9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (8) TMI 26 - AT - Income TaxNotional fair rental value - computation of notional rent - Held that - AO had taken the market rent from the website on 28/07/2011 whereas the assessment order was passed on 30/12/2011 and thus there was almost a period of 6 months between the date the information was obtained from the website and the date on which the assessment order was passed. The Ld. CIT (Appeals) has further observed that the AO should have intimated the proposed adoption of notional rent to the assessee and that the AO was not right in making addition behind the back of the assessee under assumed circumstances. CIT (Appeals) proceeded to adopt a notional rent of ₹ 12,000/- per month instead of ₹ 22,000/- per month as adopted by the AO. In our considered opinion, the AO was patently wrong in adopting a figure of notional fair rental value without confronting the assessee with the same and as such the entire addition is liable to be deleted. However, since the assessee has not challenged the action of the Ld. CIT (Appeals) in upholding the computation of notional rent to the extent of ₹ 12,000/- per month, we cannot grant any further relief to the assessee but deem it fit to dismiss ground numbers 1 and 2 of the Department s appeal. Addition under section 68 - Held that - Hon ble Delhi High Court in the case of CIT versus Divine Leasing and Finance Ltd 2006 (11) TMI 121 - DELHI HIGH COURT for the proposition that the burden of proof can seldom be discharged to the hilt by the assessee and if the AO harbours doubt of legitimacy to any subscription, he is empowered to carry out thorough investigations but if the AO fails to unearth any wrong or illegal dealings, he cannot adhere to his suspicions and treat the subscribed capital as the undisclosed income of the company. CIT (Appeals) correctly observed that in all the cases the assessee had submitted all possible evidences and there was no evidence on record which may prove that assessee had given cash for receiving advances. The Ld. CIT (Appeals) has further observed that the assessee had duly discharged his burden of proof which a person of ordinary prudence would discharge under section 68 of the Act and that once the assessee has discharged his primary onus, the burden shifts to the AO to prove that the transaction of advance was not genuine. - Decided in favour of assessee.
Issues:
1. Notional fair rental value determination 2. Addition under section 68 of the Income Tax Act Issue 1: Notional Fair Rental Value Determination: The Department appealed against the order by the Ld. CIT (Appeals) reducing the notional rent from ?22,000 to ?12,000 per month. The AO had based the rent on real estate agencies' quotes from websites, but the Ld. CIT (Appeals) found fault with the AO for not notifying the proposed rent to the assessee before making the addition. The ITAT upheld the Ld. CIT (Appeals)'s decision, stating that the AO was wrong in adopting a figure without informing the assessee, leading to the dismissal of the Department's appeal grounds related to this issue. Issue 2: Addition under Section 68 of the Income Tax Act: Regarding the deletion of the addition under section 68, the Ld. CIT (Appeals) found the AO's findings self-contradictory and lacking proper verification procedures. The Ld. CIT (Appeals) emphasized that the burden of proof shifted to the AO once the assessee had discharged the primary onus, citing relevant case law. The ITAT concurred with the Ld. CIT (Appeals)'s findings, noting that the Department failed to provide evidence contradicting the Ld. CIT (Appeals)'s conclusions. Consequently, the ITAT upheld the deletion of the addition made under section 68, leading to the dismissal of the Department's appeal on this issue. In conclusion, the ITAT dismissed the Department's appeal, upholding the Ld. CIT (Appeals)'s decisions on both issues related to the notional fair rental value determination and the addition under section 68 of the Income Tax Act. The judgment highlighted the importance of proper procedures, burden of proof, and factual consistency in tax assessments and appeals.
|
