Smt. Jyotsna Anand Goswami, Surat v. The Income tax Officer, Ward-3(2),, Surat

ITA 795/AHD/2006 | 2002-2003
Pronouncement Date: 18-02-2010 | Result: Partly Allowed

Appeal Details

RSA Number 79520514 RSA 2006
Assessee PAN ABLPG2620C
Bench Ahmedabad
Appeal Number ITA 795/AHD/2006
Duration Of Justice 3 year(s) 10 month(s) 17 day(s)
Appellant Smt. Jyotsna Anand Goswami, Surat
Respondent The Income tax Officer, Ward-3(2),, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 18-02-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 18-02-2010
Date Of Final Hearing 04-02-2010
Next Hearing Date 04-02-2010
Assessment Year 2002-2003
Appeal Filed On 31-03-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI JM AND A. N. PAHUJA AM) ITA NO.795/AHD/2006 A. Y.: 2002-03 SMT. JYOTSNA ANAND GOSWAMI 28-29 PRATHNA ROW HOUSE ADAJANROAD SURAT PA NO. ABLPG 2620C VS THE INCOME TAX OFFICER WARD 3 (2) SURAT (APPELLANT) (RESPONDENT) APPELLANT BY SHRI M. K. PATEL AR RESPONDENT BY SHRI SANJEEV KASHYAP DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-II SURAT DATED 27- 01-2006 FOR ASSESSMENT YEAR 2002-03. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL AVAILABLE ON RECORD. 3. ON GROUND NO.1 THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS.30 146/- TOWARDS INCOME FROM HOUSE PROPERTY BY E STIMATING THE RENTAL INCOME. THE AO HAS STATED THAT SPOT ENQUIRIE S WERE MADE BY THE INSPECTOR WITH A VIEW TO ASCERTAIN THE ARV AND IT W AS FOUND THAT AT PRESENT ONE SHRI RAJESHBHAI MEHTA WAS STAYING THERE AND ENQUIRIES FROM THE NEIGHBORS REVEALED THAT DURING THE FINANCIAL YE AR 2001-02 THE ROW HOUSE WAS OCCUPIED BY THE TENANT AND KEEPING IN VIE W THE PRIME LOCATION OF THE PROPERTY THE MONTHLY RENT WAS ESTIMATED AT RS.4 000/-. IT WAS CONTENDED BY THE ASSESSEE THAT THE SAID HOUSE WAS U NOCCUPIED AND IT WAS ONLY AFTER THE EARTHQUAKE ON 26-01-2001 ONE OF HER FRIENDS MR. VARGEES IS STAYING IN THE HOUSE WITHOUT PAYING ANY RENT. IT WAS STATED ITA NO.795/AHD/2006 SMT. JYOTSNA ANAND GOSWAMI 2 THAT MUNICIPAL RENTAL VALUE IS AT RS.13 830/- WHICH MAY BE ADOPTED U/S 23 OF THE IT ACT. THE LEARNED CIT(A) NOTED THAT THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE THAT THE HOUSE REMAINED VACANT DURING THE ASSESSMENT YEAR UNDER APPEAL. NO FURTHER EVIDENCE I S PRODUCED TO SHOW THAT THE FLAT WAS VACANT. THE LEARNED CIT(A) CONSID ERING THE SPOT ENQUIRIES MADE BY THE INSPECTOR CONFIRMED THE ADDIT ION. 4. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THA T THE OUT COME OF THE ENQUIRIES WAS NEVER CONFRONTED TO THE ASSESSEE. ON THE OTHER HAND THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORIT IES BELOW AND SUBMITTED THAT THE FINDINGS OF THE AO ARE BASED UPO N SPOT ENQUIRIES CONDUCTED BY THE INSPECTOR OF THE DEPARTMENT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD. EVEN IF THE ASSESSEE HAS NOT P RODUCED ANY EVIDENCE THAT THE FLAT REMAINED UNOCCUPIED IN PART OF THE PE RIOD IN THE FINANCIAL YEAR UNDER CONSIDERATION THE AO IS REQUIRED TO DET ERMINE THE ANNUAL VALUE AS PER THE PROVISIONS OF SECTION 23 (1) OF TH E IT ACT WHICH PROVIDES FOR DETERMINATION OF ANNUAL VALUE OF PROPERTY THE SAME SHALL BE DEEMED TO BE THE SUM FOR WHICH THE PROPERTY MIGHT REASONAB LY BE EXPECTED TO LET FOR YEAR TO YEAR OR WHERE THE PROPERTY OR ANY PART OF THE PROPERTY IS LET AND THE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE O WNER IN RESPECT THEREOF IS IN EXCESS OF THE SUM REFERRED TO IN CLAUSE (A) THE SUM SO RECEIVED OR RECEIVABLE OR WHERE THE PROPERTY OR ANY PART OF THE PROPERTY IS LET AND WAS VACANT DURING THE WHOLE OR ANY PART OF THE PREV IOUS YEAR AND OWING TO SUCH VACANCY THE ACTUAL RENT RECEIVED OR RECEIVA BLE BY THE OWNER IN RESPECT THEREOF IS LESS THAN THE SUM REFERRED TO IN CLAUSE (A) THE AMOUNT SO RECEIVED OR RECEIVABLE. THE ITAT DELHI SPECIAL B ENCH IN THE CASE OF ACIT VS MAYUR RECREATIONAL AND DEVELOPMENT LTD. 301 (AT) 324 HELD THAT ANNUAL LETTING VALUE DETERMINATION- HIGHEST OF THE THREE SUMS ITA NO.795/AHD/2006 SMT. JYOTSNA ANAND GOSWAMI 3 MUNICIPAL VALUATION FAIR RENT DETERMINED BY RENT C ONTROL ACT AND ACTUAL RENT RECEIVED BY THE ASSESSEE TO BE TAKEN INTO CONS IDERATION. THE HONBLE DELHI HIGH COURT IN THE CASE OF JOHN TINSON AND COM PANY PVT. LTD. AND OTHERS VS CIT AND OTHERS 298 ITR 407 (DEL) HELD THA T THE ASSESSING OFFICER IS DUTY BOUND TO CALCULATE THE STANDARD REN T OF A PROPERTY UNDER SECTION 23. FOR THIS PURPOSE IT IS INCUMBENT ON TH E ASSESSEE TO PROVIDE ALL NECESSARY INFORMATION AND MATERIAL TO THE ASSESSING OFFICER SO THAT HE CAN DISCHARGE THIS OBLIGATION. THE STANDARD RENT IS SYN ONYMOUS WITH THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR. SECTION 23 (1) IS A DEEMING PROVISION AND IF THE LEGISLATURE INTENDED THAT IT WOULD BE REASONABLE THAT INCOME-TAX MUST BE PAID ON LIMITED RENT BASIS IT SHOULD HAVE EXPRESSLY AND UNEQUIVOCALLY ST ATED SO. IN THIS CASE THE MATTER WAS REMANDED BY THE HONBLE HIGH COURT F OR RECONSIDERATION OF THE ISSUE. 6. CONSIDERING THE ABOVE FACTS WE ARE OF THE VIEW THAT THE AO HAS NOT CONSIDERED THIS ISSUE IN PROPER PERSPECTIVE AND HAS MERELY RELIED UPON THE REPORT OF THE INSPECTOR WHICH HAS NO BASIS AT A LL. THE SAME IS ALSO NOT CONFRONTED TO THE ASSESSEE. WE ACCORDINGLY SET ASID E THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THE ISSUE TO THE FILE OF THE AO WITH DIRECTION TO RE-DECIDE THIS ISSUE IN THE LIGHT OF THE PROVISI ONS OF SECTION 23 (1) OF THE IT ACT AND AS PER THE DECISIONS QUOTED ABOVE BY GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. AS A RESULT THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STA TISTICAL PURPOSES. 