2019 (3) TMI 1296

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....er s. 143(3) of the Income Tax Act, 1961 (the Act) concerning AY 2012-13. 2. As per the grounds of appeal, the assessee is aggrieved by the disallowance of interest on borrowed capital to the extent of Rs. 6,77,014/- instead of claim of Rs. 8,27,014/- under s.23(2)(b) of the Act. 3. Briefly stated, the assessee, a salaried employee filed return of income for the AY 2012-13 showing gross salary of Rs. 19,61,077/- from Bennett Coleman & Co. Ltd. The assessee inter alia claimed deduction on interest on borrowed capital at Rs. 8,27,014/- under s.24 of the Act under the head 'income from house property'. The return filed by the assessee was subjected to scrutiny assessment. The AO observed that the assessee has not derived any income from ....

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....to contend that the property is given on rent. The AO accordingly held that the property is a self-occupied property and accordingly, the assessee is entitled to claim interest on borrowed capital limited to the extent of specified sum i.e. Rs. 1,50,000/-. The AO further questioned the bonafides of the rent paid to his mother in the absence of any concrete documents such as bank statement etc. The AO accordingly restricted the claim of interest to the extent of Rs. 1,50,000/- entitled to assessee referred under s.23(2) of the Act and disallowed the remaining amount of Rs. 6,77,014/- and added the same in the hands of the assessee while determining the assessed income. 4. Aggrieved, the assessee preferred appeal before the CIT(A) and reit....

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....rked for the purposes of only self-occupied property specified under s.23(2) of the Act. 7. The learned DR for the Revenue, on the other hand, relied upon the orders of the AO and CIT(A) and submitted in furtherance that the conduct of the assessee is self-evident. It was contended that the assessee himself has omitted to declare any rental income from the property at the first place. When confronted about the restriction placed for deduction of interest on self-occupied property, the assessee has attempted to show the property to be actually let out under s.23(3) of the Act to avoid the statutory restriction of allowability of deduction of interest (Rs.1,50,000/-) showing the receipt of rental income in cash from mother. The learned DR ....

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....tant case, has also claimed 'nil' annual value on this residential house in the return of income. However, by way of revised computation in the course of assessment proceedings, the assessee has altered his stand and claimed that he was not in actual occupation of the residential house (co-owned by him alongwith his mother). It was claimed that the residential house at Shilaj was actually occupied by his mother and thus, the residential property was let out to mother at a monthly rental of Rs. 30,000/- per month, which was received in 'cash'. The assessee accordingly has claimed that the residential house being a let out a property, the statutory restriction for allowability of interest on borrowed capital is not applicable. The assessee th....

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....s under Chapter XXII of the Act. Thus, the income claimed to have been received and not declared in the return cannot be seen in a light hearted banner. The assessee has conveniently revised the computation to introduce the source of rental income from mother who also happens to be co-owner of the same property. The receipt has been shown to be in cash to shun any possibility of verification. Thus, no trail is available to verify the correctness of the version of the assessee in a reasonable manner. Thus, one has to rely only on the preponderance of probabilities. The version of the assessee is prima facie improbable having regard to the ground realities. The assessee neither satisfies the condition from exclusion from the ambit of Section ....