GOWRI SHANKAR GUPTA,HYDERABAD vs. INCOME TAX OFFICER, WARD-2(3), HYDERABAD

Succinctly stated, the assessee had e-filed his return of income for the A.Y.2017-18 on 24.07.2017, declaring an income of Rs.47,74,430/-. Subsequently, the case of the assessee was selected for limited scrutiny for two reasons, viz.(i) the amount paid or credited in his “Form 26AS” was significantly more as compared to the income from house property as was declared in the return of income; and (ii) that there were large value of cash deposits made during the demonetization period.

During the course of the assessment proceedings, the Assessing Officer (“the AO”) observed that the assessee in the demonetization period had made cash deposits of Rs.35.13 lacs in his bank account No.118001000030501 with Indian Overseas Bank. It was further observed by him that the aforesaid bank account held by the assessee with Indian Overseas Bank was not disclosed by him in the return of income. As the assessee had failed to come forth with any explanation regarding the source of the cash deposit of Rs.35.13 lacs (supra) in his bank account, therefore, the AO held the same as having been sourced out of his unexplained money u/s 69A of the Act. Apart from that, the AO observed that though the assessee as per 26AS had received an amount of Rs.11,02,500/- towards rent from M/s Lead Space, but had not disclosed the same in his return of income. On being queried, the assessee though claimed that he had not received the aforesaid income, but he failed to corroborate the same. Accordingly, the AO made an addition of the undisclosed rent receipt in the hands of the assessee and vide his order u/s 143(3) dated 10.12.2019 determined his income at Rs.93,93,456/-.

Aggrieved, the assessee carried the matter before the CIT(A), but, without success. Apropos the addition of cash deposits of Rs.35.13 lacs (supra), it was the claim of the assessee that the same was sourced out of the opening cash balance of Rs.36,66,031/- available with him on 31.03.2016. However, the CIT(A) did not find favor with the said explanation of the assessee. The CIT(A) observed that the assessee in the “Schedule AL” of his return of income for the A.Y.2016-17 had, inter alia, claimed the availability with him of cash in hand of Rs.1,06,092/- on 31.03.2016. Accordingly, the CIT(A) based on the aforesaid facts rejected the explanation of the assessee regarding the source of the cash deposits of Rs.35.13 lacs (supra) made in his bank account during the subject year.

Apropos the rental income of Rs.11,02,500/- received by the assessee from M/s Lead Space, it was the assessee’s claim that the same was liable to be assessed under the head “income from house property” as against “income from other sources” as had been so done by the AO. Although the assessee in support of his aforesaid contention had pressed into service certain judicial pronouncements, but the same did not find favor with the CIT(A). The CIT(A) was of the view that as the assessee had received the rental income from displaying of the hoarding and not from letting out of the roof, therefore, the same was rightly assessed by the AO under the head “income from other sources”. Also, the CIT(A) observed that as the assessee despite specific direction had failed to place on record a copy of the “agreement” which could reveal whether the amount was received for usage of space or from erecting/placing of hoarding, therefore, the judicial pronouncements relied upon by him could not be acted upon. Accordingly, the CIT(A) approved the view taken by the AO that the rental receipt from placing the hoarding was rightly brought to tax under the head “income from other sources”. For the sake of clarity, the observations of the CIT(A) on both the aforesaid issues is culled out as under : “6.1. During the appellate proceedings, the appellant has not disputed regarding taxing the rental income of Rs.11,02,500/- received from M/s Lead Space, however, he has claimed that the same should be taxed under the head “Income from House Property” as against taxed by the AO under the head “Income from Other Sources” and deduction u/s 24 of the Act should to be allowed at 30% of rental receipts of Rs.3,30,750/- should be allowed. It has been claimed by the appellant that rent received was against Mounting Antenna and hence income thereupon should be treated as “Income from House Property”. The appellant relied upon the following judicial pronouncements in this regard i. Nayagara Hotels & Builders Pvt Ltd Vs. CIT [2015] 60 taxmann.com 83 (Delhi) ii. Manpreet Singh Vs. ITO (ITA No. 3976/Del/2013) iii. Bhimanagr Co-op Housing Society Ltd Vs. ITO (ITA No. 423/Ahd/2012)

The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us.

