COTHA VINOD HAYAGRIV,BANGALORE V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(2) , BANGALORE

ITA 86/BANG/2024

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The case involves an appeal by Shri Cotha Vinod Hayagriv against the order of the Commissioner of Income-tax (Appeals) - 11, Bangalore, which upheld an addition to the assessee's income from house property for the Assessment Year 2018-19. The addition was based on an estimated fair market value of rental income, significantly higher than what the assessee declared. The Tribunal's decision was influenced by a similar case involving the same property for a different assessment year, where it had set aside a similar addition. The Tribunal found that the authorities had not properly confronted the assessee with the investigation report used to estimate the fair market value.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 785245 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Appeal Filed On: 16-01-2024
• Other Referred Cases: ITA No. 85/Bang/2024
• Laws Referred To: Income Tax Act, 1961, Karnataka Municipal Corporation Act of 1976
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BALUSAMY N.
• Assessee Lawyers: M. MONISH SOWKAR
• Keywords: Set aside; Fair market value
• Section: 153A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI SOUNDARARAJAN K., JUDICIAL MEMBER ITA No. 86/Bang/2024 Assessment Year : 2018-19 Shri Cotha Vinod Hayagriv, 3A/1, 4th Floor, ‘A’ Block, The Touchstone Main Guard Cross Road, Commercial Street, Bangalore – 560 001. PAN: AAGPH7671A Vs. The Deputy Commissioner of Income Tax, Central Circle – 1(2), Bangalore. APPELLANT RESPONDENT Assessee by : Shri M. Monish Sowkar, Advocate Revenue by : Shri Balusamy N., JCIT-DR Date of Hearing : 30-07-2025 Date of Pronouncement : 27-10-2025 ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER This is an appeal filed by the assessee challenging the order of the Ld.CIT(A)-11, Bangalore dated 13/07/2023 in respect of the A.Y. 2018-19 and raised the following grounds: “1. The impugned order of the learned Commissioner of Income-tax (Appeals) - 11, passed under Section 250 of the Income Tax Act, 1961 is opposed to law, weight of evidence, probabilities, facts and circumstances of the appellant's case. Printed from counselvise.com Page 2 of 6 ITA No. 86/Bang/2024 2. The appellant denies itself liable to be assessed on a total income of Rs. 3,57,03,400/- as against the returned income of Rs.3,35,19,400/-under the facts and circumstance of the case. 3. The learned Commissioner of Income Tax (Appeals) is not justified in upholding an addition of a sum Rs. 21,83,997/- being the alleged income under the head income from house property based on the rent received from the previous tenant on the facts and circumstances of the case. 4. The learned Commissioner of Income Tax (Appeals) failed to appreciate that the actual rent received by the appellant of a sum of Rs. 55,000/-per month is the annual value as per the provisions of section 22 r.w.s 23 of the Act, consequently the addition made is unsustainable in law on the facts and circumstances of the case 5. The learned Commissioner of Income Tax (Appeals) failed to appreciate that when the previous tenant has paid rent at a higher price the same has been offered to tax in the relevant assessment year therefore when the appellant earned rent at a lower rate the same ought have computed as the income of the Appellant on the facts and circumstances of the case. 6. The learned Commissioner of Income Tax (Appeals) erred in calculating the Actual rent by comparing the rent paid by the previous tenant which do not become base for the expected rent from the property as there was construction of metro which hinder the value of the property which result in the less rental income. 7. Without prejudice, the learned Commissioner of Income Tax (Appeals) failed to appreciate the municipal value computed in accordance with Section 108A of Karnataka Municipal Corporation Act of 1976 ought to have been considered as the annual value of the property and since the rent received and offered as income is higher than the municipal value, there was no requirement for any addition on the facts and circumstances of the case. 8. The appellant craves for leave of this Hon'ble Tribunal, to add, alter, delete, amend or substitute any or all of the above grounds of appeal as may be necessary at the time of hearing. Printed from counselvise.com Page 3 of 6 ITA No. 86/Bang/2024 9. For these and other grounds that may be urged at the time of hearing of appeal, the Appellant prays that the appeal may be allowed for the advancement of substantial cause of justice and equity.” 2. This appeal was filed with a delay of 103 days and the assessee explained the cause for the delay. 3. We have considered the application and we are of the opinion that the assessee should be more vigilant and therefore in order to render justice, we are inclined to condone the delay on condition that the assessee should pay by way of cost a sum of Rs. 10,000/- to the Prime Minister’s National Relief Fund and proceeded to decide the appeal on merits. 