Income Tax Appellate Tribunal - Mumbai
Meena Vaswani, Mumbai vs Assistant Commissoner Of Income Tax ... on 22 October, 2018
आयकर अपीऱीय अधिकरण "H" न्यायपीठ मुंबई में ।
IN THE INCOME TAX APPELLATE TRIBUNAL "H" BENCH, MUMBAI
BEFORE SHRI C.N.PRASAD, JUDICIAL MEMBER AND
SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER
MA No. 695 , 693 & 696/Mum/2017
Arising out of ITA No. 1983-1985/Mum/2015
Assessment Year 2009-10 to 2011-12
Mrs. Meena Vaswani ACIT-26(1)
301, Tropicana 7 Bunglow Mumbai
Near Nana Nani Park
Andheri(W) v.
Mumbai-400061
PAN ACJPV8378B
Applicant Respondent
Assessee by Mr. Vijay H. Shah
Revenue by Shri Manoj Kumar Singh
Date of Hearing : 03 -08-2018
Date of Pronouncement : 22-10-2018
ORDER
PER RAMIT KOCHAR, Accountant Member
These three Miscellaneous application‟s( hereinafter called " the MA") have been filed by assessee being MA No. 695, 693 & 696/Mum/2017 arising out of ITA no. 1983-1985/Mum/2015 for assessment year‟s (AY) 2009-10 to 2011-12 respectively . These three MA‟s filed by assessee are seeking rectification on the grounds that the alleged mistakes crept in the common order passed by the Income-Tax Appellate Tribunal( hereinafter called "the tribunal") dated 30.03.2017 in ITA no. 1983 to 1985/Mum/2015 for AY‟s 2009-10 to 2011-12 respectively which as per version of the assessee are apparent from records and needed to be rectified within the limited mandate of Section 254(2) of the Income-tax Act,1961(hereinafter called " the Act") . There was a solitary issue under dispute in all these three years which concerned itself with denial of exemption u/s 10(13A) of the 1961 Act with respect to HRA received by the assessee from her employer M/s Eastern International Hotels Limited. It is the claim of the assessee that these mistakes are such that these cannot be rectified by amending the said MA No. 695,693 & 696/Mum/2017 Arising out of ITA No. 1983-1985/Mum/2015 common order dated 30.03.2017 and the only recourse left with the tribunal is to recall its common order dated 30.03.2017 passed for AY‟s 2009-10 to 2011-12. Thus, in nutshell prayer is made for recall of the tribunal order dated 30.03.2017 for AY 2009-10 to 2011-12 which was a common order passed by tribunal for all these three years.
2. The Background of the case are that tribunal has passed an detailed well reasoned order in ITA no. 1983 to 1985/Mum/2015 vide common orders dated 30.03.2017 for the AY‟s 2009-10 to 2011-12 wherein claim of the assessee for deduction u/s 10(13A) of the 1961 Act with respect of HRA received from her employer M/s Eastern International Hotels Limited was denied to the assessee on the grounds that the assessee did not pay any rent to her mother for taking residential premises owned by her mother allegedly on rent. The assessee was a qualified chartered accountant and working in an company M/s Eastern International Hotels Limited as salaried employee. The assessee received HRA from said company which was claimed as an exempt income u/s 10(13A) of the 1961 Act on the grounds that the assessee paid rent to her mother in living in a residential flat owned by her mother in Neha Apartments instead of staying in her own residential flat situated in Tropicana Apartments with her husband and daughter which was just five minute walking distance from the residential flat owned by her mother where her mother was also staying. The tribunal based on material on record disbelieved the story put up by the assessee that she paid an rent of Rs. 31,500/- per month to her mother for staying in residential flat owned by her mother in Neha Apartments which was just five minute walking distance from the residential flat owned by the assessee in Tropicana Apartments . The assessee also did not produce any evidence to substantiate source of cash flows to evidence generation of sufficient cash in hand to pay Rs. 31,500/- per month to her mother as her bank statements did not showed cash withdrawals to justify rent payments. The detailed operative portion of the order of the tribunal is reproduced below:
