Tribunal overturns rental income addition due to lack of fair opportunity for objection.

The Appellate Tribunal set aside the Assessing Officer's addition of rental income under the head income from house property, as the Assessing Officer did not provide a fair opportunity for the assessee to object to the fair market rental value determination. The Tribunal directed a re-adjudication with proper hearing and compliance with the law, allowing the assessee's appeal for statistical purposes.

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Issues:
1. Addition of rental income by Assessing Officer under income from house property.

Analysis:

Issue 1: Addition of rental income by Assessing Officer under income from house property
The appeal before the Appellate Tribunal ITAT Allahabad concerned the addition of rental income by the Assessing Officer under the head income from house property. The Assessing Officer determined the fair market rental value of the property based on a comparable instance of a property let out to Debt Recovery Tribunal. The Assessing Officer computed the Annual Letting Value (ALV) of the property and added the difference to the total income of the assessee. The assessee challenged this action before the Ld. CIT (A) but was unsuccessful. The Ld. AR of the assessee argued that the Assessing Officer did not dispute the actual rent received by the assessee and made the addition without determining the fair market rental value of the property as per the provisions of the Income Tax Act. The Ld. AR contended that the decision of the Assessing Officer was arbitrary and unjustified. On the other hand, the Ld. DR argued that there was no written agreement for the rental, and the decision in a similar case was not binding precedent due to lower tax effect. The Appellate Tribunal noted that the Assessing Officer did not give the assessee a fair opportunity to object to the rate of rent adopted as the fair market rental value. The Tribunal set aside the matter to the Assessing Officer for re-adjudication after providing an appropriate hearing to the assessee and determining the annual letting value in accordance with the law. Consequently, the appeal of the assessee was allowed for statistical purposes.

This detailed analysis of the judgment provides insights into the legal issues involved, arguments presented by both parties, and the reasoning behind the Tribunal's decision to set aside the matter for re-adjudication.

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