SHRI DURGA DEVI,NEW DELHI vs. ACIT, NEW DELHI

Date of Hearing : 11.01.2023 Date of Pronouncement : 17.01.2023 ORDER PER SHAMIM YAHYA, A.M.: These are appeals filed by the assessee against the common order of the Ld. CIT(A)-31, New Delhi, dated 18.01.2017 and pertains to A.Y.s 2013-14 & 2014-15.

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6. Against this order, the assessee is in appeal before us.

7. The ld. Counsel of the assessee contended that on same facts and similar circumstances the ITAT, ‘D’ Bench in the case of Shri Kamal Kumar vs. ACIT, vide order dated 28.04.2022, in has considered the property located in similar locality and, after elaborate discussion, has found that there was reasonable cause for not putting the property on rent. Hence, the ld. Counsel pleaded that since on similar facts in similarly located property, ITAT has found the reasonable cause for not putting the property on rent, it was sufficient to permit the assessee to get away from the rigors of notional rent.

8. Per contra, the ld. DR relied upon the orders of the authorities below.

9. Upon careful consideration, we note that the submissions of the assessee’s counsel is that there was a sealing drive in the locality, so, it was difficult to find tenant and this was the reason the property could not be let out. It is the plea that identical facts were appreciated by the ITAT in the aforesaid order. We find that on similar facts, the ITAT in the aforesaid decision has adjudicated the issue as under:-

4 ITA.Nos.2004 & 2005/Del./2017 “5. Appreciating the matter on record and the contentions of the Ld. AR and ld. DR it can be observed that there is no dispute with regard to two material facts. The first being that the property was commercial in nature and second that the property remained vacant during the relevant financial year 2012-13. The foundation of the case of assessee is an affidavit dated 26.11.2016 which was submitted in the form of additional evidence before the Ld. First Appellate Authority and which after being admitted under Rule 46A of the Income Tax Rules, 1962 was considered by the Ld. First Appellate Authority and a remand report was called. The remand report is on page no. 16 of the paper book and also referred by the ld. First Appellate Authority in para no. 4.3 of its order. It is very apparent from the affidavit tendered in additional evidence that the only ground seeking exemption from Section 23(1)(c) of the Act was that the property was situated at MG Road and same was not regularized so the efforts made to put the property on rent had failed. There was no mention in the affidavit of any ongoing metro work being the cause of this failure to rent the property. However, in the remand report the assessing officer has mentioned of the fact that assessee failed to substantiate his claim with any document to prove that the premises was one of the premises which was impacted with metro work. Thus, there is an apparent factual error in considering the affidavit of assessee in right prospective.

5 ITA.Nos.2004 & 2005/Del./2017 those within Lal Doras and Village Abadi areas. It was also observed that there can be no compromise on structural and fire safety norms of any building in the Capital. 6.1 However, the ld. Tax Authorities failed to take into consideration, these minutes which substantially indicated that there was a genuine dispute in the locality where the property of assessee was situated with regard to failure of owners of the property to comply with municipal laws concerning structural and fire safety. The Lower Tax Authorities and specially the Ld. AO while submitting the remand report had fallen in error in observing that as the building of assessee was not one of those buildings which were referred in the minutes as partly demolished therefore, he was not to be benefited due to the minutes of the meeting. The bench is of considered opinion that meeting was not just about partially demolished buildings but the issue discussed and relevant in the meeting was the demolition drive and ceiling of the building by the Government for non compliance of structural and safety norms by the building owners in the said locality. The same deserved due consideration at the end of tax authorities as assessee had put a claim in the affidavit that due to demolition drive and sealing of the building by the Government in the locality he failed to get tenants. 6.2 The Ld. First Appellate Authority considered the affidavit of the assessee to be a self-serving documents and thus refused to rely upon it. The Bench is of considered opinion that an affidavit along with verification appended when stands corroborated with any piece of evidence, like in the present case the copies of minutes of meeting, then the same cannot be said to be a self- serving affidavit of a fact. As these facts are verifiable facts and not merely facts stated on belief. The Tax Authorities had their means to have gone further into the inquiry with regard to facts stated in the affidavit. Rather and strangely the Tax authorities observed that this on oath statement is not substantiated by evidence, so disbelieved the affidavit. At the same time, once the affidavit was admitted by way of additional evidence and the remand report on its factual aspects was called it cannot be brushed aside by calling it a selfserving document unless the same was factually controverted by evidence or on oath statement on the part of revenue. 6.3 Thus, the bench is of the considered opinion that there was sufficient material before the ld. Tax Authorities which established that there was a genuine dispute in the locality where the 6 ITA.Nos.2004 & 2005/Del./2017 commercial building of assessee was situated and that dispute was of such nature that no prudent person could be expected to have taken the disputed building on rent. The fact that this meeting was called on 28.11.2011 where a consensus was reached between the authorities and owners of building indicate that during the relevant financial year the property was actually not available in the hands of assessee to be let out. Admittedly it was let out in next FY.

