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2018 (5) TMI 1854 - AT - Income TaxIncome from house property - Deemed annual lettable value of flats - Assessee mainly received income from dividend, property income and profits from partnership firm of which the assessee is partner - HELD THAT:- The Hon‟ble Bombay High Court held in Tip Top Typography [2014 (8) TMI 356 - BOMBAY HIGH COURT] that when the monthly rental shows a total mismatch or does not reflect the prevailing rent, then AO is not prevented from carrying out necessary investigations and enquiry to find out the going rent of the property in question. The AO must have cogent material/evidences in his possession that parties have concealed the real position. The AO is required to disclose the material in his possession to the tax-payer for rebuttal before proceeding to adopt the prevailing market rent. The AO has to make comparative analysis of the comparable properties of similar nature before applying the prevailing market rent of the property under question. The satisfaction of the AO that the bargains reveal inflated or deflated rent based on fraud, emergency, relationship and other considerations which make it unreasonable must precede the undertaking of above exercise. Thus, under these circumstances keeping in view factual matrix of the case discussed in extenso above and recent decision in the case of Tip Top Typography (supra) we are of the considered view that this matter need to be restored back to the file of the AO for making making denovo assessment after make necessary enquires and investigation in line with decision of Hon‟ble Bombay High Court in the case of Tip Top Typography(supra) and after providing proper and adequate opportunity of being heard to the assessee. The evidences/explanation submitted by the assessee in its defence shall be admitted by the AO and adjudicated on merits in accordance with law. This ground no. 1 of the Revenue is allowed for statistical purposes. Addition u/s.68 - HELD THAT:- Mere suspicion on part of the AO that the assessee may claim this expenses of ₹ 35.07 lacs in some future distant point of time is not sufficient to fasten tax-liability merely on basis of suspicion of the AO that some event may happen in future at some point of time which is unknown wherein the assessee may try to claim these expenses which it has not claimed now as deduction , and the same will cause prejudice to the Revenue at that unknown distant point of time. This is too far-fetched and have no legs to stand to fasten tax-liability on the assessee as these are baseless suspicions. In any case 1961 Act is a living and robust statute which is capable of taking care of such contingent events if at all and when they happens. We confirm the appellate order of learned CIT(A) and sustain the deletion of the addition as was made by learned CIT(A). The Revenue fails on this ground. The ground no. 2 is adjudicated against Revenue. Disallowance u/s. 14A r.w.r.8D - suo motu disallowance of 50% expenses offered by the assessee and non recording of satisfaction by the AO u/s 14A(2)- HELD THAT:- Section 14A clearly speaks of disallowance of the expenditure incurred by the assessee in relation to earning of an exempt income and no notional expenditure can be disallowed u/s 14A which had not even been incurred at all by the assessee. Also there is no allegation or incriminating material on record that the assessee incurred any expenditure out of books of accounts which was not recorded in books of accounts warranting any additions to income to bring to tax the said unrecorded expenditure - on suo motu disallowance of 50% expenses offered by the assessee and non recording of satisfaction by the AO u/s 14A(2) before invoking Rule 8D, we are of the considered view that the appellate order of learned CIT(A) needs to be upheld/sustained which we sustain and hence the disallowance offered by the assessee u/s 14A suo-motu voluntarily to the tune of ₹ 5,44,975/- stood accepted.
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