JASHVANT C. RAVAL,MUMBAI vs. ASST CIT 11(2), MUMBAI

The Present Appeal has been preferred by the assessee against the order dated 01.09.2014 of the Commissioner of Income Tax (Appeals) - 3, [hereinafter referred to as the CIT(A)] relevant to assessment year 2010-11. 2 Jashvant C. Raval vs. ACIT 2. The assessee has taken the following grounds of appeal: 1. “Accepting the notional rent of Rs.4,00,000 (Raval House) and Rs.7,00,000 (Laburnum Lane House) for the full year on the basis of ratio of 8% return on investment laid down in Radha Devi Dalmiya Vs. CIT (1982) 125 ITR 134 and Bippinbhai Vadilal Family Trust Vs. CIT (1994) 208 ITR 1005, without going into the submissions made by the appellant.

Rejecting the additional evidence in respect of rent from Laburnum Lane Housing proving that the rent received in the vicinity at arms’s length was Rs.14,500 p.m.

The brief facts of the case are that during the course of assessment proceedings, the Assessing Officer noted that the assessee had reflected three house properties in his balance-sheet against which the assessee had shown annual letting value as follows:

ALV from Raval House, Mumbai, being LOP property – Rs.60,000/-.

ALV of flat on Laburnum Road, Pune-Rs.81,000/- The Assessing Officer was of the opinion that the rent shown to have been received by the assessee was very nominal. He therefore asked the assessee to explain in this respect. After considering the submissions of the assessee, the assessing officer held that the property at Meridian Apartments in Andheri (W) was self occupied property of the assessee and he accordingly computed the ALV of the said property at Nil. In respect of Raval House Property, the assessee explained that the tenant M/s. JCR & Co. was a sister concern of the assessee and therefore there was no rental agreement executed with the said concern. The assessee also filed the copy of Municipal Rental Valuation of the properties in the area. The assessing Officer, however, further rejected the Municipal Value stating the same to be outdated and estimated the annual letting value at 8% of the value of the property shown in the balance sheet. Likewise for the Laburnum property, at Pune, the Assessing Officer estimated annual letting value of the same at Rs. 7,00,000/-.

Being aggrieved by the above action of the AO, the assessee filed appeal before the Ld. CIT(A). Before the CIT(A), the assessee submitted certain additional evidence and contended that in case of Raval House Property only 200 sqft constituting 1/3rd of the floor area, has been rented out for 3 months only at the rate of Rs.20,000/- per month. As regards the Laburnum property, the assessee stated that the house was newly constructed and was only partly let out during the year for nine months only. The assessee relied upon the Municipal Valuation and also comparative rentals of other properties in the vicinity. In this respect, the ld. CIT(A) called upon the remand report in respect of additional evidence submitted by the assessee under Rule 46A of the I.T. Act. In the remand report, though the assessing Officer noted that from the perusal of the records and also from the additional evidence, it was noticed that Raval House was let out for a period of 3 months and Laburnum house was let out for 9 months. However, the notional rent was worked out in respect of both the properties for whole year. However it was not established from sufficient evidences that what portion of the property had been rented out. The Ld. CIT(A) further observed that the assessee had not furnished written agreement with Ms. JCR & Co with regard to letting of the properties by the assessee. He also considered that the entire property was let out 6 Jashvant C. Raval vs. ACIT by the assessee and rejected the contention of the assessee that only the part of the property was let out. He therefore confirmed the ALV of the properties as was estimated by the AO. Aggrieved by the order of CIT(A), the assessee has come in appeal before us.

The ld. Counsel for the assessee before us, has submitted that the lower authorities have not correctly appreciated additional evidences filed by the assessee before them. She has filed a letter dated 8th June,2006 pointing out certain evidences to contend that the Rival House property was occupied by the assessee only on 31-08-2009 and further that the Laburnum property at Pune, was acquired only on 19.06.2009 and letting out was made from July 2009. She has also relied upon the Municipal annual rental valuation and comparative rental value of other properties in the vicinity. She has further submitted that the following documents sought to be relied upon by her are very much necessary for the just decision of the case: 1. Raval House, Khar west, Mumbai a. Occupation certificate dated 31.08.2009 b. Municipal Assessment bill mentioning date of first assessment bill as 21.12.2009 7 Jashvant C. Raval vs. ACIT c. Society certificate dated 27.04.2010 stating that Raval house was occupied from w.e.f. 21.12.2009 d. Municipal ARV dated 03.07.2010 e. Confirmation from JCR & Co. for rent paid for three months i.e. From Jan 2010 to March 2010 2. Laburnum Road, Pune a. Purchase agreement dated 19.06.09 for Flat No. A/4 evidencing that let out was made only from July 2009. b. Pune Municipal Assessment bill (ALV is also mentioned) c. Comparable Leave & License agreement dated 28.09.2012 of third party in Laburnum Lane d. Leave and license agreement dated 03.10.2008 of JCR & Co with third party in Baner Road, Pune. e. Confirmation from JCR & Co. for rent paid for Nine months i.e. July 09 to March 2010. She has requested that the assessing officer may be directed to consider the above documents which are in the nature of clinching evidence which go to the root of the case.