Pankaj Kayathwal vs Income Tax Officer

Bhavnesh Saini, J

This appeal by Assessee has been directed against the Order of the Ld. CIT(A)-1, Noida, Dated 25.09.2017, for the A.Y. 2014-2015.

I have heard the Assessee-in-Person and Ld. D.R. on behalf of the Revenue.

Briefly the facts of the case are that in this case return of income was filed by assessee declaring NIL income. The assessee is an individual and deriving income from salary. The case was selected for scrutiny. The A.O. issued statutory notices for completion of the assessment which remain un-complied with. The A.O. issued show cause notice under section 144 of the I.T. Act and asked for the reply of the assessee and supporting documents on the points specified in the notice. The A.O. pointed-out that assessee filed return of income at NIL. However, perusal of 26AS reveals that assessee has received salary of Rs.25,41,859/- from M/s. L.G. Electronics India Pvt. Ltd., Greater Noida, which should have been shown in the return of income. In the absence of any supporting documents, the A.O. made addition of Rs.25,41,859/- under the head "Income from Salary" and computed the income of assessee at the salaried income.

The assessee preferred appeal before the Ld. CIT(A). The Counsel for assessee submitted before Ld. CIT(A) that he is an employee of Multinational Company and submitted the details of his income obtained from the employer for filing of the income tax return, but, his case has not been properly handled and the details called for by the A.O. could not be furnished. It was submitted that gross salary of the assessee was Rs.26,26,187/- instead of Rs.25,41,860/- as considered by the A.O. Learned Counsel for the Assessee, therefore, submitted that the correct figure of the salary may be taken at Rs.26,26,187/-. The Counsel for Assessee also submitted that assessee was entitled to the deduction under section 10 of the I.T. Act amounting to Rs.4,04,060/- being the rent paid by assessee in respect of the house taken on rent. It was also claimed that amount of Rs.1,24,080/- is an admissible deduction under the provisions of Chapter-VIA of the I.T. Act, 1961.

3.1. The Ld. CIT(A) after considering the explanation of assessee noted that assessee has paid rent to his wife who in turn has been residing with the assessee in the same house. The Ld. CIT(A), therefore, observed that there is a funny situation wherein the Landlord of the house is using the property let out for her residence as well as while claiming to have let it out to a rent paying tenant. Obviously, the arrangement is a collusive arrangement and a colourable exercise to reduce the tax payable by the assessee. Therefore, claim of assessee for deduction under section 10 of the I.T. Act was denied. The Ld. CIT(A), however, find that claim of assessee for deduction under Chapter-VIA is admissible. The same was accordingly allowed. The total income of the assessee was determined at the gross salary of Rs.26,26,187/- reduced by the admissible deduction under Chapter-VIA of Rs.1,24,080/-.

The assessee in the present appeal has claimed deduction of Rs.4,04,060/- on account of rent paid to his wife.

After considering the rival submissions, I am of the view that no interference is called for in the Order of the Ld. CIT(A). The assessee submitted that rent was paid to his wife who has shown the same as income in her return of income. This itself is not justified to make a claim of deduction under section 10 of the I.T. Act. The Ld. CIT(A) has categorically recorded a finding of fact that assessee paid the rent to his wife who is residing with the assessee in the same house. It is, therefore, clear that alleged rent was paid by the assessee to his wife as a owner of the house, who, in turn, have been residing in the same house with the assessee. When the Landlord/owner have been residing in the rented house, where is the question of paying any rent by the assessee to the Landlord. The Ld. CIT(A), therefore correctly held that it is a colourable devise to avoid legitimate payment of the taxes. No interference is required in the matter. This ground of appeal of assessee has no merit and the same is accordingly dismissed. No other point is argued or pressed.

In the result, appeal of Assessee dismissed. Order pronounced in the open Court.