Income Tax Appellate Tribunal - Chandigarh
Shri C.P. Aggarwal , New Delhi vs Dcit, Chandigarh on 2 June, 2017
I N T H E I N C O M E T A X AP P EL L AT E T R I BU N A L
D I VI S I O N B EN C H , C H AN D I G A R H
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER
AND MS. ANNAPURNA GUPTA,ACCOUNTANT MEMBER
ITA Nos. 1125 to 1130/CHD/2016
A.Ys: 2007-08 to 2012-13
Shri C.P.Aggarwal, Vs The DCIT,
F-334, Sarita Vihar, Central Circle-II,
New Delhi. Chandigarh .
PAN: ACDPA6142N
(Appellant) (Respondent)
Appellant by : Shri Aman Bansal
Respondent by : Ms. C.Chandrakanta,DR
Date of Hearing : 31.05.2017
Date of Pronouncement : 02.06.2017
O R D E R
Per Bench :
Th e present ap p e a l s f i l ed by the same a s se s s e e r e l a t i n g to d i f f ere n t a s s e s sm e n t y e a r s h a v e be e n p r e f e r r e d a g a i n s t t he c o mm o n o r d e r of l d. C o m m i s si o n e r o f I n c o m e Ta x ( A p p e a l s ) ( he r e i n a f t er r e f e rr e d to as CI T( A ) d a t ed
2 5 . 0 8 . 2 0 16 which in turn h as been passed in a p p e al against the a sse s s m e n t o r de r s o f even d a t e 3 0 . 0 9 . 2 0 14 p a s s e d b y th e AO i n r e l a ti o n t o t h e a s s e s sm e n t p r o c e e d i ng s c a r r i e d ou t u / s 1 5 3 A o f th e I n com e Ta x A c t .
2. I d en t i c a l gr o u n ds h a v e b e e n t a ke n b y t h e a s s e ss e e i n all the as s e s sm e n t y e a rs . Since c o m m on issues are i n v o l v e d , he n c e a l l t h e a p p e al s w e r e h e a r d t og e th e r a n d a r e b e i n g d i s p o s e d of b y t hi s c o mm on o r d e r . Th e f a ct s , f o r t h e s a k e o f c o n v e ni e n c e , a r e t a k en f r o m I TA 1 1 2 5/ C H D / 2 0 1 6 2 f o r a s s e s sm e n t ye a r 2 0 0 7 - 08 . Th e a s s e s s ee i n th i s a p p e a l h a s t a k e n t h e fo l l o w i n g gr o u n d s :
1. The Ld. CIT (Appeals) has grossly erred in law as well as on facts in not disposing off the ground of appeal raised by the assessee that the Assessment order u/s 153A made by the Ld. AO is bad in law since no incriminating document or undisclosed income was found during search operations for the year under consideration. Therefore additions made may please be deleted.
2. The Ld. CIT (Appeals) has grossly erred in law as well as on facts in confirming the addition of Rs.43688/- made by Ld. AO by revising the Annual Rental value of House I property on estimation basis. The addition may please be deleted.
3. The brief facts of the case are that the assessee, an individual, had filed his return of income u/s 139 of Income Tax Act,1961 on 31.07.2007 showing total income of Rs. 2,71,210/-
under the heads of salary, house property and income from other sources. The return was processed u/s 143(1) of the Act. Thereafter, search & seizure operation u/s 132 of the Act was carried out on 04.10.2012 on the premises of M/s Steel Strips group of cases. The residential premises of the assessee was also covered under the search. During the course of search, some documents were found and seized which included a lease agreement between the assessee and one Mr. Noorul Qamar Subhani. As per this agreement, the assessee was receiving rent of Rs. 6000/- per month of the two flats rented out by him. Further, a handwritten letter was also seized from the premises of the assessee which was written by said Mr. Noorul Qamar Subhani to the assessee stating therein that the lease rent from 01.01.2011 to 30.11.2011 was Rs. 6500/- and for 01.12.2011 to 31.10.2012 was Rs. 6800/- per month for the two flats owned by the assessee. During the search proceedings, assessee was asked about the rental income and was confronted with the 3 seized documents. The assessee, in reply to question No. 21, in his statement recorded during the search action stated that he had shown less rental income and that he would revise the return of income accordingly and would pay additional tax. Thereafter, the assessee in response to the notice issued u/s 153A of the Act filed his return of income on 21.01.2014 declaring total income of Rs. 3,10,337/-. The rental income for the year was shown/revised to Rs. 70,600/- as against gross rental income of Rs. 24000/- shown in the original return filed u/s 139(1) of the Act for the year under consideration. The assessee was asked to give details of the rental income. The assessee gave break-up as under :
S.No. Details of the Date of Cost of As per return u/s 153A As per properties from acquisition/ acquisition/ Cost return u/s 139 which rent has construction of of construction been received the property Period for Amount of Amount of rent which rent has rent received received been received considered on lump sum basis (in Rs.).
