ACIT, New Delhi v. M/s. Allied Finance Pvt. Ltd, New Delhi

ITA 1400/DEL/2009 | 1997-1998
Pronouncement Date: 15-01-2010 | Result: Dismissed

Appeal Details

RSA Number 140020114 RSA 2009
Bench Delhi
Appeal Number ITA 1400/DEL/2009
Duration Of Justice 9 month(s) 5 day(s)
Appellant ACIT, New Delhi
Respondent M/s. Allied Finance Pvt. Ltd, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 15-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 15-01-2010
Date Of Final Hearing 21-12-2009
Next Hearing Date 21-12-2009
Assessment Year 1997-1998
Appeal Filed On 09-04-2009
Judgment Text
I.T.A. NO.964 1400 & 1401 /DEL/08-09 1/7 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE SHRI R.P. TOLANI JUDICIAL MEMBER AND SHRI A.K. GARODIA ACCOUNTANT MEMBER I.T.A. NO.964 /DEL/2008 ASSESSMENT YEAR : 2002-03 M/S ALLIED FINANCE (P) LTD. DCIT 3-LODHI INSTITUTIONAL AREA CENTRAL CIRCLE-9 NEW DELHI. V. NEW DELHI. AND I.T.A. NO.1400 & 1401/DEL/2009 ASSESSMENT YEAR : 1997-98 & 1998-99 DCIT M/S ALLIED FINANCE (P) CENTRAL CIRCLE-9 LTD. 3-LODHI INSTITUTIONAL NEW DELHI. V. AREA NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO.AAACA-3030-B APPELLANT BY : SHRI ROHIT JAIN & SHRI ROHIT GARG AR. RESPONDENT BY : MS. PRATIMA KAUSHIK SR. DR. ORDER PER A.K. GARODIA AM: OUT OF THIS BUNCH OF THREE APPEALS ONE APPEAL IS F ILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2002-03 WHICH IS DIRECTED AGAINST THE ORDER OF LD CIT(A) II NEW DELHI DATED 20.12.2007 AND THE REMAINING TWO AP PEALS ARE FILED BY THE REVENUE FOR ASSESSMENT YEARS 1997-98 & 1998-99AND T HESE APPEALS OF THE . I.T.A. NO.964 1400 & 1401/DEL/08-09 2/7 REVENUE ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LD CIT(A)-II NEW DELHI BOTH DATED 15.1.2009. 2. SINCE COMMON ISSUE IS INVOLVED ALL THESE APPEAL S WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IS A CO-OWNER HAVING 1/3 RD SHARE IN A PROPERTY SITUATED AT 12-AURANGZEB LANE NEW DELHI. TOTAL RENT RECEIVED BY THE ASSESSEE FROM TENANCY OF THIS PROPERTY HAS BEEN SHOWN AT RS.9000/- P.A. AND AFTER CONSIDERING THE FACTS OF T HE CASE AS MENTIONED IN DETAIL IN ASSESSMENT ORDER FOR ASSESSMENT YEAR FOR 1988-89 THE ALV OF THE PROPERTY WAS ASSESSED AT RS.84 LAKHS P.A. BY THE ASSESSING O FFICER IN THE ASSESSMENT ORDER FOR ALL THE THREE YEARS. IN ASSESSMENT YEAR 1988-89 AND 1989-90 THE ASSESSING OFFICER HELD THAT THE LETTING OF THIS PRO PERTY AT AURANGZEB LANE BY THE THREE COMPANIES INCLUDING THE ASSESSEE COMPANY WAS COLLUSIVE IN NATURE. THE ASSESSING OFFICER IN THOSE TWO YEARS ESTIMATED THE MONTHLY RENTAL OF THE PROPERTY AT RS. 7 LAKHS PER MONTH AND ACCORDINGLY ADOPTED TH E ALV OF THE PROPERTY AT RS.84 LAKHS AND ACCORDINGLY 1/3 RD SHARE OF THE ASSESSEE WAS WORKED OUT AT RS.28 LAKHS AND THE SAME WAS TAXED AS RENTAL INCOME IN THE