"11. We have considered rival contentions and perused all the materials placed on record. We have observed that the assessee is an individual being a qualified chartered accountant working with East India Hotels 2 MA No. 695,693 & 696/Mum/2017 Arising out of ITA No. 1983-1985/Mum/2015 Limited as Senior Finance and Accounts Executive. The assesseehusband incidentally is also qualified chartered accountant. The couple hadone daughter. The assessee owned a 2BHK residential flat at „Tropicana‟ which is jointly owned by the assessee with her husband. The assessee has claimed deduction u/s 80C of 1961 Act for repayment of housing loan availed for purchasing residential flat at „Tropicana‟ . The assessee has also claimed the said residential flat at „Tropicana‟ as self occupied residential property and interest on housing loan availed for purchase of said flat at „Tropicana‟ is claimed as loss under the head „Income from House Property. The assessee has declared the said address of „Tropicana‟ as her residential address with Bank, in ration card as well in return of income filed with Revenue. The assessee has also admitted during the assessment proceedings that she is living with her husband and daughter which is emanating from the assessment order of the AO. The assessee‟s mother Smt. P B Dorwani owns a 1BHK residential flat of 400 square feet at „Neha Apartments‟ which is just five minutes walking distance from „Tropicana‟. Smt P B Dorwani has three daughters namely assessee who is married , Ms Kamla who is staying at Thane and one unmarried daughter Ms Vimla. The assessee has received HRA of Rs.2,52,000/- from her employer as a part of her remuneration which was claimed as exempt u/s 10(13A) of the Act on the ground that she had paid rent of Rs. 31,500/- per month to her mother Mrs. PB Dorwani towards renting of her residential flat situated at „Neha Apartments‟ , wherein assessee has claimed that she was staying with her mother at„Neha Apartments„ instead of staying in her own flat at „Tropicana‟ which is only five minute walking distance. It is also observed that no leave and license agreement was entered into by the assessee with her mother for renting of „Neha Apartment‟. The rent receipts issued by Mrs P B Dorwani were however duly produced before the authorities below and rent was stated to be paid regularly in cash. It is undisputed that no cheque has been issued by the assessee to Mrs P B Dorwani towards rent. The assessee also could not produce any document showing the intimation given by her to the society of „Neha Apartments‟ regarding her stay with her mother. It is also an undisputed position that the assessee could not produce proof of cash withdrawals from her bank account to substantiate that the payment have been made by her to her mother towards rent which were made out of withdrawals by her from her bank account. The assessee in-fact admitted that household expenses were met by her husband and withdrawal from her bank account is minimum as cheques were issued only for mobile bill payments. The assessee has produced the rent receipt to substantiate that the rent has been paid by the assessee. It is also noticed that the mother of the assessee has not filed return of income with Revenue disclosing the said rental income received from the assessee. No return of income has been filed by the mother ofthe assessee since last six assessment years. The ward inspector was deputed by the AO to verify the contentions of the assessee who has reported that the assessee is staying at Tropicana‟ and not at „Neha 3 MA No. 695,693 & 696/Mum/2017 Arising out of ITA No. 1983-1985/Mum/2015 Apartments‟ . The report was submitted by Inspector after personally visiting both the residential flats at „Tropicana‟ and „Neha Apartments‟ and after making due enquiries from Secretaries and watchman of the two societies of „Tropicana‟ and „Neha Apartments‟ .It was also stated by the inspector in his report that flat at „Neha Apartment‟ is one BHK flat of 400 square feet wherein mother of the assessee namely Mrs P B Dorwani lives with her unmarried daughter Ms Vimla.Notices u/s 133(6) of 1961 Act were served on mother of the assessee Mrs P B Dorwani but no replies were submitted by said Mrs. P B Dorwani to the said notice. The assessee also did not produce Smt. P.B. Dorwani, mother of the assessee before the AO. No cogent reasons are brought on record for non-compliance of notices u/s 133(6) of1961 Act nor any reasons were forthcoming for non production of Mrs P B Dorwani before the authorities below, more so opportunities were accorded to the assessee by the AO and even at the stage of appellate proceedings before