Case Law Details
Anilbhai Chunilal Bhayani Vs ITO (ITAT Rajkot)
ITAT finds that both AO and CIT (A) have not satisfied with the explanation given by the assessee about the usage of the properties for the business purpose, and estimation of the rental value of the properties. The ld.AO rejected the claim of the assessee on the ground that no business activities carried out by the assessee at these premises and estimated the rental value of the property on hypothetical basis. The ld.CIT(A) also confirmed the observation of the AO, but reduced the rental value of the properties by holding that value determined by the AO was on the higher side. A perusal of the assessment order would indicate that the ld.AO has rejected the contentions of the assessee regarding user of these buildings and land for the purpose of business simply for the reason that the assessee failed to submit any evidence demonstrating the fact that these premises were used for any business purpose. In the case of Anilbhai Chunilal Bhayani, the ld.AO at page no.6 of the assessment order has observed that there is no letter head provided by the assessee showing the fact that address of its shops/godowns is being displayed on the letter-head of JC & Co. In other words, the ld.AO was expecting that the assessee should produce some secondary evidence in the shape of letter head, electricity bills showing that the premises were used for the purpose of business. To our mind, these reasoning are fallacious. The assessee has been pleading that premises has been used for business purpose. The AO should have deputed someone to inspect the sites. By simply sitting in the office, he just assigned the reason that I don’t agree with your submission. This type of simple denial of the claim is not sustainable in the eyes of law. The statement of facts made by the assessee has to be rejected on the basis of some investigation. The AO has rejected the statement of facts on the ground of insufficiency of evidence produced by the assessee. To some extent for an ideal situation, the assessee could be asked to produce more evidence, but pleadings cannot be rejected simply for insufficiency without investigating or inspecting site in such circumstances. We have accepted the claim of the assessee that it has been engaged in transportation business. We have allowed transportation expenses. Considering this aspect, we are of the view that the ld.Revenue authorities are not justified in rejecting the claim of the assessee that house properties were used for the purpose of business. This claim was rejected without making any investigation. Therefore, we reverse the finding of both the authorities and direct the AO not to assess house property income.
FULL TEXT OF THE ITAT JUDGEMENT
Above two appeals by the assesseees against the orders of the ld.CIT(A), Jamnagar of even dated 24.08.2017 for the assessment year 201314. Since grounds in both the appeals are identical, except variation in quantum additions, therefore, for the sake of convenience, we dispose of both the appeals by this common order.
2. The grounds raised by the assessees in the appeals reads as under:
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