7. ON GROUND NO.2 THE ASSESSEE HAS CHALLENGED THE A DDITION OF RS.74 111/-. IT WAS NOTED BY THE AO THAT THE ASSESS EE HAS NOT ACCOUNTED FOR THE ABOVE PROFESSIONAL RECEIPTS RECEIVED FROM J ASLOK HOSPITAL DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. THE LEARNED CIT(A) CONSIDERING THE SUBMISSIONS OF THE A SSESSEE NOTED THAT THE ASSESSEE HAS ADMITTED THAT THE ABOVE PROFESSION AL RECEIPTS PERTAIN TO ITA NO.795/AHD/2006 SMT. JYOTSNA ANAND GOSWAMI 4 THE ASSESSMENT YEAR UNDER APPEAL AND NOT TO THE NEX T YEAR. THE ASSESSEE HAS CLAIMED TDS BENEFIT TO SHOW THAT THE ABOVE RECE IPTS PERTAIN TO THE ASSESSMENT YEAR UNDER APPEAL WHICH HAS NOT BEEN DIS CLOSED IN THE BOOKS OF ACCOUNT. THE APPEAL OF THE ASSESSEE WAS ACCORDIN GLY DISMISSED. THE AO WAS ACCORDINGLY DIRECTED TO MAKE NECESSARY VERIF ICATION AND TO DO THE NEEDFUL IF THE SAME RECEIPT IS SHOWN IN THE SUBSEQU ENT ASSESSMENT YEAR 2003-04. THE LEARNED COUNSEL FOR THE ASSESSEE ACCEP TED THE FINDINGS OF THE LEARNED CIT(A) AND DID NOT ARGUE ON THIS POINT. ON CONSIDERATION OF THE ABOVE WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE MATTER. THE AO HAS GIVEN A SPECIFIC FINDING THAT TH E ASSESSEE HAS NOT INCLUDED THE ABOVE PROFESSIONAL RECEIPTS IN HER INC OME WHICH PERTAIN TO THE PERIOD 01-03-2002 TO 31-03-2002. THE SAME FALLS IN THE ASSESSMENT YEAR UNDER APPEAL. THEREFORE THE LEARNED CIT(A) WA S JUSTIFIED IN CONFIRMING THE ADDITION AND DIRECTING THE AO TO MAK E NECESSARY VERIFICATION IN THE SUBSEQUENT ASSESSMENT YEAR BECA USE NO DOUBLE ADDITION OF THE SAME INCOME CAN BE MADE. IN THIS VI EW OF THE MATTER WE DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 8. ON GROUND NO.3 OF THE APPEAL THE ASSESSEE HAS C HALLENGED THE ADDITION OF RS.1 92 000/- BEING INTEREST PAID ON BO RROWINGS. THE AO HAS STATED THAT THE ASSESSEE HAS TAKEN INTEREST BEARING LOANS IN THE FINANCIAL YEAR 1997-98 AND INTEREST FREE LOANS WERE GIVEN IN THE SAME YEAR. THE AO REJECTED THE ASSESSEES CONTENTION THAT THE LOANS W ERE GIVEN OUT OF THE SALE PROCEEDS OF JEWELLERY DECLARED UNDER VDIS. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS RECEIV ED RS.26 19 066/- ON SALE OF DIAMOND JEWELLERY DURING THE FINANCIAL YEAR 1997-98 AND OUT OF THE SAME SHE HAD GIVEN INTEREST FREE FRIENDLY LOANS OF RS.15 00 000/-. IT WAS ALSO SUBMITTED THAT THE ASSESSEE ADOPTED CASH S YSTEM OF ACCOUNTING UP TO THE ASSESSMENT YEAR 2001-02 AND IN THE ASSESS MENT YEAR UNDER APPEAL THE SAME WAS CHANGED TO MERCANTILE