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TMI Blog2005 (2) TMI 437X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment framed by the AO and the additions made therein. 2. The learned CIT(A) failed to appreciate that the assessment order dt. 5th March, 2001, passed under s. 143(3) by the AO was without jurisdiction, bad in law, null and void, inter alia, wrongly upheld the same. 3. The learned CIT(A) further, erred in not appreciating the contention of the appellant while upholding the unjustified AL V of incomplete and inhabitable flat No. 309, Abhimanyu Apartments, Patparganj, New Delhi, assessed by the AO at Rs. 76,258 as against nil shown by the appellant. 4. The learned CIT(A) was further not justified while rejecting the contention of the appellant that the provisions of s. 22 of the IT Act, 1961, could not be applied, without appreciating the facts of the case judiciously, that the flat in question was inherently incapable of being let out. 5. Without prejudice to the above, the CIT(A) further erred in upholding the ALV . of the flat determined at Rs. 76,258 by the AO, which is even otherwise very much excessive, unreasonable and based on a unique method devised by the AO not provided anywhere in the IT Act, 1961, or Rules made thereunder. 6. That all the comments passed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the AO, it does not seek to restrict the scope of the clear definition given in s. 22 of the Act. The AO also did not find any force in the submission of the assessee that the flat is incomplete and as such has 'nil' ALV, as according to the AO, the possession of the flat in Delhi is only handed over after obtaining completion certificate by the builder. The AO, therefore, concluded that the flat, in question, qualifies to a building within the meaning of the term as is used in s. 22 of the Act. The AO was of the view that the assessee acquired flat No. 309, Abhimanyu Apartments, Patparganj, New Delhi, on 16th Sept., 1988 at a cost of Rs. 4,63,650. By applying the cost indexation, the value of this investment was taken at Rs. 9,53,218 and 1/l0th was taken of the ALV at Rs. 95,322 and by reducing 1/5th of the repair amount, addition of Rs. 76,258 was made in the returned income. The assessment order was challenged before the CIT(A) on two of the grounds that the AO (Addl. CIT) was not having jurisdiction to pass the assessment order and that the AO was unjustified in adopting the ALV of incomplete flat No. 309, Abhimanyu Apartments, Patparganj, New Delhi, at Rs. 76,258 as agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authorities below have rightly charged flat No. 309, Abhimanyu Apartments, Patparganj, New Delhi, to tax according to ss. 22 and 23 of the IT Act by determining ALV as against 'Nil' income shown by the assessee? 11. Issue NO.1: The learned counsel for the assessee submitted that s. 2(7 A) of the IT Act provides definition of the "AO", which does not include the Addl. CIT. He has further submitted that jurisdiction in the case of the assessee was with the ITO, Ward-2(2), Amritsar. He has further submitted that the CIT, Central. Ludhiana, passed an order of transfer dt. 12th Sept., 2000 in concurrence by referring to the earlier entries as against the entry at Sr. No. 68 under s. 127(2) of the IT Act. He has further submitted that the Addl. CIT, Special Range, Amritsar. intimated the assessee about the change of the jurisdiction vide separate letter, copy of which is filed at p. 5 of the paper book. He has submitted that the assessee immediately filed objections before the CIT (Central), Ludhiana, and the Addl. CIT, Special Range, Amritsar, vide letter dt. 28th Dec., 2000. He has further submitted that the ITO (Judicial) (Central), Ludhiana, intimated the assessee vide letter dt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t provides jurisdiction of the IT authorities and provides that the IT authorities shall exercise all or any of the powers and perform all or any of the functions conferred on, or as the case may be, assigned to such authorities by or under this Act in accordance with such directions as the Board may issue for the exercise of the powers and performance of the functions by all or any of those authorities. It also provides that the directions of the Board under sub-s. (1) may authorise any other IT authority to issue orders in writing for the exercise of the powers and performance of the functions by all or any of the other IT authorities, who are subordinate to it. It is also provided that the Board or any other IT authority authorised by it may have regard to any one or more of the following criteria giving jurisdiction, namely: (a) territorial area; (b) person or classes of persons; (c) income or classes of income; and (d) cases or classes of cases. It is also provided that the Board may authorise the Director General or Chief CIT or CIT to issue orders in writing the powers and functions conferred on, or, as the case may be, assigned to the AO. Sec. 2(7A) provides the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as an earlier order which was superseded by the subsequent order of the CIT (Central), Ludhiana, dt. 12th Sept., 2000. As such the contention of the learned counsel for the assessee has no force and the same is accordingly rejected. 