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2015 (2) TMI 984 - AT - Income TaxAddition on account of rental income - addition of ₹ 4,00,285 on account of difference in value of immovable property located at Raj Villa, Kanti Factory Road, Patna and valued at ₹ 5,95,100 by the learned Departmental Valuation Officer against the value of ₹ 1,94,815 as declared by the assessee - Held that:- No incriminating material has been seized with respect to the undisclosed investment in the building, during the course of search and seizure operations. Probably no occasion with the Revenue has arisen to record reasons for referring the matter to the Departmental Valuation Officer. Accordingly, in the facts and circumstances of the case, the addition so made on the basis of Departmental Valuation Officer' report by the Assessing Officer and confirmed by the learned Commissioner of Income-tax (Appeals) is against the law and facts of the present case. Accordingly, the addition so confirmed by the learned Commissioner of Income-tax (Appeals) is bad in law and the Assessing Officer is directed to delete the addition so made. On merit also, the valuation report issued by the Departmental Valuation Officer is not reliable as there are several limitations of plinth area rate method applied. Also the valuation report submitted by the assessee has not been refuted by the Departmental Valuation Officer in spite of many opportunities given to the Departmental Valuation Officer during the course of proceedings under section 263 of the Act. It is also a fact on record that the assessee had submitted year-wise cash flow statement considering the receipts and expenses of the assessee before the Assessing Officer, which are of the accurate amount and the Assessing Officer has not cast upon any doubt in the entries in the cash flow statement and has not pointed out any defect in the same, which in fact, has been considered by the Assessing Officer for making addition to the returned income of the assessee. Thus no addition on this account can be made and so directed to be deleted - Decided in favour of assessee. Non deletion of addition of ₹ 8,18,998 on account of rental income from house property, located at Raj Villa, Kanti Factory Road, Patna by CIT(A) - Held that:- The learned Commissioner of Income-tax (Appeals) has taken note of annual rent of ₹ 2,76,360 derived from the Punjab National Bank for the ground floor of block A and has taken the same as basis for estimating the floor-wise rent for three floors of block A at a total of ₹ 6.62 lakhs, which is self-contradictory. Though he himself has accepted that except the ground floor of block A, the apartment was still under construction and the property was incapable of being let out prior to its completion. Therefore, there was no basis for adopting estimation of ₹ 6.62 lakhs for the three floors, which is highly excessive. It is also on record that ground floor of block A has been out to Punjab National Bank and is used for commercial purposes whereas other floors are used for residential purposes. The institutions like banks, etc., using properties for commercial purposes, normally paying higher rent than others used for residential purposes. Therefore, the learned Commissioner of Income-tax (Appeals) is not justified in estimating rent on the basis of rent received from Punjab National Bank for all the floors of block A. Also the estimation of ₹ 3,000 per flat in block B is without any basis. The assessee has submitted confirmations from the concerned tenants with regard to the rent paid by them, which is on record. Accordingly, the estimations made by the Assessing Officer and confirmed by the learned Commissioner of Income-tax (Appeals) are without any basis and cannot be approved. here is no evidence with the Revenue to show that the assessee had collected more rent than what has been declared in the returns of income filed regularly with the Income-tax Department. Accordingly, no addition is called for on such account. - Decided in favour of assessee.
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