SYSTEM OF ACCOUNTING AND THE INTEREST AMOUNTING TO RS.2 88 211/- FOR THE PER IOD FROM 01-04-1998 ITA NO.795/AHD/2006 SMT. JYOTSNA ANAND GOSWAMI 5 TO 31-03-2002 WAS DULY ACCOUNTED FOR IN THE ASSESSM ENT YEAR UNDER APPEAL. THEREFORE THE ASSESSEE IS ENTITLED FOR DED UCTION OF THE INTEREST OF RS.1 92 000/-. IT WAS FURTHER SUBMITTED THAT THE AS SESSEE IS HAVING HER CAPITAL AMOUNT OF RS.63 89 275/- AS ON 31-03-1998. THEREFORE THE ADDITION IS UNJUSTIFIED. THE LEARNED CIT(A) HOWEVER NOTED THAT THE LOAN OF RS.4 00 000/- RAISED IN THE FINANCIAL YEAR 1997-98 WAS UTILIZED FOR ACQUISITION OF THE HOUSE AND THERE IS NO NEXUS OF T HE SAME WITH THE PAYMENT OF INTEREST BEARING LOAN TO SHREE GANESH PO LYESTER PVT. LTD. THE LEARNED CIT(A) ACCORDINGLY CONFIRMED THE ADDITION. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BE FORE THE AUTHORITIES BELOW EXPLAINING THE AVAILABILITY OF THE SALE PROCE EDS OF THE DIAMOND JEWELLERY IN A SUM OF RS.26 19 066/-. HE HAS SUBMIT TED THAT LOANS WERE GIVEN IN THE ASSESSMENT YEAR 1997-98 AND THAT THE A SSESSEE HAS A HANDSOME CAPITAL BALANCE. THEREFORE THERE IS NO NE XUS PROVED BETWEEN THE BORROWED FUNDS AND INTEREST FREE LOANS GIVEN TO OTHERS. ON THE OTHER HAND THE LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 9. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE AR E OF THE VIEW THAT THE ADDITION IS CLEARLY UNJUSTIFIED. THE ASSESSEE S PECIFICALLY PLEADED BEFORE THE AUTHORITIES BELOW THAT INTEREST FREE LOA N OF RS.15 00 000/- WAS PAID OUT OF THE SALE CONSIDERATION OF THE DIAMOND J EWELLERY DECLARED UNDER VDIS AND THE SAME WERE DEPOSITED IN THE BANK ACCOUNT NO.9758. IT WOULD THEREFORE SHOW THAT THERE WAS NO NEXUS B ETWEEN THE BORROWED FUNDS AND THE AMOUNT GIVEN AS INTEREST FREE LOANS T O OTHERS. THE LEARNED CIT(A) HAS NOT DECIDED THIS ISSUE AT ALL. THE ASSES SEE ALSO PLEADED THAT THE ASSESSEE HAS CAPITAL BALANCE OF RS.63 89 275/-. THIS FACT IS ALSO NOT DISPUTED BY THE AUTHORITIES BELOW. THE ABOVE FACTS THEREFORE PROVE THAT THE ASSESSEE HAS SUFFICIENT BALANCE TO GIVE INTERES T FREE LOANS TO OTHERS. THE AUTHORITIES BELOW HAVE NOT PROVED ANY NEXUS BET WEEN THE BORROWED FUNDS AND THE INTEREST FREE LOANS GIVEN TO OTHERS. IN THE ABSENCE OF ANY SPECIFIC FINDINGS THAT THE BORROWED FUNDS HAVE BEEN DIVERTED FOR NON- ITA NO.795/AHD/2006 SMT. JYOTSNA ANAND GOSWAMI 6 BUSINESS PURPOSES THE AUTHORITIES BELOW WERE NOT J USTIFIED IN MAKING THE DISALLOWANCE OF THE INTEREST. WE ACCORDINGLY SET AS IDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION. AS A RES ULT GROUND NO.3 OF THE APPEAL OF THE ASSESSEE IS ALLOWED. 