4. The brief facts of the case are that the assessee is an individual and filed his return of income on 23/07/2018. Based on the search conducted on 04/01/2018, the rental income of the property at Mantri Altius was computed at Rs. 26,10,887/- as against the rental income of Rs. 6,60,000/- computed and declared by the assessee. The computation was made by the AO on the basis of the enquiry conducted by the investigation wing of the IT Dept. The authorities without confronting the report to the assessee and also without considering the explanation offered by the assessee, had estimated the rental income. As against the said order, the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) had confirmed the fair market value estimated by the AO and dismissed the appeal. 5. As against the dismissal order, the assessee is in appeal before this Tribunal. 6. At the time of hearing, the Ld.AR submitted that the property was let out to the assessee’s son and therefore out of love, a minimum rent of Rs. 55,000/- per month was collected. The Ld.AR further submitted that the report of the investigation wing of the IT Dept. was not furnished to the assessee and therefore contended that based on the said report the fair Printed from counselvise.com Page 4 of 6 ITA No. 86/Bang/2024 market value cannot be estimated. The Ld.AR also submitted that in respect of the A.Y. 2017-18, similar estimation was made but this Tribunal had set aside the said addition and furnished the copy of the order and prayed to allow the appeal also. 7. The Ld.DR relied on the orders of the lower authorities and prayed to dismiss the appeal. 8. We have heard the arguments of both sides and perused the materials available on record. 9. The dispute involved in this appeal is about the estimation of fair market value of the house property and the consequential addition made there under. We have also perused the order of this Tribunal in ITA No. 85/Bang/2024 dated 28/05/2025 in respect of the A.Y. 2017-18 in assessee’s own case in which similar addition was based on the search as well as the report of the Investigation Wing, in respect of the same property. In the said order, this Tribunal had deleted the addition made in the income from house property with the following findings: “7. Considering the rival submissions, we noted that a search was conducted on 04.01.2018. Accordingly, a notice under section 153A of the Act was issued on 04.02.2019. We also find force on the arguments advanced by the learned AR regarding unabated Assessment Year since in this case, on the date of search on 04.01.2018, the period of notice issued under section 143(2) of the Act was not expired and the assessee has filed return of income un der section 139(1) of the Act for the Assessment Year and no assessment was completed. Therefore, the arguments raised by the learned Counsel on this point is dismissed. 8. We noted that the assessee had filed return of income under section 139(1) of the Act declaring income of Rs.4,01,26,790/-. We also noted from the Order of the AO that while completing the assessment has made addition only on the basis of enquiry conducted by the Investigation Wing of the Income Tax Department without any basis and the report of the Investigation Wing of the Income Tax Printed from counselvise.com Page 5 of 6 ITA No. 86/Bang/2024 Department has not been confronted to the assessee and what are the basis for estimating the rent is also not brought out by the AO. As per section 23(1)(a) and (b) of the Act and the rent recewived by the assessee is more than the rent fixed by the BBMP which is at Rs.6 per sq.ft.The assessee has given the residential property to his son with love and affection for their betterment of life. Considering the totality of facts and circumsetances of the case, we delete the addition made by the AO.” 10. There are no new facts available in the present case and the facts are similar and only the A.Y. differs. In such circumstances, we are following the findings given by the Tribunal in respect of the A/Y 2017-18 and allow the appeal by setting aside the estimated addition made to the Income from House Property and direct the AO to accept the income declared at Rs. 6,60,000/-. We also made it clear that if the assessee had not paid the cost of Rs. 10,000/- as directed while condoning the delay, the benefit granted in this order would not be applicable and the order of the Ld.CIT(A) would restore automatically. 11. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 27th October, 2025. Sd/- Sd/- (WASEEM AHMED) (SOUNDARARAJAN K.) Accountant Member Judicial Member Bangalore, Dated, the 27th October, 2025. /MS / Printed from counselvise.com Page 6 of 6 ITA No. 86/Bang/2024 Copy to: 1. Appellant 2. Respondent 3. CIT 4. DR, ITAT, Bangalore 5. Guard file 6. CIT(A) By order Assistant Registrar, ITAT, Bangalore Printed from counselvise.com "