SATTYASHEEL NANDLAL NAIK(HUF),PUNE V. DCIT, CIRCLE-6, PUNE, PUNE

ITA 761/PUN/2024

AI Insights

The case involves Sattyasheel Nandlal Naik (HUF), who appealed against the order of the CIT(A)/NFAC confirming the addition of Rs.54,99,635 to his income as deemed rent from three flats under section 23(4) of the Income Tax Act. The assessee argued that the flats were not in a lettable condition and thus should not attract deemed rent. The Assessing Officer had initially calculated the deemed rent after finding that the assessee did not disclose any deemed rental income in his return. The Tribunal admitted additional evidences submitted by the assessee, which were not available during the original assessment and appellate proceedings, and decided to remand the case for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 47244 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND DESAI
• Assessee Lawyers: S. N. PURANIKH
• Keywords: Additional evidence; Capital Gains
• Section: 142(1); 143(2)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.761/PUN/2024 िनधाᭅरण वषᭅ / Assessment Year : 2017-18 Sattyasheel Nandlal Naik (HUF), 878, Shukrawar Peth, Pune- 411002. PAN : AAAHN5509B Vs. DCIT, Circle-6, Pune. Appellant Respondent आदेश / ORDER PER VINAY BHAMORE, JM: This appeal filed by the assessee is directed against the order dated 23.03.2024 passed by Ld. CIT(A)/NFAC for the assessment year 2017-18. 2. The appellant has raised the following grounds of appeal :- “1. CIT(Appeals) has erred on facts and law in confirming the addition to Income of Rs.54,99,635/- on Account of Income from House Property u/s 23(4) of I.T. Act. Assessee by : Shri S. N. Puranikh Revenue by : Shri Arvind Desai Date of hearing : 16.01.2025 Date of pronouncement : 08.04.2025 ITA No.761/PUN/2024 2 Appellant prays to delete the addition since Sec.23(4) is not Applicable and further those Flats were not complete, defects not removed as confirmed by Builder. 2. The Proceedings & Assessment are bad-in-law. 3. In any event CIT(A) has erred in confirming applicability of provisions of sec.23(4). 4. Appellant prays to add, alter, amend, take additional grounds, submit additional evidence, and/or withdraw the ground/s during appellate Proceedings.” 3. Facts of the case, in brief, are that the assessee is a HUF deriving income from house properties capital gains and income from other sources and has furnished its return of income on 28.03.2018 declaring total income of Rs.2,76,71,380/-. The return was selected for scrutiny and accordingly notices u/s 143(2) and 142(1) respectively were issued to the assessee along with questionnaire. The Assessing Officer found that the assessee is owner of Flat No.B-16, Flat No.D-2601 and D-2602 but no deemed rental income u/s 23(4)was disclosed by the assessee in its return of income. In reply, the assessee submitted that Flat No.B- 16 is a bare shell flat for which flouring, electric fitting, internal wall, internal plaster and painting, bathrooms, toilet fittings, kitchen etc is pending and the flat is not in letable condition. Regarding Flat D-2601 and D-2602, the assessee submitted that ITA No.761/PUN/2024 3 possession of these two flats are not obtained since many defects are there. Accordingly, the assessee requested the Assessing Officer not to calculate deemed rent u/s 23(4) of above flats. The Assessing Officer rejected the contention and calculated deemed rent on the above three flats at Rs.54,99,635/- after providing benefit of statutory deductions @ 30%. Accordingly, the Assessing Officer completed the assessment by determining total income at Rs.3,31,71,015/- as against the income returned by the assessee at Rs.2,76,71,380/-. The above assessed income includes income from house property of Rs.54,99,635/-. 4. In first appeal after considering the reply of the assessee, Ld. CIT(A)/NFAC dismissed the appeal and confirmed the addition of Rs.54,99,635/- made by the Assessing Officer on account of income from house property u/s 23(4) of the Act. It is this order against which the assessee is in appeal before this Tribunal. 5. Ld. AR appearing from the side of the assessee submitted before us that the assessee has filed two applications for admission of additional evidences. First application was filed on 27.08.2024 wherein copy of sale deed of Flat No.B-16 has been furnished wherein it has been mentioned that the flat is sold in bare shell ITA No.761/PUN/2024 4 condition i.e. without completion of internal works i.e. flouring, plaster, painting etc. According to the assessee, this sale deed itself proves that the flat was not in letable condition therefore, the Assessing Officer should not have had calculated any deemed rent u/s 23(4) of the Act. 5.1 Another application for admission of additional evidence was furnished on 15.01.2025 wherein the assessee has furnished copy of possession certificate with respect to Flat No.D-2601 and D- 2602. According to this additional evidence, the assessee demonstrated that possession of these two flats was taken on 30.01.2020 which proves the contention of the assessee that prior to 30.01.2020 these flats were not in the possession of the assessee. Therefore, the Assessing Officer should not have had calculated any deemed rent on these two flats. Ld. AR further requested before the Bench that these two additional evidences could not be filed before Ld. CIT(A)/NFAC and therefore, it was requested by him that the matter may kindly be set-aside back to the file of Ld. CIT(A)/NFAC to decide the appeal afresh after considering these two additional evidences which has substantial bearing on the facts of the case. ITA No.761/PUN/2024 5 6. Ld. DR appearing from the side of the Revenue relied on the order passed by the subordinate authorities and requested to confirm the same. 7. We have heard Ld. Counsels from both the sides and perused the material available on record. In this regard, we find that the Assessing Officer has calculated deemed rent on three different flats owned by the assessee. On the other hand, it was the contention of the assessee that Flat No.B-16 was not in letable condition and Flat No.D-2601 and D-2602 was not in the possession of the assessee since various defects were pointed out by the assessee in these two flats to the builder and therefore, possession of these two flats was not obtained. Ld. Counsel of the assessee in support of his contention submitted two additional evidences which were not available on the date of passing of the assessment order, therefore, could not be produced prior to completion of assessment proceedings and also could not be produced during the appellate proceedings. In this regard, we find that the additional evidences are very much relevant and have a substantial bearing on the facts of the case. Therefore, we admit the same. These additional evidences suggest that either the flat ITA No.761/PUN/2024 6 was not in letable condition or flats were not occupied by the assessee since there were basic defects to be cured by the builder. It also appears from the perusal of these evidences that the possession of two flats was obtained by the assessee on 30.01.2020 and one flat B 16 was subsequently sold by the assessee and the fact was mentioned in the sale deed that Flat No.B-12 was in bare shell condition i.e. unfinished and lot of works was pending in it, therefore, nobody can occupy the same for his residence. Considering the totality of the facts of the case and in the interest of justice, we deem it appropriate to set-aside the order passed by Ld. CIT(A)/NFAC and remand the matter back to the Assessing Officer with a direction to decide the issue afresh as per fact and law after considering the additional evidences produced by the assessee and also after providing reasonable opportunity of hearing to the assessee. The assessee is also hereby directed to respond to the notices issued by the Assessing Officer in this regard and produce requisite documents/evidences in support of its case without taking any adjournment under any pretext, otherwise the Assessing Officer shall be at liberty to pass appropriate order as ITA No.761/PUN/2024 7 per law. Thus, the grounds of appeal raised by the assessee are partly allowed for statistical purposes. 8. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on this 08th day of April, 2025. Sd/- Sd/- (R. K. PANDA) (VINAY BHAMORE) VICE PRESIDENT JUDICIAL MEMBER पुणे / Pune; ᳰदनांक / Dated : 08th April, 2025. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “B” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 5. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. "