HANDS OF THE ASSESSEE. THE TRIBUNAL IN THE CONSOLIDATED ORDER DA TED 29.12.1997 FOR THE ASSESSMENT YEARS 1988-89 AND 1989-90 AS REPORTED IN 65 ITD 512 (DEL.) CATEGORICALLY OBSERVED THAT RENTAL VALUE ADOPTED BY THE ASSESSING OFFICER AT RS.7 LAKLHS PER MONTH HAS NO BASIS AND THE SAME RESTED P URELY ON SURMISES. AFTER MAKING THIS OBSERVATION THE TRIBUNAL RESTORED THE MATTER TO THE ASSESSING OFFICER WITH A DIRECTION TO ADOPT THE RATABLE VALUE AS DETE RMINED BY THE MUNICIPAL CORPORATION. IN THE RELEVANT THREE YEARS WHICH AR E BEFORE US THE ASSESSING OFFICER HAS MERELY FOLLOWED HIS ORDER FOR ASSESSMEN T YEAR 1988-89 AND COMPLETED THE ASSESSMENT ADOPTING ANNUAL VALUE OF T HE PROPERTY AT RS.84 LAKHS. WHEN THE ASSESSEE FILED APPEAL BEFORE THE LD CIT(A) LD CIT(A) DIRECTED THE ASSESSING OFFICER TO DETERMINE THE ALV OF THE PROPE RTY AS DETERMINED BY THE NDMC. WHILE PASSING THE PENALTY ORDER IN ALL THE TH REE YEARS IN ASSESSMENT . I.T.A. NO.964 1400 & 1401/DEL/08-09 3/7 YEAR 1997-98 THE ASSESSING OFFICER HAS LEVIED PEN ALTY OF RS.9 59 330/- ON THE BASIS OF ASSESSEES INCOME BY ADOPTING ALV OF THE P ROPERTY IN DISPUTE AT THE RATE OF RS.7 LAKHS PER MONTH. SIMILARLY IN ASSESSMENT Y EAR 1998-99 THE ASSESSING OFFICER HAS LEVIED PENALTY OF RS.7 80 850/- AND IN THIS YEAR ALSO THE PENALTY WAS LEVIED ON THE BASIS OF ALV OF DISPUTED PROPERTY AT RS.7 LAKHS PER MONTH. BUT IN ASSESSMENT YEAR 2002-03 THE ASSESSING OFFICER HAS LEVIED A PENALTY OF RS.8 90 840/- ONLY BY DETERMINING AND TAXING RS.2 6 0 653/- AS ASSESSEES I/3 RD SHARE OF RENTAL INCOME FROM THIS PROPERTY ON THE B ASIS OF RATABLE VALUE OF THE DISPUTED PROPERTY AS DETERMINED BY NDMC. IN ASSESSM ENT YEAR 1997-98 AND 1998-99 THE PENALTY WAS DELETED BY THE LD CIT(A) O N THE BASIS THAT THE ASSESSEE DECLARED RENTAL RECEIPTS ON ACTUAL BASIS W HEREAS THE ASSESSING OFFICER ADOPTED THE SAME ON ESTIMATE BASIS AND THERE IS SUB JECTIVE ANALYSIS IN THE ISSUE. IT WAS HELD BY HIM THAT THESE ESTIMATED INCOME THOU GH ASSESSABLE AS INCOME OF THE ASSESSEE BUT CANNOT BE BROUGHT UNDER PURVIEW OF PENALTY. BUT IN ASSESSMENT YEAR 2002-03 LD CIT(A) HAS CONFIRMED THE PENALTY. NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US IN ASSESSMENT YEAR 2002-03 AND THE REVENUE IS IN APPEAL IN REMAINING TWO YEARS I.E. 1997-98 & 1998-9 9. 4. IT WAS SUBMITTED BY LD AR OF THE ASSESSEE THAT N O PENALTY IS IMPOSABLE IN THE PRESENT CASE IN ANY OF THESE THREE YEARS BECAUS E THE ASSESSEE HAS DECLARED THE ACTUAL RENTAL INCOME RECEIVED BY IT ON ACCOUNT OF THIS PROPERTY. IT IS ALSO SUBMITTED THAT THE ASSESSEE HAS FULLY DISCLOSED AND DESCRIBED THE NATURE AND PENDING INCOME TAX DISPUTES ON THE AFORESAID ISSUES BY WAY OF SUITABLE NOTES IN THE AUDITED FINANCIAL STATEMENT IN ALL THE THREE YE ARS. REGARDING THIS NOTE IT WAS SUBMITTED THAT