10. ON GROUND NO.4 THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS.50 000/- TOWARDS LOW HOUSEHOLD EXPENDITURE. THE AO NOTED THAT THE ASSESSEES FAMILY CONSISTS OF THREE MEMBERS AND TOT AL WITHDRAWAL HAS BEEN MADE AT RS.72 815/- AND LOOKING TO THE COST OF LIVING AT MUMBAI AND FOREIGN TRIPS THE ADDITION OF RS.50 000/- WAS ACCORDINGLY MADE. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE AS SESSEE IS A DOCTOR BY PROFESSION AND THE EXPENSES ON ACCOUNT OF ELECTRICI TY TELEPHONE AND RENT/MUNICIPAL TAXES AND MAINTENANCE CHARGES ARE BO RNE BY THE EMPLOYER OF THE ASSESSEE . NO SERVANT IS EMPLOYED I N THE HOUSE OF THE ASSESSEE AND THE EDUCATION EXPENSES OF THE ASSESSEE ARE ONLY RS.1 500/- PER MONTH. THE LEARNED CIT(A) HOWEVER CONFIRMED TH E ADDITION. 11. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO P APER BOOK PAGE 20 WHICH IS REPLY FILED BEFORE THE AUTHORITIES BELOW. 12. ON CONSIDERATION OF THE ABOVE FACTS WE ARE OF THE VIEW THAT THE ADDITION IS EXCESSIVE IN THE NATURE. THE ASSESSEE H AS SPECIFICALLY PLEADED BEFORE THE AUTHORITIES BELOW THAT HER ELECTRICITY A ND TELEPHONE EXPENSES ARE REIMBURSED BY HER EMPLOYER. SIMILARLY RENT MU NICIPAL TAXES AND MAINTENANCE CHARGES ARE PAID BY THE EMPLOYER. THE A UTHORITIES BELOW HAVE NOT REBUTTED THE CLAIM OF THE ASSESSEE THROUGH ANY MATERIAL ON RECORD. CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THAT NO SPECIFIC MATERIAL HAS BEEN BROUGHT ON RECORD AGAINST THE ASS ESSEE WE ARE OF THE VIEW THAT THE ENDS OF JUSTICE WOULD MEET IF THE ADD ITION IS REDUCED TO RS.25 000/- AGAINST RS.50 000/- MADE BY THE AUTHORI TIES BELOW. WE ACCORDINGLY MODIFY THE ORDERS OF THE AUTHORITIES BE LOW AND RESTRICT THE ITA NO.795/AHD/2006 SMT. JYOTSNA ANAND GOSWAMI 7 ADDITION TO RS.25 000/-. AS A RESULT THIS GROUND O F APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 13. ON GROUND NO.5 THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS.14 345/- ON ACCOUNT OF MOBILE PHONE AND VEHICLE AND DEPRECIATION ON ESTIMATE BASIS. THE AO HAS DISALLOWED 20% OF THE AB OVE EXPENDITURE. IT WAS CONFIRMED BY THE LEARNED CIT(A). CONSIDERING TH E INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME AND THAT THE A SSESSEE IS A DOCTOR BY PROFESSION IT IS REASONABLE TO ESTIMATE HER PERSON AL EXPENDITURE ON THE ABOVE ITEM AT 10% INSTEAD OF 20% DONE BY THE AUTHOR ITIES BELOW. THE ORDERS OF THE AUTHORITIES BELOW ARE ACCORDINGLY MOD IFIED AND WE RESTRICT THE ADDITION TO 10% OF THE ABOVE EXPENDITURE. AS A RESULT THIS GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 14. AS A RESULT APPEAL OF THE ASSESSEE IS PARTLY A LLOWED. ORDER PRONOUNCED ON 18-02-2010 SD/- SD/- (A. N. PAHUJA) ACOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 18-02-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR ITAT AHMEDABAD