Rental Income Not Taxed: Taxpayer Claims to Be Mere Rent Collector, ITAT Permits Fresh Hearing Conditionally [Read Order]

The assessee submitted that it was merely a rent collection agent for 32 individual co-owners of a property known as "Wavoo Mansion" and not the owner of the premises.

According to the assessee, the rental income amounting to over ₹1.6 crore as per Form26AS was duly declared by the respective co-owners in their individual returns, while the assessee only earned a 6% commission on the collections.

The assessment was earlier completed under Sections 147, 144, and 144B of the Income Tax Act after the assessee failed to respond to notices, and the return filed was treated as invalid. The CIT(A) had also dismissed the assessee’s appeal in an ex parte order due to non-compliance and absence of supporting documentation.

Before the Tribunal, the assessee submitted detailed evidence including audited accounts, co-owners’ income tax acknowledgments, and notarized affidavits confirming the ownership structure.

Considering that the material evidence had not been examined by the lower authorities due to lack of representation, the ITAT decided to remand the matter back to the Assessing Officer for fresh consideration.

However, this relief was granted conditionally. The bench of S. R. Raghunatha and S.S. Viswanethra Ravi directed the assessee to pay a cost of ₹10,000 to the State Legal Aid Authority, Madras High Court, within 30 days and to produce proof of such payment before the Assessing Officer. Similar directions were issued for related assessment years 2014-15 and 2016-17.

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