SUMAN GUPTA,MUMBAI vs. DCIT - CC- 4(2), MUMBAI

PER OM PRAKASH KANT, AM These appeals by the assessee are directed against two separate orders, both dated 21.03.2018, passed by the Ld. Commissioner of Income-tax (Appeals)-52, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2015-16 and 2014-15 respectively. As common grounds are involved in these appeals ,therefore same

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were heard together and disposed off by way of this consolidated were heard together and disposed off by way of this consolidated were heard together and disposed off by way of this consolidated order for convenience. order for convenience.

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not accepted by the Assessing Officer. On further appeal, in not accepted by the Assessing Officer. On further appeal, not accepted by the Assessing Officer. On further appeal, assessment year 2015 assessment year 2015-16, the Ld. CIT(A) rejected the claim of the ed the claim of the assessee in relation to jewellery and deemed rental value. In assessee in relation to jewellery and deemed rental value assessee in relation to jewellery and deemed rental value assessment year 2014 assessment year 2014-15 also the addition of the deemed rental 15 also the addition of the deemed rental value has been sustained by the Ld. CIT(A). value has been sustained by the Ld. CIT(A).

First we take up the appeal of the assessee for assessment 2.1 First we take up the appeal of the assessee for assessment First we take up the appeal of the assessee for assessment year 2015-16. The relevant ground 16. The relevant grounds of appeal are reproduced as of appeal are reproduced as under:

1(a). On the facts and in the circumstances of the case 1(a). On the facts and in the circumstances of the case 1(a). On the facts and in the circumstances of the case and in law, the Id. CIT (A)erred in confirming addition of and in law, the Id. CIT (A)erred in confirming addition of and in law, the Id. CIT (A)erred in confirming addition of Rs. 42,37,838/ Rs. 42,37,838/- in respect of jewelleries found at the in respect of jewelleries found at the time of search time of search proceedings without appreciating the fact proceedings without appreciating the fact that the said jewelleries were already disclosed in the that the said jewelleries were already disclosed in the that the said jewelleries were already disclosed in the return of wealth tax filed forAY 2014 return of wealth tax filed forAY 2014-15 on 31/07/2014 15 on 31/07/2014 ie prior to date of search and therefore question of ie prior to date of search and therefore question of ie prior to date of search and therefore question of making addition does not arise, which is wrong and making addition does not arise, which is wrong and making addition does not arise, which is wrong and contrary to the facts and circumstances of the case, the contrary to the facts and circumstances of the case, the contrary to the facts and circumstances of the case, the provisions of Income Tax Act, 1961, and the Rules made provisions of Income Tax Act, 1961, and the Rules made provisions of Income Tax Act, 1961, and the Rules made there under. 1(b). On the facts and in the circumstances of the case 1(b). On the facts and in the circumstances of the case 1(b). On the facts and in the circumstances of the case and in law, the Id. CIT (A)erred in confirming addition of and in law, the Id. CIT (A)erred in confirming addition of and in law, the Id. CIT (A)erred in confirming addition of Rs. 42,37,838/ Rs. 42,37,838/- in respect of jewelleries found at the in respect of jewelleries found at the time of search proceedings on reasoning that appellant time of search proceedings on reasoning that appellant time of search proceedings on reasoning that appellant agreed to offer the said amount to tax at the time of agreed to offer the said amount to tax at the time of agreed to offer the said amount to tax at the time of search without appreciating the fact that due to paucity search without appreciating the fact that due to paucity search without appreciating the fact that due to paucity of time for reconciliation of jewelleries found du of time for reconciliation of jewelleries found during the ring the search with return of wealth tax, appellant agreed to search with return of wealth tax, appellant agreed to search with return of wealth tax, appellant agreed to offer the said jewelleries to tax at the time search, which offer the said jewelleries to tax at the time search, which offer the said jewelleries to tax at the time search, which is wrong and contrary to the facts and circumstances of is wrong and contrary to the facts and circumstances of is wrong and contrary to the facts and circumstances of the case, the provisions of Income Tax Act, 1961, and the the case, the provisions of Income Tax Act, 1961, and the the case, the provisions of Income Tax Act, 1961, and the Rules made there un Rules made there under.

