VINAY BHASIN,NEW DELHI vs. ACIT, CIRCLE- 61(1), NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘H’: NEW DELHI

BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER

ITA No.164/DEL/2020 [Assessment Year: 2016-17]

Sh. Vinay Bhasin, ACIT, C-14, First Floor, South Circle-6(1), Extension, Part-II, Vs New Delhi New Delhi-110049 PAN-AAAPB3445J Assessee Revenue

Assessee by Sh. Shailesh Gupta, CA Revenue by Sh. Amit Katoch, Sr. DR

Date of Hearing 17.08.2023 Date of Pronouncement 23.08.2023 ORDER PER SHAMIM YAHYA, AM,

This appeal by the assessee is directed against the order of the Ld.

CIT(A)-20, New Delhi, dated 29.11.2019 pertaining to Assessment Year

2016-17.

“1. That the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in sustaining an addition of a sum of Rs. 10, 95, 669/- on account of addition under section 23 of the Act by holding that assessee - appellant has earned notional rent with respect to three properties being owned by assessee - appellant during the impugned assessment year. 1.1. That the learned CIT (A) while sustaining the addition on account of notional rent with respect to commercial property at Shop No. 504, Goa, has failed to appreciate the fact that the assessee - appellant was not able to let out the said property despite his best efforts for want of tenant and the said property being commercial property, as such the provisions of section

2 ITA No.164//Del/2020

23(4) were not applicable and thus, the addition so made should be deleted. 1.2. That. the learned CIT (A) while sustaining the addition on account of notional rent with respect to vacation house property at 257, Phase - 2, Aldeia De Goa, has failed to appreciate the fact that the assessee - appellant was not able to let out the said property despite his best efforts for want of tenant and further, the addition of 7% of total investment in said propertv as notional rent is without any basis and is also misconceived in law and thus, the addition so made should be deleted. 1.3. That the learned CIT (A) while sustaining the addition on account of notional rent with respect to house property at S - 196, Panchsheel Park, Delhi, has failed to appreciate the fact that the assessee - appellant was not able to let out the said property despite his best efforts for want of tenant and further, the addition of a sum of Rs. 4, 15, 520/- as notional rent is too without any basis and is also misconceived in law and further, without prejudice to the above the deemed rent as worked out by assessee - appellant following the MCD valuation was Rs. 61, 251/-, should have been adopted as deemed notional rent. 1.4 That in doing so, the learned CIT (A) has failed to appreciate the fact that the requisite documents/evidences along with explanations were tendered by assessee, but both the learned AO and CIT (A) have based their decision on preconceived notions and misconceived facts and as such, the addition so sustained should be deleted. 2. That the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in sustaining an addition of a sum of Rs. 35, 000/- on account of addition under section 23 of the Act by holding that assessee - appellant has earned notional rent with respect to the property at 102, 1S Floor, A-5, World Spa, Gurgaon, being owned by assessee - appellant during the impugned assessment year. 2.1. That the learned CIT (A) while sustaining the addition on account of notional rent with respect to the said property, has failed to appreciate the fact that the actual rent received by assessee - appellant was Rs. 4, 90, 000/-(1/2; share) and the same was duly backed by lease deed, email correspondences and ledger account and as such, the addition of a sum of Rs. 35, 000/- is without any basis and misplaced on facts, which needs to be deleted, as such.. 3. That the learned CIT (A) has relied on judgments totally inapplicable to the facts of assessee - appellant and has also based her findings on mere suspicion and surmises which are

3 ITA No.164//Del/2020

contrary to material available on record and as such, the addition so sustained needs to be deleted. 4. That the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in sustaining addition in the hands of assessee –appellant without giving any fair and proper opportunity of being heard to the assessee, thereby, violating the principles of natural justice.” 3. Brief facts of the case are that the Assessing Officer during the

assessment proceedings found that the assessee has not shown rental

income in respect of immovable properties possessed by him during the

year. The Assessing Officer identified four of such properties out of which

one property i.e. 109, Navjeevan Vihar, New Delhi has been the address of

residential correspondence of the assessee. The Assessing Officer treated

the same as residential house property of the assessee and calculated

notional rent as per provisions of Section 23(1)(a) of the Act with respect

to all the other three properties. While doing so the Assessing Officer had

taken support of the case laws such as

I. Commissioner of Income Tax vs Smt. Bhagwati Devi (2008) 298 ITR 413 (Jharkhand) II. ITO vs Chem. Mech. P. Ltd. 83 ITD 427, Mumbai ITAT, b-Bench III. Smt. Radha Devi Dalmia vs. Commissioner of Income Tax (1980) 125 ITR 134 Allahabad High Court IV. Susham Singla vs. Commissioner of Income Tax P & H High Court 3.1. In the absence of any calculation of annual let able value of the

property submitted by the assessee the Assessing Officer had considered

the ALV of the properties @7% of the total investment value. The

Assessing Officer considered notional rental income from

4 ITA No.164//Del/2020

CIT(A). The Ld. CIT(A) confirmed the order of the Assessing Officer by

observing as under:-

“The appellant during appeal hearing submitted that provisions of Sec.24 of the Act are applicable to residential property only and not to commercial property. Therefore, no notional rent u/s 23(1)(a) of the Act should be calculated on shop no.504 Ambrosia, Goa. The appellant is obvious misinformed because for calculation of notional rent u/s 23(1)(a) of the Act there is no distinction between residential property and commercial property. However, the same is not applicable to a property which is issued for the business and profiession of the appellant i.e. for commercial purposes by the appellant. All the properties from which the appellant receives or can receive rent come under Sec. 23(4) of the act the appellant can declare one such property as his residence if he owns more than one property. Therefore the contention of the appellant is misplaced and the notional rent calculated by the Assessing Officer on this property is sustained. The appellant further submitted that the ALV of the property situated at 257, Phase-II, Aldeia de Goa cannot be 7% of the investment and he would submit the Annual Letable Value from the municipal authorities within some time. However, the last date of hearing was 11.11.2019 and till this date i.e. 25.11.2019 the appellant could not produce any ALV of the property. However, as per the description of the property it is a house constructed on a plot of 400 sq. meters. Hence the AL of the property at a place like Goa cannot be less than that determined by the Assessing Officer. The calculation made by the Assessing Officer is sustained. As far as the ALV of the house property situated at S-196, Panchsheel Park, in Delhi is concerned the appellant has submitted the ALV to be Rs. 94,122/- which is astonishingly low in comparison to the size of the property and the location of the property in Delhi. The Assessing Officer has determined the same at Rs. 5,93,600/- which is absolutely reasonable. Hence, the notional rental income from such property of Rs.4,15,520/- as calculated by the Assessing Officer is confirmed.” 5. Against the above order, the assessee is in appeal before us.

5 ITA No.164//Del/2020

Order pronounced in the open court on 23rd August, 2023.

Sd/- Sd/- [KUL BHARAT] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER Delhi; 23.08.2023. f{x~{tÜ? f{x~{tÜ? f{x~{tÜ? f{x~{tÜ? Copy forwarded to: 1. Assessee 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi