The Jaipur Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the Rs. 3 lakh income addition, ruling that the proportionate income was already disclosed in the tax return.
Harish Jain, appellant-assessee, was searched under section 132 of the Income Tax Act. During the search, a rent agreement document for House No. 175 Rajiv Gandhi Nagar, Kota, between Shri Umesh Kumar and the appellant was seized. The agreement, covering the period from May 1, 2014, to April 30, 2015, showed a total rent of Rs. 9,50,000, with Rs. 2,50,000 paid upfront and the rest paid in three installments by January 2015.
However, the document also showed a receipt of Rs. 13,00,000, while the assessee had reported only Rs. 10,40,000 in the income tax return. As a result, Rs. 3,00,000 was added to the appellant’s income.
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When the matter was taken to the Commissioner of Income Tax ( Appeals ) [ CIT(A) ], he confirmed the addition, observing that the amount noted in the incriminating document was not offered for taxation. Since the document was deemed incriminating material, he upheld the addition.
The two member bench comprising Dr.S.Seethalakshmi(Judicial Member) and Rathod Kamlesh Jayantbhai(Accountant Member) noted the assessee’s argument that the document should be read in full. The rent amount for the period from May 1, 2014, to April 30, 2015, was already included in the income tax return for Rs. 10,40,000.
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The assessee contended that the document could not be partially considered incriminating. Since the taxable portion was already reported, the ITAT directed the deletion of the Rs. 3,00,000 addition.
In short the appeal filed by the assessee was allowed.
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