DCIT, Bangalore v. Smt. Bothireddy Jayashri, Bangalore

ITA 800/BANG/2010 | 2006-2007
Pronouncement Date: 24-01-2011 | Result: Dismissed

Appeal Details

RSA Number 80021114 RSA 2010
Assessee PAN EMBER2008W
Bench Bangalore
Appeal Number ITA 800/BANG/2010
Duration Of Justice 7 month(s) 8 day(s)
Appellant DCIT, Bangalore
Respondent Smt. Bothireddy Jayashri, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 24-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 24-01-2011
Assessment Year 2006-2007
Appeal Filed On 15-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SMT. P.MADHAVI DEVI JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER ITA NO.800(BANG)/2010 (ASSESSMENT YEAR: 2006-07) DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE 5(1) BANGALORE. VS. APPELLANT SMT. BOTHIREDDY JAYASHRI NO.7/2 BRUNTON ROAD BANGALORE-25. RESPONDENT APPELLANT BY: SHRI K.HARIPRASAD RAO. RESPONDENT BY : SHRI CHERIAN K BABY. O R D E R PER SMT. P.MADHAVI DEVI JM: THIS IS AN APPEAL BY THE REVENUE AND IS DIRECTED AG AINST THE ORDER OF THE CIT(A)-II BANGALORE DATED 1-2-20 10 FOR THE ASSESSMENT YEAR 2006-07. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL WHO FILED HER RETURN OF INCOME FOR THE A SSESSMENT YEAR 2006-07 ON 29-12-2006 DECLARING AN INCOME OF RS.68 61 328/-. DURING THE ASSESSMENT PROCEEDINGS U/S 143(2) OF THE INCOME-TAX ACT 1961 [HEREINAFTER REFERRED T O AS 'THE ACT'] THE AO OBSERVED THAT THE ASSESSEES SOURCE O F INCOME INCLUDES INCOME FROM HOUSE PROPERTY INCOME FROM PR OFESSION ITA NO.800(BANG)/2010 PAGE 2 OF 5 AND CAPITAL GAIN. IT WAS FURTHER OBSERVED THAT A S URVEY U/S 133A OF THE ACT WAS CONDUCTED ON THE ASSESSEES PRE MISES ON 25-9-2008 AND DURING THE SAID SURVEY IT WAS SEEN T HAT THE ASSESSEE HAS NO QUALIFICATION IN THE ARCHITECTURAL FIELD AND THE CONCERN M/S.JAPCON KNOWN AS ARCHITECTS IS BEING RUN BY HER HUSBAND SHRI PRABHAKAR REDDY AND A STATEMENT TO THI S EFFECT WAS RECORDED DURING THE COURSE OF SURVEY WHEREIN TH E ASSESSEE HAD ADMITTED THAT HER HUSBAND IS AN ARCHITECT WHO L OOKS AFTER ALL THE AFFAIRS OF THE CONCERN. TAKING THIS INTO C ONSIDERATION THE AO HELD THAT THE ASSESSEE IS ONLY A BENAMIDAR OF SH RI PRABHAKAR IN RESPECT OF ARCHITECTURAL INCOME AND THE ARCHITEC TURE PROFESSION OF M/S.JAPCON AND THE ASSESSEE HAS INTEN TIONALLY SHOWN LOSS TO SET IT OFF AGAINST INCOME FROM HOUSE PROPERTY AND THUS TO EVADE INCOME-TAX. AGGRIEVED BY THE SAME T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHO ALLOWED THE SAME AND THE REVENUE IS IN APPEAL BEFORE US. 3. SHRI K.HARIPRASAD RAO THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE AO AND SUBMITTED THAT THE ASSESSEE IN THE COURSE OF SURVEY HAS CLE ARLY ADMITTED THAT SHE IS NOT AN ARCHITECT AND IS IN NO WAY CONTR IBUTING TO THE BUSINESS OF ARCHITECTURE RUN BY THE CONCERN M/S.JAP CON AND THAT THE INCOME OR LOSS OF THE PROPRIETARY CONCERN M/S.J APCON IS ASSESSABLE IN THE HANDS OF SHRI PRABHAKAR REDDY. T HUS ACCORDING TO HIM THE CIT(A) HAS ERRONEOUSLY ALLOWE D THE ASSESSEES APPEAL WITHOUT CONSIDERING THE ABOVE FAC TS. ITA NO.800(BANG)/2010 PAGE 3 OF 5 SHRI CHERIYAN K.BABY THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER HAND PLACED RELIANCE UPON T HE ORDERS OF THE CIT(A) AND SUBMITTED THAT THE ASSESSEE IS A QUA LIFIED INTERIOR DESIGNER AND AFTER RETURNING FROM THE UNIT ED STATE OF AMERICA