Shri Sashi Kumar Mohta,, v. The Income tax Officer,,

ITA 159/AHD/2004 | 1995-1996
Pronouncement Date: 30-04-2015 | Result: Partly Allowed

Appeal Details

RSA Number 15920514 RSA 2004
Assessee PAN AAAPM0059K
Bench Ahmedabad
Appeal Number ITA 159/AHD/2004
Duration Of Justice 11 year(s) 3 month(s) 6 day(s)
Appellant Shri Sashi Kumar Mohta,,
Respondent The Income tax Officer,,
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2015
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 30-04-2015
Date Of Final Hearing 07-04-2015
Next Hearing Date 07-04-2015
Assessment Year 1995-1996
Appeal Filed On 23-01-2004
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE SHRI SHAILENDRA KR. YADAV J.M. & SHRI ANIL CHATURVEDI A.M.) I.T. A. NOS.159 & 160/AHD/2004 (ASSESSMENT YEAR: 19 95-96 & 1996-97) SHRI SASHI KUMAR MOHTA DHUN HOUSE MISSION ROAD BHADRA AHMEDABAD V/S THE INCOME TAX OFFICER WARD 3(4) AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAAPM 0059K APPELLANT BY : SMT. URVASHI SHODHAN A.R. RESPONDENT BY : SHRI ROOP CHAND SR. D.R. ( )/ ORDER DATE OF HEARING : 07-04-20 15 DATE OF PRONOUNCEMENT : 30 -04-2015 PER SHRI ANIL CHATURVEDI A.M. 1. THESE 2 APPEALS FILED BY THE ASSESSEE ARE AGAINST T HE ORDER OF CIT(A)-VII AHMEDABAD DATED 17.12.2003 FOR A.YS. 1995-96 & 1996 -97. 2. AT THE OUTSET BEFORE US THE LD. A.R. SUBMITTED TH AT THOUGH THE APPEAL OF THE ASSESSEE RELATES TO 2 DIFFERENT ASSESSMENT YEARS BU T THE FACTS AND CIRCUMSTANCES OF BOTH THE CASES ARE SIMILAR EXCEPT FOR THE ASSESSMENT YEARS AND AMOUNTS AND THE SUBMISSIONS ARE ALSO COMMON FOR BOTH THE APPEALS AND THEREFORE BOTH THE APPEALS CAN BE HEARD TOGETHER. W E THEREFORE PROCEED TO ITA NOS. 159 & 160/AHD/2004 . A.YS. 1995-9 6 & 1996-97 2 DISPOSE OF BOTH THE APPEALS TOGETHER FOR THE SAKE O F CONVENIENCE AND THUS PROCEED WITH THE FACTS IN A.Y. 1995-96. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 4. ASSESSEE IS AN INDIVIDUAL STATED TO BE PROPRIETOR O F GOPAL TRADING COMPANY AND INVESTOR CLUB AND IS ALSO STATED TO BE DOING TH E BUSINESS OF TRADING IN SHARES AND DERIVING INCOME FROM PROPERTY SITUATED A T MADHU INDUSTRIAL ESTATE MUMBAI WHICH IS LET OUT TO CENTRAL EXCISE D EPARTMENT. ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 1995-96 ON 26.0 2.1997 DECLARING TOTAL LOSS OF RS. 4800/-. THE RETURN WAS INITIALLY WAS PR OCESSED U/S. 143(1)(A). SUBSEQUENTLY NOTICE U/S. 148 WAS ISSUED ON 22.03.20 02 AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S. 143(3) R.W.S 147 VIDE OR DER DATED 10.03.2003 AND THE TOTAL INCOME WAS DETERMINED AT RS. 1 00 170 /-. AGGRIEVED BY THE ORDER OF A.O. ASSESSEE CARRIED THE MATTER BEFORE L D. CIT(A) WHO VIDE ORDER DATED 17.12.2003DISMISSED THE APPEAL OF THE ASSESSE E. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A) ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED VARIOUS GROUNDS WHICH HAVE BEEN SUBSEQUENTLY BEEN CONCISED AND THE REVISED AND CONCISE GROUNDS OF APPEAL RAISED READS AS UNDER:- 1. LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIRMING ORDER PASSED BY AO U/S.143 (3) R W S 147 OF THE ACT. LD. CIT (A) OUGHT TO HAVE QUASH ED THE ORDER. 2. LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION MADE BY AO OF RS. 1 00 170/- IN A Y 1995/96 RS. 1 85 470/- IN A Y 1996/97 AND RS. 5 73 018/- IN A Y 1997/98 BY CLUBBING RENTAL INCOME OF OTHER FAMILY M EMBERS IN THE HANDS OF THE APPELLANT. LD. CIT (A) OUGHT TO HAVE APPRECIATED AN D HELD FAMILY ARRANGEMENT EXECUTED AS PER PROVISIONS OF LAW AS VALID AND OUGH T TO HAVE DELETED THE ADDITIONS. IT BE SO HELD NOW. ITA NOS. 159 & 160/AHD/2004 . A.YS. 1995-9 6 & 1996-97 3 5. BEFORE US LD. A.R. SUBMITTED THAT SHE DID NOT WANT TO PRESS GROUND NO. 1 AND THEREFORE THE GROUND NO. 1 IS DISMISSED AS NOT PRE SSED. GROUND NO. 2 IS WITH RESPECT TO CONFIRMING THE ADDI TION OF RS. 1 00 170/-. 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS A.O NO TICED THAT ASSESSEE HAS RECEIVED RENTAL INCOME OF RS. 1 73 700/- WHEREAS HE HAD OFFERED TO TAX THE INCOME OF RS. 73 530/- ONLY AND FOR WHICH THE JUSTI FICATION OF ASSESSEE WAS THAT THE PROPERTY AT MADHU INDUSTRIAL ESTATE WAS PU RCHASED IN 1975 IN THE NAME OF SHASHI KUMAR MOHTA TRUST AND OF WHICH THE A SSESSEE WAS THE SOLE BENEFICIARY. ON ASSESSEE ATTAINING MAJORITY IN SEP TEMBER 1976 THE RIGHTS IN THE PROPERTY WERE TRANSFERRED IN THE NAME OF ASSESS EE. SUBSEQUENTLY THE SUB- DIVISION OF PROPERTY WAS VOLUNTARILY DONE IN 1988 AND THEREAFTER FURTHER SUB- DIVISION WAS DONE IN THE YEAR 1990 AT THE INSTANCE OF HIS FATHER SHRI PRUSHOTAMDASJI MOHTA. IN 1988 THE SUB-DIVISION WAS IN FAVOUR OF 3 OTHER PERSONS NAMELY THE WIFE OF ASSESSEE AND TWO MINOR C HILDREN. IT WAS THEREFORE SUBMITTED THAT THE RENT RECEIPT FROM THE PROPERTY WAS DISCLOSED IN THE HANDS OF THE RESPECTIVE PERSONS AND THE ASSESSE ES SHARE OF RENT WAS OF RS. 73 530/- AND THEREFORE THE SAME WAS DECLARED BY THE ASSESSEE. THE SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE A.O AS HE REFUSED TO ACCEPT THAT THERE WAS ANY SUB-DIVISION O F PROPERTY EITHER IN THE YEAR 1988 OR IN THE YEAR 1990 AS CLAIMED BY THE ASS ESSEE. A.O ALSO NOTED THAT THE AGREEMENT ALLEGEDLY EXECUTED IN THE YEAR 1 990 TO SUB-DIVIDE PROPERTY HAD NO LEGAL SANCTITY BECAUSE IF SUCH A SU B-DIVISION HAD ACTUALLY TAKEN PLACE IT WOULD HAVE BEEN SHOWN BY THE ASSESSE E IN THE RETURN OF INCOME FROM A.Y. 1990-91 ONWARDS INCLUDING A.Y. 95- 96 & 96-97. SINCE NO SUCH SUB-DIVISION WAS CLAIMED BY THE ASSESSEE IN ASSESSMENT YEARS EARLIER TO 1997-98 A.O WAS OF THE VIEW THAT THE SO CALLED AGREEMENT OF ITA NOS. 159 & 160/AHD/2004 . A.YS. 1995-9 6 & 1996-97 4 FAMILY ARRANGEMENT EXECUTED IN 1990 WAS NOTHING BUT A COLORFUL DEVICE ADOPTED BY THE ASSESSEE TO DIVERT HIS RENTAL INCOME WITH A MOTIVE TO REDUCE HIS TAX LIABILITY. HE ACCORDINGLY CONSIDERED THE EN TIRE RENTAL INCOME OF RS. 1 73 700/- RECEIVED ON LETTING OF PROPERTY AT MADH U INDUSTRIAL ESTATE TO BE BELONGING TO ASSESSEE AND THEREFORE ACCORDING TO HI M IT WAS TO BE TAXED IN THE HANDS OF THE ASSESSEE. SINCE THE ASSESSEE HAD O FFERED ONLY RS. 73 530/- AS RENTAL INCOME A.O MADE ADDITION OF THE DIFFEREN TIAL AMOUNT OF RS. 1 00 170/- (1 73 700- 73 530/-) OF RENTAL INCOME. A GGRIEVED BY THE ORDER OF A.O. ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE CONFIRMED THE ADDI TION MADE BY THE A.O HOLDING US UNDER:- 6.4 TO CONCLUDE THEREFORE THE FOLLOWING UNDISPUTE D FACTS HAVE EMERGED IN THIS CASE: (I) THE PROPERTY FROM WHICH THE RENTAL INCOME HAS B EEN RECEIVED BY THE APPELLANT DURING ALL THESE YEARS DID NOT BELONG TO ANY HUF OR TO HIM IN HIS INDIVIDUAL CAPACITY. THE PROPERTY BELONG TO SHRI SHASHIKUMAR MOHTA TRUST. II) IT IS ALSO AN ADMITTED FACT THAT SHRI. SHASHIKU MAR MOHTA TRUST IS IRREVOCABLE ONE. (III) THE PURPOSE OR THE MOTIVE BEHIND THE SO CALLE D PARTITION OF THE PROPERTY BELONGING TO THE TRUST IN THE YEAR 1988 AND 1990 IS VOID-AB-INIT IO BECAUSE THE TRUST IS NOT A PARTY TO THESE SO CALLED FAMILY ARRANGEMENTS. (IV) THE PURPOSE OF SO CALLED FAMILY PARTITION IN T HE YEAR 1990 AND DISCLOSED TO THE DEPARTMENT FOR THE FIRST TIME IN THE ASSESSMENT YEA R 1997-98 SEEMS TO BE NOTHING BUT TO DIVERT A LARGE PART OF THE RENTAL INCOME INTO VARIO US HANDS. HAD THERE BEEN ANY GENUINE PARTITION IN THE YEAR 1990 THE SAME COULD HAVE BEE N REFLECTED IN ALL THE SUBSEQUENT YEARS AND PARTICULARLY THE ASSESSMENT YEARS 95-96 96-97 WHEREIN THE RENTAL INCOME WAS DIVIDED BETWEEN FOUR PERSONS ONLY. (V) THE PROPERTY HAS BEEN HELD BY THE TRUST AND THE APPELLANT WAS ENTITLED TO ITS ENTIRE INCOME BEING ITS SOLE BENEFICIARY. (VI) THERE WAS NO NEED FOR THE A.O. TO INVOKE THE PROVISIONS OF SECTION 64 OF THE ACT BECAUSE THERE WAS NO TRANSFER OF THE PROPERTY WHICH IS RECOGNIZED BY THE LAW. ITA NOS. 159 & 160/AHD/2004 . A.YS. 1995-9 6 & 1996-97 5 (VII) IT IS ALSO AN ACCEPTED FACT THAT THE ENTIRE RENTAL INCOME HAS BEEN RECEIVED B Y THE APPELLANT AND THE INCOME HAS BEEN DIVIDED THEREAFTER ONLY AFTER OBTAINING A CONSENT DECREE FROM THE COURT. 7 UNDER THESE CIRCUMSTANCES I HAVE NO HESITATION TO HOLD THAT THE PROPERTY UNDER CONSIDERATION WAS ACQUIRED IN THE YEAR 1975 IN THE NAME OF THE TRUST CALLED SHASH IKUMAR MOHTA TRUST. CONSIDERING THE FACT THAT THE APPELLAN T IS THE SOLE BENEFICIARY OF THE TRUST THE ENTIRE RENTAL INCOME NEEDS TO BE ASSESSED IN HI S OWN HANDS ON RECEIPT BASIS. ACCORDINGLY THE ADDITION OF RS. 1 00 170/- RS. 1 85 470/- AND RS. 5 73 080/- MADE FOR A.YS. 1995-96 96-97 AND 97-98 RESPECTIVELY ARE CON FIRMED. 7. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A) ASS ESSEE IS NOW IN APPEAL BEFORE US. 8. BEFORE US LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND FURTHER SUBMITTED THAT THE RESPECTIVE SH ARE OF INCOME FROM RENT HAS BEEN OFFERED BY ALL THE 10 ENTITIES IN THEIR RE SPECTIVE INCOME-TAX RETURNS THEY ALL ARE SEPARATELY ASSESSED TO TAX AND THE INC OMES HAVE BEEN ALSO ASSESSED ACCORDINGLY. SHE THEREFORE SUBMITTED THAT ONCE AGAIN TAXING THE ENTIRE RENTAL INCOME IN THE HANDS OF THE ASSESSEE W OULD AMOUNT TO DOUBLE TAXATION OF THE SAME INCOME MORE SO WHEN THE SAME H AS BEEN OFFERED TO TAX BY THE RESPECTIVE ASSESSEES AND ALSO BEEN ACCEPTED BY THE DEPARTMENT. SHE THEREFORE SUBMITTED THAT IF THE INCOME IS HELD TO B E TAXED IN THE CASE OF ASSESSEE THEN SUITABLE DIRECTIONS MAY BE GIVEN TO T HE EFFECT THAT IT BE NOT TAXED IN THE HAND OF THE OTHER PERSONS. LD. D.R. O N THE OTHER HAND SUPPORTED THE ORDER OF A.O AND LD. CIT(A). 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 ITA NOS. 159 & 160/AHD/2004 . A.YS. 1995-9 6 & 1996-97 6 ENTIRE RENTAL INCOME HAS TO BE TAXED IN THE HANDS O F THE ASSESSEE HOWEVER CONSIDERING THE ASSESSEES SUBMISSION THAT THE SHAR E OF RENTAL INCOME HAS ALREADY BEEN OFFERED TO TAX AND HAS BEEN ACCEPTED B Y 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 TA XATION OF THE SAME INCOME WE ARE OF THE VIEW THAT THE AFORESAID SUBM ISSION OF ASSESSEE NEEDS TO BE RE-EXAMINED AT THE END OF A.O. WE THEREFORE R ESTORE 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 T HE TAXABILITY OF THE SAID INCOME IN THE HANDS OF OTHER CO-OWNERS NEED TO BE D EALT IN ACCORDANCE WITH LAW. WE ALSO DIRECT THE ASSESSEE TO FILE THE NECES SARY DETAILS AS SOON AS POSSIBLE BEFORE THE A.O SO THAT HE MAY TAKE LEGAL V IEW IN FACTS AND CIRCUMSTANCES OF CASE. A.O IS DIRECTED ACCORDINGLY. 10. IN THE RESULT THE APPEAL OF ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE. ITA NO. 160/AHD/2004 (FOR A.Y. 1996-97) 11. BEFORE US BOTH THE PARTIES HAVE ADMITTED THAT THE FACTS AND CIRCUMSTANCES OF THE CASE ARE IDENTICAL TO THAT OF A.Y. 1995-96. THE REFORE FOLLOWING SAME REASONING WHILE DECIDING THE MATTER HEREINABOVE TH E MATTER IS RESTORED TO A.O WITH SIMILAR DIRECTION. 12. AS A RESULT THE GROUNDS OF ASSESSEES ARE PARTLY A LLOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE ITA NOS. 159 & 160/AHD/2004 . A.YS. 1995-9 6 & 1996-97 7 13. IN THE RESULT BOTH THE APPEALS OF ASSESSEE ARE PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 30 - 04 - 2015. SD/- SD/- (SHAILENDRA KR. YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR. ITAT AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT AHM EDABAD