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2019 (9) TMI 1727 - AT - Income TaxIncome from house property - Determination of annual value or determined vacancy allowance - Deemed/assumed rental income - as argued property in question remained vacant throughout the year under appeal because no tenant could be found - CIT (A) held that the benefit of the vacancy allowance u/s 23(1)(c) of the Act is not available to the assessee as a property was not let out anytime at least once - HELD THAT - Having regard to the clear provisions of the Act and harmonious reading of Section 23(1)(a) and 23(1)(c) of the Act were hereby hold that the rent received by the assessee has to be treated as the annual value of the house and liable to tax under income from house property. The action of the ld. CIT (A) on this ground is hereby upheld. Addition on account of cash and jewellery found from the residence of the Appellant and bank lockers in the names of family members of the Appellant during search and seizure operations - argument of the ld. AR that the jewellery was purchased with the imprest money of the company available with the assessee -HELD THAT - Wealth Tax Return of Surpreet Suri and Kinty Suri wife shown a total amount of 2481.672 gms whereas the total jewellery found and recorded as per the panchanama pertaining to Surpreet Suri and Kinty Suri was 3622.15 gms. Since the assessee has got two sons and no provision has been given by the revenue regarding the jewellery possessed by them in view of the Instruction No. 1916 dated 11.05.1994 in para (ii) and (iii) keeping in view the return income of the assessee which is 4.5 crores for the assessment year 2013-14 we hereby consider it fair to allow 200 gms of jewellery per person and thus an amount of 740 gms can be treated as unexplained excess jewellery in the hands of the assessee against 2528 gms determined by the revenue. This was due to the fact that the amount of jewellery of 1388 gms belonging to Narender Kaur Suri and Preet Pal Suri parents of the assessee found at the residence of the assessee were treated in the hands of the assessee wrongly even though the panchnama reveals clearly that the jewellery belongs to the parents of the assessee. The appeal of the assessee on this ground is treated as partly allowed.
Issues Involved:
1. Addition of Rs. 2,94,000 on account of deemed/assumed rental income. 2. Addition of Rs. 2,37,08,076 on account of cash and jewellery found during search and seizure operations. 3. Excessiveness of the additions made by the AO and confirmed by the CIT(A). 4. Levy of interest under Sections 234A, 234B, and 234C of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Addition of Rs. 2,94,000 on account of deemed/assumed rental income: The assessee contested the addition of Rs. 2,94,000 on the grounds that the property in question remained vacant throughout the year as no tenant could be found. The Assessing Officer (AO) estimated the letting value at Rs. 35,000 per month, adding Rs. 2,94,000 to the total income after deductions under Section 24 of the Income Tax Act, 1961. The CIT(A) upheld the addition, stating that the benefit of the vacancy allowance under Section 23(1)(c) is not available as the property was never let out. The assessee argued that despite best efforts, no tenant was found, and cited various case laws to support the argument that no such condition is specified in Section 23(1)(c). However, the Tribunal upheld the CIT(A)'s decision, confirming that the rent received by the assessee should be treated as the annual value of the house and taxed under income from house property. 2. Addition of Rs. 2,37,08,076 on account of cash and jewellery found during search and seizure operations: During the search, jewellery and cash were found at the residence and in bank lockers of the assessee and family members. The AO treated the excess jewellery weighing 2528 gms as unexplained investment, as the declared jewellery in Wealth Tax returns was significantly less than what was found. The assessee argued that the jewellery was purchased with imprest money from the company and presented bills from Swaran Shree Jewels. However, the AO and CIT(A) rejected this explanation due to inconsistencies in the bills and the impracticality of a company providing imprest for personal purchases. The Tribunal, upon examining the material, allowed a partial relief by considering 740 gms of jewellery as explained, reducing the unexplained jewellery to 740 gms from 2528 gms, based on the Instruction No. 1916 dated 11.05.1994 and the high-income level of the assessee. 3. Excessiveness of the additions made by the AO and confirmed by the CIT(A): The assessee claimed that the additions made were excessive and that the authorities did not properly appreciate the documentary evidence and case laws submitted. The Tribunal, after reviewing the arguments and material on record, partly allowed the appeal by reducing the unexplained jewellery to 740 gms, thus providing partial relief to the assessee. 4. Levy of interest under Sections 234A, 234B, and 234C of the Income Tax Act, 1961: The assessee argued that the levy of interest under Sections 234A, 234B, and 234C was illegal and excessive. The Tribunal noted that the application of these sections is consequential and upheld the interest levied as per the provisions of the Act. Conclusion: The appeal of the assessee was partly allowed. The Tribunal upheld the addition of Rs. 2,94,000 on account of deemed rental income but provided partial relief concerning the unexplained jewellery, reducing the amount considered unexplained. The levy of interest under Sections 234A, 234B, and 234C was deemed consequential and upheld. The overall result was a partial allowance of the assessee's appeal.
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