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TMI Blog2017 (8) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Income Tax Inspector, it was found that no such companies existed at the addresses furnished by the assessee. The AO held that the assessee had failed to discharge his onus to establish the creditworthiness of the parties and the genuineness of the transactions. The impugned amount was treated as unexplained credit under section 68 of the Act and added to the income of the assessee as income from undisclosed sources. 2.1 Aggrieved, the assessee preferred an appeal before the Ld. CIT (Appeals) wherein the Ld. CIT (Appeals) reduced the notional rent to ₹ 12,000 per month instead of ₹ 22,000 per month as considered by the AO. On the issue of addition under section 68 of the Act, the Ld. CIT (Appeals) accepted the assessee s arguments and deleted the entire addition. 2.2 Aggrieved the Department has now approached the ITAT and has raised the following grounds of appeal 1. Whether on the facts and circumstances of the case in law, the Ld. CIT (A) erred in directing the A.O. to levy a notional rent of ₹ 12,000/- per month against the notional monthly rent of ₹ 22,000/- per month adopted by the A.O. 2. Whether on the facts and circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stored. 4. In response, the Ld. Authorised Representative submitted that the addition in respect of fair rental value was made on the basis of website and advertisements and the addition was made without issue of any show cause notice and on the basis of the documents collected at the back of the assessee. It was submitted that it was undisputed that the property had remained vacant during the year and the provisions of section 23 (1) (c) of the Act would, therefore, apply in this case. It was further submitted that the assessee was not given any opportunity to counter the claim of the AO. It was also submitted that the rates as mentioned in the website and the advertisements were not authentic and that the actual position always deferred from that shown in the advertisements or the websites. 4.1 On the issue of addition under section 68 of the Income Tax Act, the Ld. Authorised Representative submitted that the allegation of the AO that the notices under section 133 (6) were not complied with was incorrect as the notices were duly complied with, not once but twice, on 14/12/2011 and 24/12/2012 respectively. On the allegation of the AO that the confirmations were either not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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. These grounds, accordingly, stand dismissed. 5.1 As far as the issue of deletion of addition under section 68 of the Act is concerned, it is seen that the Ld. CIT (Appeals) has observed in Para 6.3 of the impugned order that the records available indicate that the findings of the AO were selfcontradictory. The Ld. CIT (Appeals) has observed that the AO has mentioned that the notices under section 133 (6) were not served on the creditors due to non-availability of any person and on the other hand, letter dated 28/08/2013 issued by the AO to the Principal Officer of M/s Colour Buildwell Private Limited was served on the same address by the Postal Department. The Ld. CIT (Appeals) has further observed that the report of the Inspector regarding visit to the addresses does not carry any evidence of p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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