DATTATRAY R. SAWANT L/H OF LATE SMT. KAMAL D. SAWANT, THANE(W) v. ITO, WARD1(3), THANE(W)

ITA 4425/MUM/2008 | 2005-2006
Pronouncement Date: 18-02-2010 | Result: Allowed

Appeal Details

RSA Number 442519914 RSA 2008
Assessee PAN AWDPA1808B
Bench Mumbai
Appeal Number ITA 4425/MUM/2008
Duration Of Justice 1 year(s) 7 month(s) 21 day(s)
Appellant DATTATRAY R. SAWANT L/H OF LATE SMT. KAMAL D. SAWANT, THANE(W)
Respondent ITO, WARD1(3), THANE(W)
Appeal Type Income Tax Appeal
Pronouncement Date 18-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 18-02-2010
Date Of Final Hearing 11-02-2010
Next Hearing Date 11-02-2010
Assessment Year 2005-2006
Appeal Filed On 27-06-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI A.L. GEHLOT A.M. AND SMT. P. MADHAVI DEVI J.M. ITA NO. 4425/M/2008 ASSESSMENT YEAR: 2005-06 DATTATRAY R. SAWANT APPELLANT L/H OF LATE. SMT. KAMAL D. SAWANT 16-A YAMUNA APARTMENT YASHASVI NAGAR THANE (W) PIN 400 608. (PAN AWDPA 1808B) VS. INCOME TAX OFFICER RESPONDENT WARD 1(3) THANE. APPELLANT BY : MR. SUBODH L. RATNAPARKHI RESPONDENT BY : MR. MOHD. USMAN ORDER PER A.L. GEHLOT A.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A)-I THANE PASSED ON 28.03.2008 FOR THE ASSES SMENT YEAR 2005=06 WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWI NG GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN LAW THE LEARNED CIT(A) ERRE D IN ARRIVING AT THE CONCLUSION THAT THE SUM OF RS. 41 52 975/- R ECEIVED BY THE APPELLANT FROM SUB-LETTING OF TENANTED HOUSE PROPER TY IS TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. 2. ON THE FACTS AND IN LAW THE CIT(A) ERRED IN NOT APPRECIATING THAT THE APPELLANT CARRIED ON THE ACTIVITY OF SUB-L ETTING OF TENANTED PREMISES AS AN ADVENTURE IN THE NATURE OF TRADE AND HENCE THE INCOME ARISING THERE FROM WAS CORRECTLY O FFERED TO TAX BY THE APPELLANT UNDER THE HEAD INCOME FROM BUSINE SS. 3. ON THE FACTS AND IN LAW THE LEARNED CIT(A) ERRE D IN NOT GRANTING THE APPELLANT DEDUCTION FOR EXPENSES INCUR RED IN EARNING OF THE INCOME BROUGHT TO TAX. ITA NO. 4425/M/08 DATTATRAY R. SAWANT 2 4. ON THE FACTS AND IN LAW THE LEARNED CIT(A) ERRE D IN ENHANCING THE ASSESSMENT WITHOUT AFFORDING THE APPELLANT ANY OPPORTUNITY OF SHOWING CAUSE AGAINST SUCH ENHANCEMENT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSEE HAD TAKEN A PROPERTY ON RENT NAMELY SHOP NO. 3 & 4 GROUND FL OOR AKHALWAYA BUILDING GOVT. GATE ROAD PAREL BOMBAY FROM ISMAI L E. AKHALWAYA AND OTHERS ON 01.08.1983 AT A MONTHLY RENT OF RS. 4 05/- VIDE AGREEMENT DATED 29 TH DECEMBER 1983. THE ASSESSEE SUB-LET THIS PROPERTY TO MUMBAI DISTRICT CENTRAL CO-OP. BANK LTD . WITH EFFECT FROM 29.12.1983. THE ASSESSEE CLAIMED THIS RENTAL INCOME AS BUSINESS INCOME WHEREAS THE AO HELD THE SAME AS INCOME FROM HOUSE PROPERTY. THE CIT(A) AFTER EXAMINING THE ISSUE IN DETAIL IN T HE LIGHT OF SUB- SECTION (IIIB) OF