learned CIT(A) to substantiate its claim. The assessee has now filed affidavit of her mother Mrs P B Dorwani for the first time before the tribunal stating that the assessee has paid rent of Rs. Rs.31,500/- to her mother during the previous year relevant assessment year and residential flat at „Neha Apartment‟ was taken on rent by the assessee from her mother Mrs. P B Dorwani . The said affidavit filed by the assessee of her mother as well an affidavit of her ( both placed in file ) constitute additional evidences for which no application has been made by the assessee for admission of additional evidences as contemplated u/r 29 of Income-tax(Appellate Tribunal) Rules, 1963 nor any reasonshave been specified for non furnishing of the same before authorities below. However, on perusal of the content of the two affidavits it is seen that the reiteration is made of the contentions of the assessee before lower authorities which were already on record. The assessee has also submitted that inspector report was not provided to the assessee by the AO and no opportunity was given for cross examination of the incriminating information provided to the ward inspector by the Secretary and Watch man of the two societiesof the residential apartments situated at „Tropicana‟ and „Neha Apartments‟. We have observed that the assessee as well her husband both are qualified chartered accountants and are well versed with the law. The assessee is contemplating paying rent to her mother for taking her premises on rent for her residential purposes. The assessee did not produce any evidence except rent receipts to substantiate that there was actual hiring of premises by the assessee for which rent is paid. The rent is paid in cash against which there are no withdrawal of cash from bank shown by the assessee.The assesse herself admitted that there are minimal withdrawal from her bank account as household expenses are incurred by her husband. The assessee could not explain and reconcile said cash payments of rent with known sources of cash as the cash was not withdrawn from bank. This rent receipt prepared by her mother does not inspire confidence. There are no other evidences available which relate to the period when the transaction of hiring of the premises by the assessee in the normal course of renting of premises 4 MA No. 695,693 & 696/Mum/2017 Arising out of ITA No. 1983-1985/Mum/2015 was progressing . The evidences at the time of transactions which arenormal to are relevant and cogent evidence to substantiate the assessee‟s contentions. These facts are especially in the knowledge of the assessee and burden is on the assessee to bring out these evidences to substantiate her contentions that rent paid was genuine but such evidences are not forthcoming . The assessee did not come forward with any evidence to substantiate its contentions except rent receipt which is not backed by any known sources of cash held by the assessee as there were no cash withdrawal from bank account of the assessee .Section 106 of Indian Evidence Act, 1872 is relevant which stipulates as under:
"Section 106 in The Indian Evidence Act, 1872
106. Burden of proving fact especially within knowledge.--When any fact is especially within the knowledge of any person, the burden of proving that fact is upon him. Illustrations
(a)****
(b)A is charged with travelling on a railway without a ticket. The burden of proving that he had a ticket is on him."
Section 6 of Indian Evidence Act, 1872 is also relevant in this context which is reproduce hereunder:
"Section 6 in The Indian Evidence Act, 1872
6. Relevancy of facts forming part of same transaction.--Facts which, though not in issue, are so connected with a fact in issue as to form part of the same transaction, are relevant, whether they occurred at the same time and place or at different times and places. Illustrations
(a)to (c) ****
(c) A sues B for a libel contained in a letter forming part of a correspondence. Letters between the parties relating to the subject out of which the libel arose, and forming part of the correspondence in which it is contained, are relevant facts, though they do not contain the libel itself."
(d)The question is, whether certain goods ordered from B were delivered to A. The goods were delivered to several intermediate persons successively. Each delivery is a relevant fact."