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1(c). On the facts and in the circumstances of the case 1(c). On the facts and in the circumstances of the case 1(c). On the facts and in the circumstances of the case and in law, the Id. CIT (A)ought to have accepted the and in law, the Id. CIT (A)ought to have accepted the and in law, the Id. CIT (A)ought to have accepted the contention of the appellant to the effect that said contention of the appellant to the effect that said contention of the appellant to the effect that said jewelleries were disclosed in the return of wealth tax jewelleries were disclosed in the return of wealth tax jewelleries were disclosed in the return of wealth tax filed before date of search though filed before date of search though inadvertently appellant inadvertently appellant offered the same in return of income filed u/s 153A, in offered the same in return of income filed u/s 153A, in offered the same in return of income filed u/s 153A, in the light of; (i) the proposition laid down in National Thermal Power the proposition laid down in National Thermal Power the proposition laid down in National Thermal Power Corporation v.CIT 229 ITR 383 (SC); and Corporation v.CIT 229 ITR 383 (SC); and (ii) the principles laid down in Circular No. 14 (XL (ii) the principles laid down in Circular No. 14 (XL (ii) the principles laid down in Circular No. 14 (XL-35) dated 11.4.1955 ofthe CBDT. .4.1955 ofthe CBDT. 1(d). On the facts and in the circumstances of the case 1(d). On the facts and in the circumstances of the case 1(d). On the facts and in the circumstances of the case and in law, the lower authorities failed to appreciate that and in law, the lower authorities failed to appreciate that and in law, the lower authorities failed to appreciate that addition of Rs. 42,37,838/ addition of Rs. 42,37,838/- in respect of jewelleries in respect of jewelleries found in search would lead to double taxation as found in search would lead to double taxation as found in search would lead to double taxation as appellant had alr appellant had already disclosed the said jewelleries in eady disclosed the said jewelleries in Return of wealth tax, which is wrong and contrary to the Return of wealth tax, which is wrong and contrary to the Return of wealth tax, which is wrong and contrary to the facts and circumstances of the case, the provisions of facts and circumstances of the case, the provisions of facts and circumstances of the case, the provisions of Income Tax Act, 1961, and the Rules made there under. Income Tax Act, 1961, and the Rules made there under. Income Tax Act, 1961, and the Rules made there under. 2. On the facts and in the circumstances of the cas On the facts and in the circumstances of the cas On the facts and in the circumstances of the case and in law, the CIT(A) erred in making addition u/s. 23 in the in law, the CIT(A) erred in making addition u/s. 23 in the in law, the CIT(A) erred in making addition u/s. 23 in the impugned order u/s 143(3) r.w.s.153A of the Income Tax impugned order u/s 143(3) r.w.s.153A of the Income Tax impugned order u/s 143(3) r.w.s.153A of the Income Tax Act, 1961 without appreciating the fact that no Act, 1961 without appreciating the fact that no Act, 1961 without appreciating the fact that no incriminating material was found during the course of incriminating material was found during the course of incriminating material was found during the course of search proceedings in respect of s search proceedings in respect of said additions, which is aid additions, which is wrong and contrary to the facts and circumstances of the wrong and contrary to the facts and circumstances of the wrong and contrary to the facts and circumstances of the case, the provisions of Income Tax Act, 1961, and the case, the provisions of Income Tax Act, 1961, and the case, the provisions of Income Tax Act, 1961, and the Rules made there under. Rules made there under. 3(a). Without prejudice to above, on the facts and in the 3(a). Without prejudice to above, on the facts and in the 3(a). Without prejudice to above, on the facts and in the circumstances of the case and in law, t circumstances of the case and in law, the Id. CIT (A) he Id. CIT (A) erred in confirming the addition of Rs. 4,08,663/ erred in confirming the addition of Rs. 4,08,663/ erred in confirming the addition of Rs. 4,08,663/-being "Income from deemed let out property" located at Apeejay "Income from deemed let out property" located at Apeejay "Income from deemed let out property" located at Apeejay House and Pune by applying a rate of 7% of cost of House and Pune by applying a rate of 7% of cost of House and Pune by applying a rate of 7% of cost of property of Rs. 1,44,09,475/ property of Rs. 1,44,09,475/- i.e.Rs. 10,08.663/- less Rs. 6,00,000/- offered by the appellant and reasons by the appellant and reasons assigned for doing so are wrong and contrary to the facts assigned for doing so are wrong and contrary to the facts assigned for doing so are wrong and contrary to the facts

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and circumstances of the case, the provisions of Income and circumstances of the case, the provisions of Income and circumstances of the case, the provisions of Income Tax Act, 1961, and the Rules made there under. Tax Act, 1961, and the Rules made there under. 3(b). Without prejudice to above, on the facts and in the 3(b). Without prejudice to above, on the facts and in the 3(b). Without prejudice to above, on the facts and in the circumstances of the case and in law, the Id. CIT (A) tances of the case and in law, the Id. CIT (A) tances of the case and in law, the Id. CIT (A) failed to appreciate that the Annual value of the deemed failed to appreciate that the Annual value of the deemed failed to appreciate that the Annual value of the deemed let out properties should be considered based on let out properties should be considered based on let out properties should be considered based on municipal ratable value fixed by municipal authorities in municipal ratable value fixed by municipal authorities in municipal ratable value fixed by municipal authorities in terms of section 23(1) of the Act and not as terms of section 23(1) of the Act and not as 7% of cost of 7% of cost of the properties, which is wrong and contrary to the facts the properties, which is wrong and contrary to the facts the properties, which is wrong and contrary to the facts of the case and provisions of the Income Tax Act, 1961 of the case and provisions of the Income Tax Act, 1961 of the case and provisions of the Income Tax Act, 1961 and the rules made thereunder. and the rules made thereunder. 3(c). Without prejudice to above, on the facts and in the 3(c). Without prejudice to above, on the facts and in the 3(c). Without prejudice to above, on the facts and in the circumstances of the case and in law, the circumstances of the case and in law, the circumstances of the case and in law, the lower authorities erred in computing deemed notional rent on authorities erred in computing deemed notional rent on authorities erred in computing deemed notional rent on the property located at Apeejay House by considering it the property located at Apeejay House by considering it the property located at Apeejay House by considering it as non businessproperty as no depreciation was claimed as non businessproperty as no depreciation was claimed as non businessproperty as no depreciation was claimed on the said business premises in its return of income filed on the said business premises in its return of income filed on the said business premises in its return of income filed by the appellant, which by the appellant, which is wrong and contrary to the is wrong and contrary to the Facts of the case and provisions of the Income Tax Act, Facts of the case and provisions of the Income Tax Act, Facts of the case and provisions of the Income Tax Act, 1961 and the rules made thereunder. 1961 and the rules made thereunder. 3. In ground No. 1 of the appeal, the assessee is aggrieved with In ground No. 1 of the appeal, the assessee is aggrieved with In ground No. 1 of the appeal, the assessee is aggrieved with the rejection of the claim in respect of jewellery of Rs.42,37,838/-. the rejection of the claim in respect of jewellery of Rs.42,37,838/ the rejection of the claim in respect of jewellery of Rs.42,37,838/

