Barons Inn Vs ITO (ITAT Bangalore)
The appeal before the ITAT Bangalore arose from an order of the National Faceless Appeal Centre (NFAC) for Assessment Year 2020-21. The reassessment order had been passed under Sections 147 read with 144 of the Income-tax Act, 1961, determining the assessee’s total income at Rs. 62,96,782 as against the returned income of Rs. 6,71,632. An addition of Rs. 56,06,865 was made on the ground that rent receipts amounting to Rs. 80,09,807 received from Speciality Restaurants Limited and another party had not been disclosed under the head “Income from House Property” after allowing the standard deduction of 30%. The NFAC confirmed the addition and dismissed the assessee’s appeal.
According to the facts recorded by the Tribunal, information received from the Insight Portal and Form 26AS showed that the assessee had received rental income of Rs. 80,09,798. Since the assessee had disclosed only Rs. 6,71,630 in its return of income filed on 9 January 2021, the assessment was reopened. Several opportunities and show-cause notices were issued to the assessee, which were only partly responded to, resulting in the reassessment order dated 17 March 2025 making the addition of Rs. 56,06,865.
The assessee contended that it was engaged in the business of running and maintaining commercial establishments and providing associated services such as furniture maintenance, canteen facilities, housekeeping, and security services. It argued that the receipts were business income and not income from house property. The assessee relied on judicial precedents and CBDT Circular No. 16/2017 dated 25 April 2017 in support of its claim. It was submitted that the amounts received from Speciality Restaurants Limited and another tenant were taxable as business income and did not become income from house property merely because tax had been deducted at source under Section 194-I. The assessee also argued that non-response by tenants to notices issued under Section 133(6) could not justify the addition when details of properties, agreements, annual accounts, and services had already been furnished.
