KRISHANLAL R MEDIRATTA HUF,MUMBAI vs. DCIT CIRCLE 23(1), MUMBAI, MUMBAI

IN THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI “E” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No.213/MUM/2026 (AY: 2017-18) Krishanlal R Mediratta HUF vs. DCIT Circle 23(1), Mumbai Flat No 705, 7th Floor, Stellar Tower Room No 511, 5th Floor, Piramal CHSL, 2nd Cross Lane, Lokhandwala Chamber, Lal Baug, Parel, Mumbai- Complex, Andheri (West), Mumbai- 400012. 400053. PAN/GIR No: ΑΑΕΗΚ4635B (Appellant) (Respondent) Assessee by Shri Himanshu Gandhi Revenue by Shri Hemanshu Joshi (SR DR) Date of Hearing 02.04.2026 Date of Pronouncement 01.07.2026

O R D E R PER BIJYANANDA PRUSETH, AM:

This appeal filed by the revenue emanates from the order passed under

section 250 of the Income-tax Act, 1961 (in short, ‘Act’) by the National Faceless

Appeal Centre [in short, ‘NFAC’], dated 04.11.2025 for the assessment year (AY)

2017-18.

" 1. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming the action of Ld AO of initiating reassessment proceeding under section 148 of Income Tax Act, 1961 which is bad in law and require to be quashed

income for the AY 2017-18. As per the information with the available with the AO,

the assessee had received rent of Rs.1,06,08,000/- during the year under

consideration, but it did not file the return. Hence, the case was reopened u/s 147

and notice u/s 148 of the Act was issued on 31.03.2021. In response, assessee filed

return of income on 28.04.2021 declaring total income at Rs.59,71,350/-. The AO

found that the assessee had paid rent of Rs.10,33,359/-. Hence, notice u/s 142(1)

was issued asking to furnish various details. In reply, the assessee submitted that it

had paid the above rent to M/s Vimal Prints (rent of Rs.85,050/- per month) to earn

more rent from M/s Garware Synthetic Ltd. The assessee had taken adjacent

industrial gala on rent from M/s Vimal Prints. The assessee paid municipal tax of

Rs.1,91,220/- and paid interest on loan taken against the property of Rs.3,47,502/-

and Rs.2,49,539/- to Bharat Co-operative Bank Ltd. and Sheetal K. Mediratta. The AO

was not satisfied with the reply of the assessee because he could not provide cogent

submission supporting with documentary evidence as to how much rent he earned

for letting out the same portion to the tenant. The assessee also did not file bank

statement to show that rent was paid by him. Therefore, the AO added

Rs.10,33,359/- towards the expenses on rent. In absence of proof of payment of

taxes to the local authorities, an amount of Rs.1,91,225/- was added to the total

income. The AO also disallowed the deduction of Rs.5,97,041/- towards interest paid

on borrowed capital. The claim of payment of interest was not substantiated by

providing any bank statement or certificate. Accordingly, the above three additions

were made and total income was determined Rs.74,25,600/- as against returned

income of Rs. 59,71,350/-.

CIT(A) the assessee could not file the bank statement evidencing rent payment of

Rs.10,33,359/-. Hence, the addition was confirmed. The addition towards interest payment of Rs.5,97,041/- was also confirmed because no evidence could be

adduced by the assessee. The expenses towards taxes was also disallowed because

the evidence filed by the assessee showed that it was in the name of Manish Textiles

Industries but the appellate had claimed that the property was owned by M/s Vimal

Prints.

Tribunal. The Ld. AR filed a paper book and submitted that the property was taken

from M/s Vimal Print long back and the appellant has been paying rent to it since

long. During the year, the rent agreement was renewed, which is evident from page

No. 43 wherein the rent deposit dates are 07.10.2014 and 15.11.2014. The Ld. AR

also submitted that the bank statement highlighting rent payment was submitted

before CIT(A) on 16.12.2022 (Page Nos. 72 and 27-39 of PB). However, the same was

ignored by CIT(A). The CIT(A) also ignored the working of income under the head

“Income from other sources” in respect of rent received and paid on sub-let

property. For this, he referred to reply dated 29.11.2024 submitted to the CIT(A). He

therefore, requested to allow rent paid to Vimal Print of Rs.10,33,359/-.

the assessee vide letter dated 19.11.2024 has filed the reply stating that out of

Rs.34,08,000/-, a sum of Rs.12,17,150/- would be treated as “Income from other sources” and the balance amount of Rs.21,90,850/- would be treated as “Income

from house property.” The appellant had also made other submissions and details

including bank statement showing rent payment, which have not been considered

by the CIT(A) in the appellate order. Therefore, in the interest of justice, we deem it

proper to set aside the order of CIT(A) and restore the matter to his file for

verification of the claim of the assessee in light of the facts discussed above and

allow necessary relief in accordance with law after granting adequate and

reasonable opportunity of being heard to the assessee. The CIT(A) is at liberty to call

for further details if he is not satisfied with the details discussed above. The ground

is accordingly, allowed for statistical purpose.

in not allowing the municipal taxes paid amounting to Rs.1,91,225/- u/s 23(1) of the

Act. In this regard, the Ld. AR submitted that the appellant is proprietor of Manish

Textiles Industries, which is mentioned in rent agreement as well as para 5 of

assessment order. Therefore, the rent receipt is for appellant’s property only which

are rented. However, this fact was also ignored by the CIT(A). He submitted that the

appellant had also submitted rent payment receipts before the lower authorities.

Hence, the payment of property tax should be allowed.

has stated that the appellant is the proprietor of Manish Textiles Industries in whose

name the rent agreement was entered into. This fact as well as the other details have

not been considered by the AO or CIT(A). Hence, we deem it proper to set aside the

matter to the file of CIT(A) for re-adjudication on the basis of the details and

evidences submitted by the appellant. The CIT(A) may call for further details if he is

not satisfied with the reply of the assessee. The ground is allowed for statistical

purpose.

capital. The Ld. AR submitted that the interest certificate was submitted before

CIT(A) vide letter dated 30.11.2022 (Page no. 61 & 70 of PB). The same was ignored

by the CIT(A). Further, loan from Sheetal Mendiratta was taken for property given on

rent and the interest was allowed in past years. She had also offered the said income

in her return. Therefore, the addition may be deleted.

has submitted that interest certificate was submitted to the CIT(A), who ignored the

same in the appellate order. He also submitted that the interest on loan borrowed

from Sheetal Mendiratta was offered by her in her return and the loan was utilized

for the impugned property. Since these facts have not been considered by the CIT(A)

in the appellate order, we deem it proper to set aside the matter to the file of CIT(A)

for re-adjudication on the basis of the details and evidences submitted by the

appellant. The CIT(A) may call for further details if he is not satisfied with the reply

of the assessee. The ground is allowed for statistical purpose.

aside the issues to the file of CIT(A), the other grounds become academic in nature

and hence, not required to be decided.

Order is pronounced on 01.07.2026.

Sd/- Sd/- (SANDEEP GOSAIN) (BIJYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER

*Aniket Chand; Sr. PS MUMBAI Date: 01.07.2026 Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The PCIT/CIT 4. DR/AR, ITAT, MUMBAI 5. Guard File

By Order

Assistant Registrar ITAT, MUMBAI