We have heard the learned authorized representatives of both parties, perused the material available on record as well as considered the judicial pronouncements that were pressed into service by the Ld.AR to drive home his contentions. Shri Sashank Dundu, Ld.AR for the assessee, at the threshold of the hearing of the appeal, submitted that the AO had grossly erred in treating the cash deposits of Rs.35.13 lacs (supra) made by the assessee in his bank account, as having been sourced out of his unexplained money u/s 69A of the Act. Elaborating on his contention, the Ld.AR submitted that the assessee had inadvertently in his return of income for the A.Y.2016-17, had wrongly mentioned the cash in hand available with him on 31.03.2016 as Rs.1,06,092/-. The Ld.AR submitted that the subject cash deposit of Rs.35.13 lacs (supra) was made by the assessee out of the cash in hand available with him on 31.03.2016. The Ld.AR to buttress his claim had drawn our attention to the “balance sheet” of the assessee for F.Y.2015-16, which revealed cash in hand of Rs.36,66,031/- on 31.03.2016, Page 12 of APB. Also, the Ld.AR to impress upon us that the assessee in the preceding years too had substantial cash in hand available with him drawn support from the “balance sheets” of the assessee for F.Y.2013-14, F.Y. 2014-15 and F.Y. 2016-17. The Ld.AR submitted that though the assessee had substantial cash in hand of Rs.36.66 lacs (approx.) available with him on 31.03.2016, but inadvertently, the same was mentioned in the “Schedule AL” of his return of income for the A.Y.2016-17 as Rs.1,06,092/-. On a specific query by the Bench, whether the “balance sheet” for the F.Y.2015-16 and those for the preceding years were filed with/formed part of the returns of income of the assessee for respective years, the Ld.AR answered in negative.

Apropos the rental income received by the assessee from M/s Lead Space, that was brought to tax by the A.O as his income under the head “Other sources”, the Ld.AR submitted that as the assessee had received the said income from letting out of the terrace, where the hoarding was put, therefore, the same was liable to be assessed under the head “house property”. The Ld.AR to buttress his aforesaid claim had drawn support from “Form 26AS” for the subject year, which, inter alia revealed that the TDS on the rental receipts in question was deducted u/s 194I(b) of the Act. The Ld.AR had further drawn support from certain judicial pronouncements.

Per contra, the Ld. DR relied upon the orders of the lower authorities. The Ld. DR submitted that as the assessee had in his return of income for the A.Y.2016-17 claimed that cash in hand of Rs.1,06,092/- was available with him on 31.03.2016, therefore, he cannot be permitted to state a fact contrary to the record and claim availability of cash in hand of Rs.36.66 lacs (supra) on 31.03.2016. Elaborating further, the Ld. DR submitted that the “balance sheet” filed by the assessee for the year ending 31.03.2016 could not be acted upon as the same was not filed along with the return of income and had no evidentiary value.

We have thoughtfully considered the contentions of the Ld. Authorized Representatives of both parties in the backdrop of the orders of the lower authorities.

Apropos the claim of the Ld.AR that the cash deposit of Rs.35.13 lacs (supra) made in the assessee’s bank account during the year under consideration was sourced out of the cash in hand of Rs.36.66 lacs (supra) that was available with him on 31.03.2016, we are unable to concur with the same. As the assessee in the “Schedule AL” of his return of income for the A.Y.2016-17, had claimed the availability with him of cash in hand of Rs.1,06,092/- on 31.03.2016, therefore, he cannot be permitted to turn around and to state a fact contrary to the record that cash in hand of Rs.36.66 lacs (supra) was available with him on 31.03.2016. In so far the “balance sheet” as on 31.03.2016 relied upon by the assessee is concerned, wherein, he had tried to project the availability of cash in hand of Rs. 36.66 lacs (supra) on 31.03.2016, we find no substance in the same. We say so, for the reason, that though the Ld.AR had drawn support from the aforesaid “balance sheet”, but as observed by the Ld. D.R, and rightly so, as the same was never filed by the assessee along with the return of income, therefore, the same does not have any evidentiary value. Accordingly, the aforesaid “balance sheet” pressed into service by the assessee in his attempt to establish the availability of cash in hand of Rs. 36.66 lacs (supra) with him on 31.03.2016, in the absence of any evidentiary value cannot be admitted to dislodge his disclosure of possessing cash in hand of Rs. 1,06,092/- made in the “Schedule AL” of his return of income for the subject year. We thus, find no infirmity in the view taken by the lower authorities, who had rightly rejected the claim of the assessee regarding the sources of the cash deposit of Rs.35.13 lakhs (supra) and held the same as having been sourced out of his unexplained money u/s 69A of the Act, uphold the same.

Apropos the claim of the assessee that the rental income received by him from M/s Lead Space, i.e. for putting up the hoarding at the terrace, we find no infirmity in the view taken by the lower authorities, who had rightly brought the same to tax as his income under the head “Other sources”. We say so, for the reason, that a perusal of the “agreement” dated 01.10.2014 executed between the assessee and M/s Lead Space, reveals beyond doubt that the same was for the installation of one advertisement hoarding on the terrace of the property owned by the assessee. On a careful perusal of the terms of the aforesaid “agreement”, it transpires that the assessee had agreed to the erection of one hoarding of size 70”x40” on the terrace of his property, i.e., Plot No.1-11-89, located at S.P.Road, Begumpet, Secunderabad. Also, in unequivocal terms, it is stated in the “agreement” that an amount of Rs.10,00,000/- per annum would be received by the assessee for ground rental for putting up the hoarding on his aforementioned property. Considering the facts as are discernible from the aforesaid “agreement” dated 01.10.2014, we are of the firm conviction that as the assessee had received the rental income of Rs.11,02,500/- for putting up of the hoarding on the aforesaid property and not for letting out of the terrace or any part thereof, the same had rightly been brought to tax in his hands as income from other sources. Although, the Ld.AR had relied upon the judgment of Hon’ble High Court of Delhi in the case of Niagara Hotels & Builders (P.) Ltd. Vs. Commissioner of Income Tax [2015] 60 taxmann.com 83 (Delhi), but the same being distinguishable on facts, thus, would not carry its case any further. In the said case, the assessee which owned the terrace floor of a building had entered into an “agreement” with a telecom company and had given the said floor on licence as space for mounting the tower and antenna. As the assessee in the case before us had not entered into any agreement for letting out any floor/space, but had executed an agreement, permitting the other party to erect one hoarding on the terrace of his property, therefore, the reliance placed by the Ld.AR on the aforesaid judicial pronouncement is misconceived. Rather, we find that the facts involved in the case of the assessee before us are covered by the judgment of Hon’ble High Court of Kolkata in the case of Mukherjee Estate (P.) Ltd. Vs. CIT [2000] 113 Taxmann 313 (CAL), wherein, it was held that the income from hoarding received by the assessee was assessable as its income from other sources. Also, a similar view had been taken by the Hon’ble High Court of Calcutta in the case of CIT Vs. Kanak Investments (P.) Ltd. [1974] 95 ITR 419 and CIT Vs. Modee Mfg.Co. (P.) Ltd. [1986] 159 ITR 270 (CAL). We thus, find no infirmity in the view taken by the CIT(A), who had approved the view taken by the A.O that the rental income received by the assessee from putting up/erecting the hoarding on his property, was to be brought to tax as its income under the head “other sources”, and thus, uphold the same.

Resultantly, the appeal filed by the assessee being devoid and bereft of any substance is dismissed. 15th मई, 2025 को खुली अदालत में सुनाया गया आदेश।