IN ASSESSMENT YEAR 2002-03 SUCH NO TE WAS GIVEN VIDE NOTE (B) (1) (B) TO THE AUDITED FINANCIAL STATEMENT FOR THE YEAR ENDING ON 31 ST MARCH 2002 AS CAN BE SEEN ON PAGE NO.14 OF THE PAPER BOOK. RE GARDING SIMILAR NOTE IN ASSESSMENT YEAR 1997-98 IT WAS POINTED OUT THAT SU CH NOTE IS AVAILABLE VIDE NOTE NO. (B) 12 AS CAN BE SEEN ON PAGE NO.22 OF THE PAPE R BOOK. REGARDING SIMILAR NOTE IN ASSESSMENT YEAR 1998-99 IT WAS POINTED OU T THAT SUCH NOTE WAS GIVEN VIDE NOTE NO. (B) (6) AS CAN BE SEEN ON PAGE NO.32 OF THE PAPER BOOK. IT WAS . I.T.A. NO.964 1400 & 1401/DEL/08-09 4/7 SUBMITTED THAT UNDER THIS FACTUAL POSITION IT CANNO T BE SAID THAT THE ASSESSEE HAS CONCEALED INCOME OR FURNISHED INACCURATE PARTICULAR S OF INCOME AND HENCE PENALTY IS NOT LEVIEABLE. 5. AS AGAINST THIS LD DR OF THE REVENUE SUPPORTED THE PENALTY ORDERS AND THE ORDERS OF THE LD CIT(A) IN ASSESSMENT YEAR 2002-03 . IT WAS SUBMITTED BY HIM THAT A CLEAR FINDING IS GIVEN BY LD CIT(A) IN ASSESSMENT YEAR 2002-03 THAT AS PER THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER MUNI CIPAL AUTHORITY REPLIED THAT TRANSACTION WAS TAINTED WITH COLLUSIVENESS DUE TO C O-OWNER RELATIONSHIP AND THEREFORE RENT OFFERED CANNOT BE CORRECT INDICATIO N OF THE ANNUAL RATABLE VALUE. IT WAS SUBMITTED THAT BECAUSE OF THIS PENALTY WAS RIG HTLY IMPOSED BY THE ASSESSING OFFICER. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GON E THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT AS PER THE ASSESS MENT ORDER PASSED BY THE ASSESSING OFFICER IN ALL THE THREE YEARS WHICH ARE UNDER CONSIDERATION BEFORE US ADDITION OF INCOME WAS MADE BY THE ASSESSING OFFICE R ON THE BASIS OF THE ASSESSMENT ORDER PASSED BY HIM IN ASSESSMENT YEAR 1988-89. IN THAT YEAR THE MATTER WAS IN DISPUTE BEFORE THE TRIBUNAL AND AS PE R THE TRIBUNAL DECISION IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 1988-89 & 1989-90 AS REPORTED IN 65 ITD 512 THE TRIBUNAL RESTORED THE MATTER TO THE A SSESSING OFFICER WITH A DIRECTION TO ADOPT THE RATABLE VALUE AS DETERMINED BY THE MUNICIPAL CORPORATION. THE MATTER WAS FURTHER CARRIED IN DISPUTE BEFORE TH E HON'BLE DELHI HIGH COURT AND VALUE DETERMINED BY THE NDMC IS IN DISPUTE BEFORE T HE HON'BLE DELHI HIGH COURT AS PER COPIES OF JUDGMENT OF HON'BLE DELHI HIGH COU RT DATED 24.11.2001 SUBMITTED BY THE ASSESSEE BEFORE US. ALTHOUGH THE ASSESSEE HAS DECLARED THE ACTUAL RENTAL RECEIPT ONLY TOWARDS ITS SHARE OF INC OME I.E. RS.9 000/- PER MONTH AS WAS DONE BY THE ASSESSEE IN ASSESSMENT YEAR 1988-8 9 THIS ALONE CANNOT BE A BASIS TO HOLD THAT THE ASSESSEE HAS CONCEALED ITS I NCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME BECAUSE THE ENTIRE FACTUAL PO SITION WAS DULY DISCLOSED BY THE ASSESSEE IN THE AUDITED FINANCIAL STATEMENT OF ALL THE RELEVANT YEARS. IN . I.T.A. NO.964 1400 & 1401/DEL/08-09 5/7 ASSESSMENT YEAR 1997-98 THE FOLLOWING NOTE WAS GI VEN BY THE ASSESSEE WITH THE AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31.3.1997:- NDMC HAS CLAIMED PROPERTY TAX OF RS.12 LAKHS FROM THE THREE COMPANIES WHICH ARE THE CO OWNERS OF PROPERTY SITUATED AT 12 AURENGZEB LANE NEW DELHI RESPECTIVELY WITH EFFECT FROM 1973. THE AMOUN T HAS BEEN DEPOSITED IN THE FORM OF FDR WITH THE HON'BLE HIGH COURT OF D ELHI AS PER THE DIRECTION OF THE COURT. THE NDMC IS NOT ENTITLED TO THIS AMOUNT OF THE VARIOUS GROUNDS MENTIONED IN THE WRIT PETITION. 7. SIMILARLY IN ASSESSMENT YEAR 1998-99 SIMILAR NOTE WAS GIVEN BY THE ASSESSEE ALONG WITH THE AUDITED STATEMENT ACCOUNTSF OR THE YEAR ENDED 31.3.1998 AND SUCH NOTE BEING NO.6 AS IS AVAILABLE ON PAGE NO.32 OF THE PAPER BOOK READS AS UNDER:- NDMC HAS CLAIMED PROPERTY TAX OF RS.12 LAKHS FOR P ROPERTY SITUATED AT 12 AURENGZEB LANE NEW DELHI W.E.F. 1973. THE AMO UNT HAS BEEN DEPOSITED WITH THE HON'BLE HIGH COURT OF DELHI AS P ER THE DIRECTION OF THE COURT. 8. SIMILAR NOTE IN ASSESSMENT YEAR 2002-03 WAS GI VEN BY THE ASSESSEE ALONG WITH THE AUDITED BALANCE SHEET FOR THE YEAR E NDED 31.3.2002 AS AVAILABLE ON PAGE NO.14 OF THE PAPER BOOK SUCH NOTE IS BEING REPRODUCED BELOW:- INCOME TAX DEMAND HAS BEEN RAISED BY THE ASSESSING OFFICER AMOUNTING TO RS.23 LAKHS FOR EACH YEAR FROM ASSESSMENT YEAR 1 981-82 TO 1999-2000. THE ASSESSMENTS FOR THE ASSESSMENT YEAR 1981-82 TO 1984-85 HAVE BEEN CANCELLED BY CIT(A) NEW DELHI. HOWEVER AGAINST TH E ORDER OF CIT(A) NEW DELHI THE DEPARTMENT HAS FILED APPEAL BEFORE IT AT WHICH ARE PENDING. THE ASSESSMENT ORDERS/APPELLATE ORDERS OF OTHER ASSESSMENT YEARS 1985-86 TO 1999-00 HAVE BEEN SET ASIDE BY ITA T/CIT (A) DIRECTING . I.T.A. NO.964 1400 & 1401/DEL/08-09 6/7 THE ASSESSING OFFICER TO COMPUTE THE ANNUAL LETTING VALUE OF PROPERTY AS PER THE RATEABLE VALUE DETERMINED BY THE FIGURE TO BE FINALLY DETERMINED BY THE HON'BLE HIGH COURT OF DELHI. THE APPEAL EFFECT HAS NOT YET BEEN GIVEN BY THE ASSESSING OFFICER. THE INCOME TAX DEMAND OF RS.23 LAKHS PLUS INTEREST PAYABLE ON THE BASIS OF ABOVE DECISION OF THE APPELLATE AUTHORITIES IS BEING DISPUTED BY THE COMPANY IN THE ITAT/HIGH C OURT OF DELHI. 9. IN THE LIGHT OF THESE NOTES APPENDED BY THE ASS ESSEE ALONG WITH THE AUDITED STATEMENT OF ACCOUNTS FOR ALL THE THREE REL EVANT YEARS AND ALSO WITH REGARD TO THIS FACTUAL POSITION THAT THIS DISPUTE W AS ALREADY BEFORE THE DEPARTMENT SINCE ASSESSMENT YEAR 1988-89 AND THE MATTER WAS S UB JUDICE EVEN WHEN THE RETURNS FOR THESE ASSESSMENT YEARS WERE FILED BY TH E ASSESSEE IT CANNOT BE EXPECTED THAT WHEN THE ASSESSEE IS NOT ACCEPTING TH E VIEW OF THE DEPARTMENT REGARDING ASSESSMENT OF THE RENTAL INCOME WITH REG ARD TO THIS PROPERTY THE ASSESSEE