2026 (4) TMI 718

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....3-14 (A.Y.) 2. The assessee has raised the following grounds of appeal:- "(1) That the order of the learned Deputy Commissioner of Income Tax, Amravati Circle u/s 143(3) is bad in law and wrong on facts and the learned CIT(A) erred in confirming the same. (2) That the learned CIT(A) erred in law and on facts in confirming the action of AO in making addition of Rs. 1,92,000/- as rent received from son, by considering Rs. 3,72,000/- as fair market value. On the facts and circumstances of the case, the rent of Rs. 1,80,000/- received from son, Shri Rajesh Amlani was reasonable and at fair market rate of property. The action of authorities is hence, unwarranted. (3) That the learned CIT(A) erred in law and on facts....

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.... Tower, Sahakar Nagar, Amravati. Such rent was received from assessee's son. Ld.AO based on the verification conducted by the Inspector of the Income tax Department, came to a conclusion that fair market value of rent is much higher and calculated it at Rs. 3,72,000/-, as accepted fair market rent i.e. Rs. 31,000/- p.m. Ld.AO observed that assessee on one hand is paying rent at a higher rate, but is charging nominal rent from her son and concluded the proceedings making addition for under-statement of rental income at Rs. 1,92,000/- (3,72,000 - 1,80,000). 5. Ld.AO also observed that assessee has charged salary expenses of Rs. 3,00,000/- paid to her son Mr. Naresh Amlani. For examining these details under the provisions of section 40A(2)(....

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....ll as Nagpur. Payment has been made to her son who is employed for last 10 years and provides services relating to purchase and sale at both the locations and also looks-after loading and unloading of cement and other bank related works. He also submitted that being a family owned business, the lump-sum salary is credited at the end of the assessee and that the total taxable income of Mr. Naresh Amlani is Rs. 9,08,728/-. He also submitted that turnover of the assessee has increased from 63.94 cr. to 73.02 cr. during the year under consideration, net profit has is also increased from 25.07 lakhs to 31.54 lakhs. He prayed that the impugned addition deserves to be deleted. 9. On the other hand, Ld. Departmental Representative (DR), vehement....

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....ete the addition of Rs. 1,92,000/- made by the Assessing Officer. Ground No.2 raised by the assessee is allowed. 11. Ground No.3 relates to disallowance of salary expenditure of Rs. 3,00,000/- paid to the assessee's son Mr.Naresh Amlani. The alleged disallowance made by the Ld.AO is majorly based on some portion of statement of Mr.Naresh Amlani and that too, have been utilized by the Ld.AO for the purpose of making disallowance. I find that Ld.AO has completely disregarded the fact that Mr. Naresh Amlani is son of the appellant, who gave services in the family under business. The assessee i.e. mother is the proprietor and the son and other family members jointly work in the family business. Mr. Naresh Amlani is looking after the business....