TaxTMI 
TaxTMI 
2014 (1) TMI 900
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....d further against the deletion of an amount of Rs. 6,38,191 added by the A.O. into the income of the assessee as unexplained expenditure. The assessee has filed the cross objections alleging clerical mistake relating to the factual findings given by the learned CIT(A) while deleting the addition made on account of unexplained expenditure. 3. The brief facts of the case are that the assessee, an individual, filed his return of income declaring total income of Rs. 18,09,690/-. During the course of assessment proceedings under Section 143(3) of the Act, Assessing Officer observed that the assessee had shown rental income of Rs. 3 lakhs from his property at Prabhadevi, Mumbai, rented out to M/s Reiter India Pvt. Ltd. The Assessing Officer was ....
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....al to determine the market rate of rent of the property in question, on the day on which it was rented to the tenant in question and further to make necessary enquiries in this regard from the society/nearby area in respect of the market rate which the flat could have fetched and also to allow the assessee to cross examine the Inspector. It was further directed to make necessary enquiries regarding AIR information relating to expenditure of Rs. 6,38,191/- from the concerned banks and to make the necessary information available to the assessee and to verify the genuineness of the facts. The concerned A.O. instead of making enquiries regarding the fair/market rent of the property as on the day of tenancy, reported in the remand report dated 2....
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.... though it was used against him. He further observed that whole exercise was carried out in an arbitrary manner. There was no mentioned in the assessment order that the flat owned by the assessee would fetch a particular rent in the society. Learned CIT(A) thus deleted the addition made by the A.O. of the notional interest of Rs. 7,50,000/- in the income of the assessee observing as under:- "2.4.1. The decision relied by the Assessing Officer in the case of Fizz Drinks Ltd. (95) TTJ 249 (Delhi) are distinguishable on facts. The facts in that case was that the agreed rent was Rs. 1 per month and interest free security deposit was of Rs. 1,62,38,000/- taken by the owner. It was this factor which made in the mind of t....
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....pon the authority of the Full Bench of the Delhi High Court styled as CIT v. Moni Kumar Subba (2011) 333 ITR 38, to submit that no addition can be made of notional interest on the interest free security deposit while determining the Annual Letting Value under Section 23(1)(a). 6. We have considered the rival submissions of learned representatives of the parties. The Hon'ble Full Bench of the Delhi High Court in the case of 'Moni Kumar Subba' (supra) has held that Section 23 (1)(a) requires determination of the "fair rent" being " the sum for which the property might reasonably be expected to let from year to year". The AO has to make an enquiry as to what would be the possible rent that the property might fetch. If he finds that the actual....
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....ing to the market value. However, the AO neither made available the said report to the assessee nor conducted any enquiry to determine the fair/market rental value of the property. Despite directions by the CIT(A), he vide letter dated 28-2-2011 (copy placed in appeal paper book at page 11) reported that there was no requirement to do so. Even he did not allow the assessee to cross examine the Inspector. When despite directions by the CIT(A), the Assessing Officer did not choose to determine the fair/market rental value of the property by making necessary enquiries then in our view the rental income offered by the assessee is to be treated as the fair/market rental income or the Annual Letting Value of the property. The Hon'ble Full Bench o....
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....second issue relating to unexplained expenditure is concerned, the learned AR has submitted that assessee has not made any purchases through his credit cards as has been alleged by the revenue. He has also relied upon certain bills of Citi Bank and copy of e-mail from Standard Chartered Bank to submit that no such purchases were made through credit cards by the assessee. However, it may be observed that in para 3.1 of his order, the learned CIT(A) has mentioned about remand report of the AO dated 10-2-2012, vide which, it was reported by the AO that the letters were issued to the said banks, who in their reply had furnished the statement of credit cards showing complete details of transactions carried out by the assessee between April, 2004....