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accordingly in the return of income filed for the year under accordingly in the return of income filed for the year under accordingly in the return of income filed for the year under consideration the assessee declared the undisclosed income consideration the assessee declared the undisclosed income consideration the assessee declared the undisclosed income corresponding nding to jewellery of to jewellery of Rs.42,37,838/- Rs.42,37,838/ and cash of Rs.4,98,000/-. During the course of assessment proceedings, the . During the course of assessment proceedings, the . During the course of assessment proceedings, the assessee contended that jewellery and silver found in the hands of assessee contended that jewellery and silver found in the hands of assessee contended that jewellery and silver found in the hands of the family members was already shown in the wealth tax return of the family members was already shown in the wealth tax return of the family members was already shown in the wealth tax return of the family members but but due to lack of sufficient time to reconcile at due to lack of sufficient time to reconcile at the time of the search proceedings, the jewellery was offered to tax the time of the search proceedings, the jewellery was offered to tax the time of the search proceedings, the jewellery was offered to tax while recording the s while recording the statement u/s 132(4) of the Act. But in tatement u/s 132(4) of the Act. But in reality, the jewellery declared in wealth tax return the jewellery declared in wealth tax return is more than th s more than the jewellery found in the course of the search. The Assessing Officer jewellery found in the course of the search. The Assessing Officer jewellery found in the course of the search. The Assessing Officer rejected the contention of the assessee observing as under: rejected the contention of the assessee observing as under: rejected the contention of the assessee observing as under:

“7. During the assessment proce 7. During the assessment proceeding. the assessee he assessee submitted the details of Jewelleries and silver found in submitted the details of Jewelleries and silver found in submitted the details of Jewelleries and silver found in hands of various fa hands of various family members during the course of mily members during the course of search and explanation regarding the items shown in the search and explanation regarding the items shown in the search and explanation regarding the items shown in the wealth tax returns of the family m wealth tax returns of the family members. The assesses embers. The assesses also submitted wealth tax returns of the family members. ted wealth tax returns of the family members. ted wealth tax returns of the family members. As regards Jewelleries seized of Rs. 12,37,838/ As regards Jewelleries seized of Rs. 12,37,838/ As regards Jewelleries seized of Rs. 12,37,838/-, assessee submitted that due to lack of sufficient time to ssee submitted that due to lack of sufficient time to ssee submitted that due to lack of sufficient time to reconcile at the time of the search proceedings. the the time of the search proceedings. the amount of jewellery of Rs. 42,37,838 was offered to lax amount of jewellery of Rs. 42,37,838 was offered to lax amount of jewellery of Rs. 42,37,838 was offered to lax while recording the statement under section 132|4) of the while recording the statement under section 132|4) of the while recording the statement under section 132|4) of the IT Act but if can be appreciated th t but if can be appreciated that there were already at there were already more Jewelleries in the returns then those were found in more Jewelleries in the returns then those were found in more Jewelleries in the returns then those were found in the course of the search.Though while filing the return of the course of the search.Though while filing the return of the course of the search.Though while filing the return of income the items were tallied but i income the items were tallied but in order to coopcrate n order to coopcrate with tho Departme with tho Department and since the disclosure was the disclosure was made in the statement made under section ement made under section 132(4) of the IT Act, he IT Act, this amount of jewellery is offered to this amount of jewellery is offered to tax.

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7.2. The submission of the assessee is considered but not 7.2. The submission of the assessee is considered but not 7.2. The submission of the assessee is considered but not accepted. The accepted. The accepted. The assessee herself confessed in assessee assessee herself confessed in herself confessed in the the the statement recorded on oath us. 132(4) of the It Act that statement recorded on oath us. 132(4) of the It Act that statement recorded on oath us. 132(4) of the It Act that she has received the above income during various she has received the above income during various she has received the above income during various occasion from relatives and friends and she occasion from relatives and friends and she also offered also offered these incomes while filing return of income. Hence, the these incomes while filing return of income. Hence, the these incomes while filing return of income. Hence, the said addition made by the assessee herself cannot be said addition made by the assessee herself cannot be said addition made by the assessee herself cannot be withdrawn. Since the assessee herself ha withdrawn. Since the assessee herself has declared such s declared such addition in her return of income, no further addition is addition in her return of income, no further addition is addition in her return of income, no further addition is made.” 5. On further appeal, the Ld. CIT(A) rejected the contention of the On further appeal, the Ld. CIT(A) rejected the contention of the On further appeal, the Ld. CIT(A) rejected the contention of the assessee observing as under: assessee observing as under:

“6.1 I have considered the submissions and contentions 6.1 I have considered the submissions and contentions 6.1 I have considered the submissions and contentions of the assessee as also of the assessee as also the order of the AO. It is observed the order of the AO. It is observed that on the excess jewellery found at the time of search that on the excess jewellery found at the time of search that on the excess jewellery found at the time of search action, the assessee made a declaration of undisclosed action, the assessee made a declaration of undisclosed action, the assessee made a declaration of undisclosed income of Rs 42,37,838/ income of Rs 42,37,838/- in the statement on oath u/s in the statement on oath u/s 132(4). The assessee in her return of income filed for 132(4). The assessee in her return of income filed for 132(4). The assessee in her return of income filed for the relevant year pursuant to the search action also included relevant year pursuant to the search action also included relevant year pursuant to the search action also included the said declaration of Rs 42,37,838/ the said declaration of Rs 42,37,838/-. However, during . However, during the assessment proceedings, the assessee submitted that the assessment proceedings, the assessee submitted that the assessment proceedings, the assessee submitted that though reconciliation could not be given at the time of though reconciliation could not be given at the time of though reconciliation could not be given at the time of thesearch action, she has thesearch action, she has subsequently managed to subsequently managed to reconcile the difference and requested the AO to allow reconcile the difference and requested the AO to allow reconcile the difference and requested the AO to allow withdrawal of the said undisclosed income included in withdrawal of the said undisclosed income included in withdrawal of the said undisclosed income included in the Return of Income for the relevant ear. However, the the Return of Income for the relevant ear. However, the the Return of Income for the relevant ear. However, the AO did not allow this request of the assesses on the AO did not allow this request of the assesses on the AO did not allow this request of the assesses on the ground that t ground that the same could not be reconciled at the time he same could not be reconciled at the time of search action and she herself had also included the of search action and she herself had also included the of search action and she herself had also included the amount of the said declaration made in the return of amount of the said declaration made in the return of amount of the said declaration made in the return of income filed for the relevant year pursuant to the search income filed for the relevant year pursuant to the search income filed for the relevant year pursuant to the search action. 6.2 In the appellate proceedinas also 6.2 In the appellate proceedinas also the assessee made the assessee made similar claims as made before the AO. It is observed that similar claims as made before the AO. It is observed that similar claims as made before the AO. It is observed that there is no dispute that the jewellery found at the time of there is no dispute that the jewellery found at the time of there is no dispute that the jewellery found at the time of search action could not be reconciled by the assessee search action could not be reconciled by the assessee search action could not be reconciled by the assessee and therefore, an admission of undisclosed income of Rs and therefore, an admission of undisclosed income of Rs and therefore, an admission of undisclosed income of Rs