IN THE YEAR 1987 THE ASSESSEE HAS ESTABLIS HED THE PROPRIETARY CONCERN M/S.JAPCOM AND HAS BEEN RENDERI NG SERVICES ACCORDINGLY. HE SUBMITTED THAT THE ASSESS EE HAS BEEN OFFERING PROFITS FROM THE SAID BUSINESS OVER A PERI OD OF TIME AND DUE TO HER ILL-HEALTH SHE HAS NOT BEEN ABLE TO DO T HE BUSINESS PROPERLY AND THEREFORE HAS BEEN INCURRING LOSSES. HE SUBMITTED THAT THE SURVEY HAD TAKEN PLACE IN NOVEMBER 2008 WH EREAS IN OCTOBER 2008 ITSELF THE ENTIRE BUSINESS OF THE PROP RIETARY CONCERN HAS BEEN TRANSFERRED TO THE COMPANY WHICH S HOWS THE CLEAR INTENTION OF THE ASSESSEE TO CARRY ON THE BUS INESS AND IT IS NOT THE INTENTION TO SET OFF THE LOSSES FROM THE PR OPRIETARY CONCERN AGAINST INCOME FROM HOUSE PROPERTY. HE DRE W OUR ATTENTION TO THE ORDER OF THE CIT(A) WHO HAS AT LE NGTH CONSIDERED THE ASSESSEES CONTENTION BEFORE ALLOWIN G THE ASSESSEES APPEAL. AS REGARDS THE STATEMENT OF THE ASSESSEE DURING THE COURSE OF SURVEY THAT HER HUSBAND IS TAK ING CARE OF THE AFFAIRS OF THE ASSESSEE-FIRM HE SUBMITTED THAT THE HUSBAND OF THE ASSESSEE IS A QUALIFIED ARCHITECT AND THE AS SESSEE HAS ENGAGED VARIOUS PERSONS INCLUDING HER HUSBAND AS AN EMPLOYEE AND IN THAT CAPACITY HER HUSBAND IS ASSISTING HER I N CARRYING ON THE BUSINESS. HE SUBMITTED THAT THE ASSESSEE HAS BE EN OFFERING INCOME FROM PROFESSION IN THE EARLIER YEARS AND THE AO HAS ALL ITA NO.800(BANG)/2010 PAGE 4 OF 5 ALONG BEEN ACCEPTING THE SAME EVEN IN THE ASSESSMEN T U/S 143(3) AS RECORDED BY THE CIT(A) IN HIS ORDER. 4. HAVING HEARD BOTH THE PARTIES AND TAKING INTO CONSIDERATION THE MATERIAL ON RECORD WE FIND THAT THE PROPRIETARY CONCERN HAS BEEN IN BUSINESS FOR A NUMB ER OF YEARS AND THE ASSESSEE BEING THE PROPRIETOR OF THE SAID CONCERN HAS BEEN OFFERING INCOME IN HER HANDS AND THE SAME HAS ALSO BEEN ACCEPTED BY THE REVENUE. THE REVENUE CANNOT BLOW H OT AND COLD IN DIFFERENT YEARS. IF THE REVENUE HAS ACCEPTE D THAT THE ASSESSEE IS A PROPRIETOR UNDERTAKING BUSINESS OF M/ S.JAPCON IN SOME YEARS IT CANNOT TAKE A DIFFERENT STAND IN THE RELEVANT ASSESSMENT YEAR PURELY ON THE BASIS OF THE STATEMEN T RECORDED DURING THE COURSE OF SURVEY TO THE EFFECT THAT THE ASSESSEES HUSBAND IS TAKING CARE OF THE BUSINESS ACTIVITIES. WE FIND THAT THE CIT(A) HAS CONSIDERED ALL THE ABOVE FACTS AT LE NGTH BEFORE ALLOWING THE ASSESSEES APPEAL. HOWEVER WE FIND T HAT THE TOTAL EXPENSES INCURRED AS SHOWN BY THE ASSESSEE ARE RS.44 84 883/- AS AGAINST THE INCOME OF RS.10 31 13 0/- WHICH IS MORE THAN FOUR TIMES OF THE INCOME EARNED. THE C IT(A) HAS HIMSELF OBSERVED THAT THIS GIVES AN IMPRESSION THAT THE ASSESSEE IS INFLATING THE EXPENDITURE TO OFFSET THE INCOME FROM RENT AND THIS ASPECT SHOULD HAVE BEEN EXAMINED IN P ROPER PERSPECTIVE. HOWEVER HE FAILED TO GIVE ANY DIRECT ION TO THE AO TO VERIFY THE SAID DETAILS. IN VIEW OF THE SAME W HILE REJECTING THE REVENUES APPEAL WE DIRECT THE AO TO RE-VERIFY THE DETAILS ITA NO.800(BANG)/2010 PAGE 5 OF 5 OF THE EXPENDITURE GIVEN BY THE ASSESSEE AND AFTER DUE VERIFICATION ALLOW THE SAME IN ACCORDANCE WITH LAW. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JANUARY 2011. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (SMT. P.MADHAVI DEVI) JUDICIAL MEMBER EKS COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) CONCERNED 4. CIT 5. DR ITAT BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE