UMMED SINGH LODHA, Jaipur v. ACIT, Jaipur

ITA 179/JPR/2011 | 2003-2004
Pronouncement Date: 08-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 17923114 RSA 2011
Bench Jaipur
Appeal Number ITA 179/JPR/2011
Duration Of Justice 4 month(s) 7 day(s)
Appellant UMMED SINGH LODHA, Jaipur
Respondent ACIT, Jaipur
Appeal Type Income Tax Appeal
Pronouncement Date 08-07-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 08-07-2011
Assessment Year 2003-2004
Appeal Filed On 01-03-2011
Judgment Text
1 ITA 179(2)-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 179 & 180/JP/2011 ASSTT. YEAR : 2003-04 & 05-06. SHRI UMMED SINGH LODHA VS. THE ACIT CENTRAL CIR CLE-2 A-110 ATREY PATH SHYAM NAGAR JAIPUR. JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MUKESH KHANDELWAL RESPONDENT BY : SHRI D.K. MEENA ORDER DATE OF ORDER : 08/07/2011. PER R.K. GUPTA J.M. THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAINS T THE ORDERS OF LD. CIT (A) RELATING TO ASSESSMENT YEARS 2003-04 AND 05-06. 2. IN APPEAL FOR ASSESSMENT YEAR 2003-04 FIRST ISS UE RELATES TO DISALLOWING 15% OF DEPRECIATION CLAIMED ON ACCOUNT OF PERSONAL USE OF CARS. 3. THE AO DISALLOWED THE ENTIRE DEPRECIATION CLAIME D ON TWO CARS AT RS. 1 06 111/-. THE LD. CIT (A) HELD THAT IF 15% OUT OF TOTAL DISAL LOWANCE OF RS. 1 06 111/- IS ALLOWED THAT WILL BE REASONABLE. IN THIS WAY THE LD. CIT ( A) SUSTAINED AN ADDITION OF RS. 15 901/-. 4. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD WE ARE OF THE VIEW THAT IF DISALLOWANCE IS SUSTAINED AT RS. 10 000/- AGAINST RS. 15 901/- THAT WILL MEET THE ENDS OF JUSTICE. WE ORDER ACCORDINGLY. 2 5. GROUND NO. 2 RELATES TO TAXING THE RENTAL INCO ME IN THE HANDS OF ASSESSEE IGNORING THE FACT THAT SAME HAS ALREADY BEEN TAXED IN THE HANDS OF M/S. KARAN LODHA TRUST. 6. ASSESSEE OWNS SCHOOL BUILDING PROPERTY AT PADMAW ATI COLONY WHICH WAS GIVEN ON RENT TO THE SCHOOL. THE ASSESSEE TRANSFERRED TH E OWNERSHIP OF THE BUILDING TO M/S. KARAN LODHA TRUST VIDE TRUST DEED DATED 1.8.2000. THIS DEED WAS SIGNED BY ONE SHRI MAHESH AGARWAL BUT SHRI MAHESH AGARWAL DENIED THAT HE HAS SIGNED ANY DEED. THEREFORE AN ADVERSE INFERENCE WAS DRAWN AND THE R ENTAL INCOME WAS TREATED AS THE INCOME OF THE ASSESSEE. THE AO HAS HELD THAT SCHO OL BUILDING PROPERTY BELONGS TO ASSESSEE AND CLAIM OF PURPORTED TRANSFER IN THE NAM E OF M/S. KARAN LODHA TRUST IS WRONG. THEREFORE THE RENTAL INCOME WAS ASSESSED IN THE HA NDS OF ASSESSEE. IT WAS SUBMITTED BEFORE LD. CIT (A) THAT THE ADDITION WAS MADE FOR A .Y.2001-02 AND 02-03 ALSO. HOWEVER THE TRIBUNAL HAS SET ASIDE THE MATTER TO T HE FILE OF AO. IT WAS FURTHER SUBMITTED THAT RENTAL INCOME HAS ALREADY BEEN SHOWN IN THE NA ME OF M/S. KARAN LODHA TRUST THEREFORE THIS IS A DOUBLE ADDITION. THE LD. CIT (A) WAS NOT SATISFIED WITH THE EXPLANATION AS IN HIS VIEW THE PROPERTY WAS NOT TRA NSFERRED IN THE NAME OF TRUST. PLACING RELIANCE ON THE DECISION OF HONBLE SUPREME COURT I N THE CASE OF ITO VS. CH. ATCHAIAH 218 ITR 239 (SC) WHEREIN IT IS HELD THAT MERELY BEC AUSE A WRONG PERSON IS TAXED WITH RESPECT TO THE PARTICULAR INCOME THE AO IS NOT P RECLUDED FROM TAXING THE RIGHT PERSON WITH RESPECT TO THAT INCOME. ACCORDINGLY HE CONFIR MED THE ORDER OF AO. 7. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD WE FIND THAT ASSESSEE DESERVES TO SUCCEED. THE DENIAL OF THE CLAIM ON ACCOUNT THAT SECRETARY OF THE TRUST DENIED IN HAVING SIGNED THE TRUST DEED IN OUR VIEW IS NOT JUSTIFIED. THE AO 3 AND LD. CIT (A) SHOULD HAVE EXAMINED OTHER EVIDENC ES ALSO. JAIPUR NAGAR NIGAM AUTHORITY HAS CHARGED HOUSE TAX IN THE NAME OF TRUS T I.E. M/S. KARAN LODHA TRUST COPY OF THE SAME IS PLACED AT PAGE 19 OF THE PAPER BOOK. THE HOUSE TAX IS PAID BY THE TRUST RECEIPT OF THE SAME IS PLACED AT PAGE 10. TDS HAS BEEN DEDUCTED BY THE TRUST AND TDS CERTIFICATE ON ACCOUNT OF RENT PAID ARE PLACED AT P AGES 11 & 12 OF THE PAPER BOOK. THE TRUST HAS FILED RETURN SHOWING THE RENTAL INCOME AT ITS END COPY OF RETURN AND COMPUTATION ARE PLACED ON RECORD. IT IS FURTHER SEE N THAT THE TRUST HAS PAID TAX ON THE SAME RATE AS THE TAX PAYABLE BY THE ASSESSEE. THER EFORE IN THIS WAY THERE IS NO LOSS OF REVENUE EVEN. THE COPY OF BALANCE SHEET IS ALSO PL ACED WHEREIN TRUST HAS SHOWN THAT PROPERTY WAS ITS OWN. IF ALL THESE EVIDENCES ARE T AKEN INTO CONSIDERATION THEN IT IS AMPLY PROVED THAT THE BUILDING HAS BEEN GIVEN TO THE TRUS T BY THE ASSESSEE. IT IS FURTHER SEEN THAT APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2005-06 IS ALSO PENDING HERE BEFORE THE TRIBUNAL AND NO RENTAL INCOME HAS BEEN ADDED IN THE HANDS OF THE ASSESSEE BY THE AO FOR THIS YEAR WHEREAS THERE IS A RENTAL INCOME FOR A.Y . 2005-06 ALSO. THE RATIO OF THE DECISION OF HONBLE SUPREME COURT IN OUR VIEW RAT HER SUPPORTS THE CASE OF THE ASSESSEE THAT INCOME RELATABLE TO THE PERSON SHOULD BE ASSES SED IN THE HANDS OF THAT PERSON ONLY AND REAL PERSON IN WHOSE HANDS THE RENTAL INCOME IS ASSESSABLE IS TRUST NOW. IN VIEW OF THESE FACTS AND CIRCUMSTANCES WE HOLD THAT THE RENT AL INCOME IS ASSESSABLE IN THE HANDS OF THE TRUST AND NOT IN THE HANDS OF THE ASSESSEE. ACCORDINGLY THE ADDITION MADE BY AO AND CONFIRMED BY LD. CIT (A) IS DELETED. 8. THE REMAINING ISSUE IS AGAINST CONFIRMING THE AD DITION OF RS. 2 128/- OUT OF TELEPHONE EXPENSES. 4 9. ASSESSEE CLAIMED TELEPHONE EXPENSES AT RS. 10 6 39/-. THE AO DISALLOWED 1/5 TH ON ACCOUNT OF PERSONAL USE OF TELEPHONE. THE LD. C IT (A) CONFIRMED THE SAME. 10. WE ARE OF THE VIEW THAT IF THIS ADDITION IS SUS TAINED AT RS. 1 000/- THAT WILL MEET THE ENDS OF JUSTICE. WE ORDER ACCORDINGLY. 11. THERE IS NO OTHER GROUND IN THE APPEAL FOR THIS YEAR 2003-04. 12. IN APPEAL FOR ASSESSMENT YEAR 2005-06 FIRST GR OUND WAS NOT PRESSED THEREFORE THE SAME IS DISMISSED AS NOT PRESSED. 13. GROUND NO.2 RELATES TO SUSTAINING THE REJECTION OF BOOKS OF ACCOUNT BY INVOKING PROVISIONS OF SECTION 145(3). 