Dr. Somasekhar, Bangalore v. ACIT, Bangalore

ITA 672/BANG/2009 | 2004-2005
Pronouncement Date: 29-01-2010 | Result: Allowed

Appeal Details

RSA Number 67221114 RSA 2009
Bench Bangalore
Appeal Number ITA 672/BANG/2009
Duration Of Justice 6 month(s) 29 day(s)
Appellant Dr. Somasekhar, Bangalore
Respondent ACIT, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 29-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 29-01-2010
Date Of Final Hearing 28-01-2010
Next Hearing Date 28-01-2010
Assessment Year 2004-2005
Appeal Filed On 30-06-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH SMC B BEFORE SHRI K.K. GUPTA ACCOUNTANT MEMBER ITA NO.672(BNG)/09 (ASSESSMENT YEAR : 2004-05) DR. M. SOMASEKHAR NO.6 G 8 TH STREET JOGUPALYA ULSOOR BANGALORE. .... APPELLANT. VS. ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 2(2) BANGALORE. ..... RESPONDENT. APPELLANT BY : SHRI NARENDRA SHARMA. RESPONDENT BY : SMT. V.S. SREELEKHA. O R D E R THIS APPEAL BY THE ASSESSEE AGITATES THE CONFIRMATION OF ADDITION OF RS.33 330 IN THE HANDS OF THE ASSESSEE AS INCOME FROM THE PRO PERTY WHICH DOES NOT BELONG TO THE ASSESSEE. 2. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE ASSESSEE IS A DOCTOR AND FILED RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR D ECLARING INCOME OF RS.1 26 640. AN ASSESSMENT WAS FRAMED UNDER THE PROVISIONS OF SE CTION 144 WHEN THE ASSESSING OFFICER CONSIDERED THE ASSESSEE RETURNING INCOME F ROM HOUSE PROPERTY AT RS.48 000. HE CONSIDERED THAT THE ASSESSEE HAD FILED A BLOCK R ETURN FOR THE PERIOD 1997-98 TO 2002-03 DECLARING INCOME FROM HOUSE PROPERTY AT RS. 74 300 FOR THE A.Y. 2002-03. TO ARRIVE AT A REASONABLE FIGURE OF INCOME FROM HOUSE PROPERTY 10% WAS ADDED TO THE RENT RECEIVED FOR A.YS 2003-04 AND 2004-05. AGGRIEVED T HE ASSESSEE APPEALED BEFORE THE ITA NO.672(BNG)/09 - 2 - FIRST APPELLATE AUTHORITY WHO HELD THAT THE ASSESSI NG OFFICER HAD METICULOUSLY ANALYSED THE SEIZED MATERIAL AND BROUGHT TO THE NOTICE OF TH E ASSESSEE WITH AN INTENTION OF TREATING THE UNDISCLOSED INCOME WHICH THE ASSESSEE COULD NOT EXPLAIN OR DISPROVE. RELYING ON HIS DECISION IN THE APPELLATE ORDER FOR THE BLOCK PERIOD HE CONFIRMED THIS ORDER OF THE ASSESSING OFFICER. 3. THE LEARNED COUNSEL ARGUED THAT THE AMOUNTS OF INCOME FROM HOUSE PROPERTY THAT HAD BEEN RENDERED BY THE ASSESSEE IN THE BLOCK RETURN WERE ON THE BASIS OF UNDISCLOSED INCOME FROM HOUSE PROPERTY IN WHICH HE WAS THE OWNER ALONG WITH HIS MOTHER. THEREFORE THIS PARTICULAR PROPERTY FOR THE A.YS 2003-04 AND 2004-05 WHICH ACTUALLY ONLY BELONGED TO THE ASSESSEES MOTHER COU LD NOT BE PART OF THE INCOME FROM HOUSE RENT WAS NOT RETURNED BY WAY OF REGULAR RETUR N. THE LEARNED CIT(A) ALSO RELIED ON THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFF ICER UNDER SECTION 158BC WHICH HE HAD CONFIRMED RELYING ON HIS OWN