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42,37,838/- was made in the statement on oath us was made in the statement on oath us 132(4) and this declaration was also included in the 132(4) and this declaration was also included in the 132(4) and this declaration was also included in the return of income forthe relevant year filed pursuant to the return of income forthe relevant year filed pursuant to the return of income forthe relevant year filed pursuant to the search action. Therefore, the AO has rightly rejected the search action. Therefore, the AO has rightly rejected the search action. Therefore, the AO has rightly rejected the request of the assessee to be allowed to withd request of the assessee to be allowed to withdraw the raw the amount of undisclosed income of Rs 42.37.338/ amount of undisclosed income of Rs 42.37.338/ amount of undisclosed income of Rs 42.37.338/- which was surrendered in statement on oath us 132(4) during was surrendered in statement on oath us 132(4) during was surrendered in statement on oath us 132(4) during the search action and also voluntarily included in her the search action and also voluntarily included in her the search action and also voluntarily included in her return of income for the relevant year filed pursuant to return of income for the relevant year filed pursuant to return of income for the relevant year filed pursuant to the search action. Accordingl the search action. Accordingly, this Ground of Appeal is y, this Ground of Appeal is dismissed.” 6. Before us, the Ld. Counsel of the assessee has filed a Before us, the Ld. Counsel of the assessee has filed a Before us, the Ld. Counsel of the assessee has filed a paper book containing pages 1 to 59. The pages 38 to 59 are copy of the ook containing pages 1 to 59. The pages 38 to 59 are copy of the ook containing pages 1 to 59. The pages 38 to 59 are copy of the wealth tax return filed for assessment year 2014 wealth tax return filed for assessment year 2014-15 in the case of (i) 15 in the case of (i) Suman Gupta i.e. the assessee, (ii) Natasha Gupta, (iii) Ginni Gupta . the assessee, (ii) Natasha Gupta, (iii) Ginni Gupta . the assessee, (ii) Natasha Gupta, (iii) Ginni Gupta and (iv) Prateek Gupta. Before us, the and (iv) Prateek Gupta. Before us, the assessee has filed an assessee has filed an application for admitting th application for admitting those wealth tax return se wealth tax returns filed by the assessee and her relative her relatives as additional evidence under Rule 29 of as additional evidence under Rule 29 of the ITAT Rules, 1963. T 1963. The Ld. Counsel of the assessee referred to he Ld. Counsel of the assessee referred to Paper Book page No. 12 and submitted that quantity of ‘silver’ and Paper Book page No. 12 and submitted that quantity of Paper Book page No. 12 and submitted that quantity of ‘gold’ jewellery found during the course of search from the assessee found during the course of search from the assessee found during the course of search from the assessee and her family members is less than the jewellery declared by the and her family members is less than the jewellery declared by th and her family members is less than the jewellery declared by th assessee and her family members in the wealth tax returns filed. assessee and her family members in the wealth tax return assessee and her family members in the wealth tax return Regarding the diamond ding the diamond also, it was submitted that value of the that value of the diamond and precious stone declared in the wealth tax return is diamond and precious stone declared in the wealth tax return is diamond and precious stone declared in the wealth tax return is more than the value of the diamond and the precious stone found more than the value of the diamond and the precious stone foun more than the value of the diamond and the precious stone foun during the course of the during the course of the search from the assessee and her family assessee and her family members. The Ld. Counsel accordingly submitted that additional members. The Ld. Counsel accordingly submitted that additional members. The Ld. Counsel accordingly submitted that additional

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evidences filed by the assessee might be admitted and issue of filed by the assessee might be admitted and issue of filed by the assessee might be admitted and issue of reconciliation of the jewellery found along with jewellery declared in reconciliation of the jewellery found along with jewellery decl reconciliation of the jewellery found along with jewellery decl the wealth tax return may be restored back to the file of the the wealth tax return may be restored back to the file of the the wealth tax return may be restored back to the file of the Assessing Officer.

