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2019 (12) TMI 962 - AT - Income TaxAddition to rental income - two lease agreements - the rent has been remarkably low for the last eight months of the financial year. - hiding material facts - rental income of the assessee from the leased out premises should be taken @ ₹ 5 lacs per month for the whole year as against the rental income taken by assessee @ 5 lacs for four months and ₹ 1 lacs per month for 8 months - HELD THAT - There is absolutely no mention of any sketch containing the factory shed and administrative building in any of the agreements. Further the second agreement does not bear the signature of any witnesses although the agreement says that it was signed in the presence of the witnesses. We, therefore, hold that the explanation offered by the assessee is not born out of records. The so called sketches are not signed by the notary. These documents in our opinion are only self serving. The letter addressed to the Excise Superintendent also can be termed as self serving, since the copy of letter which is placed at page 63 of the paper book, does not bear the seal of the Excise Department where as the previous letter dated 30.10.2006 addressed to the excise department bears the seal of the department alongwith the designation of the person who has received it. Therefore, it is only a piece of paper ment for self serving. In view of the above discussion and in view of the detailed order passed by the CIT(A) on this issue, we find no infirmity in the same. Accordingly the same is upheld and the grounds raised by the assessee are dismissed.
Issues:
Addition of rental income without proper show cause and corroborative documents. Analysis: The appeal was against the CIT(A)'s order confirming an addition of ?22,40,000 to rental income without proper show cause or considering corroborative documents. The assessee, a partnership firm, declared total income of ?2,04,73,052 for A.Y. 2010-11. The AO noted rental income of ?28 lacs and questioned the low rent in the lease agreements for the last eight months of the financial year. The AO calculated rental income at ?5,00,000 per month for the entire year, resulting in an addition of ?22,40,000 after allowing deductions. The CIT(A) upheld this addition, stating the property could reasonably be expected to let at ?5,00,000 per month based on Section 23 of the IT Act. The assessee argued they only rented the administrative block, not the factory shed, but the AO and CIT(A) found inconsistencies in the documents provided. The Tribunal upheld the CIT(A)'s decision, dismissing the appeal and confirming the addition. The AO found discrepancies in the lease agreements, leading to the addition of ?22,40,000 to the total income. The CIT(A) and Tribunal agreed with the AO's assessment that the property could reasonably be expected to let at ?5,00,000 per month based on the agreements and relevant provisions of the IT Act. The assessee's argument that they only rented the administrative block was not substantiated with sufficient evidence, as inconsistencies were found in the documents provided. The Tribunal upheld the CIT(A)'s decision, stating the explanations offered by the assessee were not supported by the records, and the documents provided were self-serving and lacked credibility. The Tribunal's decision was based on the assessment of the lease agreements, rental income, and the provisions of the IT Act. The Tribunal found that the AO's addition of ?22,40,000 was justified, considering the discrepancies in the documents provided by the assessee. The Tribunal agreed with the CIT(A)'s analysis that the property could reasonably be expected to let at ?5,00,000 per month, as per Section 23 of the IT Act. The Tribunal dismissed the assessee's appeal, upholding the addition to the rental income and emphasizing the lack of credible evidence supporting the assessee's claims.
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