SHOULD HAVE DECLARED ITS INCOME ON THE BAS IS OF THE VIEW TAKEN BY THE DEPARTMENT WITH REGARD TO THE SAME. THE ASSESSEE HA S MAINTAINED ITS STAND WHICH WAS ALTHOUGH NOT ACCEPTED B Y THE DEPARTMENT BUT SINCE THE DISPUTE WAS WELL KNOWN TO THE DEPARTMENT ALSO AT THE TIME WHEN THE RETURN OF INCOME WAS FILED BY THE ASSESSEE FOR THESE THREE RELEVANT YEAR S IT CANNOT BE SAID THAT THE ASSESSEE HAD CONCEALED ITS INCOME OR FURNISHED INAC CURATE PARTICULARS OF INCOME PARTICULARLY WHEN SUITABLE NOTE REGARDING THIS ASPE CT WAS GIVEN BY THE ASSESSEE IN THE AUDITED FINANCIAL STATEMENT. CONSIDERING ALL THESE ASPECTS OF THE MATTER WE ARE OF THE CONSIDERED OPINION THAT ALTHOUGH THE INC OME ON THIS ACCOUNT MAY BE ASSESSABLE IN THE HANDS OF THE ASSESSEE BUT PENALTY CANNOT BE LEVIED EVEN IF SOME ADDITION IS ULTIMATELY SUSTAINED ON THIS ACCOU NT BECAUSE FOR LEVY OF PENALTY MERE ADDITION OF INCOME IS NOT SUFFICIENT AND IT HA S ALSO TO BE SHOWN THAT THE INCOME WAS CONCEALED BY THE ASSESSEE OR THAT THE AS SESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. ACCORDING TO THE FACTS OF THE PRESENT CASE AS DISCUSSED ABOVE WE ARE OF THE CONSIDERED OPINION T HAT IN THE FACTS OF THE PRESENT CASE IT CANNOT BE SAID THAT THE ASSESSEE HAS CONCE ALED ITS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME IN ANY OF THE THREE YEARS WHICH ARE . I.T.A. NO.964 1400 & 1401/DEL/08-09 7/7 BEFORE US. THIS ALLEGATION CAN BE MADE IN THE INITI AL YEARS I.E. ASSESSMENT YEAR 1988-89 & 1989-90 ETC. BUT FOR THE RETURNS FILED B Y THE ASSESSEE AFTER COMPLETION OF THE ASSESSMENT IN THE INITIAL YEAR I.E. 1988-89 AFTER GIVING SUITABLE NOTE IN THE AUDITED ACCOUNTS IT CANNOT BE ALLEGED THAT IN THOS E YEARS ALSO THE ASSESSEE HAS CONCEALED INCOME OR FURNISHED INACCURATE PARTICULAR S OF INCOME HENCE PENALTY IS NOT LEVIABLE IN THE FACTS OF THE PRESENT CASE IN ANY OF THE THREE YEARS WHICH ARE BEFORE US. WE THEREFORE DELETE THE PENALTY IN AL L THE THREE YEARS. 10. SOME OTHER CONTENTIONS WERE ALSO RAISED BY THE LD AR OF THE ASSESSEE AND RELIANCE WAS ALSO PLACED ON SOME JUDGMENTS BUT SINCE WE HAVE DECIDED THE ISSUE ON THE BASIS OF FACTS OF THE PRESENT CASE THOSE CONTENTIONS AND ARGUMENTS AND JUDGMENTS CITED BY LD AR OF THE ASSES SEE ARE NOT REQUIRED TO BE DISCUSSED HEREIN. 11. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED FOR ASSESSMENT YEAR 2002-03 AND THE REMAINING TWO APPEALS OF THE REVENU E FOR ASSESSMENT YEAR 1997-98 AND 1998-99 ARE DISMISSED 12. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JANUARY 2010. SD/- SD/- (R.P. TOLANI) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 15..1.2010. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)- NEW DELHI. 5. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DELHI. TRUE COPY. BY ORDER (ITAT NEW DELHI).