The doctrine of Res gestae will set in. The assessee could not produce any evidence arising in the normal course of happening of transaction of hiring of premises such as leave and license agreement, letter to society intimating about her tenancy, payment through bank, cash payments backed with known sources, electricity bill payments through cheque, water bill payments through cheque , some correspondence coming during that period of alleged tenancy to prove that transaction of hiring of premises was genuine and was happening during the said period. In-
5MA No. 695,693 & 696/Mum/2017 Arising out of ITA No. 1983-1985/Mum/2015 fact we have observed that no such cogent evidence has been brought on record which could substantiate that the assessee had taken the said premises on rent from her mother as no evidence of her actually staying at the said premises were produced on record. The assessee was in-fact staying in her own flat at „Tropicana‟ with her husband which is emanating from various evidences which are on record such as ration card, bank statements, return of income filed with Revenue etc which is also in consonance with normal human conduct of Indian married women living with her husband and daughter in a residential flat owned by the assessee jointly with husband , the assessee also did not bring any cogent evidence to substantiate that she had taken the residential flat at „Neha Apartment‟ on rent from her mother. The mother of the assessee has also not filed return of income since last six assessment years and said rental income was not brought to tax in the hands of mother of the assessee . The assessee could also not able to bring on record any cogent evidence to prove that her un-married sister Ms Vimla was living at Bhayander. Even on touchstone of preponderance of human probabilities , it is quite improbable that the assessee was living with her mother at „Neha Apartments‟ and paying her substantial rent of Rs. 31,500/- per month for a small flat of 1 BHK of 400 square feet while her own house was at just five minute walking distance at „Tropicana‟ . It is also improbable that the assessee being a married lady will leave her husband and daughter and start living with mother at another residential flat which is just five minute walking distance and pay huge rent per month. It is different matter that the assesseemay look after her old and sick mother by frequent visits but this theory of rent as set out by the assessee did not inspire confidence keeping in viewmaterial produced before us. It is also probable that the assessee may contribute towards looking after her old and ailing mother out of salary but the same is not sufficient to claim exemption u/s 10(13A) of 1961 Act. Looking into all these factual matrix of the case before us, we are of considered view that the whole arrangement of rent payment by the assessee to her mother is a sham transaction which was undertaken by the assessee with the sole intention to claim exemption of HRA u/s 10(13A) of 1961 Act in order to reduce tax liability and hence in our considered view, exemption u/s 10(13A) of the Act cannot be allowed to the assessee as the payments towards rent are not genuine payment . The evidences on record are speaking loudly which is just opposite to what the assessee is contending. Even if we eschew report of inspector , then also material on record do not inspire confidence that the transaction of rent was a genuine transaction as discussed by us in detail above. The right of cross examination is not absolute. The assessee has to first discharge its primary onus cast under law and if the same stood duly discharged which is not rebutted by authorities , but despite that then also the authorities proceed to put assessee to prejudice solely relying on the basis of incriminating statement recorded of third party at the back of the assessee, then certainly the right to cross examination the said third party whose incriminating statement recorded at the back of the assessee is relied 6 MA No. 695,693 & 696/Mum/2017 Arising out of ITA No. 1983-1985/Mum/2015 upon by authorities to prejudice the assessee will become absolute. But in the instant case , primary onus cast on the assessee itself did not stood discharged by the assessee as discussed above. The assessee could not prove the genuineness of the rent paid by the assessee to her mother Mrs. P B Dorwani for alleged renting of „Neha Apartments‟ and usage of the said premises „Neha Apartments‟ by the assessee. Under these circumstances, we find no infirmity in the order of the ld. CIT(A) and we confirm the same and dismiss the appeal of the assessee. We order accordingly.
12. In the result, appeal of the assessee in ITA no. 1984/Mum/2015 for assessment year 2010-11 is dismissed.
13. Our above decision in ITA No. 1984/Mum/2015 for assessment year 2010-11 shall apply mutatis mutandis to the assessee‟s other appeals in ITA No. 1983/Mum/2015 for assessment year 2009-10 and ITA No. 1985 / Mum /2015 for assessment year 2011-12 wherein the facts are identical.
14. In the result, appeals filed by the assessee in ITA No.1983/Mum/2015 to 1985/Mum./2015 for assessment years 2009- 10 to 2011-12 are dismissed."
Thus, it could be seen above , that the tribunal passed detailed order dated 30.03.2017 after appreciation of material on record.