APPELLATE ORDER THEREON. BOTH THE AUTHORITIES ERRED IN REFERRING TO THE RETURN MADE IN THE BLOCK ASSESSMENT FOR THE PERIOD 1.4.1996 TO 28.9.2002 WITHOUT EXAMINING THE MATTER IN THE LI GHT OF THE ASSESSEES SUBMISSIONS. HE POINTED OUT THAT ALL THE MATERIAL FOR IDENTIFYIN G THE OWNERSHIP WERE AVAILABLE TO THE ASSESSEE TO ESTABLISH BEYOND DOUBT THAT THE PURPORT ED PART OF THE INCOME COULD NOT BE TAXED IN THE HANDS OF THE ASSESSEE AS IT BELONGED T O THE ASSESSEES MOTHER. MUNICIPAL TAXES WERE PAID BY THE MOTHER AS PER THE REVENUE RE CEIPTS SUBMITTED IN THE PAPER BOOK. NEITHER THE ASSESSING OFFICER NOR THE LEARNE D CIT(A) VERIFIED LEASE DEED AND THESE DOCUMENTS TO ESTABLISH THAT THE ASSESSEE COUL D NOT BE TAXED FOR THE PURPORTED INCOME BEING RENTAL INCOME LEASED OUT BY THE ASSESS EES MOTHER AND NOT THE ASSESSEE. ITA NO.672(BNG)/09 - 3 - HE ALSO FURNISHED A COPY OF THE RETURN OF INCOME ON THE BASIS OF WHICH THE ASSESSMENT UNDER SECTION 144 WAS MADE AND INDICATED THAT THE A SSESSEE COULD NOT BE TAXED OVER AND ABOVE THE SUM OF RS.48 000 FOR THE IMPUGNED ASS ESSMENT YEAR ON A PROPERTY WHICH DID NOT BELONG TO HIM. HE PRAYED THAT THE ISSUE OF 10% ENHANCEMENT ARBITRARILY MADE AMOUNTING TO RS.33 330 MAY KINDLY BE DIRECTED TO BE DELETED. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE OPPOSED THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE BY STATING THAT THE FACT O F OWNERSHIP OF THE LEASED OUT PROPERTY AS BELONGING TO THE MOTHER OF THE ASSESSEE WAS NEVER BEFORE THE ASSESSING OFFICER OR BEFORE THE LEARNED CIT(A) AS CAN BE PURS UED IN THE RESPECTIVE ORDERS. THEREFORE THE ASSESSING OFFICER SOUGHT TO COMPLY WI TH THE UNDISCLOSED INCOME AS DECLARED BY THE ASSESSEE FROM HOUSE PROPERTY UPTO A .Y. 2002-03 TO HOLD THAT THE ASSESSEE HAD RETURNED INCOME FROM HOUSE PROPERTY ONLY AT RS.48 000 BY ENHANCING IT BY 10% LEADING TO NET INCREASE INCOME OF RS.33 330 FROM HOUSE PROPERTY. THE OWNERSHIP DOCUMENTS WHICH THE LEARNED COUNSEL HAS R ELIED UPON WERE NOT PART OF THE RECORDS AVAILABLE TO THE AUTHORITIES BELOW. 5. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERU SED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSMENT ORDER HAS BEEN FRAMED UNDER THE PROVISIONS OF SECTIN144 WHEN THE ASSESSING OFFICER SOUGHT TO TAKE STATEMENT ON R ECORD AFTER HAVING FIXED THE CASE FOR SCRUTINY ON 31.8.2005. THEREAFTER WHEN THE ASS ESSING OFFICER REQUIRED PRESENCE OF THE ASSESSEE ON ADJOURNED DATES THERE WAS NO COM PLIANCE TO THE NOTICE RESULTING IN INCOME FROM HOUSE PROPERTY TO BE ENHANCED BY 10% FOR THE IMPUGNED ASSESSMENT YEARS KEEPING THE BASE AT RS.74 300 AS RETURNED BY THE ASSESSEE FOR THE ASSESSMENT ITA NO.672(BNG)/09 - 4 - YEAR 2002-03 IN THE BLOCK PERIOD. THE LEARNED CIT( A) ALSO COMPOUNDED THE ISSUE BY RELYING ON AN ARBITRARY INCREASE OF 10% FOR THE IMP UGNED ASSESSMENT YEARS RELYING