TMI Blog2017 (7) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... Pannu, Accountant Member And Shri Pawan Singh, Judicial Member Revenue by : Shri Suman Kumar (DR) Assessee by : None ORDER Per Pawan Singh, Judicial Member 1. These two appeal by Revenue under section 253 of the Income-tax Act (the Act) are directed against the order of ld. CIT(A)-27, Mumbai dated 31.10.2013 07.10.2013 for Assessment Year 2009-10 2010-11 respectively. 2. First we shall take appeal ITA No. 332/Mum/2014. The Revenue has filed this appeal against the deletion of penalty levied u/s 271(1)(c) of the Act. Though the Revenue has raised as many as four grounds of appeal. However, as per our considered view the only substantial ground of appeal is whether the ld. CIT(A) erred in deleting the penalty levied u/s 271(1)(c) of the Act. 3. Brief facts of the case are that the assessee filed return of income for relevant AY on 23.09.2009 declaring loss of ₹ 2,73,92,317/-. The assessment was completed u/s 143(3) of the Act on 26.12.2011. The Assessing Officer (AO) while passing the assessment order, made the addition of ₹ 3,91,307/- on income from House Property. No appeal was filed by assessee against the additions in the assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ked the assessee to furnish the detail of the property let out and deemed let out along with the computation of notional income. The assessee submitted details of property. On the basis of the details the notional income from house property was computed @ 8.55% of total investment in these properties. The AO determined the rental income on the basis of detailed provided by assessee. The notional income of House Property was determined at ₹ 5,59,010/-. The AO after allowing deduction u/s 24(a) added the income of ₹ 3,91,307/-. The AO issued notice for levy of penalty under section 274rws 271(1)(c). In the reply of notice, the assessee contended that the assessee voluntary offered the notional income. We have seen that he AO worked out the notional rental income during the assessment on the basis of estimated deemed income from house property and added the same in the income of the assessee. The assessee has not filed any appeal against the addition made by AO. The Hon ble Bombay High Court in DIT Vs Administrator of Late Mr. F.E. Dinshaw (2013) Taxman.com 95(Bom) held that if the claim made by the assessee in the return of income, which was rejected by revenue, it woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stment, the AO computed the notional rental income @ 8.50% of total investment. The AO worked out the notional rent of ₹ 13,87,989/- and after giving deduction u/s 24(a), the addition of ₹ 13,87,989/- under the head Income from House Property was added in the total income of assessee. Aggrieved by the order of AO, the assessee filed appeal before the ld. CIT(A). The ld. CIT(A) directed the AO to verify the municipal ratable value of the disputed property and modify the order accordingly. Aggrieved by the order of AO, the Revenue has filed the present appeal before us. 9. The appeal came up for hearing on 12.04.2017, none-appeared on behalf of assessee despite the service of notice. This appeal was fixed along with the appeal ITA No. 332/Mum/2014. As none appeared on behalf of assessee, we left no option except to hear the submission of ld. DR for the Revenue and to proceed with on the basis of material available on record. Ld. DR for the Revenue argued that the ld. CIT(A) was not correct in giving direction to the AO that assessee was eligible for municipal ratable value. In fact, the assessee never offered the notional income on deemed let out of the property u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thane Showroom : Joint with G.I. Kakadia 2015032 Agreement made Under construction 12 Kandivali Shop (Rahuuleela Showroom) 3536077 Vacant 13 Flat with worli (Harmony) 16296250 Vacant 14 Flat at (Tulsi Tower) 881100 Vacant 15 Flat at worli (Amar Nagar) 2614124 Vacant 11. On the basis of information provided by assessee, the AO noticed that the property mentioned at Serial No. 12 to 15 are ready for possession and on the basis of investment made in those properties, the AO worked out the notional rental income. On appeal before the ld. CIT(A), the ld. CIT(A) after considering the contention of assessee and referring various decision relied before him directed the AO to verify the municipal ratable value in respect of the properties and modify the order accordingly. The Hon ble Bombay High Court in CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e location, the use to which the property has been put, the access thereto and the special advantages or benefits. It is possible that in a high rise building because of special advantages and benefits an office or a block on the upper floor may fetch higher returns or vice versa. Therefore, there is no magic formula and everything depends upon the facts and circumstances in each case. However, we emphasize that before the AO determines the rate by the above exercise or similar permissible process he is bound to disclose the material in his possession to the parties. He must not proceed to rely upon the material in his possession and disbelieve the parties. The satisfaction of the AO that the bargain reveals an inflated or deflated rate based on fraud, emergency, relationship and other considerations makes it unreasonable must precede the undertaking of the above exercise. After the above ascertainment is done by the AO he must, then, comply with the principles of fairness and justice and make the disclosure to the Assessee so as to obtain his view; (iv) Notional rent on the security deposit cannot be taken into account for the determination of the annual value. If the transa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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