DEEPAK SRICHAND BHATIJA,MUMBAI vs. ACIT CIR 12(2), MUMBAI

Brief facts are, assessee an individual filed his return of income for the assessment year under consideration on 8th July 2008, declaring total income of ` 19,82,670. During the assessment proceedings, the Assessing Officer while verifying the computation of income filed along with return of income noticed that assessee has claimed SOP status for two properties. On further verification of information obtained, he noticed that second SOP is a flat located at Kandivali for which the assessee has admitted notional income of ` 2,000, under the head income from house property. The Assessing Officer was of the view that in the localities near to Kandavali, where officers of Income Tax Department were staying, were paying market rent @ ` 25.56 per sq.ft. He, therefore, was of the view that the income shown by the assessee in respect of the SOP is not as per the market rate. Therefore, applying market rent @ ` 25.56 per sq.ft. to carpet area of the flat at 700 sq.ft. Assessing Officer determined the monthly market rate of ` 17.892 and after allowing 10% margin, he finally worked out the monthly market rent of ` 16,102 and the ALV at ` 1,93,233. After allowing 30% standard deduction, he determined the net taxable income from SOP at ` 1,35,263. The assessee having already declared income of ` 2,000, he added back the balance amount of ` 1,33,263. Being aggrieved of such addition, assessee preferred appeal before the learned Commissioner (Appeals).

In the course of hearing of appeal, assessee submitted, a certificate from the concerned housing society to show that the annual ratable value is ` 30,000 and after deduction of municipal taxes, the net ALV was shown at ` 8,534. It was further submitted by the assessee that the actual carpet area of the flat as per the purchase deed is ` 338.29 per sq.ft. and not ` 700 sq.ft., as worked out by the Assessing Officer. On the basis of submissions made by the assessee, learned Commissioner (Appeals) called for a remand report and after considering the observations of the Assessing Officer in the remand report ultimately confirmed the addition by observing that the assessee has not submitted any evidence to prove that the market rent of the flat would be less than what is determined by the Assessing Officer.

We have considered the submissions of the parties and perused the material available on record. At the time of hearing, the learned Authorised Representative accepting the market rent of ` 25.56 per sq.ft. applied by the Assessing Officer submitted, the actual carpet area of the plot is 338.29 sq.ft. and not 700 sq.ft. as taken by the Assessing Officer. He submitted, though, before the learned Commissioner (Appeals) assessee had submitted the purchase deed to prove this fact but the learned Commissioner (Appeals) has completely

In the result, appeal stands allowed for statistical purposes. Order pronounced in the open Court on 22.04.2016