The Tax Publishers2020 TaxPub(DT) 3233 (Ahd-Trib)

INCOME TAX ACT, 1961

Section 143(3)

Where AO made addition on allegation that assessee suppressed rental income for relevant year, as AO was required to follow the procedure laid down in section 23 but he failed to call for the evidence and prove that property could fetch higher rent and assessee proved that it gave concession in rent to its tenant on basis of some hard facts, addition made by AO was unjustified.

Assessment - Additions to income - Alleged suppression of rental income by assessee -

Assessee challenged order of CIT(A) confirming the addition made by AO on alleged ground of suppression of rental income by assessee. Assessee further contended that even if addition was to be made, it was statutorily entitled to deduction of standard deduction @30% under section 24 from the aforesaid alleged suppressed rental income. AO made addition on allegation that rental income for relevant year shown by assessee was lower. Held: AO was required to follow the procedure laid down in section 23. He had to call for the evidence and prove that property could fetch higher rent instead of unnecessarily pointing out peripheral defects in agreement of assessee. He could have determined annual letting value of the property. Both revenue authorities miserably failed to follow procedure contemplated in section 23. Assessee gave a concession in rent to its tenant on the basis of some hard facts. Case of AO could be appreciated, if he made reference to the rent deed of adjoining properties and pointed out that leased property could fetch higher rent, and therefore, annual letting value of the assessee's house property was to be determined equivalent to amount on which original rent fixed between assessee and tenant. However, rental income shown by assessee deserved to be accepted in the absence of any other material collected by AO.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2013-14



IN THE ITAT, AHMEDABAD BENCH

SUBSCRIBE TaxPublishers.inSUBSCRIBE FOR FULL CONTENT