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submitted that same was same was declared the same in the return of income declared the same in the return of income filed in the view of the disclosure made the assessee during search in the view of the disclosure made the assessee during search in the view of the disclosure made the assessee during search action. During the assessment proceedings, the assessee submitted . During the assessment proceedings, the assessee submitted . During the assessment proceedings, the assessee submitted before the Assessing ssessing Officer, a reconciliation chart for reconciliation chart for permitting withdrawal of the undisclosed income declared against jewellery. withdrawal of the undisclosed income declared against jewellery. withdrawal of the undisclosed income declared against jewellery. However, the Assessing Officer rejected However, the Assessing Officer rejected the claim of the assessee the claim of the assessee on the ground that the assessee herself confessed the jewellery as the ground that the assessee herself confessed the jewellery as the ground that the assessee herself confessed the jewellery as unexplained recorded u/s 132(4) of the Act and also declared in the explained recorded u/s 132(4) of the Act and also declared in the explained recorded u/s 132(4) of the Act and also declared in the return of income filed. return of income filed. According to the Assessing Officer, income According to the Assessing Officer, income declared in return of income can’t be rolled back except by way of declared in return of income can’t be rolled back except by way of declared in return of income can’t be rolled back except by way of revising the return of income. revising the return of income. In view of the above fact In view of the above facts and ground the issue before us is the issue before us is that once income has been declared in the once income has been declared in the return of income, whether whether it becomes irreversible or is there any it becomes irreversible or is there any option for the assessee to claim assessee to claim for refund of the same without for refund of the same without revising the return of income. revising the return of income. The settled legal position as emerges position as emerges from the decision of the Hon’ble Supreme Court in Goetz India Ltd. Goetz India Ltd. from the decision of the Hon’ble Supreme Court in v/s CIT, [2006] 284 ITR 323(SC) v/s CIT, [2006] 284 ITR 323(SC) and the decision of the Hon’ble and the decision of the Hon’ble Jurisdictional High Court in CIT v/s Pruthvi Brokers and CIT v/s Pruthvi Brokers and Jurisdictional High Court in Shareholders Pvt. Ltd., [2012] 349 ITR 336 (Bom.) is that the Shareholders Pvt. Ltd., [2012] 349 ITR 336 (Bom Shareholders Pvt. Ltd., [2012] 349 ITR 336 (Bom appellate authority certainly has power and jurisdiction to entertain appellate authority certainly has power and jurisdiction to entertain appellate authority certainly has power and jurisdiction to entertain a fresh claim of the assessee otherwise then by way of revised a fresh claim of the assessee otherwise then by way of revised a fresh claim of the assessee otherwise then by way of revised return of income if the relevant fact for deciding such issue are return of income if the relevant fact for deciding such issue are return of income if the relevant fact for deciding such issue are available on record.

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8.1 We find that in the case of the n the case of the assessee, due to lack of time due to lack of time, the assessee could not reconcile the assessee could not reconcile during the course of search action during the course of search action and it was declared in the return of income and it was declared in the return of income. However owever, later on if the evidence supports the view that the jewellery found during the evidence supports the view that the jewellery found during the evidence supports the view that the jewellery found during the course of the search of the search action stand reconciled by way of jewellery by way of jewellery declared in the return of wealth tax filed prior to the date of the declared in the return of wealth tax filed prior to the date of the declared in the return of wealth tax filed prior to the date of the search, then the claim of the assessee cannot be dismissed merely then the claim of the assessee cannot be dismissed merely then the claim of the assessee cannot be dismissed merely for the reason that same was offered in the statement u/s 132(4) of for the reason that same was offered in the statement u/s 132(4 for the reason that same was offered in the statement u/s 132(4 the Act and declared in the return of income filed. the Act and declared in the return of income filed. The government The government cannot collect the tax amount which is not as per law. The fist cannot collect the tax amount which is not as per law. The cannot collect the tax amount which is not as per law. The appellate authority was expected to was expected to consider the claim consider the claim being an quasi-judicial authority authority and and take take into into consideration consideration the the circumstances during the course of search action, where it was circumstances during the course of search action circumstances during the course of search action possible on the part of the assessee to admit the jewellery as possible on the part of the assessee to admit the jewellery as possible on the part of the assessee to admit the jewellery as unexplained without reconciliation, though it was duly declared in unexplained without reconciliation, though it was duly declared in unexplained without reconciliation, though it was duly declared in wealth tax returns. The article 265 of the constitution also . The article 265 of the constitution also . The article 265 of the constitution also mandates that no taxes can be collected otherwise then authority of mandates that no taxes can be collected otherwise then authority of mandates that no taxes can be collected otherwise then authority of law. In the case, the Assessing officer has no authority to treat the In the case, the Assessing officer has no authority to treat the In the case, the Assessing officer has no authority to treat the jewellery as unexplained if same is already declared in wealth tax jewellery as unexplained if same is already declared in wealth tax jewellery as unexplained if same is already declared in wealth tax returns filed prior to the date of search. returns filed prior to the date of search. In the f In the facts and circumstances of the case, we feel it appropriate to admit returns of circumstances of the case, we feel it appropriate to admit circumstances of the case, we feel it appropriate to admit wealth tax filed by the assessee and wealth tax filed by the assessee and her family her family members as additional evidence. . Accordingly, we set-aside the finding of ld aside the finding of ld CIT(A) on the issue in dispute and CIT(A) on the issue in dispute and restore the matter back to the file restore the matter back to the file

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of the Ld. Assessing Officer for verifying whether the items of the of the Ld. Assessing Officer for verifying whether the items of the of the Ld. Assessing Officer for verifying whether the items of the jewellery/gold/silver found during the course of the search tally jewellery/gold/silver found during the course of the search tally jewellery/gold/silver found during the course of the search tally with the items of gold/ gold/silver, jewellery etc. declared by the assessee etc. declared by the assessee and her family members in the return of wealth tax filed prior to the members in the return of wealth tax filed prior to the members in the return of wealth tax filed prior to the date of the search, and then decide , and then decide the issue in accordance with in accordance with law. It is needless to mention that the assessee shall afforded It is needless to mention that the assessee shall afforded It is needless to mention that the assessee shall afforded adequate opportunity of being heard. In the result, the ground opportunity of being heard. In the result, the ground No. 1 opportunity of being heard. In the result, the ground of the appeal is accordingly allowed for statistical purposes. is accordingly allowed for statistical purposes. is accordingly allowed for statistical purposes.

