R KUSUMA,BANGALORE vs. INCOME TAX OFFICER, WARD 6(2)(1), BANGALORE

Page 3 of 7 5. Assessee is aggrieved with the appellate order preferred this appeal. Sri. V. Chandrashekhar – Advocate appearing on behalf of the assessee submitted that no doubt the assessee could not appear before the learned CIT – A but assessee has furnished the detailed statement of facts. Thesestatements of facts if considered from the right perspective, the addition could not have been made in the hence of the assessee. He submitted that that assessee has claimed credit of tax deducted at source of ₹ 7,99,523, the assessing officer multiplied it by 10 times and stated that income corresponding to the TDS is ₹ 79,95,230. As the assessee has been given security deposit of ₹ 50 lakhs, same was reduced from the above sum and the balance sum of ₹ 29,95,230 was stated to be income from house property. The assessee further stated in the statement of fact that assessee has taken a property on lease agreement from one CGangadhara which was subleased to various entities and lease rentals from these subleases had already been offered for income tax. He submits that in the show cause notice the AO discussed only the lease rent of Wildcraft India Private Limited. During hearing before the AO, the assessee categorically stated that Wildcraft India Private Limited has given him an advance rent of 1,58,33,333. The details of payment received, along with the permanent account number of Wildcraft India Private Limited was also provided the assessee also stated that the lease rent is shown in the three assessment years differently. Assessee also submitted that the TDS credit of ₹ 7,99,523 is an income of the assessee and corresponding expenditure of ₹ 7,99,523 being the excess amount paid to Mr. ganga dharamurthy should be granted as deduction to the assessee. He further stated that there is a detailed rebuttal in the statement of facts filed before the learned CIT which is not at all been considered. In the end he submitted that the learned assessing officer is incorrect in making an addition of ₹ 29,95,230.

Page 4 of 7 7. We have carefully considered the rival contention and perused the orders of the learned lower authorities. The addition made by the learned assessing officer is based on the tax deduction at source shown by the assessee of ₹ 7,99,000. The assessing officer multiplied the same by 10 and stated that assessee should have disclosed the rental income of ₹ 79,95,230. He granted a deduction of ₹ 50 lakhs been the amount of security deposit. He takes the balance sum of ₹ 29,95,230 as addition based on receipts for TDS. He rejected the explanation given by the assessee that there is no income earned by the assessee. He also ignored the request of the assessee that a sum of ₹ 7,99,523 is an excess TDS credit claimed by the assessee in the return of income which may not be granted to him. It was also the claim that assessee deserves the deduction of expenditure of ₹ 7,99,523 being expenditure of the rent which was transferred to C Gangadhara Murthy. The learned Assessing Officer ignored the same. The learned CIT – A admittedly issued five notices to the assessee but none of them replied to except in case of two notices where only the adjournment request was made. The learned CIT – A granted the adjournment. Despite this in subsequent notices the assessee did not submit any reply. Thus, the learned CIT – A did not have any other option but to decide the appeal of the assessee as per facts available on record. He discussed the merits of the case and as assessee could not add further, dismissed the appeal of the assessee.

“The action of the AO is not justified as the AO has not provided the opportunity of hearing before passing of the Assessment Order since the AO in the show cause notice issued dated 02.09.2022 or during the personal hearing, never discussed the lease agreement dated 11.04.2018 or its content which is the basis of addition of Rs. 29,95,230/-. The action of Page 5 of 7 the AO making addition to the returned income without issue of show cause notice/providing opportunity of hearing to the Appellant is bad in law. b. The action of the AO is not justified as the AO has not provided the section and rule under which the income becomes taxable except for quoting that it is unexplained. c. Further, the AO has not appreciated the fact that the income resulting in excess TDS credit received and utilized by the appellant in FY 18-19/19-20 has a corresponding expenditure which is incurred in the form of excess payment to C Gangadhara Murthy on behalf of M/s Wildcraft India Pvt Ltd i.e., by transfer Rs. 1,08,73,708/- instead of Rs. 97,86,337/-. If the AO wishes to tax the excess TDS credit, then the corresponding expenditure/loss incurred by the Appellant by transferring rental advance rent should also be considered. d. The Appellant would like to submit the action of the AO treating Rs. 29,95,230/- as Income in FY 19-20 is bad in law as the actual excess TDS credit was received in FY 18-19 and not in FY 19-20. e. The Appellant would like to submit that action of the AO treating Rs. 29,95,230/- as Income in FY 19-20 is bad in law as this is a non existent amount which was never received by the Appellant nor did it accrue to her at no point in time. The AO is forcing the Appellant to offer to Rs. 29,95,230/- as income just because the M/s Wildcraft India Pvt Ltd had made TDS on Rental Advance Payment even though the same was not adjusted against the rent receivable by the Appellant.”