2017 (4) TMI 1445 - AT - Income Tax

Addition as income from the house property - addition made by AO as income from house property by calculating ALV on assumption basis - HELD THAT - We find that the AO recorded that during the year under consideration assessee has shown income from house property at ₹ 1,85,150/-, on account of rent of ₹ 2,64,500/- received from letting out of part of unsold portion of project Rama s Janak Vihar, Banipark, Jaipur. AO has applied ratio lay down in the case of Commissioner of Income Tax vs. M/s Ansal Housing Finance and Leasing Co. Ltd. 2012 (11) TMI 323 - DELHI HIGH COURT . We find that the facts are identical as were in the Commissioner of Income Tax vs. Ansal Housing Finance and Leasing Co. Ltd.. In the case in hand some of the flats are admittedly let out by the assessee. Therefore, under these undisputed facts, respectfully fallowing the Hon ble Delhi High Court. We do not see any reason to interfere into the order of the Ld. CIT(A), same is hereby affirmed. Therefore, this ground of the assessee s appeal is dismissed. Addition u/s 40A(3) - HELD THAT - The assessee has failed to demonstrate that the payments made to the Jaipur Vidhyut Nigam falls under the category of exemption as provided under Rule 6DD of the Income Tax Act Rule 1962. In the absence of the same, we do not see any reason to interfere into the order of the Ld. CIT(A). This ground of assessee s appeal is dismissed. Addition on account of advances shown against flat booking for which sales has been made in subsequent years - AO made addition by treating the advances from Shri Azad Hussain as bogus - HELD THAT - It is observed by the Assessing Officer that vide letter dated 19/3/2015, the assessee was specifically asked to file the date and mode of receipt of advances of ₹ 28,24,000/- from Shri Azad Hussain but nothing was stated in the reply dated 23/3/2015. The contention of the assessee is that, the amount was not received during the year under appeal. This issue requires fresh consideration by the Assessing Officer. The Assessee is directed to furnish the supporting evidences in respect of its claim that the advances were received in earlier years. The AO would then verify the same by making necessary inquiry. Therefore, this ground is allowed for statistical purpose

Summary

Issues Involved:
1. Addition of ?14,11,556/- as income from house property.
2. Addition of ?21,967/- under Section 40A(3) of the Income Tax Act, 1961.
3. Addition of ?29,26,000/- on account of advances shown against flat booking.
4. Non-consideration of additional evidences furnished by the assessee under Rule 46A of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Addition of ?14,11,556/- as Income from House Property:

The assessee argued that the addition made by the Assessing Officer (AO) was based on an incorrect application of Section 23(1)(a) of the Income Tax Act, 1961, and should have instead considered Section 23(1)(c). The AO calculated the Annual Letting Value (ALV) of the vacant unsold portion of a multistory project, Rama's Janaki Vihar, on an assumption basis, leading to an addition of ?14,11,556/-. The assessee contended that the property was partly let out, and the actual rent received should be considered under Section 23(1)(c). However, the CIT(A) and the Tribunal upheld the AO's decision, referencing the Delhi High Court's ruling in the case of Ansal Housing Finance and Leasing Co. Ltd., which stated that ALV is applicable regardless of actual income received. The Tribunal affirmed the CIT(A)'s order, rejecting the assessee's argument that the entire project should be considered as a single property.

2. Addition of ?21,967/- under Section 40A(3) of the Income Tax Act, 1961:

The AO disallowed ?21,967/- under Section 40A(3) for cash payments made to Jaipur Vidyut Vitran Nigam Ltd. (JVVNL) for electricity expenses, which exceeded the permissible limit. The assessee argued that the payments were genuine and made to a government agency, and thus should not be disallowed. The CIT(A) upheld the AO's decision, stating that JVVNL is not the government, and the payments did not fall under any exceptions provided in Rule 6DD. The Tribunal agreed with the CIT(A), noting that the assessee failed to demonstrate that the payments met the criteria for exemptions under Rule 6DD.

3. Addition of ?29,26,000/- on Account of Advances Shown Against Flat Booking:

The AO treated the advances received from Shri Azad Hussain as bogus and added ?29,26,000/- to the income. The assessee claimed that the amount was received in the financial year 2008-09 and was related to the sale of flat B-104, which was booked and possession handed over in that year. The assessee provided additional documents, including allotment and possession letters, to support this claim. The CIT(A) rejected the additional evidence, stating it did not meet the conditions under Rule 46A. The Tribunal, however, found merit in the assessee's claim and directed the AO to reconsider the issue, allowing the assessee to furnish supporting evidence to prove that the advances were received in earlier years.

4. Non-Consideration of Additional Evidences Furnished by the Assessee under Rule 46A:

The assessee submitted additional evidence, including allotment and possession letters, during the appellate proceedings, which were not available during the assessment. The CIT(A) refused to admit these under Rule 46A, stating the assessee did not meet the conditions for admitting additional evidence. The Tribunal found that these documents were crucial for deciding the issue of advances and directed the AO to admit and verify the additional evidence provided by the assessee.

Conclusion:

The Tribunal upheld the additions made under Sections 23(1)(a) and 40A(3) but remanded the issue of advances back to the AO for fresh consideration, allowing the assessee to present additional evidence. The appeal was partly allowed for statistical purposes.