2018 (11) TMI 643 - AT - Income Tax

Addition under the head Income from House Property - ALV of residential house - Held that - DR could not distinguish any facts of the present Assessment Year with the earlier Assessment Years i.e. 2004-05 to 2009-10 wherein the Tribunal allowed the identical issue in favour of the assessee as held Assessing Officer was not justified in violating the rule of consistency on the issue of ALV of the property in question, already accepted by the Revenue in early AYs under similar facts and circumstances of the case. The Assessing Officer is thus directed to delete the additions in question made in the Assessment Years under consideration on the basis of a notional value of ₹ 73,80,000/- per annum as against ₹ 24,000/- per annum declared by the assessee being the annual rent received or receivable. The issue raised in the grounds is thus decided in favour of the assessee.

Summary

Issues:
Appeal against addition of income from house property under section 23(1)(a) of the Income Tax Act, 1961, based on notional value exceeding actual rent received; Application of rule of consistency in assessing annual value of property; Judicial pronouncements regarding rent determination under Delhi Rent Control Act.

Analysis:
1. The appellant contested the addition of income from house property by the Assessing Officer under section 23(1)(a) of the Income Tax Act, 1961, based on a notional value significantly higher than the actual rent received. The appellant argued that the value adopted was excessive and unreasonable, emphasizing that the department had consistently assessed income based on actual rent received in previous years. The appellant also cited judicial pronouncements stating that rent cannot exceed the Standard Rent determined under the Delhi Rent Control Act. The appellant challenged the appellate order as arbitrary, illegal, and in violation of legal principles.

2. The Assessing Officer determined the taxable income, making a net addition under the head of income from house property, based on an annual value higher than the actual rent received. The CIT (A) dismissed the appeal, following earlier orders for Assessment Years 2004-05 and 2009-10. The appellant highlighted that the Tribunal had previously allowed appeals on the same issue for those years.

3. During the hearing, the Authorized Representative argued for the appellant, pointing out the Tribunal's previous decisions favoring the appellant on identical issues. The Departmental Representative relied on the Assessing Officer and CIT (A) orders. The Tribunal noted the principle of consistency in assessing identical issues for the appellant, citing previous cases where the Assessing Officer had accepted claimed annual rent in assessments for various years.

4. The Tribunal emphasized the importance of consistency in the Assessing Officer's approach and held that the rule of consistency should be followed in similar cases for the same assessee. Referring to past judgments, the Tribunal ruled in favor of the appellant, directing the Assessing Officer to delete the additions made based on a notional value exceeding the actual rent received. The Tribunal set aside the CIT (A) order and allowed the appeal of the assessee based on the established principle of consistency in income tax assessments.

5. In conclusion, the Tribunal allowed the appeal, finding the issue identical to previous years where the Tribunal had ruled in favor of the appellant. The order of the CIT (A) was set aside, and the appeal of the assessee was allowed.