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Property Amount Amount Flat at Brighton Flat at Brighton 4,02,40,060 4,02,40,060 Office premises at Appejay House Office premises at Appejay House 1,23,36,609 1,23,36,609 Propety at Lavassa 92 Propety at Lavassa 92 1,71,90,735 1,71,90,73 Property at lavassa 94 Property at lavassa 94 1,71,49,899 1,71,49,899 Property at Alibaug Property at Alibaug 5,02,696 5,02,696 Flat at Pune 20,72,866 20,72,866 50% share in Sakinaka Property 50% share in Sakinaka Property 2,37,027 2,37,027 12.1 The assessee offered income from house property from various The assessee offered income from house property from various The assessee offered income from house property from various properties at Rs.6,00,000/ properties at Rs.6,00,000/- per annum. The Assessing Officer per annum. The Assessing Officer estimated the deemed rent on the property @ 7% of the value of the estimated the deemed rent on the property @ 7% of the value of the estimated the deemed rent on the property @ 7% of the value of the property as ‘income from house property income from house property’ following the decision of following the decision of the Hon’ble Allahabad High Court in the case of M/s Radha Devi M/s Radha Devi the Hon’ble Allahabad High Court in the case of Dalmia v. CIT 125 ITR 134 (All) Dalmia v. CIT 125 ITR 134 (All). The detail of the rental value . The detail of the rental value deemed by the Assessing Officer is as under: deemed by the Assessing Officer is as under:

Property Amount Amount Office premises at Appejay House Office premises at Appejay House 1,23,36,609 1,23,36,609 Propety at Lavassa 92 Propety at Lavassa 92 1,71,90,735 1,71,90,735 Property at lavassa 94 Property at lavassa 94 1,71,49,899 1,71,49,899 Property at Alibaug Property at Alibaug 5,02,696 5,02,696 Flat at Pune 20,72,866 20,72,866 50% share in Sakinaka Property 50% share in Sakinaka Property 2,37,027 2,37,027 Total 4,94,89,832 4,94,89,832 7% of above 34,64,288 34,64,288

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Income already offered by assessee Income already offered by assessee 6,00,000 6,00,000 Income to be offered Income to be offered 28,64,288 28,64,288 12.2 Out of the total investment of Rs.1,44,09,475/ he total investment of Rs.1,44,09,475/- in properties, he total investment of Rs.1,44,09,475/ the Ld. CIT(A) upheld return on the investment the Ld. CIT(A) upheld return on the investment @ 7% @ 7% as deemed rental value on two property rental value on two property namely ‘Apeejay house’ and ‘residential namely ‘Apeejay house’ and ‘residential property at Pune’, which ’, which was computed to Rs.10 was computed to Rs.10,08,663/- as against Rs.6,00,000/ against Rs.6,00,000/- declared by the assessee and therefore, the declared by the assessee and therefore, the Ld. CIT(A) sustained the addition to the extent of Rs.4,08,663/-. Ld. CIT(A) sustained the addition to the extent of Rs.4,08,663/ Ld. CIT(A) sustained the addition to the extent of Rs.4,08,663/

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in respect of the claim has been filed by the assessee before the in respect of the claim has been filed by the assessee in respect of the claim has been filed by the assessee lower authorities or before us lower authorities or before us and therefore this claim of the and therefore this claim of the assessee stands rejected. assessee stands rejected.

14.1 The Second reasoning is reasoning is that as far as section s far as section 23(1) of the Act is concerned the lett lettable value of the properties is able value of the properties is less than the value assessed by the Assessing officer. As far as this argument of value assessed by the Assessing officer. As far as this argument of value assessed by the Assessing officer. As far as this argument of the assessee is considered, we find that the assessee is considered, we find that income from house property income from house property is measured as annual value of the pro is measured as annual value of the property. The determination of The determination of annual value has been contemplated in section 23 of the Act. For annual value has been contemplated in section 23 of the annual value has been contemplated in section 23 of the ready reference, said section is reproduced as ready reference, said section is reproduced as under: : “ Annual value how determined Annual value how determined. 23. (1) For the purposes of section 22, the annual value of 23. (1) For the purposes of section 22, the annual value of 23. (1) For the purposes of section 22, the annual value of any property any property shall be deemed to be— (a) the sum for which the property might reasonably be (a) the sum for which the property might reasonably be (a) the sum for which the property might reasonably be expected to let from year to year; or expected to let from year to year; or (b) where the property or any part of the property is let and (b) where the property or any part of the property is let and (b) where the property or any part of the property is let and the actual rent received or receivable by the owner in the actual rent received or receivable by the owner in the actual rent received or receivable by the owner in respect thereof is in respect thereof is in excess of the sum referred to in clause excess of the sum referred to in clause (a), the amount so received or receivable; or (a), the amount so received or receivable; or (c) where the property or any part of the property is let and (c) where the property or any part of the property is let and (c) where the property or any part of the property is let and was vacant during the whole or any part of the previous was vacant during the whole or any part of the previous was vacant during the whole or any part of the previous year and owing to such vacancy the actual rent rec year and owing to such vacancy the actual rent rec year and owing to such vacancy the actual rent received or receivable by the owner in respect thereof is less than or receivable by the owner in respect thereof is less than or receivable by the owner in respect thereof is less than the sum referred to in clause (a), the amount so received or the sum referred to in clause (a), the amount so received or the sum referred to in clause (a), the amount so received or receivable : Provided that the taxes levied by any local authority in Provided that the taxes levied by any local authority in Provided that the taxes levied by any local authority in respect of the property shall be deducted (irrespective of respect of the property shall be deducted (irrespective of respect of the property shall be deducted (irrespective of the previous year in which the liability to pay such taxes the previous year in which the liability to pay such taxes the previous year in which the liability to pay such taxes was incurred by the owner according to the method of was incurred by the owner according to the method of was incurred by the owner according to the method of

