Tribunal remands CIT(A) order for reassessment on fair rental value. Assessee's appeal dismissed; Revenue's appeal allowed.

The Tribunal set aside the CIT(A)'s order due to improper remand, directing reassessment of fair rental value by the CIT(A). The Assessee's appeal was dismissed for lack of evidence on property uninhabitability. The Revenue's appeal was allowed, stressing procedural adherence and evidence-based assessment.

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Issues Involved:
1. Legitimacy of CIT(A)'s decision to remit the matter back to the AO.
2. Assessment of deemed rental income under Section 22 of the Income Tax Act, 1961.
3. Comparison of fair market value of properties in different sectors.

Detailed Analysis:

1. Legitimacy of CIT(A)'s Decision to Remit the Matter Back to the AO:
The Revenue contended that the CIT(A) erred in remitting the matter back to the AO, violating the statutory remit of Section 251 of the Income Tax Act, 1961, which states that CIT(A) may confirm, reduce, enhance, or annul the assessment order but does not have the power to set aside the issue. The Tribunal agreed with the Revenue, noting that the CIT(A) should have invited a remand report from the AO rather than remanding the issue back. Consequently, the Tribunal set aside the CIT(A)’s order on this ground.

2. Assessment of Deemed Rental Income under Section 22 of the Income Tax Act, 1961:
The Assessee argued against the addition of Rs. 6,15,440 as notional annual lettable value under Section 22, asserting that the property was in a dilapidated condition and unfit for habitation. The Assessee provided evidence such as the completion certificate from 1959 and the fact that the new buyer demolished the house. However, both the AO and CIT(A) found these arguments unsubstantiated, as no concrete evidence was provided to prove the house was uninhabitable. The Tribunal upheld this view, emphasizing that even dilapidated properties have an annual letting value and that the Assessee failed to provide sufficient evidence to support the claim of uninhabitability.

3. Comparison of Fair Market Value of Properties in Different Sectors:
The Assessee objected to the AO’s comparison of the property in Sector 18 with a property in Sector 9, arguing that Sector 9 is a high-profile area and not comparable to Sector 18. The CIT(A) acknowledged this argument but noted that the AO had not made necessary field inquiries to fetch the fair market value for the relevant period (FY 2015-16). The Tribunal agreed that the AO should have conducted proper inquiries and obtained the annual rental value for the year under consideration. The Tribunal directed the CIT(A) to reassess the fair rental value considering the location and period specifics.

Conclusion:
The Tribunal set aside the CIT(A)’s order due to the improper remand of the issue and directed a reassessment of the fair rental value by the CIT(A) after conducting necessary inquiries. The Assessee’s appeal was dismissed due to the lack of substantial evidence supporting the claim of the property being uninhabitable. The Revenue’s appeal was allowed, emphasizing the need for proper procedural adherence and evidence-based assessment.

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