Shri Vasumal Jethani v. Commissioner Of Income Tax Jaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 74 / 2006 Shri Vasumal Jethani ----Appellant Versus Commissioner Of Income Tax Jaipur ----Respondent _____________________________________________________ For Appellant(s) : Mr. P.K. KasliwalFor Respondent(s) : Ms. Parinitoo Jain _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VINIT KUMAR MATHURJudgment 31/01/2017 1. By way of this appeal, the appellant has assailed thejudgment and order of the Tribunal whereby Tribunal has partlyallowed the appeal of the department and reversed the order ofCIT(A). 2.This court while admitting the appeal on 17.9.2007 hadframed following substantial question of law:- “Whether the Income Tax Appellate Tribunal wasjustified in not allowing the deduction under Section24(1) of the Income Tax Act, 1961 while adding theincome of Rs.1,08,000/- towards rent of guest house?” 3.The facts of the case are that the assessee is an aged personand is a property dealer since long. He has two sons, namely, ShriJai Kishan and Shri Ashok, who are having the brokerage incomefrom the property dealing. No regular books of account weremaintained. Returns were filed on estimate basis. A survey wasconducted on06.02.1997 at his business and residential premises.Statements of the assessee, his son Shri Jai Kishan and one Shri Tanvir were recorded. On the basis of the material gathered at thetime of survey, various additions were made, which were partlyrestricted/deleted by the CIT(A) in appeal. 4.Counsel for the appellant Mr. Kasliwal has taken us to theorder of the CIT(A) wherein it has been held as under:-order of the CIT(A) wherein it has been held as under:- 3.The facts of the case are that the assessee is an aged personand is a property dealer since long. He has two sons, namely, ShriJai Kishan and Shri Ashok, who are having the brokerage incomefrom the property dealing. No regular books of account weremaintained. Returns were filed on estimate basis. A survey wasconducted on06.02.1997 at his business and residential premises.Statements of the assessee, his son Shri Jai Kishan and one Shri Tanvir were recorded. On the basis of the material gathered at thetime of survey, various additions were made, which were partlyrestricted/deleted by the CIT(A) in appeal. 4.Counsel for the appellant Mr. Kasliwal has taken us to theorder of the CIT(A) wherein it has been held as under:-order of the CIT(A) wherein it has been held as under:- “The contention/ details in respect of this ground ofappeal, were carefully considered. My predecessor inA.Y. 1997-98 had not accepted the claim of theguesthouse having been let out Shri Tanvir “in absenceof any written agreement and other collateralevidence. However, from the aforementioned details, itemerges that the income from the guesthouse is to beassessed under the income from house property,particularly as the ownership remained with theappellant. The then CIT(A), Ajmer, had estimated anoccupancy rate of 70% of the ten double bed room,one single bad room and two dormitories bed roomsand estimated that the net income per month shouldbe round Rs.16,500/-. In absence of documentaryevidence about the receipts of the appellant beingRs.10,000/- only per month, it appears that theestimate of Rs.16,500/- per month was not unjust orexcessive. A such, the income from guesthouse comesto Rs.1,98,000/- (Rs. 16,500/- x 12) which afterdeduction u/s 24(1) @ 25%) comes to Rs. 1,48,500/-.The income declared is Rs. 90,000/-. Therefore, theaddition is restricted to Rs. 58,500/- and relief of Rs.49,500/- is allowed in respect of this ground.”appeal, were carefully considered. My predecessor inA.Y. 1997-98 had not accepted the claim of theguesthouse having been let out Shri Tanvir “in absenceof any written agreement and other collateralevidence. However, from the aforementioned details, itemerges that the income from the guesthouse is to beassessed under the income from house property,particularly as the ownership remained with theappellant. The then CIT(A), Ajmer, had estimated anoccupancy rate of 70% of the ten double bed room,one single bad room and two dormitories bed roomsand estimated that the net income per month shouldbe round Rs.16,500/-. In absence of documentaryevidence about the receipts of the appellant beingRs.10,000/- only per month, it appears that theestimate of Rs.16,500/- per month was not unjust orexcessive. A such, the income from guesthouse comesto Rs.1,98,000/- (Rs. 16,500/- x 12) which afterdeduction u/s 24(1) @ 25%) comes to Rs. 1,48,500/-.The income declared is Rs. 90,000/-. Therefore, theaddition is restricted to Rs. 58,500/- and relief of Rs.49,500/- is allowed in respect of this ground.” 5.However, he further contended that while reversing thefindings of CIT(A), no cogent reasons are given by the Tribunal. 6.Counsel for the respondent Ms. Parinitoo Jain has supportedthe order of the Tribunal and contended that no interference iscalled for. 7.We have heard counsel for the parties. 8.The Tribunal has considered the finding of CIT(A) in para no.7 and observed as under:- “By considering the totality of the facts andcircumstances of the case, it appears that there is noagreement between the assessee and Shri Tanvir forletting out the guest house on the fixed rent, asclaimed by the assessee. In the previous assessmentyear, the rent was estimated by the CIT(A) at 5.However, he further contended that while reversing thefindings of CIT(A), no cogent reasons are given by the Tribunal. 6.Counsel for the respondent Ms. Parinitoo Jain has supportedthe order of the Tribunal and contended that no interference iscalled for. 7.We have heard counsel for the parties. 8.The Tribunal has considered the finding of CIT(A) in para no.7 and observed as under:- “By considering the totality of the facts andcircumstances of the case, it appears that there is noagreement between the assessee and Shri Tanvir forletting out the guest house on the fixed rent, asclaimed by the assessee. In the previous assessmentyear, the rent was estimated by the CIT(A) at Rs.16,500/- per month and the same was accepted bythe assessee as no further appeal was filed by him.When it is so, then we find no infirmity with the orderof the AO, who has made the addition by followingearlier order of the CIT(A). Therefore, we set aside theorder of the CIT(A) and restore the order of the AO forthe assessment year under consideration. The additionof Rs.1,08,000/- is hereby sustained by allowing thisground in favour of the Department.” 9.In that view of the matter, the matter is required to beremitted back to the tribunal. 10.Accordingly, the appeal stands disposed of. 11.Both the parties will appear before the Tribunal on or before6.3.2017. The Tribunal will dispose of the same within threemonths. (VINIT KUMAR MATHUR)J. (K.S. JHAVERI)J. Brijesh 73.