Now, these MA‟s have been filed and it is pointed that following mistakes crept in the order dated 30.03.2017 passed by the tribunal for AY‟s 2009-10 to 2011-12, as set out under:
1) It is contended that the tribunal has given an perverse finding of fact that the assessee claimed deduction u/s 80C of the 1961 Act with respect to housing loan repayment. If we see assessment order dated 28.03.2013 passed by the learned assessing officer u/s 143(3) for AY 2011-12(lead year while framing tribunal order) , it can be seen that the assessee has claimed her own residential flat situated at Tropicana as self occupied property and has also claimed deduction of Rs.13,888/- as interest on housing loan. (para 7.2 /AO assessment order-page 4) . Thus, the assessee was claiming both exemption of HRA u/s 10(13A) on the grounds that alleged rent was paid to mother for staying at her residential flat at Neha Apartment, while own 7 MA No. 695,693 & 696/Mum/2017 Arising out of ITA No. 1983-1985/Mum/2015 residential flat at Tropicana Apartments was shown as self occupied residential flat and benefit of deduction of interest paid on housing loan to the tune of Rs.13,888/- was claimed. Further perusal of form no. 16 dated 21.06.2010 issued by Mr. R K Malhotra V.P.Finance & Audit of Eastern International Hotels Limited , Mumbai( PAN AAACE2487L and TDS number MUME04786F) for AY 2010-11 issued in favour of Mrs Meena Vaswani clearly shows that the assessee did claimed Rs. 45,457/- towards housing loan repayment u/s 80C(pb-
page 1/ pb filed with MA appl). It is another matter that her other investments were more than Rs. 1,00,000/- and deductions u/s 80C were to be capped at Rs.1,00,000/- as provided vide relevant year applicable Finance Act, the assessee ultimately could not get income- tax deduction u/s 80C on repayment of principal amount of housing loan to the tune of Rs. 45,457/- because of capping of deduction u/s 80C to Rs. 1,00,000/- , but the assessee proactively claimed deduction u/s 80C on principal repayments of housing loan, goes to show that there was no mistake apparent from records. The conclusions were drawn by tribunal based on the entire factual matrix of the case keeping in view totality of the circumstances and not merely on the ground that the deduction u/s 80C was claimed. The assessee did however claimed deduction u/s 24 of Rs. 13,888/- towards interest paid on housing loan by declaring and rightly so that residential flat at Tropicana was her self occupied residential flat. This contention of the assessee has no merits and is rejected.
2) The assessee has also contended that the AO did not allow cross examination of the inspector who submitted report incriminating assessee. The assessee relied upon decision of the Hon‟ble Supreme Court in the case of Kishanchand Chelaram v. CIT reported in 125 ITR 713(SC). The assessee failed to note that tribunal in para 11/page 19 of its operating decision has clearly recorded that even if inspector report is eschewed, then also material on record do not inspire confidence that the transaction of rent was a genuine transaction. It 8 MA No. 695,693 & 696/Mum/2017 Arising out of ITA No. 1983-1985/Mum/2015 was further held by the tribunal in the said para11/page 19 of its order that the assessee did not even discharged its primary onus and the assessee failed to prove the genuineness of the rent paid to her mother for alleged renting of residential flat at „Neha Apartments‟ owned by her mother and further usage of said residential premises „Neha Apartments‟ by the assessee also could not be proved by the assessee. Thus, the tribunal did not rely on inspector report to prejudice the assessee knowingly well that the said report was recorded behind the back of the assessee and the revenue has not allowed cross examination of the inspector. Thus, this contentions also has no legs to stand and are hereby rejected.
Thus, based on our above reasoning , we are constrained to dismiss all these three MA‟s filed for AY 2009-10 to 2011-12. The assessee fails in all these MA‟s. We order accordingly.
4. These three MA‟s for AY 2009-10 to 2011-12 have common ground as the same emanated from common order passed by tribunal for all these three years dated 30-03-2017 and have solitary common issue under dispute relating to allowability of exemption u/s 10(13A) with respect to HRA received from her employer namely M/s Eastern International Hotels Limited . Thus, these three M.A.‟s No. 695, 693 & 696/Mum/2017 arising out of appeals in ITA no. 1983-1985/Mum/2015 for AY‟s 2009-10 to 2011- 12 are all dismissed as indicated above. We order accordingly.
Order pronounced in the open court on 22.10.2018 आदे श की घोषणा खल ु े न्यायालय में ददनाांकः 22 .10.2018 को की गई ।
Sd/- Sd/-
(C.N.PRASAD) (RAMIT KOCHAR)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai, dated: 22.10.2018
copy to...
Nishant Verma
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MA No. 695,693 & 696/Mum/2017
Arising out of ITA No. 1983-1985/Mum/2015
Sr. Private Secretary
1. The appellant
2. The Respondent
3. The CIT(A) - Concerned, Mumbai
4. The CIT- Concerned, Mumbai
5. The DR Bench,
6. Master File
// Tue copy//
BY ORDER
DY/ASSTT. REGISTRAR
ITAT, MUMBAI
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