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TMI Blog2014 (2) TMI 649X X X X Extracts X X X X X X X X Extracts X X X X ..... ately assessed in the hand of the estate then the tax payable would be lower than what has been paid by Smt. Adarsh kaur Gill because she has other income also, than the rental income – thus, CIT(A) has found that there is no reduction of tax on account of rent from sub-letting of property assessed in the hand of Smt. Adarsh Kaur Gill as an individual. The dispute has a long and chequered history spanning over half a century - Despite courts having tried to resolve the controversy many times, the basic dispute between the parties is coming under challenge again and again, albeit under new and in genuine grounds - it is only under exceptional grounds that any court or authority can re-open the dispute – thus, the appeal of the revenue is devoid of merits and dismissed – Decided against Revenue. - ITA No. 2853 to 2860/Del/2004, ITA No. 3124/Del/2004, CO No. 187/Del/2004, 60 to 66/Del/2007 - - - Dated:- 7-2-2014 - Shri J. S. Reddy And Shri A. T. Varkey,JJ. For the Appellant : Shri D. K. Mishra, CIT DR For the Respondent : Smt Bharat Beriwal, Adv. ORDER Per A. T. Varkey, Judicial Member These appeals are preferred by the revenue as well as by two of the legal h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Estate Abnash Kaur are wrong perverse invalid, opposed to the evidence etc. (v) That the appellant craves leave to add, to amend or alter or to substitute or to withdraw any of the grounds of the appeal or before the date of disposal of the appeal." 3. The grounds raised in the cross objections Nos. 60-66/Del/2007 by the legal heirs Smt Surjit Kaur Gill and Shri. Gurmit Singh Gill is as follows:- "1. That the order of the learned CIT(A) is erroneous both on facts and in law. 2. That the learned CIT(A) even after holding that the estate continues to be undivided erred in directing the exclusion of rent received by Smt. Adarsh Kaur Gill from the alleged subletting of property No. 3, South End Road, New Delhi in clear violation of the provisions of section 168 of the IT Act, 1961. 3. That the learned CIT(A) failed to appreciate that the original of the alleged lease agreement dated 1811.1958 between late Smt. Abnash Kaur and Smt. Adarsh Kaur Gill was not produced at any stage of the proceedings and the same cannot be read into evidence more so when the original document has not seen the light of the day even till date. 4. That the learned CIT(A) erred both on facts and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 17.01.1956 and registered it on 30.01.1957, which is the bone of contention in this case and several cases going on from the year 1961 onwards. 7. She (Smt. Abnash Kaur) decided to construct a floor on the afore said property and for financing the same she mortgaged the said property in favour of Smt. Sushila Daphtary and Shri Anil Daftary for a sum of Rs. 1,98,000/-. Besides the entire property along with the additional construction was insured by Smt. Abnash Kaur for a total value of Rs. 2,50,00 for a year in November 1959. 8. In the year 1957, Shri Seth Shiv Prasad passed away. Then on 11th July 1960 the officials from Recovery Department of District Collection Officer, Delhi visited the property for attaching the same towards the recovery on income tax dues amounting to Rs. 23,37,547.45 from the alleged late Shri Seth Shiv Prasad. It was alleged that in order to overcome the situation, the said property was shown as being let out by Smt. Abnash Kaur to her sister Smt. Adarsh Kaur with a right to sublet the same; but no lease deed was filed as part of the objection before the District Collection Officer, nor before the concerned Income Tax Officer. In fact the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Rs. 3,60,000/- was given back to Smt. Sushila and Shri Anil Daphatry and they redeemed the mortgage. The entire amount was supposed to have been paid by Smt. Adarsh Kaur from May 1978 to 1979. The operative portion of the compromise decree by the Hon ble Punjab and Haryana High Court, Circuit Bench at Delhi in RFA (OS) No. 11/1971is as follows:- "In order to avoid any possible dispute amongst the appellants themselves, it is recorded that all the other appellants will be bound to contribute to any sums that may be paid by Mrs. Adarsh Kaur Gill pursuant to this compromise, and that after payment she will be entitled to recover their proportionate share from the other appellants. If the compromise is carried out, then on payment of the of the amounts hereby agreed to be