INDIRA DEVI,KOLKATA vs. D.C.I.T., CC-1(1), KOLKATA

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ITSSA 138/KOL/2024Status: DisposedITAT Kolkata31 January 2024AY 2014-20153 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee was entitled to a 'telescopic benefit' in respect of the undisclosed rental income. The Tribunal noted that the assessee had made a total disclosure of gross rental income amounting to ₹1,80,00,000/- for the period spanning FY 2008-09 to FY 2014-15. It was observed that this total disclosure was more than the amount of undisclosed rental income assessed by the Assessing Officer for the relevant assessment year. Therefore, considering the factual matrix, the Tribunal concluded that the assessee should be given the benefit of the overall disclosure, as it was sufficient to cover the shortfall in the current year's rental income of ₹59,41,114/-. Accordingly, the order of the CIT(Appeals) was set aside, and the Assessing Officer was directed to delete the addition. The principle established is that if a comprehensive disclosure of income over multiple years, made during a search, exceeds the assessed undisclosed income for a particular year, the assessee should receive the benefit of such excess disclosure.

What were the facts?

This appeal by the assessee, Indira Devi, concerns Assessment Year 2014-15 against an order of the CIT(Appeals)-20, Kolkata, dated 27.09.2024. The dispute revolves around an addition of ₹59,41,114/- made by the Assessing Officer (AO) and partly confirmed by the CIT(Appeals) on account of undisclosed rental income. A search under Section 132 was conducted on the assessee on 03.04.2014. During the search, it was found that the assessee was receiving rent from several properties not disclosed in her return. The assessee disclosed a total gross rental income of ₹1,80,00,000/- for the period from FY 2008-09 to FY 2014-15, which included ₹31,44,095/- for FY 2013-14 relevant to the assessment year in question. A notice under Section 153A was issued on 29.04.2015, and the assessee filed a return declaring a total income of ₹25,20,800/-. The AO made an addition of ₹72,33,964/- for rent received but not disclosed. The CIT(Appeals) deleted ₹12,92,850/- of this addition, attributing it to extrapolation and estimation, and sustained the remaining ₹59,41,114/-.

What were the issues?

1. Whether the addition of ₹59,41,114/- on account of rental income for Assessment Year 2014-15 is sustainable, considering the assessee's disclosure of ₹1,80,00,000/- as gross rental income for the period FY 2008-09 to FY 2014-15. Assessee's Contention: The assessee argued that the total disclosure of ₹1,80,00,000/- made during the search, covering a period from FY 2008-09 to FY 2014-15, was sufficient to cover the alleged undisclosed rental income for the current assessment year. The assessee contended that a 'telescopic benefit' should be granted, as the overall disclosure exceeded the amount assessed as undisclosed income for the year. Revenue's Contention: The judgment records that the rival contentions were heard, but it does not explicitly detail the revenue's specific arguments against the assessee's claim for telescopic benefit or its reasoning for sustaining the addition beyond what the CIT(Appeals) had deleted.

Which sections of the Income-tax Act were involved?

Section 132,Section 153A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRI SONJOY SARMA, JM

For Appellant: Shri Manish Tiwari, AR
For Respondent: Shri Guru Bhashyam, DR
Hearing: 23.01.2025Pronounced: 31.01.2025

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals), Kolkata-20, (hereinafter referred to as the “Ld. CIT(A)”] dated 27.09.2024 for the AY 2024-15.

2.

The only issue raised in the grounds of appeal is against the confirmation of addition of ₹59,41,114/- by the ld. CIT (A) as made by the ld. AO on account of rental income.

3.

The facts in brief are that the search u/s 132 of the Act was conducted on the assessee on 03.04.2014, during which the assessee was found to be receiving the rent from several properties which was not disclosed in the return of income and accordingly, the assessee made a disclosure of ₹1,80,00,000/- of gross rental income for the period

4.

In the appellate proceedings, the ld. CIT (A) partly allowed the appeal of the assessee by deleting the addition to the extent of ₹12,92,850/- and partly sustaining the addition to the extent of ₹59,41,114/-. The ld. CIT (A) deleted the addition which is attributed to the extrapolation and estimation of rental income however, sustained the remaining addition.

5.

After hearing the rival contentions and perusing the materials available on record, we find that the assessee has made a total disclosure of gross rental of ₹1,80,00,000/- over the period of F.Y. 2008-09 to F.Y. 2014-15. We note that though the rent assessed by the AO is correct but the rental disclosure during search was more than amount of undisclosed on account of undisclosed gross rental income. Therefore, when the disclosure made was more than the actual rent received by the assessee taking into account the period right from the F.Y. 2008-09 to F.Y.2014-15, then the assessee has to be given benefit of telescopic benefit. Thus, considering the factual matrix , in our view, the assessee has to be given telescopic benefit out of the total disclosure of gross rental made by the assessee as the total disclosure is enough to cover the shortfall in the current year

6.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 31.01.2025.

Sd/- Sd/- (SONJOY SARMA) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 31.01.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//

Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata

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