High Court allows appeal delay, CIT(A) justified in rent deduction, Tribunal upholds decision. (A)

The High Court condoned the 19-day delay in filing the appeal, finding the explanation plausible. Regarding the addition made by the Assessing Officer on rent value, the CIT(A) was justified in deleting it as the Assessing Officer lacked evidence to prove the rent was below fair market value. The Tribunal upheld the CIT(A)'s decision, noting consistency in the assessee's income reporting and the Assessing Officer's failure to provide sufficient evidence. The Revenue's appeal was dismissed, and the decision was pronounced on 30.09.2019.

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Issues Involved:
1. Condonation of delay in filing the appeal.
2. Justification of the addition made by the Assessing Officer on account of the difference between rent received by the assessee and the fair market value for properties.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The appeal was filed with a delay of 19 days. Initially, the Tribunal dismissed the appeal due to the non-filing of an affidavit seeking condonation of delay. The assessee challenged this decision before the Hon’ble High Court of Delhi. The High Court held that the delay of 19 days was not extraordinary and the explanation offered by the appellant-Revenue was plausible. Consequently, the High Court set aside the Tribunal's order and restored the appeal for disposal in accordance with the law. Therefore, the delay of 19 days was condoned.

2. Justification of the Addition Made by the Assessing Officer:
The primary issue was whether the Commissioner of Income Tax (Appeals) [CIT(A)] was justified in deleting the addition made by the Assessing Officer regarding the difference between the rent received by the assessee and the fair market value of the properties.

Facts and Contentions:
- The assessee, engaged in finance, investment, and real estate, offered income from house property amounting to Rs. 5,40,00,000/-. The property was previously owned by M/s Ballarpur Industries Ltd. before demerger.
- The Assessing Officer applied the method as per Schedule III of the Wealth Tax Act, 1957, and calculated the rental value at Rs. 8,21,41,216/-, adding the difference to the total income of the assessee.
- The assessee contended that the transaction did not fall under Section 40(a)(2)(b) of the Act and that the rent received should be considered as the annual value under Section 23(1) of the Act.
- The CIT(A) deleted the addition, noting that the Assessing Officer did not provide any comparative data or evidence to show that the rent received was less than the fair market value.

Tribunal's Observations:
- The Tribunal noted that the CIT(A) had previously deleted a similar addition for the Assessment Year 2008-09, and there was no change in the material facts or legal position for the current year.
- The Tribunal referenced the case of CIT vs. Moni Kumar Subba, where it was established that the municipal value could be a yardstick for determining the annual letting value (ALV), but it was not binding on the Assessing Officer if it did not represent the correct fair rent.
- The Tribunal observed that the Assessing Officer failed to bring any evidence to show that the rent received was lower than the fair market value and had incorrectly applied the method provided in Schedule III of the Wealth Tax Act.
- The Tribunal also noted that the appellant-Revenue had consistently accepted the income offered by the assessee under the head income from house property for earlier and subsequent assessment years.

Conclusion:
The Tribunal concluded that the CIT(A) was justified in deleting the addition made by the Assessing Officer. The appeal by the Revenue was dismissed, and the order pronounced in the open court on 30.09.2019.

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