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Shri Pankaj Kayathwal, H.No.241, Sector-30, Faridabad, Haryana vs. The Income Tax Officer, Ward -2 (4), Noida.
May, 02nd 2019

Subject: Briefly the facts of the case are that in this case return of income was filed by assessee declaring NIL income.

Referred Sections:
Section 144 of the I.T. Act
Section 10 of the I.T. Act

               DELHI BENCHES "SMC" : DELHI


                Assessment Year 2014-2015

Shri Pankaj Kayathwal,
                                  The Income Tax Officer,
H.No.241, Sector-30,
Faridabad, Haryana            vs. Ward -2 (4),
PIN 121000 PAN ALRPK8316M
         (Appellant)                     (Respondent)

               For Assessee : Shri Pankaj Kayathwal,
               For Revenue : Shri S.L. Anuragi, Sr. D.R.

              Date of Hearing : 01.05.2019
      Date of Pronouncement : 02.05.2019


           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.

2.         I have heard the Assessee-in-Person and Ld. D.R.

on behalf of the Revenue.

3.         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
                                       ITA.No.742/Del./2018 Shri Pankaj
                                                 Kayathwal, Faridabad.

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.

3.          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
                                       ITA.No.742/Del./2018 Shri Pankaj
                                                 Kayathwal, Faridabad.

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
                                        ITA.No.742/Del./2018 Shri Pankaj
                                                  Kayathwal, Faridabad.

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/-.

4.          The assessee in the present appeal has claimed

deduction of Rs.4,04,060/- on account of rent paid to his


5.          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,
                                      ITA.No.742/Del./2018 Shri Pankaj
                                                Kayathwal, Faridabad.

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.

6.        In the result, appeal of Assessee dismissed.

          Order pronounced in the open Court.

                                       (BHAVNESH SAINI)
Delhi, Dated   02nd   May, 2019        JUDICIAL MEMBER
Copy to
1.   The appellant
2.   The respondent
3.   CIT(A) concerned
4.   CIT concerned
5.   D.R. ITAT `SMC' Bench, Delhi
6.   Guard File.
                     // BY Order //

      Assistant Registrar : ITAT Delhi Benches : Delhi.
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