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accounting regularly employed by him) in determining the accounting regularly employed by him) in determining the accounting regularly employed by him) in determining the annual value of the property of that previous year in which annual value of the property of that previous year in which annual value of the property of that previous year in which such taxes are actually pai such taxes are actually paid by him. Explanation. Explanation.—For the purposes of clause (b) or clause (c) of For the purposes of clause (b) or clause (c) of this sub-section, the amount of actual rent received or section, the amount of actual rent received or section, the amount of actual rent received or receivable by the owner shall not include, subject to such receivable by the owner shall not include, subject to such receivable by the owner shall not include, subject to such rules as may be made in this behalf, the amount of rent rules as may be made in this behalf, the amount of rent rules as may be made in this behalf, the amount of rent which the own which the owner cannot realise. (2) Where the property consists of a house or part of a (2) Where the property consists of a house or part of a (2) Where the property consists of a house or part of a house which house which— (a) is in the occupation of the owner for the purposes of his (a) is in the occupation of the owner for the purposes of his (a) is in the occupation of the owner for the purposes of his own residence; or own residence; or (b) cannot actually be occupied by the owner by reason of (b) cannot actually be occupied by the owner by reason of (b) cannot actually be occupied by the owner by reason of the fact that owing to his the fact that owing to his employment, business or employment, business or profession carried on at any other place, he has to reside profession carried on at any other place, he has to reside profession carried on at any other place, he has to reside at that other place in a building not belonging to him, at that other place in a building not belonging to him, at that other place in a building not belonging to him, the annual value of such house or part of the house shall the annual value of such house or part of the house shall the annual value of such house or part of the house shall be taken to be nil. be taken to be nil. (3) The provisions of sub (3) The provisions of sub-section (2) shall not apply if shall not apply if— (a) the house or part of the house is actually let during the (a) the house or part of the house is actually let during the (a) the house or part of the house is actually let during the whole or any part of the previous year; or whole or any part of the previous year; or (b) any other benefit there from is derived by the owner. (b) any other benefit there from is derived by the owner. (b) any other benefit there from is derived by the owner. (4) Where the property referred to in sub (4) Where the property referred to in sub-section (2) section (2) consists of mor consists of more than 54[two houses]— (a) the provisions of that sub (a) the provisions of that sub-section shall apply only in section shall apply only in respect of 55[two] of such houses, which the assessee respect of 55[two] of such houses, which the assessee respect of 55[two] of such houses, which the assessee may, at his option, specify in this behalf; may, at his option, specify in this behalf; (b) the annual value of the house or houses, 56[other than (b) the annual value of the house or houses, 56[other than (b) the annual value of the house or houses, 56[other than the house or ho the house or houses] in respect of which the assessee has uses] in respect of which the assessee has exercised an option under clause (a), shall be determined exercised an option under clause (a), shall be determined exercised an option under clause (a), shall be determined under sub-section (1) as if such house or houses had been section (1) as if such house or houses had been section (1) as if such house or houses had been let.

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(5) Where the property consisting of any building or land (5) Where the property consisting of any building or land (5) Where the property consisting of any building or land appurtenant thereto is held as st appurtenant thereto is held as stock-in-trade and the trade and the property or any part of the property is not let during the property or any part of the property is not let during the property or any part of the property is not let during the whole or any part of the previous year, the annual value of whole or any part of the previous year, the annual value of whole or any part of the previous year, the annual value of such property or part of the property, for the period up to such property or part of the property, for the period up to such property or part of the property, for the period up to 57[two years] from the end of the financial year in whic 57[two years] from the end of the financial year in whic 57[two years] from the end of the financial year in which the certificate of completion of construction of the property the certificate of completion of construction of the property the certificate of completion of construction of the property is obtained from the competent authority, shall be taken to is obtained from the competent authority, shall be taken to is obtained from the competent authority, shall be taken to be nil. 14.2 Thus, for determination of the ALV under Thus, for determination of the ALV under section 23(1) section 23(1), the AO has first to find out the reasonably expected rent which the first to find out the reasonably expected rent which the first to find out the reasonably expected rent which the property might fetch by letting out from year to year and then this property might fetch by letting out from year to year and then this property might fetch by letting out from year to year and then this reasonably expected rent has to be compared with the annual rent reasonably expected rent has to be compared with the annual rent reasonably expected rent has to be compared with the annual rent received or receivable by the owner and if annual rent received or received or receivable by the owner and if annual rent received or received or receivable by the owner and if annual rent received or receivable as contemplated under receivable as contemplated under section 23(1)(b) is in excess of the is in excess of the reasonable rent expected from letting out the property from year to reasonable rent expected from letting out the property from year to reasonable rent expected from letting out the property from year to year as determined u/s 23(1)(a) the amount so received or year as determined u/s 23(1)(a) the amount so received or year as determined u/s 23(1)(a) the amount so received or receivable would the annual value for the purpose of e would the annual value for the purpose of e would the annual value for the purpose of section 22 of the Act.

