TaxTMI 
TaxTMI 
2018 (4) TMI 320
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....ilar properties are fetching the rental income of Rs. 10.26 ps. to Rs. 47.13ps. per sq.ft., hence, the A.O. estimated the fair rental value at Rs. 20/- per sq.ft and determined the Annual Let out Value (ALV) at Rs. 17,40,000/- for 6352 sq.ft. owned by the assessee. The assessee submitted before the A.O. that the assessee has let out to his house to his brother Mr. V. Ananda Raju and out of the 6352 sq.ft, 50% of the house was let out and the remaining 50% was used for his personal purpose and official purposes during his stay in India. He elaborately given a detailed reply stating how many days he stayed in India from the financial years 2009-10 to 2011-12. The assessee further submitted in his reply that out of 6352 sq feet of house consisting four floors lower ground floor admeasuring 1004 sq feet, Ground floor with 1883 sq feet and second floor of 1304 Sq feet are under the occupation of the assessee. The assessee also stated that though the property was given to his brother, and the same property being used by himself, which is transgressing the privacy of the tenant by using common areas and the stair case. Since the assessee also needs the house for his personal purposes and ....
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....et out for higher rate on rent, the property may fall into unwanted hands, which in turn may lead to undesirable consequences. 5. The Ld. A.R. also argued that the rental income admitted by the assessee is more than the fair rental value fixed by municipal authorities i.e. GHMC. As per the municipal rental value, the Fair Rental value was fixed at Rs. 58,020/- as against which the admitted income was Rs. 1,14,000/-. Though the A.O. has determined the annual value on comparative buildings, he has taken up the rate of Rs. 20/- per sq.ft. even though there were buildings let out for Rs. 10/- per sq.ft. Further Ld. A.R. argued that the A.O. has not considered the factual circumstances on which 50% of the house was let out, hence, argued that the rental value admitted by the assessee is reasonable which should be accepted. The ld.A.R furher submitted that though the Ld.A.O collected the information with regard to the rents in the locality and supplied the confirmation and rent agreements of tenants/owners of the locality the A.O. failed to allow cross examination of the parties and without allowing the parties for cross examination the evidences collected behind the back of the asses....
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....ted the information behind the back of the assessee and mere furnishing of the copies of agreements and the details of the owners/tenants is not sufficient. We have gone through the lease agreements and the same were unregistered agreements. Any agreement with regard to the transaction of immovable property required to be reduced in writing and duly registered. Unless the same is registered the same cannot be taken cognigence off. Further cross examination of witness is not mere formality and it is the right of the assessee and so many things will crop up during the cross examination. Any evidence collected behind the back of the assessee cannot be used against the assessee unless the assessee is allowed cross examination. In the instant case the assessee has not waived his right to cross examination and he has requested for cross examination. In these facts and circumstances the evidence collected by the AO with regard to ALV from the surrounding areas cannot be used against him for determining the ALV of the assessee's property. In this connection we may refer the decision of ITAT, Amritsar Bench in Apeejay Education Society v. Assistant Commissioner of Income-tax, Circle-III, Ja....
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....lying upon it to the detriment of the assessee. Even if strict rules of evidence may not apply to assessment proceedings, the basic principles of natural justice would apply to the facts of the case." Honourable ITAT New Delhi 'G', Bench in Income-tax Officer, Ward-9(1), Delhi.v.Softline Creations (P.) Ltd.* [2017] 81 taxmann.com 139 (Delhi - Trib.) held that as under: 9........ There is no dispute that the statement which was relied upon by the AO was not recorded by the AO in the assessment proceeding but it was pre-existing statement recorded by the Investigating Wing and the same cannot be a sole basis of assessment without conducting a proper enquiry and examination during the assessment proceeding itself. Further despite the specific demand of the assessee for cross examination of Shri Mahesh Garg, the ld. AO has not given any heed to the request of the assessee for affording any opportunity of cross examination and used the statement of Shri Mahesh Garg against the assessee which is not permissible under the law. As it is a case of clear violation of the rule of principal of natural justice and statement which is recorded at the back of the assessee....
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....is convinced that the case before him is suspicious, determination by the parties is doubtful that he can resort to enquire about the prevailing rate in the locality. We are of the view that municipal rateable value may not be binding on the Assessing Officer but that is only in cases of afore-referred nature. It is definitely a safe guide." 7. The similar issue was considered by the ITAT, Mumbai bench in the case of Gagan Trading Company Ltd.. ACIT reported in (2012) 34 CCH 223 (Mum) held as under: "We modify the impugned order of the learned CIT(Appeals) on this issue and direct the A.O. to accept the income from house property declared by the assessee adopting the municipal ratable value as annual letting value of its property." 8. ITAT, Mumbai 'D' Bench in ITA No.1411/Mum/07 dated 26.11.2010 on the similar facts and circumstances held as under: "46. We have considered the rival submissions. In the case of Akshay Textiles (supra), the facts before the Hon'ble Bombay High Court was that A owner of the property let out the same to B. B sub-let the property to C. While determining the annual value of the property in the case of A, the AO substituted the ....