15. We may also refer to the provisions of S. 124(2), (3) and (4) of the IT Act, which deals the jurisdiction of the AO. The same is reproduced as under: "124(2) Where a question arises under this section as to whether an AO has jurisdiction to assess any person, the question shall be determined by the Director General or the Chief CIT or the CIT, or where the question is one relating to areas within the jurisdiction of different Director Generals or Chief CITs or CITs, by the Directors General or Chief CITs or CITs concerned or, if they are not in agreement, by the Board or by such Director General or Chief CIT or CIT as the Board may, by notification in the Official Gazette, specify. (3) No person shall be entitled to call in question the jurisdiction of an AO- (a) where he has made a return under sub-s. (1) of S. 139, after the expiry of one month from the date on which he was served with a notice under sub-s. (1) of S. 142 or sub-s. (2) of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Amritsar) as he was Jt. CIT, Special Range, Amritsar. because on his up gradation he has mentioned his re-designated office which designation includes in the definition of the Jt. CIT. The objection as regards jurisdiction was rejected virtually by the AO by referring to the earlier order of the jurisdiction conferred upon it by the CIT (Central), Ludhiana. Even otherwise considering the decision of the Hon'ble Allahabad High Court, it was not with the domain of this Tribunal to consider this point at this stage. We accordingly do not find any substance or merit in the contention of the learned counsel for the assessee. This point is accordingly decided against the assessee. 19. Issue NO.2: It is stated that the flat, in question, was allotted to the assessee by the Jansevak Co-operative Group Housing Society Ltd., Delhi, under financing scheme. The possession of the property was handed over to the assessee on 9th June, 1995. According to the assessee, it was not habitable because of various inherent defects or deficiencies in the flat. The assessee has pointed out such defects in his letter separately. The photographs of the interior, flooring, bathroom, etc. are also filed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was no electricity or water supply fitted in the flat. This fact was not verified by the authorities below and no such attempts have been made on their part. The assessee has made the same submissions before the AO in the earlier asst. yrs. 1996-97 and 1997-98. Copies of the written submissions and the assessment orders are available in the paper book. The AO was satisfied with the explanation of the assessee as regards non-habitability of the flat, in question, because of electricity and water supply not provided in the flat and as such did not charge the ALV of the flat to tax under ss. 22 and 23 of the IT Act. Considering the past history of the assessee and submissions made before the authorities below clearly established that no water or electricity supply was available in the flat, in question, in the relevant assessment year. The assessee also explained that certain flooring, bathroom, etc. were also found incomplete and as such it could not be used for the purpose of dwelling. The Hon'ble Orissa High Court in the matter of CWT vs. K.B. Pradhan (1981) 130 ITR 393 (On) while considering the definition of the house observed that the word "house" has no statutory definitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ieve that the property might reasonably be expected to be let out to the tenant. It is also difficult to believe that the owner would be in a position to create interest of the tenant in the property. The Hon'ble Bombay High Court in the matter of Shree Nirmal Commercial Ltd. vs. CIT at p. 712 held: "In our view, unless the property owned by the assessee is of such nature as could be let out, the charge under s. 22 of the Act cannot be attracted. In our view, if the property is of such nature that it is inherently incapable of being let out and the assessee is the owner thereof, then the charge under s. 22 of the Act cannot arise. What is necessary for the charge under s. 22 of the Act to arise is that the property be inherently capable of being let out." 23. The word 'building' used in s. 22 of the IT Act should be capable of letting out as stated in s. 23(1)(a) of the IT Act. The flat, in question, was not in a position of the above infirmity to be let out to any tenant. Therefore, the authorities below have not considered the case of the assessee in proper perspective. The AO rejected the claim of the assessee merely by mentioning that in Delhi, flats are handed over after o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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