1 D-149/153, 11.04.05/ 4,78,950 )irTRsT"
33100 12000
April to Mar
Sector-1 1 , 03.06.05
Jasola/ New
Delhi-25
2 C-81, Sector-1 1, 20.07.2006 2,16,000 August to Mar 20000 6000
Jasola, New Delhi-
25
3 C-170, Sector-11, 28.08.2006 3,46,400 Oct. to 17500 6000 |
Jasola, New Delhi Mar
Total 70,600 24,000
However, the assessee failed to give details as to who were the tenants in the said properties, for which period the said tenants occupied the property, copy of any Rent Deed etc. In the absence of any evidence or details given by the assessee, the 4 Assessing Officer rejected the above details given by the assessee and estimated the rental income of the assessee on the basis of the seized documents i.e. lease agreement and letter of the tenant (supra), proportionate for the year under consideration taking into consideration the average percentage of increase in every year. He, accordingly, assessed the rental income of the assessee for the year under consideration at Rs.
1,14,288/-. After giving the benefit of income already declared of Rs. 70,600/-, the Assessing Officer made the addition of Rs. 43,688/- for the year under consideration. In the identical manner, the additions were made for all the six assessment years under consideration, detail of which has been given in a chart given at page 7 & 8 of the assessment order, which for the sake of convenience is reproduced as under :
S. A.Y Period for which Total Rent Average Estimated Addition on No. rent is rent per rent for account of received/receivable month preceding undisclosed year (6.5% income increase) (Col. 6-
rental
income
shown as
per 153A
return)
Col. Col. 2 Col. 3 Col. 4 Col. 5 Col. 6 Col. 7
1
1 2013- April 12 to Mar 13 821 00 (for 11 7463 N.A 134346-
14 months) 99500 =
89564 (for 12 34,846
months) (for
two
flats)
Total rent for
3 flats for 12
month s=134346
2 2012- April 11 to Nov 11 = 6500x8 6600 N.A 118800 -
+
13 6500 (8 months) 6800x4 79200 =
=79200
5
Dec 11 to Mar 12 = (per two flats) 39,600
6800 (4 Months) Total rent for
3
flats for 12
months=1 18800
3 2011- April 10 to Dec 10= 6000x9 6125 5752 183750-
12 6000 (9 months) +6500x3=7350 92537 =
0
Jan 11 to Mar 11 = (per two flats) 91,213
6500 ( 3 months Total for 5 flats
for 12
months=
1 83750
4 2010-11 April 09 to Mar 10 5752x12=690 5752 5401 172560 -
24
(per two flats) 102100 =
Total rent for 70,460
5 flats for
12 months=
172560
5 2009- April 08 to Mar 09 5401x12= 5401 5071 129624-
64812
10 per two flats 85250 =
Total rent for 4 44,374
fiats for 12
months=
1 29624
6 2008- April 07 to Mar 08 5071x12= 5071 4762 121704 -
60852
09 (per two flats) 71250 =
Total rent for 4 60454
flats for 12
months=
121704
7 2007-08 April 06 to March 07 4762x12= 4762 NA 114288-
57144
(per two flats) 70600 =
Total rent for 4 43,688
flats for 12
months=
1 14288
4. The Assessing Officer also denied the benefit of standard deduction u/s 24 of the Act in relation to the added rental income.6
5. Being aggrieved by the above order of the Assessing Officer, the assessee fil ed the appeals for the above stated assessment years before the CI T(A) .
6. The CI T(A) vide impugned common order, upheld the additions so made by the Assessing Officer into the rental income of the assessee observing as under :
"3.5. I have given careful consideration to the facts of the present case and find that the assessing officer calculated income from house property of the appellant based on a document found and seized during the course of search from the premises of the appellant. The contents of the seized document have been deciphered to arrive at a conclusion that the appellant is driving income from house property which is much more than the income returned by filing the return of income. It is matter of record that the appellant did not disclose correct rental income in the returns of income filed under section 13'9 (1) of the Act. It was subsequent to the search only that income from house property was substantially increased while filing the return in response to notice. Further, in the course of assessment proceedings under section 153 A of the income tax Act, there was no disclosure of the calculation undertaken by the appellant to arrive at the rental income. The assessing officer was left with no choice but to make an estimation of rent received/receivable from the house property owned by the appellant. Under the provisions of Income tax Act, the income from house property is calculated on the basis of annual value of property which is determined in accordance with section 23 of the Act. It is contemplated in this provision that the annual value of any property shall be deemed to be the sum for which the property might reasonably be expected to let from year to year. This provision makes it amply clear that while calculating income from house property the assessing officer can also consider the factors suggesting the amount on which the said property can be reasonably let out. It is a kind of notional and deemed calculations which guide the Assessing officer to ascertain the rental capacity of the property. In the present case there is documentary evidence which can be a guiding factor for arriving at the annual value of the property for the purposes of ascertaining income from house properly. The Assessing Officer has already provided reasonable increase or decrease in the rent calculated as mentioned in the assessment order. On contrary, the appellant has not come forward to furnish any calculations or documentary evidence which would lead to a conclusion 7 different than the conclusion arrived by the assessing officer. Under the circumstances, I find no merit in the ground of appeal related to calculation of income from house property based on the document seized during the course of search. The ground of appeal No. 2 is dismissed.