14. THE AO BY OBSERVING THAT THE VALUE OF OPENING STOCK WAS DECLARED AT RS. 33 70 000/-. DURING THE YEAR NO NEW PLOT WAS PURC HASED NOT CONSTRUCTED. THE SALE OF PLOT WAS OUT OF THE EXISTING PLOTS. THE ASSESSEE DI D NOT MAINTAIN STOCK REGISTER. HE WAS ASKED TO GIVE SITE WISE COST OF PLOT CONSTRUCTION. BUT NO SUCH DETAILS COULD BE MADE AVAILABLE. IN THESE CIRCUMSTANCES THE BOOKS OF ACC OUNTS PRODUCED ARE NOT ACCEPTABLE BECAUSE NO TRUE PROFIT CAN BE DEDUCED. HENCE PROVIS IONS OF SECTION 145(3) ARE APPLICABLE. THE LD. CIT (A) HAS CONFIRMED THE ACTI ON OF THE AO. 15. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD WE FIND THAT ASSESSEE DESERVES TO SUCCEED ON THIS ISSUE. W E NOTED THAT ON ONE HAND THE AO HIMSELF RECORDS A FINDING THAT DURING THE YEAR NO N EW PLOT WAS PURCHASED NOR CONSTRUCTED THEREFORE THERE WAS NO NECESSITY TO MAINTAIN ANY S TOCK REGISTER FOR THE YEAR UNDER CONSIDERATION AS CLOSING STOCK OF EARLIER YEAR WHIC H WAS THE OPENING STOCK OF THIS YEAR HAS BEEN ACCEPTED BY THE AO HIMSELF. NEITHER ANY PLOT W AS PURCHASED DURING THE YEAR NOR ANY CONSTRUCTION WAS MADE DURING THE YEAR THEREFORE B Y OBSERVING THAT INSPITE OF 5 REQUIREMENT TO GIVE SITE WISE COST OF PLOT CONSTRUC TION IN OUR VIEW IS NOT CORRECT. THE ASSESSEE MAINTAINED BOOKS OF ACCOUNT NO DEFECT WAS POINTED OUT. THEREFORE IN OUR CONSIDERED VIEW INVOCATION OF PROVISIONS OF SECTION 145(3) WAS NOT JUSTIFIED. ACCORDINGLY WE ALLOW THIS GROUND OF THE ASSESSEE. 16. NEXT ISSUE RELATES TO APPLYING N. P. RATE OF 5% . 17. NO DEFECT WHATSOEVER WAS FOUND IN THE BOOKS OF ACCOUNT NEITHER THERE WAS ANY MATERIAL BEFORE THE AO THAT ASSESSEE HAS SOLD ITS P LOTS OR BUILDING OVER AND ABOVE THE PRICE SHOWN IN THE BOOKS OF ACCOUNT. THE PRICE ON W HICH THE PLOTS OR BUILDING WAS SOLD HAS BEEN ACCEPTED BY THE SUB REGISTRAR WHO HAS ACC EPTED THE VALUATION FOR THE PURPOSE OF STAMP DUTY. THEREFORE WITHOUT BRINGING ANY MA TERIAL ON RECORD APPLYING N.P. RATE AGAINST THE PROFIT SHOWN BY ASSESSEE WAS NOT JUSTIF IED. WE FURTHER NOTED THAT G.P. SHOWN BY ASSESSEE WAS MUCH HIGHER AS COMPARED TO EARLIER YEAR. IN EARLIER YEAR G.P. RATE SHOWN WAS 5.45% ON SALE OF RS.38.92 LACS AND IN THE YEAR THE G.P. RATE SHOWN BY ASSESSEE IS 11.90% ON SIMILAR SALE OF RS. 38.25 LACS. THIS FAC T HAS NOT BEEN TAKEN INTO CONSIDERATION EITHER BY AO OR BY LD. CIT (A). THEREFORE WE HOLD THAT APPLYING N.P. RATE WAS ALSO NOT JUSTIFIED AT THE END OF THE AO AS THE G.P. RATE SH OWN BY ASSESSEE WAS MUCH HIGHER. IN VIEW OF THESE FACTS AND CIRCUMSTANCES WE HOLD THAT THE G.P. RATE SHOWN BY ASSESSEE SHOULD BE ACCEPTED. 18. IN THE RESULT APPEALS OF THE ASSESSEE ARE ALLO WED IN PART. 19. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 08 .07.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR 6 D/- COPY FORWARDED TO :- SHRI UMMED SINGH LODHA JAIPUR. THE ACIT CENTRAL CIRCLE-2 JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 179(2)/JP/2011) BY ORDER AR ITAT JAIPUR.