notional rent can be taxed if it can be considered as “receivable” as mentioned in Section 23(1)(a) of the Act. When there is some legal disability or physical impossibility in creating a tenancy and due to which the property is left vacant, in any part or whole of the year, then there is no possibility of rent being realized and so the rent cannot be said to be “receivable” and accordingly on basis of notional rent no tax liability can be created. The tax authorities below have thus fallen in error in taxing the assessee on basis of notional rent. Thus, the bench is inclined to decide the grounds raised in favour of the assessee.”

“4. On the facts and in the circumstances of the case and in law, the authorities below has erred in confirming addition of Rs.50,70,190/- on account of jewellery found in premises of the assesse which was duly explained. The action of the authorities below is wrong, illegal, misconceived, unjustified and bad at law therefore it should be quashed.”

“5. During the search & seizure operation jewellary amounting Rs.4,36,16,381/- was found from the premise of the assessee out of which jewellary amounting to Rs.65,70,190/- has been owned up by the assessee and claimed as purchased prior to assessment

8 ITA.Nos.2004 & 2005/Del./2017 year 2008-09. In support of above, the assessee has filed bills prior to F.Y. 2006-07. On perusal of the above bills, it is seen that there is no mention of mode of payment made by the assessee. These bills were not produced during the search operation when asked for the same. Further it is also seen that assessee is a house wife and has not shown any income in preceding years. The assessee has also not filed her wealth tax return in any of the preceding years. Hence the claim of the assessee that all the jewellary was purchased prior to block period has no weight. However, keeping in view that the assessee belongs to a well to do family and is a married lady, jewellary valuing Rs. 15,00,000/- (i.e. approx value of 500 gram jewellary) is being considered as her stridhan/gift from family members. Remaining jewellary of Rs. 50,70,190/- (Rs. 65,17,190/- less Rs. 15,00,000/-) is being added to the total income of the assessee. Since, during the search action, unexplained investment in jewellary was found from the possession of the assessee, I am satisfied that the provisions of section 271AAB of the Act are clearly attracted in this case. Accordingly penalty proceedings u/s 271AAB of the Act are to be initiated on this issue separately.”

“6.7 Before me, ld. AR argued that the AO has rejected the bills without any reason. This argument is not correct. The bills have been treated to be unreliable for the reasons cited above, i.e. mode of payment was not explained, sources of investment were not explained, the investment does not appear to be accounted for in the absence of any income earned by the appellant prior to the said investment which is of a significant amount. The fact that no wealth tax returns were filed in the respective years despite there being assessable wealth in those years also go against the appellant. The filing of wealth tax returns after the date of search only appears to be an attempt to give a colour of genuineness to the explanation submitted. In view of the above, I am of the considered opinion that the sources of the jewellery have remained to be explained and accordingly, the ld. AO has rightly taxed it in the Assessment Year 2014-15 Thus, the ground nos. 4 and 7 of the appeal for the Assessment Year 2014-15 are dismissed.”

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