7. The ld. CI T(A), however, allowed the claim of the assessee of standard deduction u/s 24 of the Act observi ng that "once the additional income has been brought to tax under the specific head of Income Tax Act, it would foll ow with all eligible deductions under the same head of income".
He, therefore, held that the Assessing Officer having brought to tax the additi onal receipt as i ncome from house propert y, the standard deductions admissible to the assessee u/s 24 of the Act are to be allowed to the assessee.
8. Being aggrieved by the above order of the CI T(A), the assessee has come with the present appeal s before us.
9. We have considered the rival submissions and have also gone through the record. So far as ground No. 1 of the appeal is concerned, the main contention of ld. AR of the assessee has been that no incri mi nating document was found during the search action; however, this contention of l d. counsel for the assessee, in our view, is not correct. Duri ng the course of action, not only a lease agreement but also a letter of the tenant stating the lease rent for different periods was found and seized. Though, the said lease agreement and letter were related to the subsequent assessment years i.e. lease agreement relating to the period from 01.02.2010 to 31.12.2010 and the letter of the tenant depicting the rent for 8 the period from 01.01.2011 to 30.11.2011 and 01.12.2011 to 30.10.2012, however, when the assessee was confronted about the seized documents, the assessee categorically admitted i n his statement recorded during the search action that he had sho wn less rent and that he would revise his return and offer to tax his additi onal i ncome whi ch had not been di sclosed in the original return. The said statement has never been retracted by the assessee. Even the assessee in his return, filed i n response to the notice issued u/s 153A of the Act, has shown the rental i ncome at Rs. 70,600/- as against rental income sho wn of Rs. 24,000/- in the origi nal return. Even in his statement recorded during the search action, in reply to question No. 3 as reproduced in the assessment order, the assessee had stated that he was receiving rental income from t wo flats D-153 and D-149 situated at Janta Flats, Jasola, New Delhi ; whereas, in the return filed u/s 153A of the Act, the assessee has shown the rental income received from four fl ats including flat No. C-81 and C-170. In view of this, the plea of the assessee that no incriminating material was found during the course of search action or that the Assessing Officer had no reason to make additions in the assessment proceedings carried out u/s 153 of the Act is not found to be correct, hence not tenable. Ground No. 1 of the appeal is, therefore, di smissed.
10. In ground No. 2, the assessee has agitated the addition of Rs. 43,688/- made by the Assessing Officer by way of estimati ng the annual rental value of the house property. As we have observed above, the assessee had not substantiated 9 the fact of actual receipt of income and about the period of occupanc y of the flats by the tenants. The assessee nei ther provided any name and address of the tenant nor any rent agreement etc. The Assessing Officer relying upon the documents found during the search action and consideri ng the percentage of increase in the annual rent for subsequent years has proportionately esti mated the income of the assessee for the year under considerati on for the four flats owned by the assessee. The assessee, except from giving chart and at hi s own offering the annual income of Rs. 70,600/-, has neither brought any evidence regarding the actual income received nor has brought any evidence as to the rental value of the simil ar property situated in the same building.
We, therefore, agree with the observati ons of the CI T(A) that under the ci rcumstances, the Assessing Officer was left with no alternati ve than to assess the rental income of the assessee as per the provi sions of Section 23 of the Act. In the absence of any evidence brought on record by the assessee regardi ng the annual letting val ue of the propert y being less than that has been assessed by the Assessing Officer, we are not inclined to accept the contention of the assessee that the addition be restricted to that has been offered by the assessee in the return of income. We do not find any merit i n the contentions raised by the assessee. This ground of the appeal of the assessee i s also dismissed. 10
11. The facts and i ssues invol ved i n all the years being identical in nature, applying the same rati o and i n the light of our observati ons made above, all the appeals preferred by the assessee are hereby dismissed.
12. In the result, all the appeals of the assessee are dismissed.
Order pronounced in the Open Court on 2 n d June,2017.
Sd/- Sd/-
(ANNAPURNA GUPTA) ( SANJAY GARG)
(ACCOUN TAN T MEMBER) JUDICIAL MEMBER
Dated : 2 nd June,2017.
'Poonam'
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A)
4. The CIT,DR
Assistant Registrar,
ITAT/CHD