Tribunal orders re-adjudication, grants assessee opportunity to be heard, reduces expenses disallowance.

The Tribunal allowed the assessee's appeal, finding that the Ld.CIT(A) failed to provide a reasonable opportunity for the assessee to be heard regarding the enhancement of income from house property. The Tribunal directed a re-adjudication by the Ld.CIT(A) after granting the necessary opportunity for the assessee to present their case. Additionally, the Tribunal reduced the disallowance of telephone and vehicle expenses from 10% to 5% each, considering personal use, and ordered corresponding adjustments. The decision was pronounced on April 16, 2014.

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Issues:
1. Enhancement of income from house property without providing a reasonable opportunity to the assessee.
2. Calculation of annual value of property for income from house property.
3. Disallowance of telephone and vehicle expenses.

Issue 1:
The assessee challenged the enhancement of income from house property by the Ld.CIT(A) without providing a reasonable opportunity to be heard. The AO had calculated the notional rental value of the properties based on their value and location, while the Ld.CIT(A) directed the AO to compute the annual value by taking 8.5% of the total investment in the property. The Tribunal noted that the Ld.CIT(A) did not fulfill the requirement of providing a reasonable opportunity to the assessee as mandated by sub-section 2 of section 251. Consequently, the Tribunal allowed Grounds No. 1 to 3 for statistical purposes and ordered the case to be re-adjudicated by the Ld.CIT(A) after providing the necessary opportunity for the assessee to be heard.

Issue 2:
Regarding the disallowance of 10% of telephone expenses and vehicle expenses, which was partly confirmed by the Ld.CIT(A), the Tribunal observed that these ad hoc disallowances were made due to personal use. After considering all facts, the Tribunal decided to restrict the disallowances to 5% of the telephone and vehicle expenses, respectively, which was deemed justifiable in the case of the assessee. Consequently, Grounds No. 4 and 5 were partly allowed, and the Tribunal directed the adjustments accordingly.

In conclusion, the appeal filed by the assessee was allowed based on the above decisions regarding the issues raised. The order was pronounced in open court on April 16, 2014.

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