SECTION 27 WAS OF THE VIEW THAT THERE IS NO PERPETUAL LEASE AGREED UPON BY THE ASSESSEE WITH THAT OF THE ORIGINAL LANDLORD NOR WITH THE SUB TENANT. THEREFORE THE INCOME CAN NOT BE ASSESSED AS INCOME FROM HOUSE PROPERTY. THE CIT(A) WAS ALSO O F THE VIEW THAT THE ASSESSEES CLAIM AS BUSINESS INCOME CANNOT BE ALSO ACCEPTED AS THE ASSESSEE DID NOT INVOLVE IN THE ACTIVITIES IN THE N ATURE OF TRADE OR BUSINESS DUE TO THE FACT THAT ELEMENT OF UNCERTAINT Y RISKS NORMALLY INVOLVED IN CARRYING OUT THE BUSINESS ETC. ARE ABSE NCE IN THIS CASE. THE CIT(A) TREATED THIS RECEIPT OF RS. 41 52 975/- ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AND DIRECTED T HE AO TO COMPUTE THE INCOME OF THE ASSESSEE ACCORDINGLY. 3. THE LEARNED AR AT THE OUTSET SUBMITTED IN RESPEC T OF GROUND NO. 4 THAT ORIGINAL DISPUTE BETWEEN THE AO AND THE ASSE SSEE IS WHETHER THE INCOME IS ASSESSABLE UNDER THE HEAD INCOME FRO M BUSINESS OR INCOME FROM HOUSE PROPERTY. HE FURTHER SUBMITTED THAT THE CIT(A) HAS TAKEN THE RENTAL INCOME AS INCOME FROM OTHER S OURCES WHICH AMOUNTED TO ENHANCING THE ASSESSMENT WITHOUT HEARIN G REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 4. AFTER HEARING THE LEARNED DR AND PERUSING THE RE CORD WE FIND FORCE IN GROUND NO. 4 OF THE ASSESSEE THAT THE CIT( A) HAS DIRECTED THE ITA NO. 4425/M/08 DATTATRAY R. SAWANT 3 AO ASSESS THE SAID RENTAL RECEIPT AS INCOME FROM O THER SOURCES WHICH AMOUNTS ENHANCEMENT OF THE ASSESSMENT AS THE ORIGINAL DISPUTE OF THE AO WAS THAT THE RENTAL RECEIPT IS AS SESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY AS AGAINST THE ASSE SSEE CLAIM ON THE SAME AS BUSINESS INCOME. SECTION 251(2) CLEARLY PRO VIDES THAT THE CIT(A) SHALL NOT ENHANCE AN ASSESSMENT UNLESS THE A PPELLANT HAS HAD A REASONABLE OPPORTUNITY OF SHOWING CAUSE AGAINST S UCH ENHANCEMENT OR REJECTION. IN THE CASE UNDER CONSIDERATION WE F IND THAT THE CIT(A) HAS TAKEN A THIRD STAND WITHOUT PROVIDING REASONABL E OPPORTUNITY OF HEARING TO THE ASSESSEE IN THE MATTER LEADING TO V IOLATION OF PRINCIPLES OF NATURAL JUSTICE. THEREFORE WE DEEM I T FIT AND PROPER TO REMIT THE MATTER BACK TO THE FILE OF THE CIT(A) WIT H A DIRECTION TO PROVIDE OPPORTUNITY OF HEARING TO BOTH THE ASSESSEE AND THE AO AND THEREAFTER PASS A FRESH ORDER IN ACCORDANCE WITH LA W. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. PRONOUNCED ON THIS 18 TH DAY OF FEBRUARY 2010 SD/- SD/- (P. MADHAVI DEVI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED: 18 TH FEBRUARY 2010 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE D BENCH I.T .A.T. MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR I.T.A.T. MUMBAI. KV ITA NO. 4425/M/08 DATTATRAY R. SAWANT 4 S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 11.02.10 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 15.02.10 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER