COMMISSIONER OF INCOME TAX Vs. S M ANANDVEL

JUDGEMENT

(1.) AS against the order dated 02. 02. 2005 in ITA No. 74/mds/94 for the assessment years 1985-86 and 1986-87 of the Income Tax Appellate Tribunal, the revenue has preferred these appeals raising the following substantial questions of law:

(2.) THE relevant facts are as follows: the assessee filed its return of income for the assessment year 1985-86 on 30. 9. 1985 on a total income of Rs. 91,530/ -. Subsequently, he filed a revised return of income on 28. 3. 1988 admitting a total income of Rs. 91,755/ -. The difference being a sum of Rs. 225/- between the original return and revised return represents the interest admitted under the head "other Sources". In the meanwhile, there was a search under Section 132 of the Income-tax Act (herein after referred to as the 'act') on 27. 1. 1986 at the residence of the assessee and some incriminating materials in form of papers and books were seized. Based on those documents, it was found that a site measuring one ground and 825 sq. ft. bearing D. No. AE 100 (formerly AC 100) Anna Nagar, madras was purchased on 1. 5. 1981 at a cost of Rs. 45,000/- from one Sri srinivasa Raju Iyengar in the name of Smt. Manomani, wife of the assessee incurring a sum of Rs. 6,352/- towards stamp duty and registration charges. Thus the total cost of the plot comes to Rs. 51,352/ -. Thereafter, in March 1983, a house was constructed in the said plot with the cost of Rs. 2,04,274/-inclusive of the cost of wooden almirah. The total built-in area was 1100 sq. ft. . (1 ). According to the Revenue, the wife of the assessee, Smt. Manomani did not have any regular source of income and therefore the said land and building, referred to above, was considered to be that of the assessee under Section 22 of the Income Tax Act and thus the income from the said property was computed at Rs. 35,354/- after deducting a sum of Rs. 1,046/-towards Municipal Tax and Rs. 3,600/- towards expenses allowed under Section 23 (2) of the Act, taking into consideration that the assessee and his wife were living in 1/3rd portion of the property and 2/3rd portion of the property was let out. The said income was treated as income from house property. (2 ). For the assessment year 1986-87, the assessing officer assessed the total income under the head "income from house property" at Rs. 37,432/-taking into consideration the detailed reasons given in the assessment order for the assessment year 1985-86. (3 ). Aggrieved against the orders of the assessing officer even dated 27. 03. 1989, the assessee preferred appeals before the Commissioner of Income tax (Appeals), who taking into account the deletion of rent payment claimed to smt. Manomani, wife of the assessee with regard to the assessment years 82-83 and 83-84, allowed the appeals for the assessment year 1985-86 and 1986-87 by orders even dated 24. 09. 1993, which was also confirmed by the Income Tax A ppellate Tribunal on appeals at the instance of the Revenue.

(3.) NOT satisfied with the order of the Tribunal dated 02. 02. 2005, the revenue has preferred these appeals raising the substantial questions of law, referred supra.