Case Law Details
Rajesh Kumar Mangla Vs DCIT (ITAT Delhi)
The appeal before the Income Tax Appellate Tribunal, Delhi concerned an addition made on account of alleged undisclosed rental income for Assessment Year 2021–22. The assessee, an individual, had filed his return declaring total income of ₹33,02,320, which was later revised at the same amount. Following a search under section 132 in a related group, the Assessing Officer noted that the assessee had received rent of ₹1,72,000 per month from a tenant but had disclosed rental income only for certain months. The Assessing Officer therefore added rental income for the remaining period and allowed statutory deduction under section 24(b), treating the balance as undisclosed income under section 69B.
The assessee contended that the property had been let out jointly to two tenants at a consolidated rent of ₹1,80,000 per month and that rent of ₹9,00,000 received for the period from November 2020 to March 2021 had been duly disclosed. It was further explained that the property remained vacant for the remaining period. Confirmations from both tenants were filed, stating that the rent paid was ₹9,00,000 jointly to the assessee and his wife. Copies of the rent agreement and bank statements evidencing the payments were also produced.
The Commissioner (Appeals) upheld the addition, mainly on the ground that there was a mismatch between the rent mentioned in the rent deed and the receipts, and that TDS details were available. On further appeal, the Tribunal observed that the rent of ₹1,72,000 relied upon by the Assessing Officer pertained to May and June 2021, which did not fall in the relevant previous year. The Tribunal found that the confirmations, rent agreement, and bank statements supported the assessee’s claim that only ₹9,00,000 had been received during the year. It held that the allegation of further cash rent was incorrect and deleted the addition of ₹5,74,000 made after deduction under section 24(b). The remaining grounds relating to interest and penalty were held to be consequential. The appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal is filed by the Assessee against the order of the Learned Commissioner of Income Tax (Appeals)-29, Delhi (‘Ld. CIT(A)’ in short) dated 17.01.2025 in Appeal No. CIT(A), Delhi-29 for Assessment Year 2021-22 arising out of the order passed by DCIT, Central Circle-26, New Delhi u/s 143(3) of the Act, 1961 (‘the Act’ for short) dated 10.02.2023.
2. Brief facts of the case are that the assesse is an individual and filed his return of income on 30.12.2021 declaring total income of Rs.33,02,320/- which was revised on 25.03.2022 at the same income. A search and seizure action u/s 132 of the Act was carried out in the group of Sh. Rupesh Kumar Batra, Aditya Kumar Jha & Ors on 10.10.2021. During the course of search, it was found that assesse has received rent of Rs.1,72,000/- per month from Sh. Batra. However, the assessee has disclosed the rent for some periods only, therefore, the AO has made an addition of the rental income for the remaining period and allowed the statutory deduction u/s 24(b) of the Act.
3. Against the said order, assessee preferred an appeal before the Ld. CIT(A), who dismissed the appeal filed by the assessee, therefore, the assessee filed present appeal before the Tribunal by taking following grounds of appeal: –
1. On the facts and in the circumstances and in law, the learned CIT(Appeals) has erred in confirming the addition of 1 Rs.5,74,000/-on account of undisclosed income u/s 69B when such addition is not called for, the AO may be directed to delete the same.
2. On the facts and in the circumstances and in law, the learned CIT(A) has erred in levying consequent interest u/s 234A, 234B, 234C of the Act. The appellant denies its liability to pay such interest.
3. On the facts and in the circumstances and in law, the learned CIT(A) has erred in initiating penalty proceedings u/s 271AAC of the Act. The AO may be directed to not to initiate any such penalty proceedings.
4. The appellant craves leave to add, alter, amend and/or 4 withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal.
4. Heard both the parties and perused the material available on record. The assesse has categorically stated before the lower authorities that he had given its property at Farm No. 31, Khasra No. 1411, Village Bhati, Tehsil Saket, Delhi on monthly rental of Rs.1,80,000/- jointly to Mrs. Rashee Pradeep Shah and Mrs. Pallavi Kuchroo on sharing basis. The assessee has shown income of Rs.9,00,000/- as rent was received for the period from November, 2020 to March, 2021 and claimed that for the remaining period, the property remained vacant. The tenants also confirmed that they had paid rent of Rs.9,00,000/- to the assessee and his wife.
4.1 It is observed that the AO made the addition by alleging that assessee has received monthly rent of Rs.1,72,000/- from both the tenant separately and since the assessee has already shown the rent of Rs. 9.00 lacs, held the remaining amount of Rs. 8,20,000/- as undisclosed. Ld. CIT(A) observed that though the assessee has filed confirmations of both the tenants however, confirmed the addition for the sole reason that rent amount as per rent deed and the actual receipts are not matching and TDS details were available.
5. We find that the assessee has filed the confirmation of both the tenants wherein they have confirmed the payment of rent of Rs. 1,80,000/- jointly and further observed that rent of Rs. 1,72,000/- referred by the AO was for the period of May and June-21 and not for any month falling in the previous year relevant to assessment year before us. Further the tenant also filed copy of same rent agreement and copy of bank statements in the support of payments made to assessee towards rent. In view of these facts, we are of the view that assessee has been able to demonstrate that the actual rent received was Rs. 9.00 lacs as declared in the return of income filed and therefore, allegation of AO that assessee had received further rent of Rs. 8,20,000/- in cash from the co-tenant is incorrect. Accordingly, we hereby deleted the addition of Rs.5,74,000/- made by AO after reducing deduction u/s 24(b) of the Act. The ground of appeal No.1 of the assessee is thus allowed.
6. Grounds of appeal No.2 & 3 are consequential in nature and require no adjudication.
7. In the result, the appeal of the assessee is allowed.
Order is pronounced in the Open Court 17.11. 2026
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