ON HIS CONFIRMING THE UNDISCLOSED INCOME SO COMPUTED B Y THE ASSESSING OFFICER FOR THE BLOCK PERIOD BY HOLDING THE APPELLATE DECISION IN F AVOUR OF THE ASSESSING OFFICER. I AM UNABLE TO SATISFY MYSELF TO THE ARBITRARY BASIS FOR COMBINING THE SAID AMOUNT IN THE REGULAR RETURNS FILED BY THE ASSESSEE WHEN THE ASSE SSEE DURING THE COURSE OF PROCEEDINGS UNDER SECTION 144 GAVE A STATEMENT ON T HE FIRST OCCASION INSISTING THAT THE PROPERTY IN QUESTION STANDS IN HIS MOTHERS NAME MR S. PANCHRATHNAM. THE DOCUMENTS THAT HAVE BEEN FILED BY THE LEARNED COUNSEL INDICAT E THAT THE PROPERTY IN THE REVENUE RECORDS IS HELD IN THE NAME OF THE ASSESSEES MOTHE R. THE ASSESSEE THEREFORE WAS HANDLING THE TRANSACTIONS ON HER BEHALF BY RECEIVIN G CHEQUES IN HIS NAME TO HAND OVER TO HER. THE AMOUNT OF RENT SO RECEIVED WAS ACCOUNTED AS INCOME FROM HOUSE PROPERTY IN ASSESSEES NAME FOR THE BLOCK PERIOD. THEREFORE IT IS CLEAR THAT THE ASSESSEES MOTHER WAS TO BE SUBJECTED TO TAX FOR THE RENTAL INCOME FO R THE IMPUGNED ASSESSMENT YEARS WHEN THE ASSESSEE CHOSE TO RETURN INCOME FROM HOUS E PROPERTY ON THE PROPERTY ACTUALLY BELONGED TO HIM. THEREFORE THE ASSESSMENT FRAMED UNDER SECTION 144 ARBITRARILY CHOSE TO ENHANCE THE HOUSE PROPERTY INC OME BY MERELY 10% WAS CONFIRMED BY THE LEARNED CIT(A) WITHOUT BRINGING OUT THE BASI S FOR THE REASONING ADOPTED BY HIM AS OTHERWISE GIVEN BY THE ASSESSEE-APPELLANT BEFORE HIM EARLIER. IN THE LIGHT OF ABOVE I AM OF THE CONSIDERED VIEW THAT THE ISSUE REQUIRES RECONSIDERATION IN THE HANDS OF THE LEARNED CIT(A) WHEN HE HAS TO JUSTIFY THE BASIS FOR HOLDING THE RENTAL INCOME BELONGING TO THE ASSESSEES MOTHER TO BE TAXED IN THE HANDS O F THE ASSESSEE WHEN THE PRIMA FACIE ITA NO.672(BNG)/09 - 5 - UNDISCLOSED INCOME RETURNED BY THE ASSESSEE UNDER T HE BLOCK PERIOD WAS TO SUBSTANTIATE INCOME FROM HOUSE PROPERTY ONLY. ON THIS ISSUE THEREFORE THE MATTER IS RESTORED TO THE FILE OF LEARNED CIT(A) FOR CONSIDER ATION AFRESH AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE-APPELLAN T. THE LEARNED CIT(A) IS REQUIRED TO CONSIDER THE COMPUTATION OF INCOME FROM HOUSE P ROPERTY AS RETURNED BY THE ASSESSEE VIS--VIS CONSIDER THE CASE OF THE ASSESSI NG OFFICER FOR ARRIVING AT A REASONABLE FIGURE OF INCOME FROM HOUSE PROPERTY B Y ONLY ENHANCING 10% OF THE RETURNED INCOME DURING THE BLOCK PERIOD IRRESPECTIV E OF OWNERSHIP DUE TO FACTS WHICH HAVE BEEN MENTIONED ABOVE AND REITERATED BY THE LEA RNED COUNSEL. IN THE RESULT THE APPEAL IS CONSIDERED ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 29 TH JAN. 2010. SD/- (K.K.GUPTA) ACCOUNTANT MEMBER BANGALORE DT.29.01.2010. COPY TO : 1. THE ASSESSEE. 2. THE ASSESSING OFFICER. 3. CIT(APPEALS) 4. CIT 5. DEPARTMENTAL REPRESENTATIVE ITAT BANGALORE. 6. GUARD FILE ITAT BANGALORE. 7. GUARD FILE ITAT NEW DELHI. GPR* BY ORDER ASSISTANT REGISTRAR ITAT