SHRADDHA JAIN,NEW DELHI vs. ACIT, NEW DELHI

Date of Hearing 10.02.2016 Date of Pronouncement 25.02.2016 ORDER PER DIVA SINGH, JM The present appeal has been filed by the assessee assailing the correctness of the order dated 13.10.2015 of CIT(A)-XVIII, New Delhi pertaining to 2012-13 assessment year on the following grounds:-

1. “The learned Commissioner of Income Tax (Appeals) has grossly erred both on facts and in law in confirming the order of assessment determining the total income of the appellant at Rs. 11,25,050/- against the returned income of Rs. 4,15,041/-, despite the fact that the Learned Commissioner of Income Tax (Appeals) in para 5.6 has observed that Rs. 7,10,014/- was rightly assessed in the Assessment Year 2014-2015. He thus ought to have deleted the addition of Rs. 7,10,014/- i.e. Rs. 3,62,547/- and Rs. 3,47,468/~ being rent and interest on unpaid rent.

2. That the learned Commissioner of Income Tax (Appeals) has further erred in holding that in the income offered by the assessee of Rs. 4,15,041/- (a sum of Rs. 78,891/- representing the amount of tax deducted at source i.e., Rs. 40,283/- towards rent and Rs. 38,608/- by way of interest) though has been taxed yet no credit of the said sum could be allowed to her, despite the fact the Assessing Officer had granted such credit of tax deducted at source. 3. That on the aforesaid findings of the Commissioner of Income Tax (Appeals) thus the said sum of Rs. 78,891/- could not have been assessed to tax as the income of the Assessment Year 2012-2013 and ought to have been excluded from the total income of the assessee.

I.T.A .No.-6673/Del/2015

5. That the learned Commissioner of Income Tax (Appeals) has failed to consider that Rule 37 BA (3) of the Income Tax Rules, 1962 could not override the provisions of section 199 of the Act and thus the credit of TDS, in respect of which income has been assessed to tax, was required to be allowed to the assessee since on the first principle, the amount of TDS represented the amount of income of the assessee and was so assessable in that assessment year and as such credit of tax deducted at source should be granted to the assessee. 6. Further the levy of interest u/s 234B of the Income Tax Act, 1961 is also in disregard of the fact that the tax had been deducted at source and such amount of TDS could not have been disregarded, while computing the interest leviable under any of the provision of the Income Tax Act. It is therefore prayed that the addition sustained of Rs. 7,10,014/- directed to be deleted. It be further held that the amount of tax deducted at source of Rs. 78,891/- be granted to the assessee and no interest u/s 234B of the Income Tax Act, 1961 was thus leviable. (emphasis provided)

2.1. Accordingly the assessee was asked to show cause why the difference of Rs.3,62,547/- on account of rent receipt and Rs.3,47,467/- on account of interest received should not be disallowed and added to the taxable income of the assessee during the year under consideration.

2.2. In response to the said query, the assessee is found to have given the following submissions by letter dated 13.01.2015 before the AO:-

" assessee’s grandfather (Nana) expired on 02-12-1995 leaving behind him a dispute with Goodyear India Ltd. to whom he had let out certain properties on rent during his lifetime. After his demise the said property was vacated by M/s Goodyear India Limited by a court order. The Court further granted certain compensation as additional rent to be paid and interest on the additional rent. However, there was a dispute between the legal heirs regarding the distribution of rent & interest thereon and the matter was referred to the Courts in execution petition. During the year under consideration M/s Goodyear India Ltd, deposited an amount of rent & interest in the Courts out of which a sum of Rs.3,62,547/- was deposited on account of rent to the share of the assessee and Rs.3,47,467/- on account of interest to the share of the assessee. M/s Goodyear India Ltd. also deducted tax at source amounting-to Rs.4,283/- & Rs.38,608/- respectively out of aforesaid sums and deposited the same with the Department. These amounts of tax deducted at source are also appearing in From 26As. Since the disputes with respect to the amounts belonging to the assessee were pending in the Courts, assessee could not claim the aforesaid sums as its income for the year under consideration."

2.3. Not convinced with the explanation offered, the AO concluded as under:-

“The submission made by the assessee has been considered and found untenable because of the income arises/received in the AY 2012-13 as per the Court Order and the TDS was deducted on the income. The assessee has admitted itself that it has received the amount. The assessee has also made the claim of TDS. Since the assessee has not Page 3 of 6

I.T.A .No.-6673/Del/2015 shown income, I therefore the amount of Rs.3,62,547 is added back under the head income from house property and Rs.3,47,467/- under the head income from other sources. Penalty proceedings u/s 271(1)(c) is initiated separately. Addition (362547+347467=7,10,014/-)

“In the light of the above, the assessing officer is directed to withdraw the credit of TDS, if at all given in the assessment and consider the same as and when it is offered as income in the future assessments.”

3.1. The Ld. Sr. DR was required to point out as to how the order could be considered to be a speaking order on the issues involved as the assessee before the CIT(A) is found to have raised the following grounds as are found extracted in page 2 of the impugned order:-

I.T.A .No.-6673/Del/2015

5. That the learned Assessing Officer has erred in withdrawing interest of Rs.12,298/- u/s 271 (i)(c) of the Income Tax Act, 1961.

“In this connection, the assessee has made a contention that even if it is held that the amount is assessable in the current year, the assessing officer ought to give allowance of 30% as per the provisions of section 25B. The claim is reasonable and just, but in view of my decision that the amount is not to be assessed in the current year, the matter remains academic.” (emphasis provided) 3.3. However, on reading the above he made efforts to find out where such a conclusion had been drawn. Finally giving up it was his submissions that although it appears that the addition has not been sustained however, in the face of the assessee’s grievance it does appear that the finding in the impugned order is ambiguous. The arguments of the Ld. AR on the other hand was that the issues have not been considered ground-wise by the CIT(A) and the order is ambiguous and confusing which position was also not disputed by the Ld. Sr.DR.

4. Accordingly, on a consideration of the material available on record and in the light of the submissions of the parties before the Bench, I am of the view that in the peculiar facts and circumstances of the case, it would be necessary

I.T.A .No.-6673/Del/2015 to set aside the impugned back to the file of the CIT(A). The Ld. CIT(A) is directed to decide the same denovo ground-wise, bringing out clearly the conclusion after setting out the reasoning for the conclusion drawn so as to enable the affected party to assail its correctness if so warranted on facts. The conclusion without a relevant discussion setting out the reasoning for the conclusion cannot stand judicial scrutiny. In view of the above, the grounds raised by the assessee are allowed for statistical purposes and the issues are restored back to the file to the CIT(A) with the direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard.