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Facts
The assessee declared income of Rs. 7,85,000/- for AY 2018-19. The case was selected for scrutiny due to a large claim of loss under the head 'income from house property'. The assessee claimed ownership and housing loan deductions for two properties, one self-occupied and one let out. The Assessing Officer estimated rental income and denied interest deductions, leading to an addition.
Held
The Tribunal held that the addition of Rs. 2,10,000/- under 'income from house property' and the disallowance of carry forward loss of Rs. 12,22,124/- were not warranted. The Assessing Officer took contradictory stands regarding property ownership and rental income estimation.
Key Issues
Whether the addition made by the Assessing Officer on account of estimated rental income and denial of interest deduction on housing loan for properties claimed by the assessee are justified, especially when the Assessing Officer took contradictory stands.
Sections Cited
143(2), 142(1), 80C, 24(b), 147
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘SMC’ BENCH, KOLKATA
Before: Shri Duvvuru RL Reddy, Vice-(KZ)
Appearances by: Shri Miraz D. Shah, A.R., appeared on behalf of the assessee Shri Susanta Saha, Sr. D.R., Addl. CIT, appeared on behalf of the Revenue Date of concluding the hearing: September 04, 2025 Date of pronouncing the order: October 31, 2025 O R D E R
The present appeal is directed at the instance of assessee against the order of Id. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 09.06.2025 passed for Assessment Year 2018-2019.
(A.Y. 2018-2019) Parvesh Sharma 2. Facts in brief are that the appellant-assessee filed his return of income for AY 2018-19 declaring total ncome of Rs.7,85,000/-. The case was selected for limited scrutiny on the issue for the reason ‘large value of loss claimed under the head income from House Property’. Notice under section 143(2) dated 28.09.2019 was issued to the assessee through ITBA Portal, electronically. Further notices under section 142(1) were issued on 12.12.2019 and 18.03.2020 to the assessee through ITBA electronically. During the year under consideration, the assessee has shown income from capital gain and income from other sources along with agricultural income. The assessee furnished copy of purchase deed of properties and copy of rent agreement of let out property. On query, the assessee replied that he has taken home loan from ICICI Bank and Reliance Home Finance and furnished ICICI Bank statement and Reliance Home Finance statement for claiming deductions under sections 80C and 24(b) of the Income Tax Act, 1961. The assessee declared in his submission that this propert4y is self-occupied which address is Flat No. 1A, 1st Floor, Buildcon Orchid, Front side Holding No. RGM 23/10, Jyangra, P.S. Rajarhat, Ward No. 23, Kolkata-700059. On this property, the assessee claimed his ownership is 100% and taking loan from two entities that means Reliance Home Finance and ICICI Bank. The assessee also declared in his submission that the address of let out property is Flat No. 1B, 1st Floor, Block No. III, P.S. Magnum, Kavi Narul Islam Avenue, VIP Road, Kolkata. On this property, assessee claimed his ownership is 100% and taking loan from two entities that means Reliance Home Finance and ICICI Bank. On query, the assessee did not furnish the copy of purchase deed and (A.Y. 2018-2019) Parvesh Sharma copy of rent agreement of the let-out property. Without copy of rent agreement and rent receipt of Bank statement, the actual amount of rent received by the assessee is not ascertained on the let-out property. The rent value was acquired of Rs.25,000/- per month on the average base parameter of the covered area of 2008 sq.ft. of the nearby house property for the period from 01.04.2017 to 31.03.2018. The ld. Assessing Officer determined the income of the house property by adding the rental income after giving deduction under section 24(b) of 30% from it. Therefore, the ld. Assessing Officer assessed the total taxable income of the assessee at Rs.9,95,000/- (Returned income + income from house property, i.e. Rs.7,85,000 + Rs.2,10,000/-).
On being aggrieved, the assessee preferred an appeal before the ld. CIT(Appeals). The ld. CIT(Appeals) dismissed the appeal of the assessee for statistical purposes by saying as under:- “Upon reviewing the submissions provided by the appellant, it is observed that the loan statements issued by the ICICI Bank pertaining to the claim under sections 24(b) and 80C(2) of the Income Tax Act, 1961, for the two properties are in the names of Parvesh Sharma and Rohini Sharma. Therefore, the appellant’s assertion that there is no co-owner of the properties is factually incorrect. Furthermore, the appellant claims to have enclosed the purchase deeds for both properties, however, the documents submitted are affidavits executed on stamp papers of Rs.5000 and Rs.100 respectively. These affidavits do not constitute valid purchase deeds under the provisions of the Transfer of Property Act, 1882, as they lack the requisite legal formalities, including registration and proper stamp duty payment. 3 (A.Y. 2018-2019) Parvesh Sharma
In the light of the above facts, the Assessing Officer’s addition is upheld, as the appellant has failed to substantiate the claims with legally acceptable documents:
In the result, the appeal is dismissed for statistical purposes”.
I have heard both the sides. It was the submission of the ld. Counsel for the assessee is that he has submitted all the records but without considering the purchase and sale deed, Bank statement, Housing Loan Account of the assessee, ld. Assessing Officer as well as ld. CIT(Appeals) dismissed the appeal of the assessee and one way ld. Assessing Officer has admitted the fact that the assessee had let out the premises, but at the same time, he denied the claim of the interest component for Housing Loan saying that he is not the owner of the property. Ld. Counsel further submitted that the assessee is owner of two residential flats out of which one is self-acquired and other flat was on rent. The assessee has taken Housing Loan on both these flats. The first loan was taken from Reliance Home Finance and second loan was taken from ICICI Bank. Ld. Counsel further submitted that the assessee’s mother Kamlesh Sharma was co-applicant with the assessee and after assessee’s marriage, his wife Rohini Sharma replaced as co-applicant in place of Kamlesh Sharma. The ld. Counsel for the assessee stated that the assessee is the single owner of both the flats with co-applicant with his mother and later on, after marriage, his wife’s name (Rohini Sharma) was given as co-applicant in the documents in place of Kamlesh Sharma.
(A.Y. 2018-2019) Parvesh Sharma Therefore the ld. Assessing Officer is not correct in making the addition and disallowance of the rental income. He pleaded to set aside the order of ld. CIT(Appeals).
On the other hand, the ld. Departmental Representative relied on the order passed by the ld. Assessing Officer and further submitted that the assessee has not furnished the details before the ld. Assessing Officer and ld. CIT(Appeals). Therefore, he pleaded to uphold the orders passed by the lower authorities.
I have heard both the sides and perused the material available on record. It is an admitted fact that at the time of passing the assessment order, the ld. Assessing Officer has categorically mentioned in paragraph 5.2 that “I have to take estimated monthly rent value from the site of rented house property was going on at that time at the site of google 99 acres. The rent value was acquired of Rs.25,000/- per month on the average base parameter of the covered area of 2008 sq. ft. of the nearby house property”. Therefore, he estimated the rent at Rs.25,000/- x 12 i.e. amounting to Rs.3,00,000/- for the period of 01.04.2017 to 31.03.2018. However, the ld. Assessing Officer denied the claim of the assessee for an amount of Rs.12,22,124/- of interest loss is declined and the said amount could not be carried forward by the assessee in the subsequent year saying that the property is not in the name of the assessee. Two contrary stands should not be taken by the ld. Assessing Officer. Therefore, the ld. Assessing Officer is incorrect and wrongly concluded the assessment.
(A.Y. 2018-2019) Parvesh Sharma
Considering the facts and circumstances of the case, I am of the view that the addition of Rs.2,10,000/- under the head “income from house property” and also disallowance of carry forward loss of Rs.12,22,124/- are not warranted. Hence, the grounds raised by the assessee are allowed.
In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 31/10/2025.