paid, the mortgage deeds and little deeds shall be returned to Mrs. Adarsh Kaur Gill and the mortgaged property shall be deemed to have been redeemed by her and she will be sub mortgaged to rights of the mortgages, and shall be entitled to recover the full decretal amount from the other appellants as if this compromise has not been made and the appeal had been dismissed with interest accrued due till the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ested for grant of certificate to register 61% share in the undivided properly of late Smt. Abnash Kaur. The other 39% share is claimed to have been devolved to Smt. Abnash Kaur Gill her daughter Smt. Noorien Kaur Gill. Smt. Abnash Kaur acquired properly known as Bungalow No. 3, South End Road, New Delhi for a consideration of Rs. 2,50,000/- vide sale deed dated 18.01.56 registered as document No. 215, Additional Book No. 1, Vol. No. 354 at pages 117 t0 138 on 30.01.57 in the office of Sub-Registrar, New Delhi. Smt. Abnash Kaur expired on 10.06.76 leaving behind the following beneficiaries under her registered will dated 06.02.73 bequeathing 1/6th share each to her six beneficiaries in the above said property: Name of Beneficiaries Relationship to Original Division as per will of Abnash Kaur K. K. Bindal Son (1/6) 16.67 Ajit Singh Brother (1/6) 16.67 Surjit Kaur Gill d Sister (1/6) 16.67 G. S. Gill Nephew (1/6) 16.67 Adarsh Gill Sister (1/6) 16.67 Noorien Kaur Gill Niece 16.67 Shri K. K. Bindal S/o Late Smt. Abnash Kau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Shri Ajit Singh (brother and executor of the Will) in his benamidar declaration made in 1985 stated that the lease dated 18.11.1958 was prepared in the month of March 1961 and it was a pre-dated document, letting out Smt. Abnash Kaur s property to Smt. Adarsh Kaur with a right to sub-let it and also notes that Revenue Authorities vide its order in Assessment Year 1959-60 held that the said lease deed was a false/ fake document. 17. The Assessing Officer has also taken into account that on 29.11.1990, brother of late Abnash Kaur, Ajit Singh made again a benamidar declaration u/s 281A and also moved a petition u/s 264 of the Act declaring therein that also he reiterated that the lease was a sham transaction and had endorsed the stand taken by the revenue in this respect was correct. In the said background the Assessing Officer observes "it therefore, stand all over these years beginning from Assessment Year 1959-60, as assessed by the department, this property actually belong to Smt. Abnash Kaur and on her death would be assessed in the hands of legal heirs or executor of her estate". The Assessing Officer notes that on the expiry of Mr. Kamal Kishore Bindal (son) on 15.12.1995 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Late Abnash Kaur whose surviving legal heirs are namely Surjeet Kaur Gill, Adarsh kaur Gill, Gurmeet Singh Gill, Nurain Kaur gill. Assessment Year Income assessed Income-tax payable 1991-92 Rs. 1,31,250/- Rs. 1,73,070/- 1994-95 Rs. 8,84,800/- Rs. 10,64,545/- 1995-96 Rs. 11,61,600/- Rs. 11,49,660/- 1996-97 Rs. 11,61,600/- Rs. 10,41,770/- 1997-98 Rs. 11,81,000/- Rs. 9,46,602/- 1998-99 Rs. 11,68,000/- Rs. 9,01,358/- 1999-00 Rs. 10,95,000/- Rs. 5,04,160/- 2000-01 Rs. 13,38,000/- Rs. 6,09,090/- 21. Aggrieved by the said consolidated Assessment order u/s 168/147 of the Act dated 25.03.2003 the legal heirs of the Estate of Late Abnash Kaur, Smt Adarsh Kaur and her daughter Nurain Kaur Gill (party on one side) filed an appeal and Smt Surjit Kaur Gill, the substituted executor of the Will and her son Gurnir Singh Gill (party of the other side) filed intervening petition and appealed the said order before the ld CIT(A), who vide a consolidated order dated 26.03.2004 disposed of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raud was played on the authorities and the Court and it vitiates the entire assessments done earlier too. It was further submitted that the estate of late Smt. Abnash Kaur, i.e., property no 3, South End Road, is still undivided and the rental income received by the legal heirs on account of this property is liable to be reassessed in the hands of the estate and the Assessing Officer was right and the ld CIT(A) erred in deleting the addition made by the Assessing Officer in this regard and therefore it was prayed that the Assessing Officer s order may be restored. 25. The Counsel appearing for Smt. Sujit Kuar Gill who is the substituted executor of the Will, and her son G.S. Gill supported the departments action and reiterated that the lease deed was pre-dated and a fake one and therefore a fraud has been committed by Smt. Adarsh Kuar, therefore they justified the action of the department. 26. We have heard the rival submissions and perused the records carefully. We find that for the assessment year 1964-65, the ITO fixed as annual value at 55,000/- as annual rent received by the assessee (Smt. Abnash Kaur owner); in appeal the Appellate Asst. Commissioner upheld the action of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l to refer the following questions said to be question of law as arising out of the order of the Tribunal dated 28.04.1975 in ITA No. 3009 of 1973-74 to the High Court of Delhi at New Delhi for its opinion:- "1. Whether on the facts and in the circumstances of the case the Tribunal was justified in law in disregarding the annual value of the property determined by the Municipal authorities while determining the annual value for purposes of assessment under section 22 and 23 of the Income Tax Act, 1961 and solely bearing its determining on the rent charged by the owner from her sister ? 2. Whether on the facts and in the circumstances of the case the Tribunal was justified is not assessing the income of the house property in the hand of the assessee on the basis of the annual letting value of the property on the ground that her sister was being assessed on a similar amount under the head "other sources" by sub-letting the property? 3. Whether on the facts and in the circumstances of the case the Tribunal was justified in reducing the annual letting value of the property from Rs. 60,000/- to Rs. 10,000/- for purposes of assessment to income-tax under the provisions section 22 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it in actual physical possession of the portion of the property allotted to him/her. If the partition of the property by metes and bounds is not feasible, then the property by metes and bounds is not feasible, them the property may ordered to be sold by public auction through Court and proceeds thereof by divided between the parties to the suit in accordance with their share and entitlement. (B) Pass a preliminary decree for partition of the movable assets belonging to the estate of Smt. Abnash Kaur, as mentioned in the Schedule to the plaint and, thereafter, pass a final decree and give to each of the party to the suit his/her share of the said property. In case it is not feasible to distribute the movable assets belonging to the estate of Smt. Abnash Kaur in the in the hands of defendants Nos. 1 and 2 to each of the beneficiaries, as per the share and entitlement, then the said movable assets may be ordered to be sold by public auction through this Hon ble Court and the proceeds thereto may be divided amongst the parties, as per their share and entitlement. (C) Pass a decree for rendition of accounts and enquiry into the same with respect to the rental income of the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is set aside and application of the appellant under Order VII Rule 11 CPC is allowed to other extent reliefs (B) to (F) are concerned holding that these reliefs are time barred and, therefore, cannot be claimed by the plaintiff. Suit shall now proceed only qua relief (A), (H) (I)." 33. From the said order of the Division Bench of the Hon ble High Court, it can be noticed that there was a specific prayer in the suit for declaration that there has been no lease deed executed by Smt. Abnash Kaur in favour of Smt Adarsh Kaur and Smt Adarsh Kaur is not a lessee in the Estate and also that Smt. Adarsh Kaur is not a subrogate of mortgage deed the prayers are again reproduced. (E) Pass a decree for declaration that there has been no lease deed executed by Smt. Abnash Kaur in favour of Defendant No. 1 and that defendant No. 1 is not a lessee in the property, 3, South End Road, New Delhi, and she is not entitled to give the said property to any person on sub- lease basis; (F) Pass a decree of declaration to the effect that defendant No. 1 is not a subrogate of the mortgage deeds executed by late Smt. Abnsh Kaur with respect to the property in favour of Smt. Sushila Daphtary and her s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer in 1960 has been found correct by the declaration made by Sh. Ajit Singh u/sec. 281 of the IT Act in the year 1985 and 1990. Besides, there happened to be reduction of tax on account of rent from sub-letting of property assessed in the hands of Smt. Adarsh Kaur as individual. AO also has held that the alleged lease deed was violative of sec. 17(1)(D) of the Indian Registration Act as it is neither properly stamped nor registered and would be void. AO finally came to the conclusion that the estate of late Smt. Abnash Kaur, i.e., property no 3, South End Road, is still undivided and the rental income received by the legal heirs on account of this property is liable to be reassessed in the hands of the estate. And the Assessing Officer included the rental income received by Smt. Adarsh Kaur on account of the sub-letting the property No. 3, South End Road, New Delhi in the hands of the surviving legal heirs of the Estate and accordingly made additions as stated in para 20 above. 39. Aggrieved by the said order, an appeal was preferred wherein, the ld CIT(A) in his order which is impugned in this appeal has specifically dealt with each of these reasoning. 40. With ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 50% of the expenses incurred by her as mentioned in the preceding paragraph from the lessor." In her Will late Smt. Abansh Kaur has made reference that Sh. Ajit Singh is authorized to receive the rent of Rs. 1500/- per menson from property 3, South End Road, New Delhi from Smt. Adarsh Kaur Gill. This makes it clear that during her lifetime Smt. Abnash Kaur never terminated the tenancy rights given through the lease agreement to Smt. Adarsh Kaur Gill and she never, intended to terminate the lease agreement even after her death because otherwise there was no purpose to authorize Sh. Ajit Singh, executor of the Will to receive Rs. 1500/- p.m. as rent from Smt. Adarsh Kaur Gill. The Assessing Officer has not brought anything on record to prove that the tenancy rights given by Smt. Abansh Kaur Gill during her life time were terminated by her during her lifetime or even after her death except relying on the statement of Sh. Ajit Singh who was one of the witness to the lease agreement. Perusal of the declaration made by Sh. Ajit Singh indicates that Sh. Ajit Singh has not denied his signatures on the lease agreement. The writing of this document has not been denied even by Sh. Aji ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the contention that the estate of late Smt. Abnash Kaur, i.e., property no 3, South End Road, is still undivided and the rental income received by the legal heirs on account of this property is liable to be reassessed in the hands of the estate. This contention was also rightly rejected by the Appellate Authority stating that:- c) The Assessing Officer has ultimately come to the conclusion that the estate of late Smt. Abnash Kaur i.e. property No. 3, South End Road, New Delhi is still undivided and the rental income received by the legal heirs on account of this property is liable to be reassessed in the hands of the estate. As discussed above this conclusion drawn by the Assessing Officer cannot be considered as logical or cogent because as per Will and as statement filed before the competent authority discussed above the property owned by the estate is still on rent with Mrs. Adarsh Kaur Gill at Rs. 1500/- per month and following the decision of Hon ble ITAT Bench Delhi for different years in the case of Smt. Abansh Kaur as discussed above, it is held that the rental income assessable in the hands of the estate would be only the extent of Rs. 1500/- p.m. which is the rent p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of fraud. As such, we are constrained to reject such grounds, without adverting to the merits of such grounds. We may hasten to add that in our humble view, such challenges ought to be raised before the same forum, if at all. We are fortified by the decision of the Calcutta High court in Texmaco Ltd. VGs. ITO (1992) tax. L. R.. 788 where in the Hon ble High court held and observed as under:- "11. In view of the binding authorities, I need not inquire into the rationale of this seemingly dishonestly favouring principle. But in reality, it is not dishonesty that is being favoured but a finality. It may be that a document is bogus or sham; at the stage of reopening of assessment, it is only the case of the department that the document is sham. 12. That case is not admitted by the assessee. What the department is enjoined from doing after four years is not to treat the sham document as genuine, but merely to desist from reopening issue of the sham nature of the document. Such is the case with all provisions of limitation when as apparently very good money suit is dismissed as beyond three years, it is done so not because the legislature has framed as law for deleting good claims ..... X X X X Extracts X X X X X X X X Extracts X X X X
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