Loading judgment…
Facts
The appeals concerned assessment year 2018-19, related to quantum additions and penalty. The assessee filed appeals with a delay of 3 days, which was condoned. The Assessing Officer made additions on account of discrepancies in rental receipts from BJN Hotel Ltd. and Mobivil Technologies India Pvt. Ltd. The assessee argued that the rent amounts were offered to tax in subsequent assessment years.
Held
The Tribunal held that the assessee received the rent amounts in subsequent years and offered them to tax in the year of receipt. Regarding Mobivil Technologies India Pvt. Ltd., it was noted that actual rent received and TDS deducted were not disputed. The Tribunal found that the Assessing Officer erred in considering the agreed rent instead of the actual rent received.
Key Issues
Whether the addition made on account of rent receipts is justified when the amounts were offered to tax in subsequent years? Whether the penalty under section 270A is sustainable when quantum additions are deleted?
Sections Cited
270A, 143(3), 144B
AI-generated summary — verify with the full judgment below
Before: Shri S.S. Viswanethra Ravi&
O R D E R
PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:
Both the appeals filed by the assessee are directed against different orders both dated 13.05.2024 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2018-19 relating to quantum addition and penalty under section 270A of the Income Tax Act, 1961 [“Act” in short].
We find that the appeal was filed with a delay of 3 days. The assessee filed an affidavit for condonation of delay stating the reasons. Upon hearing both the parties and on examination of the said petition, we find the reasons stated by the assessee are bonafide, which really prevented the assessee in filing the appeal in time. Thus, the delay of 3 days is condoned.
Since issues raised in the appeals are similar based on the same identical facts, with the consent of the both the parties, we proceed to hear both the appeals together and pass consolidated order for the sake of convenience.
First, we shall take up appeal in for adjudication.
The assessee raised ground Nos. 1 & 2 in challenging the action of the ld. CIT(A) in confirming the addition made by the Assessing Officer on account of rental receipts in the facts and circumstances of the case.
Brief facts relating to the case are that the assessee is an HUF and derives income from house property. The Assessing Officer found that the assessee earned income from house property and sought details from the assessee. The assessee filed information/agreement and on examination of the same, the Assessing Officer found discrepancies with regard to BJN Hotel Ltd. and M/s. Mobivil Technologies India Pvt. Ltd. The Assessing Officer, accordingly, added an amount of ₹.3,82,269/- on account of BJN Hotel Ltd. and ₹.41,250/- on account of Mobivil India Pvt. Ltd. The ld. CIT(A) confirmed the same.
Before us, the ld. AR Shri P.M. Kathir, Advocate submits that the action of the ld. CIT(A) is not justified in confirming the addition made by the Assessing Officer without considering the submissions of the assessee and drew our attention to page 79 of the paper book. According to the ld. AR, the assessee received rental amount for the year under consideration piecemeal manner from its tenant and the same defaulted amounts were paid in subsequent AYs 2019-20 and 2020-21. The ld. AR submits that the said amount concerning the additions was offered to tax in AYs 2019-20 and 2020-21. He drew our attention to page 81 of the paper and argued that the assessee’s share of rental income as per the agreement is ₹.8,85,566/-, but, however, the assessee received only ₹.3,39,468/-. He submits that the said difference was added by the Assessing Officer on the basis of rental agreement, but however, the said difference of rental amount paid to the assessee in subsequent years. He argued that the addition confirmed by the ld. CIT(A) is not justified as the same was offered to tax in subsequent years.
The ld. DR Ms. R. Anita, Addl. CIT argued that the assessee violated the provisions under section 25(A) of the Act as well as Rule 4 of Income Tax Rules, 1962. She strongly supported the order of the ld. CIT(A).
After hearing both the parties, we note that admittedly, as per rental agreement, the assessee is to receive his share of rent at ₹.8,85,566/-, which is clear from para 4.1 of the assessment order, but, however, the Assessing Officer added the difference of rent reflected in the agreement and actual rent received. There is no dispute with regard to the actual rent received by the assessee at ₹.3,39,468/-. And there is no dispute with regard to offering the said difference in subsequent AYs 2019-20 and 2020-21. On perusal of page 81, being Form 26AS for AY 2019-20, which clearly shows the difference of amount as added by the Assessing Officer is stated to be paid in AY 2019-20. Further, on perusal of page 89 of the paper book, which clearly shows the total amount paid to the account of the assessee at ₹.10,80,000/- as against ₹.8,85,566/-. Therefore, in our opinion the assessee received the said arrears of rent for the year under consideration in subsequent years, which were offered to tax in the year of receipt. Therefore, we find force in the arguments of the ld. AR and the order of the ld. CIT(A) is not justified in confirming the order of the Assessing Officer in making the addition on account of difference between actual rent received and the rent as per agreement. Thus, the addition as confirmed by the ld. CIT(A) is deleted.
With regard to the receipt of rent from M/s. Mobivil Technologies India Pvt. Ltd, the ld. AR submits that the Assessing Officer without taking into consideration the actual rent received, proceeded to consider only the agreed rent in the agreement. The ld. AR drew our attention to page 53 to 63 and submits that the assessee received rent of ₹.3,74,885/-, which is reflected in Form 26AS. He argued vehemently that the Assessing Officer is not correct in making the addition ignoring the evidence in the form of Form 26AS showing the actual rent received.
The ld. DR relied on the order of the Assessing Officer and the ld. CIT(A).
After hearing both the parties, we note that admittedly, the assessee received rent from M/s. Mobivil Technologies India Pvt. Ltd. only to the extent of ₹.3,74,879/- and also TDS deducted thereon of ₹.37,492/-, which is not disputed by both the parties. But, however, we find that the Assessing Officer fell in error in taking into consideration the agreed rent as per the agreement resulting the impugned addition. On perusal of page 52 to 63 of the paper book, we note that the rent bill issued by the assessee in favour of M/s. Mobivil Technologies India Pvt. Ltd. for the period from 01.04.2017 to 31.03.2018. In all the months, it is noted that the assessee raised bill under the head “office rent” and also raised tax invoice for the period from July, 2017 to March, 2018, clearly shows CGST & SGST at 9% each was calculated and paid for the monthly rent received by the assessee. Therefore, we find force in the argument of the ld. AR that the Assessing Officer fell in error in ignoring the receipt of rent as reflected in Form 26AS and TDS deducted thereon. Therefore, in our opinion, the addition made by the Assessing Officer and confirmed by the ld. CIT(A) is not justified. Thus, the addition made on the amount of difference between the actual rent received and agreed rent as per agreement in the case of M/s. Mobivil Technologies India Pvt. Ltd. is deleted.
13. We find that the appeal was filed with a delay of 3 days. The assessee filed an affidavit for condonation of delay stating the reasons. Upon hearing both the parties and on examination of the said petition, we find the reasons stated by the assessee are bonafide, which really prevented the assessee in filing the appeal in time. Thus, the delay of 3 days is condoned.
We note that against the assessment order under section 143(3) r.w.s. 144B of the Act dated 18.08.2021, the Assessing Officer initiated penalty proceedings under section 270A of the Act for misreporting of income. Since we have deleted the quantum additions made by the Assessing Officer by observing that the assessee has rightly reported its income for taxation, the penalty levied under section 270A of the Act become infructuous and dismissed accordingly.
In the result, both the appeals filed by the assessee are allowed. Order pronounced on 29th November, 2024 at Chennai.