PUTLI BIBI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The Tribunal, Allahabad, has referred the following two questions of law under Section 256(2) of the IT Act, 1961, hereinafter referred to as the Act, for opinion to this Court.

(2.) Briefly stated, the facts giving rise to the present reference are as follows : The present reference relates to asst. yrs. 1973-74, 1974-75, 1976-77 and 1977-78. The applicant is an individual. She owned properties at 26/2 and 26/27, Patkapur, Kanpur. These properties were reconstructed and were let out on 31st Dec., 1968. During the assessment years in question, it was claimed by the applicant that since she was an old lady and unable to manage the properties, the entire properties were leased out on a monthly rent of Rs. 2,500 to one Parmatma Dutt Misra, a Munim in the firm in which the applicant, her son and other relations were partners. The properties were let out for a period of one year for which a registered lease deed was executed on 28th May, 1969. Prior to the leasing out the property, Parmatma Dutt Mishra was getting 20 per cent as remuneration. In the agreement, the municipal tax and water tax were to be paid by the applicant and responsibility for repairs and maintenance of the property was that of Parmatma Dutt Misra. The lease deed was renewed year after year by rent notes dt. 5th Aug., 1970, 5th Aug., 1971, 5th Aug., 1972, 5th Aug., 1973, 6th Nov., 1974 and 6th Oct., 1975 but the renewals were only for 11 months each and were not by registered agreements. The rent was also increased from Rs. 2,500 per month to Rs. 3,000 per month in the year 1974. The ITO held these agreements to be not genuine. He reopened the already completed assessment for 1971-72 determined the annual letting value of the properties on the basis of the actual rent realised by Parmatma Dutt Misra from the tenants and worked out the income from properties accordingly. For the assessment years in question the ITO had held that since the facts of the case were exactly the same as in the past and as discussed in detail in the assessment order for the asst. yr. 1971-72 the annual letting value of the properties shall be taken at the actual rent realized from the various tenants by Parmatma Dutt Misra plus Rs. 2,400 for the portion occupied for his own residence. In this way, the annual letting value of the properties was taken by the ITO at Rs. 51,000 for the asst. yr. 1973-74, Rs. 51,300 for the asst. yr. 1974-75 and the income from properties was worked out accordingly at Rs. 32,277 for the asst. yr. 1973-74 and Rs. 38,849 for the asst. yr. 1974-75 which income was repeated for the asst. yrs. 1976-77 and 1977-78.

(3.) Feeling aggrieved by the assessments the applicant preferred separate appeals before the CIT(A). The CIT(A) came to the conclusion that the ITO had rightly held that the so-called lease deeds entered into by the applicant with Parmatma Dutt Misra did not represent the real state of affairs and the IT authorities were justified in ignoring the so-called lease deeds for working out the income from the properties. He also considered the municipal valuation of the property which was determined by the Judge, Small Causes Court, Kanpur and the Addl. District Judge, Kanpur at Rs. 48,000. Still feeling aggrieved the applicant preferred separate appeals before the Tribunal. The Tribunal had upheld the order of the CIT(A).