9911796707
TMI Blog2017 (4) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... Additional Commissioner of Income Tax - 26 (1), Mumbai passed u/s 143(3) of the Income Tax Act, 1961 for the Assessment Years 2009-10 to 2011-12 on the following amongst the other grounds: 1. The learned Assessing Officer has erred in disallowing HRA exemption u/s l0(13A) amounting to Rs. 2,21,640/- (for A.Y. 2009-10) Rs. 2,52,000/- (For A.Y. 2010-11) & Rs. 2,58,000/- (For A.Y. 2011-12) without appreciating the facts of the case in the right perspective. 2. The ground of appeal is without prejudice to the other." 3. First, we shall take up the appeal filed by the assessee in ITA No. 1984/Mum/2015 for assessment year 2010-11a as we have observed that AO while making disallowance of House Rent Allowance exemption u/s 10(13A) of 1961 Act for the assessment year 2009-10 has relied upon the assessment order dated 28-03-2013 passed by AO u/s 143(3) of 1961 Act for the assessment year 2010-11, based upon which notice dated 05-04-2013 u/s 148 of 1961 Act was issued by AO for reopening of assessment for assessment year 2009-10. 4. The Brief facts of the case as they will unfold are in a very narrow compass . The assessee is a chartered accountant working as Senior Finance and Account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as submitted that since this transaction is between mother and daughter, no formal agreement was executed. However, rent receipts were collected for income tax purpose as an evidence of payment of rent. The assessee submitted that it complied with all the requirements as stipulated u/s 10(13A) of 1961 Act and there is no violation by the assessee while claiming exemption u/s 10(13A) of 1961 Act. The A.O. rejected the contention of the assessee and held that the assessee needs to prove that she hired an accommodation and used it and paid the rent.The contention of the assessee that payment of rent was a family affair and no leave and license agreement was entered was rejected by the AO as it was observed by the AO that if the rent is paid the relation between the parties was a contractual relation even if it is between family members also, and it needs to be supported by documentary evidence to prove the same. It was observed by the AO that if the rent was paid by the assessee to help her mother who was old and sick to meet her day to day living cost does not entitle assessee to claim exemption of HRA u/s 10(13A) of 1961 Act. The A.O. deputed Ward Inspector to make an enquiry to v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bile bills by cheque. The assessee also could not produce Mrs. P.B. Dorwani for examination before the AO nor Mrs. Dorwani filed any details subsequent to serving of notice u/s. 133(6) of the Act. The A.O. after verifications ,also found that Mrs. P.B. Dorwani was not filing any return of income with Revenue for last six assessment years. However, on 21-03-2013 the assessee filed a copy of the return of income filed with the Revenue by Mrs. P.B. Dorwani for assessment year 2011-12 and the return of income was found to be filed for the first time on 21st March, 2013 itself which shows that return of income was filed by Mrs P B Dorwani with Revenue only because the verification was being done by the AO regarding the offering of the rent received from assessee by her mother Mrs. P B Dorwani as income in the hands of Mrs. P.B. Dorwani. The A.O. observed that the assessee's mother Mrs. P.B. Dorwani receives pension from her employer and rental income if received has to be offered for taxation by her. It was observed that Mrs. P.B. Dorwani had not filed any return of income for the relevant assessment year disclosing any income from house property till this issue was raised during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n does not hold ground, since the watchman keeps changing on a monthly basis. 5. Statement of Mr. Girish Raheja and Mr. Govind Thawani, if any in the capacity of a Secretary, deserves to be condemned in totality since the statement of the Secretary cannot be treated as "Evidence" especially since he is neither authorized to keep constant watch about the movement of any member residing in or moving out nor his statement for past events can be considered as "Evidence" by any stretch of imagination. 6. It is worth mentioning that even the Inspector did not record the statement of Mrs. P.B. Dorwani on his visit on 12.03.2013." Thus, the assessee submitted that the conclusion drawn by the Inspector in his report was purely on surmises and conjectures and that no adverse inference could be drawn against the assessee without any documentary evidence to support the inspector report. The assessee submitted that confirmations obtained by the Inspector from the Secretary of the societies and watchman cannot be inferred as crucial evidence by any stretch of imagination. The assessee contended that the rent receipts are valid documentary evidence for claiming exemption of HRA u/s 10(13A) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .O. . The ld. Counsel for the assessee submitted that the A.O. doubted the genuineness of rent paid by the assessee and deputed Ward Inspector for verification and the Ward Inspector submitted his report on 12th March, 2013 wherein Ward Inspector stated that the asssesse is not staying at premises at 'Neha Apartments' which is owned by mother of the assessee and rather the assessee is staying at 301, Tropicana, 7 Bungalow, Near nana-nani Park, Andheri(W), Mumbai with her husband and daughter which residential flat at 'Tropicana' is owned by assessee jointly with her husband . The enquiry has been made by Ward Inspector from the watchman and Secretaries of the Societies who stated that the assessee is staying at 301, Tropicana, 7 Bungalow, Near nana-nani Park, Andheri(W), Mumbai and not at residence owned by mother Mrs P B Doorwani at 'Neha Apartment' for which rent was paid by the assessee. The distance between the residence owned by the assessee at 'Tropicana' and her mother residence at 'Neha Apartments' is only five minute walking distance. It is submitted by learned counsel for assessee that the assessee's mother is a old and sick lady. The learned counsel for the assessee subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich rent is being allegedly paid by the assessee. The ld. D.R. submitted that no intimation has been given to the society of 'Neha Apartments' by the assessee about the stay of the assessee with her mother. On verification by the A.O., it was revealed that Mrs. P.B. Dorwani was not filing any return of income with Revenue for last six assessment years and only after enquiry was started to verify genuineness of HRA exemption claimed by the assessee on 14-10-2012, the said Mrs P B Dorwani i.e. mother of the assessee filed return of income for assessment year 2011-12 only on 21st March, 2013. It was submitted that the AO verified ration card, bank statements and also return of income filed by the assessee and the assessee is showing her residence at 301, Tropicana, 7 Bungalow, Near nana-nani Park, Andheri(W), Mumbai in the afore-stated documents and not at 'Neha Apartments' as her residence. It is submitted by learned DR that the assessee has claimed exemption of HRA u/s 10(13A) of 1961 Act and also assessee has shown apartment at 301, Tropicana, 7 Bungalow, Near nana- nani Park, Andheri(W), Mumbai as self occupied property and deduction u/s 80C of 1961 Act was claimed towards the ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requirement imposed by law on the assessee to inform Society of 'Neha Apartments' that the assessee is staying with her mother at her mother's flat at 'Neha Apartment'. The assessee's mother is a senior citizen who is drawing meager pension of Rs. 8000 per month and her taxable income will be less even if rental income is included.It was submitted that there is no finding by lower authorities that income of mother of the assessee exceeded minimum amount not chargeable to tax and is having an taxable income. Ward Inspector's report cannot be relied upon. It was submitted that no evidence was called for by the authorities below to prove that the unmarried daughter of Mrs P B Dorwani namely Ms. Vimla stays at Bhayander. 11. We have considered rival contentions and perused all the materials placed on record. We have observed that the assessee is an individual being a qualified chartered accountant working with East India Hotels Limited as Senior Finance and Accounts Executive. The assessee husband incidentally is also qualified chartered accountant. The couple had one daughter. The assessee owned a 2BHK residential flat at 'Tropicana' which is jointly owned by the assessee with her h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et by her husband and withdrawal from her bank account is minimum as cheques were issued only for mobile bill payments. The assessee has produced the rent receipt to substantiate that the rent has been paid by the assessee. It is also noticed that the mother of the assessee has not filed return of income with Revenue disclosing the said rental income received from the assessee. No return of income has been filed by the mother of the assessee since last six assessment years. The ward inspector was deputed by the AO to verify the contentions of the assessee who has reported that the assessee is staying at 'Tropicana' and not at 'Neha Apartments' . The report was submitted by Inspector after personally visiting both the residential flats at 'Tropicana' and 'Neha Apartments' and after making due enquiries from Secretaries and watchman of the two societies of 'Tropicana' and 'Neha Apartments' .It was also stated by the inspector in his report that flat at 'Neha Apartment' is one BHK flat of 400 square feet wherein mother of the assessee namely Mrs P B Dorwani lives with her unmarried daughter Ms Vimla. Notices u/s 133(6) of 1961 Act were served on mother of the assessee Mrs P B Dorwani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are incurred by her husband. The assessee could not explain and reconcile said cash payments of rent with known sources of cash as the cash was not withdrawn from bank. This rent receipt prepared by her mother does not inspire confidence. There are no other evidences available which relate to the period when the transaction of hiring of the premises by the assessee in the normal course of renting of premises was progressing . The evidences at the time of transactions which are normal to are relevant and cogent evidence to substantiate the assessee's contentions. These facts are especially in the knowledge of the assessee and burden is on the assessee to bring out these evidences to substantiate her contentions that rent paid was genuine but such evidences are not forthcoming . The assessee did not come forward with any evidence to substantiate its contentions except rent receipt which is not backed by any known sources of cash held by the assessee as there were no cash withdrawal from bank account of the assessee Section 106 of Indian Evidence Act, 1872 is relevant which stipulates as under: "Section 106 in The Indian Evidence Act, 1872 106. Burden of proving fact especially wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e jointly with husband , the assessee also did not bring any cogent evidence to substantiate that she had taken the residential flat at 'Neha Apartment' on rent from her mother. The mother of the assessee has also not filed return of income since last six assessment years and said rental income was not brought to tax in the hands of mother of the assessee . The assessee could also not able to bring on record any cogent evidence to prove that her un-married sister Ms Vimla was living at Bhayander. Even on touchstone of preponderance of human probabilities , it is quite improbable that the assessee was living with her mother at 'Neha Apartments' and paying her substantial rent of Rs. 31,500/- per month for a small flat of 1 BHK of 400 square feet while her own house was at just five minute walking distance at 'Tropicana' . It is also improbable that the assessee being a married lady will leave her husband and daughter and start living with mother at another residential flat which is just five minute walking distance and pay huge rent per month. It is different matter that the assessee may look after her old and sick mother by frequent visits but this theory of rent as set out by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
