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TMI Blog2017 (4) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The whole arrangement of rent payment by the assessee to her mother is a sham transaction which was undertaken by the assessee with the sole intention to claim exemption of HRA u/s 10(13A) of 1961 Act in order to reduce tax liability and hence in our considered view, exemption u/s 10(13A) of the Act cannot be allowed to the assessee as the payments towards rent are not genuine payment . The evidences on record are speaking loudly which is just opposite to what the assessee is contending.- Decided against assessee - I. T. A. No.1983 / Mum/ 2015, I. T. A. No.1984 / Mum/ 2015, I. T. A. No.1985 / Mum/ 2015 - - - Dated:- 30-3-2017 - SHRI C. N. PRASAD, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat House Rent Allowance(HRA) of ₹ 2,52,040/- received by the assessee from her employer was claimed as exempt by the assessee as per provisions of Section 10(13A) of the Act. The assessee was asked by the AO vide SCN dated 14-02-2013 as to why HRA claimed as exempt should not be added to income of the assessee and consequently brought to tax under the provisions of 1961 Act. The assessee submitted that she has paid a rent of ₹ 31,500/- per month to her mother in cash. The A.O. observed that the assessee has shown her residential address as 301, Tropicana, 7 Bungalow, Near nana-nani Park, Andheri(W), Mumbai( hereinafter called Tropicana ) in return of income filed with Revenue which address also appears in the ration card as well as the bank account maintained with Saraswat Co-op. Bank, Juhu Branch. The AO also observed that the assessee has claimed this property at Tropicana as a self occupied property(SOP) and has also claimed loss from self occupied house property being interest on housing loan amounting to ₹ 13,888/-. Thus it was observed by AO that assessee was claiming loss from self occupied property and also claiming exemption u/s.10(13A) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d notice u/s 133(6) of the Act on mother of the assessee Smt. P.B.Dorwani who was present at the said premises. The Ward Inspector in his report stated that Smt. P.B. Dorwani is staying in a one BHK residential flat having an area of 400 sq. ft. at Neha Apartments . The Ward Inspector reported that Smt P.B.Dorwani has three daughters and one of them Ms. Vimla who is unmarried is staying in the said flat at Neha Apartments with Smt. P.B. Dorwani and another daughter Ms. Meena Vaswani i.e. assessee is staying at Tropicana with her family consisting of husband and daughter , while the third daughter Ms Kamla is staying at Thane. The Inspector also visited premises at 301, Tropicana, 7 Bungalow, Near nana-nani Park, Andheri(W), Mumbai which is only five minutes walking distance from the residential flat of Mrs. P B . Dorwani and confirmed that the assessee Mrs. Meena D. Vaswani is staying at 301, Tropicana, 7 Bungalow, Near nana-nani Park, Andheri(W), Mumbai which is a 2 BHK flat for the last many years with her husband and her daughter. The AO observed that ward inspector report clearly reveals that the assessee is staying at Tropicana and not with her mother Smt P B Dorwan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0(13A) and 24(1) of 1961 Act. The AO also held that there is no leave and license agreement and there is no proof of stay of assessee with her mother, thus, genuineness of payment of rent is not established by the assessee. The A.O. accordingly came to the conclusion that the assessee is neither staying in her mother's flat, nor paying any rent to her and therefore the assessee s claim of exemption of HRA u/s.10(13A) is totally wrong and bogus and accordingly AO added the amount of ₹ 2,52,000/- to the total income of the assessee which was claimed as exempt by the assessee u/s 10(13A) of 1961 Act, vide assessment order dated 28-03-2013 passed by the AO u/s 143(3) of 1961 Act. 5. Aggrieved by the assessment order dated 28-03-2013 passed by the A.O. u/s 143(3) of 1961 Act , the assessee filed first appeal before the ld. CIT(A). 6. Before the ld. CIT(A), the assessee submitted that the assessee is staying at A-3, Ground floor, Neha Apartment, Seven Bunglows, Andheri, Mumbai on rental basis by paying monthly rent of ₹ 31,500/- to her mother Mrs P B Dowani as the said apartment is owned by assessee s mother Mrs P B Dorwani. The assessee submitted that she was payin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld. CIT(A) observed that the assessee has a bigger flat owned by her at 301, Tropicana, 7 Bungalow, Near nana-nani Park, Andheri(W), Mumbai in which the assessee and her husband and children reside and no pressing need is shown by the assessee as to why the assessee stayed with her mother in a small flat of 400 square feet at Neha Apartments while leaving her bigger flat at 301, Tropicana, 7 Bungalow, Near nana-nani Park, Andheri(W), Mumbai with family, which is five minute walking distance away. The assessee s claim that Ms. Vimla was not staying with Mrs. P.B. Dorwani as she has own flat at Bhayander and also the claim that the assessee shifted back to Tropicana in assessment year 2013-14 and was staying with her mother was a self serving statement which are not supported by any evidence on record. The learned CIT(A) also gave credence to inspector report and statement of Secretaries and Watchman of the society who had confirmed that the assessee was not staying with her mother but was staying at 301, Tropicana, 7 Bungalow, Near nana-nani Park, Andheri(W), Mumbai with her husband and daughter and observed that the said statements could not be rebutted by the assessee. Henc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stays at Thane while the assessee stays with Mrs P B Dorwani at Neha Apartments for which rent of ₹ 31,500/- per month is paid by the assessee. It is submitted that rent was paid regularly to Mrs P B Dorwani against which rent receipts were obtained and the said rent was paid in cash. It was submitted that the AO treated rent receipts as self serving documents. It was submitted that rent paid by the assessee was not treated as genuine by the authorities below. The learned counsel reiterated the submissions as were made before lower authorities. The assessee also filed affidavit executed by her as well separate affidavit filed by her mother declaring the whole facts along with rent receipt which were filed along with written submissions which are placed in file. The assessee prayed for allowability of claim of exemption of HRA u/s 10(13A) of 1961 Act . 9. The ld. D.R. on the other hand submitted that the assessee had claimed deduction u/s 10(13A) of 1961 Act which is a wrong claim as no rent was paid by the assessee and the said alleged rent of ₹ 31,500/- per month being paid to mother was shown only to take exemption of HRA u/s 10(13A) of 1961 Act. The A.O. had con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty by the assessee and benefit of interest payments were also availed by the assessee to claim loss under the head income from house property . It was submitted by learned DR that no reply was filed against the issue of notice u/s 133(6) of the Act to Mrs P B Dorwani which was duly served on Mrs P B Dorwani. The assessee did not produce her mother before the authorities below was the contention of learned DR. . It was submitted by learned DR that whereas now the assessee has filed before the tribunal an affidavit executed by Mrs P B Dorwani which is to be rejected as the same is filed for the first time before ITAT after 4 years. It was submitted that this constitute additional evidence which should not be admitted by tribunal. The learned DR submitted that Ward Inspector had made detailed enquiry with Secretaries and watchman of both the societies which clearly reveals that the assessee is not staying with her mother at Neha Apartments rather the assessee is staying in her own flat at Tropicana . It is also submitted by learned DR that the contention of the assessee that the unmarried daughter Ms Vimla is staying in Bhayender and not with her mother at Neha Apartments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d residential property and interest on housing loan availed for purchase of said flat at Tropicana is claimed as loss under the head Income from House Property. The assessee has declared the said address of Tropicana as her residential address with Bank, in ration card as well in return of income filed with Revenue. The assessee has also admitted during the assessment proceedings that she is living with her husband and daughter which is emanating from the assessment order of the AO. The assessee s mother Smt. P B Dorwani owns a 1 BHK residential flat of 400 square feet at Neha Apartments which is just five minutes walking distance from Tropicana . Smt P B Dorwani has three daughters namely assessee who is married , Ms Kamla who is staying at Thane and one unmarried daughter Ms Vimla. The assessee has received HRA of ₹ 2,52,000/- from her employer as a part of her remuneration which was claimed as exempt u/s 10(13A) of the Act on the ground that she had paid rent of ₹ 31,500/- per month to her mother Mrs. P B Dorwani towards renting of her residential flat situated at Neha Apartments , wherein assessee has claimed that she was staying with her mother at Neha A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notices u/s 133(6) of 1961 Act nor any reasons were forthcoming for non production of Mrs P B Dorwani before the authorities below, more so opportunities were accorded to the assessee by the AO and even at the stage of appellate proceedings before learned CIT(A) to substantiate its claim. The assessee has now filed affidavit of her mother Mrs P B Dorwani for the first time before the tribunal stating that the assessee has paid rent of Rs. ₹ 31,500/- to her mother during the previous year relevant assessment year and residential flat at Neha Apartment was taken on rent by the assessee from her mother Mrs. P B Dorwani . The said affidavit filed by the assessee of her mother as well an affidavit of her ( both placed in file ) constitute additional evidences for which no application has been made by the assessee for admission of additional evidences as contemplated u/r 29 of Income- tax(Appellate Tribunal) Rules, 1963 nor any reasons have been specified for non furnishing of the same before authorities below. However, on perusal of the content of the two affidavits it is seen that the reiteration is made of the contentions of the assessee before lower authorities which were alr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The burden of proving that he had a ticket is on him. Section 6 of Indian Evidence Act, 1872 is also relevant in this context which is reproduce hereunder: Section 6 in The Indian Evidence Act, 1872 6. Relevancy of facts forming part of same transaction.-Facts which, though not in issue, are so connected with a fact in issue as to form part of the same transaction, are relevant, whether they occurred at the same time and place or at different times and places. Illustrations (a) to (c) **** (c) A sues B for a libel contained in a letter forming part of a correspondence. Letters between the parties relating to the subject out of which the libel arose, and forming part of the correspondence in which it is contained, are relevant facts, though they do not contain the libel itself. (d) The question is, whether certain goods ordered from B were delivered to A. The goods were delivered to several intermediate persons successively. Each delivery is a relevant fact. The doctrine of Res gestae will set in. The assessee could not produce any evidence arising in the normal course of happening of transaction of hiring of premises such as leave and license ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... salary but the same is not sufficient to claim exemption u/s 10(13A) of 1961 Act. Looking into all these factual matrix of the case before us, we are of considered view that the whole arrangement of rent payment by the assessee to her mother is a sham transaction which was undertaken by the assessee with the sole intention to claim exemption of HRA u/s 10(13A) of 1961 Act in order to reduce tax liability and hence in our considered view, exemption u/s 10(13A) of the Act cannot be allowed to the assessee as the payments towards rent are not genuine payment . The evidences on record are speaking loudly which is just opposite to what the assessee is contending. Even if we eschew report of inspector , then also material on record do not inspire confidence that the transaction of rent was a genuine transaction as discussed by us in detail above. The right of cross examination is not absolute. The assessee has to first discharge its primary onus cast under law and if the same stood duly discharged which is not rebutted by authorities , but despite that then also the authorities proceed to put assessee to prejudice solely relying on the basis of incriminating statement recorded of third p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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