14.3 The assessee has not let out this property and therefore there The assessee has not let out this property and therefore there The assessee has not let out this property and therefore there was no actual rent received a receivable as contemplated in section was no actual rent received a receivable as contemplated in section was no actual rent received a receivable as contemplated in section 23(1)(b) of the Act in respect of the two properties in 3(1)(b) of the Act in respect of the two properties in question. The 3(1)(b) of the Act in respect of the two properties in assessee has also not computed the sum for which these two assessee has also not computed the sum for which these two assessee has also not computed the sum for which these two properties could be reasonably expected to lead from year to year as properties could be reasonably expected to lead from year to year as properties could be reasonably expected to lead from year to year as contemplated under section 23(1)(a) of the contemplated under section 23(1)(a) of the Act. I In case of M.V. Sonavala V CIT 177 246 Sonavala V CIT 177 246 , the Bombay high Court has followed the the Bombay high Court has followed the

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decision of the Calcutta High Court in CIT V/s Prabhabati Bansali decision of the Calcutta High Court in CIT V/s Prabhabati Bansali decision of the Calcutta High Court in CIT V/s Prabhabati Bansali 141 ITR 419 and concluded that the municipal value is to be 141 ITR 419 and concluded that the municipal value is to be 141 ITR 419 and concluded that the municipal value is to be regarded as the sum for which the property might reasonably be regarded as the sum for which the property might reasonably regarded as the sum for which the property might reasonably expected to let from year to year that it was municipal ratable value expected to let from year to year that it was municipal ratable value expected to let from year to year that it was municipal ratable value which was unequivocally regarded as the sum for which the which was unequivocally regarded as the sum for which the which was unequivocally regarded as the sum for which the property might reasonably be expected to let from year to year in so property might reasonably be expected to let from year to year in so property might reasonably be expected to let from year to year in so far as section 23(1)(a (a) is concerned.

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“4. Learned counsel for the assessee invited our 4. Learned counsel for the assessee invited our 4. Learned counsel for the assessee invited our attention to a decision of the Kerala High Court in attention to a decision of the Kerala High Court in attention to a decision of the Kerala High Court in C. J. George v. CIT J. George v. CIT [1973] 92 ITR 137. That case is [1973] 92 ITR 137. That case is distinguishable. distinguishable. distinguishable. There, There, There, the the the municipal municipal municipal authorities authorities authorities determined the annual letting value at Rs. 18,000, determined the annual letting value at Rs. 18,000, determined the annual letting value at Rs. 18,000, though they were aware of the fact that the building though they were aware of the fact that the building though they were aware of the fact that the building was let out on an annual rent of Rs. 33,000. They took was let out on an annual rent of Rs. 33,000. They took was let out on an annual rent of Rs. 33,000. They took into consideration various circumstances and relevant into consideration various circumstances and relevant into consideration various circumstances and relevant factors such as the prevailing rent in the area and factors such as the prevailing rent in the area and factors such as the prevailing rent in the area and what a similar building of the same nature would fetch what a similar building of the same nature would fetch what a similar building of the same nature would fetch in that locality and then fixed the mont in that locality and then fixed the monthly rent at Rs. hly rent at Rs. 1,500. The High Court observed that it is inconceivable 1,500. The High Court observed that it is inconceivable 1,500. The High Court observed that it is inconceivable that the authority who has as much interest in that the authority who has as much interest in that the authority who has as much interest in imposing as much legitimate tax as possible would imposing as much legitimate tax as possible would imposing as much legitimate tax as possible would have ignored this aspect before fixing the annual have ignored this aspect before fixing the annual have ignored this aspect before fixing the annual letting value. In the present case th letting value. In the present case there is nothing to ere is nothing to indicate as to what circumstances or factors were indicate as to what circumstances or factors were indicate as to what circumstances or factors were actually taken into consideration by the municipal actually taken into consideration by the municipal actually taken into consideration by the municipal authorities. That case is distinguishable on facts. authorities. That case is distinguishable on facts. authorities. That case is distinguishable on facts. However, in our opinion, the determination of the However, in our opinion, the determination of the However, in our opinion, the determination of the annual letting value on the basis o annual letting value on the basis of 7 per cent. of the f 7 per cent. of the investment was a just and a fair method of investment was a just and a fair method of investment was a just and a fair method of determining the annual letting value for the year 1971 determining the annual letting value for the year 1971 determining the annual letting value for the year 1971- 72. 15.1 As the assessee has failed to adduce evidence in support of As the assessee has failed to adduce evidence in support of As the assessee has failed to adduce evidence in support of rent assessment by the municipal authorities and justification of rent assessment by the municipal authorities and justification of rent assessment by the municipal authorities and justification of the same as how same was how same was fair market rental value fair market rental value of property, we do not find any error in the order of the Ld. CIT(A) in upholding the do not find any error in the order of the Ld. CIT(A) in upholding the do not find any error in the order of the Ld. CIT(A) in upholding the estimation of annual lettable value estimation of annual lettable value (ALV) at 7% of the cost of at 7% of the cost of investment in property. Accordingly, the ground No. three of the investment in property. Accordingly, the ground No. three o investment in property. Accordingly, the ground No. three o appeal of the assessee is dismissed. appeal of the assessee is dismissed.

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without any incriminating material found during the course of the without any incriminating material found during the course of the without any incriminating material found during the course of the search. We have already h search. We have already held that the assessment year 2014 eld that the assessment year 2014-15 being abated assessment, the ratio of the Hon’ble Bombay High being abated assessment, the ratio of the Hon’ble Bombay High being abated assessment, the ratio of the Hon’ble Bombay High Court in the case of Continental Warehousing Corporation (supra) Court in the case of Continental Warehousing Corporation (supra) Court in the case of Continental Warehousing Corporation (supra) does not apply and therefore, the Assessing Officer is authorized to does not apply and therefore, the Assessing Officer is authorized to does not apply and therefore, the Assessing Officer is authorized to make the addition witho make the addition without the aid of the incriminating material ut the aid of the incriminating material also. The ground No. 1 of the appeal of the assessee is accordingly also. The ground No. 1 of the appeal of the assessee is accordingly also. The ground No. 1 of the appeal of the assessee is accordingly dismissed.

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BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai