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Income Tax Appellate Tribunal, DELHI BENCH “A”, NEW DELHI
Before: SHRI R. K. PANDA & SHRI SUDHANSHU SRIVASTAVA
Assessee by : Shri Kapil Goel, Adv. Department by : Shri Raghunath, Sr. DR Date of hearing : 19-09-2018 Date of pronouncement : 19-09-2018 O R D E R
PER R. K. PANDA, AM :
The above two appeals filed by the assessee are directed against the separate orders dated 08.12.2014 of the CIT(A)- 1, Gurgaon relating to assessment years 2009-10 and 2010-11. Since common issues are involved in both the appeals, therefore, these were heard together and are being disposed of by this common order. (A.Y. 2009-10) : 2. Facts of the case, in brief, are that the assessee is an individual and the original assessment u/s 143(1) was completed in this case vide order dated 30.12.2011 determining the total income at Rs.1,21,43,250/-. Subsequently, the Assessing Officer noted that the assessee has declared loss from house property amounting to Rs.9,08,104/- wherein he has claimed deduction u/s 24(a) of Rs.54,000/- and section 24(b) of Rs.10,34,104/-. From the Sale Deed, he noted that the property is jointly owned by the assessee and his wife Smt. Arti Sharma. The Assessing Officer, referring to the provisions of section 26, held that the assessee is having 50% ownership of the said property. Therefore, the assessee’s share in loss is 50% i.e. Rs.4,54,052/- as against Rs.9,08,104/- allowed earlier. Therefore, he issued notice u/s 154 and thereafter restricted such loss of Rs.4,54,052/- as against Rs.9,08,104/- allowed earlier as per claim in the return of income.
Before the ld. CIT(A), the assessee challenged the validity of section 154 proceedings, which was rejected by the ld. CIT(A). So far as disallowance of 50% loss is concerned, it was argued that although the property was in joint name with his wife but the same was for succession purpose and the entire consideration was paid by the assessee himself out of sale proceeds of residential house which was held in his name. There was no contribution from his wife towards purchase of the house property since she was only a house wife and did not have any taxable income and had never filed her return of income.
Relying on various decisions, it was argued that the Assessing Officer was not justified in restricting the loss from house property by 50% of such loss.
3.1 However, the ld. CIT(A) was not satisfied with the arguments advanced by the assessee. Distinguishing the various decisions cited before him, he held that the assessee did not have any evidence to substantiate the fact that he was the sole owner and his wife has no control over the said property. He accordingly held that the Assessing Officer has rightly disallowed 50% of the loss from income under the head “income from house property”.
Aggrieved with such order of the ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds :-
“Section 154 wrongly invoked by Ld. A.O. :
1. 1. That on the facts and in the circumstances of the case and in law, learned CIT- A erred in not quashing the notice issued u/s 154 and consequential order passed u/s 154 where the issue sought to be rectified do not meet and satisfy the jurisdictional pre-requisite of phrase “mistake apparent from record” and seriously erred in distinguishing the applicable precedents.
2. That on the facts and in the circumstances of the case and in law, learned CIT- A erred in not declaring the notice issued u/s 154 and consequential order passed u/s 154 as nullity where the issue sought to be rectified is not only debatable, arguable and investigative but also there are two views possible on the same. Total non-appreciation of section 26 dehors the prevailing facts.
3. That on the facts and in the circumstances of the case and in law, learned CIT- A erred in not deleting the tenuous addition of Rs.454,052 on account of 50% disallowance of loss under the head house property being enamored by fact that property is co-owned (as per sale deed) dehors the fact that whole consideration for subject house property was paid by assessee himself and wife's name was inserted for succession and administrative purposes.
4. That on the facts and in the circumstances of the case and in law, learned CIT- A erred in not deleting the tenuous addition of Rs.454,052 on account of 50% disallowance of loss under the head house property by erroneously and wrongly applying section 26 of the Act which do not advance the case of Ld AO. That the appellant craves leave to add, to, amend, modify, rescind, supplement or alter any of the grounds stated herein above, either before or at the time of hearing of this appeal.”
The ld. counsel for the assessee, at the time of hearing, did not press grounds of appeal no.1 and 2 for which the ld. DR has no objection.
Accordingly, the above grounds are dismissed as not pressed.
So far as grounds of appeal no.3 and 4 are concerned, the ld. counsel for the assessee, referring to the various pages of the Paper Book, submitted that the assessee vide his submissions dated 26.02.2013, 22.02.2013, 08.02.2013, 28.11.2013 and 06.12.2013 had categorically stated before the Assessing Officer that the assessee himself had paid the full consideration towards the house property situated at 82-E Space, Unitech Nirvana Country, Near South City-II, Gurgaon from his bank and paying the loan amount from his bank account. His wife is the second applicant for the purpose of security only and the assessee is only the owner and not his wife. He submitted that despite time and again he has mentioned the same fact before the Assessing Officer, however, he has not considered the same and the ld. CIT(A) has also not appreciated the facts properly. He accordingly submitted that the order of the ld. CIT(A) be set-aside and the grounds raised by the assessee be allowed.
The ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the ld. CIT(A). He submitted that when the assessee is the co-owner along with his wife, therefore, in absence of any evidence to show that the assessee has full control over the property and his wife has no control over the said property, the ld. CIT(A) was fully justified in restricting the loss by 50%. He accordingly submitted that the grounds raised by the assessee should be dismissed.
We have considered the rival arguments made by both the sides and perused the orders of the authorities below. We find the Assessing Officer in the 154 proceedings referring to provisions of section 26 restricted the loss from house property to 50% of such loss on the ground that the property in question is jointly held by the assessee along with his wife as per the registered Sale Deed. We find the ld. CIT(A) upheld the action of the Assessing Officer. It is the submission of the ld. counsel for the assessee that the entire consideration was paid by the assessee out of the sale proceeds of the property held by him. It is also his submission that the name of his wife was mentioned in the Sale Deed only for the purpose of safety and security and his wife has not contributed anything towards purchase of the house property since she was a house wife and has never filed her return of income. We find although the assessee in his submissions before the Assessing Officer on various dates has categorically mentioned that entire consideration has been paid by him and his wife is only the second applicant for the purpose of security, however, we find nothing has been mentioned by the Assessing Officer in the body of the assessment order.
There is absolutely no whisper on the submissions made by the assessee on various dates, copies of which are placed in the Paper Book from pages 5 to 14.
Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to give his finding regarding the contribution made by the assessee and his wife towards purchase of the said property and then decide as to whether the loss has to be apportioned as per the provisions of section 26 when the second co-owner i.e. wife of the assessee in the instant case, has not contributed anything towards purchase of the house property and her name was mentioned only for the purpose of safety, security and succession. Needless to say, the Assessing Officer shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly.
The grounds raised by the assessee are accordingly allowed for statistical purposes.
Grounds raised by the assessee are as under :-
“Disallowance of loss under the head house property Rs.601,769/-.
1. That on the facts and in the circumstances of the case and in law, learned CIT- A erred in not deleting the tenuous addition of Rs.601,769/- on account of 50% disallowance of loss under the head house property being enamored by fact that property is co-owned (as per sale deed) dehors the fact that whole consideration for subject house property was paid by assessee himself and wife's name was inserted for succession and administrative purposes.
That on the facts and in the circumstances of the case and in law, learned CIT- A erred in not deleting the tenuous addition of Rs.601,769/- on account of 50% disallowance of loss under the head house property by erroneously and wrongly applying section 26 of the Act which do not advance the case of Ld AO. That the appellant craves leave to add, to, amend, modify, rescind, supplement or alter any of the grounds stated herein above, either before or at the time of hearing of this appeal.”
After hearing both the sides, we find the grounds raised by the assessee in this appeal are identical to grounds of appeal no.3 and 4 raised by the assessee in for assessment year 2009-10. We have already decided the issue and restored the same to the file of the Assessing Officer for adjudication of the issue afresh with certain directions. Following similar reasoning, the above grounds raised by the assessee are also allowed for statistical purposes.
In the result, both the appeals filed by the assessee are partly allowed for statistical purposes.
Order pronounced in the open Court at the time of hearing itself i.e. on this 19th day of September, 2018.