of the Hon'ble Tribunal, rejection of assessee's claim under Section 10(13A) of the Act, would result in Double Taxation. This aspect being fundamentally against settled tax jurisprudence would result in mistake creeping in the Order of Hon'ble ITAT. SUBMISSION That, it is settled principle that non-consideration of binding precedence, renders the judgment to suffer from mistake apparent from record. Reference may be made to large number of judgments of the Hon'ble Apex Court, particularly in the case of ACIT Vs Saurashtra Kutch Stock Exchange [305 ITR 227] and the Hon'ble Allahabad High Court in the case of Laxmi Electronic Corpn. Ltd.v. Commissioner of Income-tax 188 ITR 398. It is also settled principle that Order of Division Bench of Tribunal is binding on Single Member Bench. PRAYER In view of the aforementioned, the order of the Hon'ble Income Tax Appellate Tribunal, Dt. 02.05.2019 is prayed to be recalled for hearing, since it is in direct contrast with a binding Division Bench Judgment of the ITAT itself.” 3. On the contrary, Ld. Sr. DR opposed these submissions and submitted that there is no mistake apparent from the record. 4. I have heard the rival contentions and perused the material available on record. I find that the Tribunal in ITA No.742/Del/2018 in para 5 of its order, decided the issue as under:- 5 | P a g e 5. “After considering the rival submissions, I am of the view that no interference is called for in the Order of the Ld. CIT(A). The assessee submitted that rent was paid to his wife who has shown the same as income in her return of income. This itself is not justified to make a claim of deduction under section 10 of the I.T. Act. The Ld. CIT(A) has categorically recorded a finding of fact that assessee paid the rent to his wife who is residing with the assessee in the same house. It is, therefore, clear that alleged rent was paid by the assessee to his wife as a owner of the house, who, in turn, have been residing in the same house with the assessee. When the Landlord/owner have been residing in the rented house, where is the question of paying any rent by the assessee to the Landlord. The Ld. CIT(A), therefore, correctly held that it is a colourable devise to avoid legitimate payment of the taxes. No interference is required in the matter. This ground of appeal of assessee has no merit and the same is accordingly dismissed. No other point is argued or pressed.” 5. From the above finding, it is evident that the case laws as cited by the assessee in Miscellaneous Application, have not been taken into consideration. It is not clear whether such case laws were cited before the Tribunal during the hearing of the appeal. However, considering the submissions of the assessee that the issue which was before the Tribunal has already been decided by the Division Bench of the Tribunal in the case of Bajrang Prasad Ramdharani Vs Asst. Commissioner of Income Tax -14, Ahmedabad [60 SOT 66] and the judgement of Hon’ble Punjab & Haryana High Court in the case of ITO Vs Justice M.S. Gujral [125 ITR 655] and also in the case of CIT vs Justice S C Mittal 121 ITR 503. Non-consideration of the binding precedents, it is an inadvertent mistake apparent from the record. Therefore, order dated 02.05.2019 is recalled for a limited purpose to consider the case laws relied by the assessee. I hereby recall the order dated 6 | P a g e 02.05.2019 and direct the Registry to fix the appeal for hearing in due course. 5. In the result, the Miscellaneous Application filed by the assessee is allowed. Order pronounced in the open Court on 15 th March, 2022. Sd/- (KUL BHARAT) JUDICIAL MEMBER * Amit Kumar * Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI