Tribunal adjusts property value for tax purposes and upholds expense disallowance.

The Tribunal partially allowed the appeal for statistical purposes, directing the Assessing Officer to adopt the municipal value for determining the annual value of the property not let out. Additionally, the Tribunal upheld the ad-hoc disallowance of expenses made by the Assessing Officer, finding it reasonable given the lack of proper substantiation by the assessee.

---

---

Issues:
1. Computation of income from property not let out based on rateable value vs. notional income.
2. Disallowance of expenses on ad-hoc basis.

Issue 1: Computation of income from property not let out
The appeal concerned the computation of income from a property not let out for the assessment year 2007-08. The Assessing Officer determined the annual value of the property at Rs. 3 lakhs, leading to an addition of Rs. 2,10,000 as income from house property. In appeal, the CIT(A) directed the adoption of a fair market value of Rs. 12,000 per month instead of Rs. 25,000, reducing the annual value to Rs. 1,44,000. The CIT(A) emphasized that the Assessing Officer did not consider the impact of an amendment to the IT Act and should have accepted the figure provided by the appellant. The Tribunal, following precedent, directed the Assessing Officer to adopt the municipal value as the basis for determining the annual value of the property, allowing the appeal for statistical purposes.

Issue 2: Disallowance of expenses on ad-hoc basis
The Assessing Officer disallowed Rs. 18,614 out of various expenses claimed by the assessee on an ad-hoc basis due to lack of full details, as most expenses were made in cash with self-made vouchers. The CIT(A) upheld this disallowance, stating it was not excessive. The Tribunal noted that the burden is on the assessee to substantiate business expenses, especially when payments are made in cash with self-made vouchers. Considering these circumstances, the Tribunal found the 10% ad-hoc disallowance reasonable and upheld the CIT(A)'s decision, dismissing the assessee's challenge.

In conclusion, the Tribunal partially allowed the appeal for statistical purposes, directing the Assessing Officer to adopt the municipal value for determining the annual value of the property not let out. Additionally, the Tribunal upheld the ad-hoc disallowance of expenses made by the Assessing Officer, finding it reasonable given the lack of proper substantiation by the assessee.

---