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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI
Before: Sh. Saktijit DeyDr. B. R. R. Kumar
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeals have been filed by the assessee against the orders of the ld. CIT(A)-31, New Delhi dated 12.12.2016.
Since, the issues involved in all these appeals are identical, they were heard together and being adjudicated by a common order.
A Search and seizure operation was conducted u/s 132 of the Income Tax Act, 1961 in the AKN group of cases during which the premises of the assessee was also covered. Accordingly, the proceeding u/s 153A were initiated and a , 1268 & 1269/Del/2018 2 Sunil Kumar notice u/s 153A of the Act was issued requiring the appellant to furnish the true and correct return of income. In response thereto, the returns of income were filed u/s 153A for the different assessment years.
4. The cases were selected for scrutiny and statutory notices were issued and served. The assessments were complete u/s 153A/143(3) vide orders dated 23.03.2018 by the AO at the following incomes for the assessment years under consideration:
AY Returned Income Total Additions Income assessed 2011-12 Rs. 1,84,575/- Rs.11,18,040/- Rs. 12,82,615/- 2012-13 Rs. 28,87,749/- Rs, 12,29,844/- Rs. 40,97,593/- 2013-14 Rs. 24,37,540/- Rs. 13.52,828/- Rs. 37,90,388/-
5. While making the impugned additions on the account of rental income, the Assessing Officer observed as under:
2011-12 “4. On perusal of the Statement of affairs of the assessee for the concerned year, it was seen that in respect of property at G-17A, NDSE, Delhi, the assessee has not shown any rental income. When query was raised to him regarding the same the following submission dated 22/03/2016 was filed by him- "that the Property at G-17A, N.D.S.E., Delhi was purchased during the financial year 1997-1998 for Rs. 1,89,000/-. The said property is very old and partly damaged and not in the condition to be let out." , 1268 & 1269/Del/2018 3 Sunil Kumar 5. The submission has been considered however, not found to be satisfactory as no substantiating evidence or supporting documents has been submitted by him in support, of the same. Further, on field verification of the same property it was found that a well built structure is present at the given address. Hence, the submission of the assessee is clearly false and deserves to be rejected. Accordingly, considering the posh locality and the area of the premise, a notional rent, of Rs.1,33,100/- per month is being levied on the premise which in my opinion is fair and reasonable. The annual value of the above residential house is determined at Rs. 15,97,209/- (i.e. enhancement of 10% from the annual value determined for the earlier assessment year) per year u/s 23(1)(a) of the Act. The is also not entitled to avail vacancy allowance u/s 23(1)(c) of the I.T. Act as it has never been let out. Thus, Income from other house property is computed as below:
Annual value of the property (as discussed Above) Rs.15,97,200/- Less: deduction 24(a) Rs.4,79,160/- Income from House property Rs.11,18,040/-
6. During the appellate proceedings before the Ld.CIT(A), the Id. AR filed the following written submission:
“2. That the assessee along with his family started living in that property thereafter and the same was occupied till the year 1999. Because this house property was very old and the condition of the property started deteriorating and it had become unlivable. Therefore, the assessee with his family shifted from that property in year 1999. , 1268 & 1269/Del/2018 4 Sunil Kumar 3. Since the condition of the house property was such that being unlivable in a bad shape despite of the efforts made, therefore, none of the tenants showed any interest in the property and hence property was not let out.
The property was an old construction in the village of Kotla Mubarakpur constructed at Khasra No. 246 and 247 of the village of Kotla Mubarakpur which is not developed by any development authority.
An affidavit of the assessee in this regard is also being filed at page No. 10 to 12 of the paper book.
Since no formal query was raised during assessment proceedings and the issue was raised at the vague end of assessment proceedings which was completed on 29/03/2018, assessee could not arrange any other documentary evidence in this regard to support his contention. An affidavit is also being filed.”
We have gone through the orders of the revenue authorities.
The provisions of section 23 (1)(a) are produced as under:-
“Annual value how determined.
(1) For the purposes of section 22, the annual value of any property shall be deemed to be— (a) the sum for which the property might reasonably be expected to let from year to year: or (b) where the property or any part of the property is let and the actual rent received or receivable by the owner in respect , 1268 & 1269/Del/2018 5 Sunil Kumar thereof is in excess of the sum referred to in clause (a), the amount so received or receivable; or (c) where the property or any part of the property is let and was vacant during the whole or any part, of the previous year and owing to such vacancy the actual rent received or receivable by the owner in respect thereof is less than the sum referred to in clause (a), the amount so received or receivable:
We are not in agreement with the arguments of the ld. AR on the issue of benefit of 23(1)(c) were not being allowed where property was vacant met vacancy in actual rent receivable shout have been taken as Nil. In that case, sub- Section (a) would be applicable.
We have considered the findings recorded by the AO as per the assessment order, the submissions made by the ld. AR and the facts of the case on record. As per the assessment orders, the AO observed that in view of the provisions of section 23 of the Act, the deemed rental income of the property at C-17A, NOSE, Delhi, which remained vacant during the year was required to be taxed under the head Income from House Property’. The AO, therefore, confronted the appellant who stated that the house was very old and partly damaged and was not in a livable condition. However, the AO got field verification done and found that a well-built structure existed at the given address. He, accordingly, rejected the explanation and estimated the ALV of the property at Rs. 12,00,000/- for the AY 2008-09 and added an annual enhancement of 10% on the same for the subsequent years. Referring to the provisions of section 23(1)(c), the AO held that since the property was not let out at , 1268 & 1269/Del/2018 6 Sunil Kumar any time during the period, the vacancy allowance was not available to the appellant. The AO has not based the estimate on any reasonable working in determining the annual letting value. No description of the property as to the area and the market rates prevalent for rentals has been brought on record. Since, the annual value determined is devoid of any rational endorsement, we hereby delete the addition made by the revenue authorities.
In the result, the appeals of the assessee are allowed. Order Pronounced in the Open Court on 09/03/2022.