Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCHES : SMC-II : NEW DELHI
Before: SHRI R.S. SYAL
BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER Assessment Year : 2011-12 Inder Kumar Bhargav, Vs. ITO, D-109, Vivek Vihar, Ward-2(4), Delhi. CR Building, New Delhi. PAN: AAGPB2557F (Appellant) (Respondent) Assessee By : Shri K. Sampath, Advocate & Shri V. Raja Kumar Department By : Shri F.R. Meena, Sr. DR Date of Hearing : 25.10.2016 Date of Pronouncement : 25.10.2016 ORDER This appeal filed by the assessee is directed against the order passed by the CIT(A) on 22.10.2014 in relation to the assessment year 2011-12.
The first issue argued by the ld. AR is against the confirmation of addition of Rs.2,77,200/- on account of deemed rental income.
Briefly stated, the facts of the case are that the assessee was the owner of the following three properties:-
Flat No.GF, Plot No.229, Shalimar Garden Extn., 1 Pasonda, Ghaziabad.
2. Flat No.F1 & S1 at A-1/24, DLF, Bhopura.
3. Flat No.F-1, F-2, S1, S2, B-1/6, Ankur Vihar, DLF, Loni, Ghaziabad.
The assessee declared rental income only in respect of one property i.e., rent from mobile tower installed at roof of B-1/6, Ankur Vihar, DLF, Loni, Ghaziabad. An Inspector was deputed for conducting inquiries regarding the status of other properties. The Inspector submitted a report indicating the rental income at particular levels. When confronted, the assessee admitted that these properties were owned by him. However, it was argued that the quantum of rent was on higher side. Not convinced with the assessee’s submissions, the AO computed income from the property at Rs.2,77,200/-, after allowing statutory deduction to the extent of 30% from the gross rent of Rs.3,96,000/- as indicated by the Inspector.
This led to the addition of Rs.2,77,200/-, which came to be confirmed in the first appeal.
After considering the rival submissions and perusing the relevant material on record, it is indisputably found that the assessee admitted to be the owner of three properties discussed by the AO in the assessment order.
The ld. AR contended that Municipal value of the property should have been taken into consideration while determining the annual letting value of the property u/s 23 of the Act. On a specific query, the ld. AR could not draw my attention towards any material indicating that these properties were not let out or the assessee did not receive any rent from such properties. There is no discussion in the assessment order or the impugned order on this vital aspect, which is significant for determining the ALV of the properties u/s 23 of the Act. Under these circumstances, I set aside the impugned order and remit the matter to the file of AO with a direction to determine the ALV of these properties as per law, after allowing an opportunity of hearing to the assessee.
The only other issue pressed by the ld. AR is against the addition of Rs.14,51,856/- on account of deemed dividend u/s 2(22)(e) of the Act.
The facts of this ground are that the assessee is a Director in M/s Bhargav Promoters (P) Ltd. and also held share capital of more than 10% in M/s 3
Bhargav Buildtech (P) Ltd. On a perusal of the copy of account of the assessee in the books of the company, it was noticed that the company’s money was lying in the assessee’s account. Total of such credit entries was worked out at Rs.14,51,816/-. Since the accumulated profits of the company were more than this amount, the AO called upon the assessee as to why the addition be not made by treating this amount as deemed dividend u/s 2(22)(e) of the Act. In reply, the assessee submitted that he accepted money from the company under current account which was squared up at the close of the financial year. It was further submitted that the assessee did not receive any payment in the nature of loan or advance.
Not convinced, the AO made addition of Rs.14,51,816/-, which was echoed in the first appeal.
Having heard both the sides and perused the relevant material on record, it is noticed that the assessee has made out a case that the said amount of Rs.14.51 lac was received by him on current account for defraying the expenses of the company and not as a loan or advance for personal use. On a specific query, the ld. AR could not produce a copy of account of the assessee in the books of the company. Only when the copy 4
of account is available that one can appreciate the contention about the amount as obtained on current account or as loan or advance. Since this significant information is not available on record, I consider it expedient to set aside the impugned order and restore the matter to the file of AO for deciding this issue afresh, after considering the nature of amount received by the assessee. If it is simply a balance in the current account, namely, the assessee was spending money on behalf of the company, then, no addition is called for. If, however, such amount is found to have been received as a loan or advance from the company, even if squared up at the end of the year, it would be a case calling for disallowance u/s 2(22)(e) of the Act. Needless to say, the assessee will be given an opportunity of being heard.
The other disallowance of Rs.22,497/- on account of interest was not pressed by the ld. AR, which is hereby dismissed.
In the result, the appeal is partly allowed for statistical purposes.
The order pronounced in the open court on 25.10.2016.