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Facts
The assessee received rental income reported in his PAN (Form 26AS) for assessment year 2013-2014, but claimed the property belonged to M/s. Surajmal Nani Bai Sharma Trust and the rent was credited to the Trust's bank account. The tenant had mistakenly reported TDS in the assessee's PAN. The AO and CIT(A) added the rental income to the assessee's hands due to lack of evidence proving ownership by the Trust, despite the assessee submitting revised Form 26AS and a rental agreement.
Held
The Tribunal noted that while revised Form 26AS and a rental agreement were submitted, conclusive evidence of property ownership by the Trust or proof that the Trust had offered the income in its return for the relevant year was still lacking. The matter was therefore remanded to the Assessing Officer with a direction to verify these facts, and if satisfied with the proof of Trust ownership or that the Trust offered the income, to delete the addition made in the assessee's hands.
Key Issues
Whether rental income reported in the assessee's PAN, but claimed to belong to a Trust, should be assessed in the assessee's hands in the absence of conclusive proof of ownership by the Trust, and if so, whether the matter warrants a remand for further verification.
Sections Cited
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, HYDERABAD “A” BENCH: HYDERABAD
Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “A” BENCH: HYDERABAD BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G, ACCOUNTANT MEMBER ITA.No.807/Hyd./2025 Assessment Year 2013-2014 DHARMENDER SHARMA, The Income Tax Officer, HYDERABAD – 500 001. vs. Ward-4(4), Telangana. HYDERABAD – 500 028. PAN AFVPS5502D (Appellant) (Respondent) For Assessee : CA, Bhupesh Kumar Dand For Revenue : MS. Helen Ruby Jesindha, Sr. AR Date of Hearing : 28.07.2025 Date of Pronouncement : 31.07.2025 ORDER PER MANJUNATHA G. :
This appeal has been filed by the Assessee against the order dated 28.02.2025 of the learned Addl/ JCIT(A)-2, Gurugram, relating to the assessment year 2013- 2014.
2. At the very outset, there is a delay of 9 days in filing the appeal before the Tribunal. The assessee has filed an affidavit explaining the reasons for the delay in filing the 2 ITA.No.807/Hyd./2025 appeal before the Tribunal that, due to adverse health conditions brought on by the extreme heat that prevailed during March and April, 2025, he was unable to file the appeal within the prescribed time limit. He, accordingly, pleaded that the delay of 9 days in filing the appeal before the Tribunal may please be condoned in the interest of justice. The Learned DR did not strongly object to the condonation of delay in filing the appeal before the Tribunal.
We have heard both the parties and perused the affidavit and petition filed by the assessee seeking for condonation of delay of 9 days in filing the appeal before the Tribunal. We are satisfied with the reasons explained by the assessee in not filing the appeal within the prescribed time limit. Therefore, we condone the delay of 9 days in filing the appeal before the Tribunal and admit the appeal for adjudication.
Brief facts of the case are that, the assessee is an individual, filed his return of income for the assessment year 2013-2014 on 07.04.2019 admitting income of Rs.18,63,900/-. The case was selected for scrutiny and 3 ITA.No.807/Hyd./2025 during the course of assessment proceedings, the Assessing Officer noticed that, as per Form 26AS statement, the assessee has received rental income of Rs.4,23,600/- from M/s. Premier Papers, but, the assessee has not admitted the same in the return of income filed. The Assessing Officer called-upon the assessee to file relevant details and also explain why rental income should not be assessed. In response, the assessee vide letter dated 29.01.2016 stated that, the property was owned by M/s. Surajmal Nani Bai Sharma Trust and is let-out to M/s. Premier Papers. Further, the tenant has reported rental payments in the PAN of the assessee, even though, the rent has been credit to the bank account of the Trust. The Assessing Officer called-upon the assessee to file relevant evidences regarding the admission of the income in the hands of the Trust. Since the assessee could not produce any evidences in support of his claim, the Assessing Officer assessed the rental income under the Head “Income from House Property”, after allowing standard deduction @ 30% and made addition of Rs.2,96,520/-.
4 ITA.No.807/Hyd./2025 4. Aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). Before the learned CIT(A), the assessee submitted that, the property has been let-out by M/s. Surajmal Nani Bai Sharma Trust. However, by an inadvertent error, the TDS has been reported in the PAN of the assessee. Further, the same has been discussed with the tenant and after the discussion, the tenant has filed revised quarterly statement in Form 26Q and the same can be verified from revised Form 26AS of the appellant and the trust. The learned CIT(A) after considering the relevant submissions of the assessee observed that, although, the assessee has filed corrected copies of Form 26AS of the appellant and the trust, but, failed to produce documentary evidences as directed by the ITAT in order to verify the ownership of the property given on rent to M/s. Premier Papers. Therefore, rejected the arguments of the assessee and sustained the addition made by the Assessing Officer towards income from house property.
Aggrieved by the order of the learned CIT(A), the assessee is now, in appeal before the Tribunal.
5 ITA.No.807/Hyd./2025 6. CA, Bhupesh Kumar Dand, Learned Counsel for the Assessee referring to Form 26AS of the appellant and Form 26AS of the Trust submitted that, originally by an inadvertent error the rental income has been reported in the PAN of the assessee. Further, when this mistake was brought to the notice of the tenant, they have filed revised Form 26Q and reported the rent in the name of M/s. Surajmal Nani Bai Sharma Trust. Further, the rent has been credited in the bank account of the trust maintained with Tamilnadu Merchantile Bank Ltd., The assessee had also filed rental agreement dated 02.11.2017 which was executed by the M/s. Surajmal Nani Bai Sharma Trust. Although, these evidences has been filed before the learned CIT(A), but, the learned CIT(A) sustained the addition only on the ground that, no evidence has been filed to prove ownership of the property in the name of the Trust. Since the rental income has been credited in the bank account of the Trust and further, the rent has been reported now in the PAN of the Trust, the additions made by the Assessing Officer in the hands of the assessee cannot be sustained.
6 ITA.No.807/Hyd./2025 Therefore, he submitted that, addition made by the Assessing Officer and sustained the learned CIT(A) should be deleted.
MS. Helen Ruby Jesindha, learned Sr. AR for the Revenue, supporting the order of the learned CIT(A), submitted that, in the first round of litigation, the ITAT has remitted the issue with a direction to verify ownership of the property. In the second round of litigation, the assessee could not file any evidence to prove ownership of the property in the name of the Trust. Mere filing of correct Form 26AS is not sufficient to prove the ownership of the property. In absence of relevant details, the learned CIT(A) has sustained the addition made by the Assessing Officer and thus, the order of the learned CIT(A) should be sustained.
We have heard both the parties, perused the material on record and the orders of the authorities below. Admittedly, the rental income was reported in the PAN of the assessee which is evident from Form 26AS filed for the 7 ITA.No.807/Hyd./2025 relevant assessment year. The assessee claims that, by mistake, the tenant has reported rental income in the name of the appellant being the Trustee of the Trust, even though, the rent has been credited to the bank account of the Trust. To support it’s contention, the appellant has filed revised Form 26AS of the assessee and the Trust. The appellant had also filed relevant bank account statement and copy of rental agreement dated 02.11.2017. From the revised Form 26 filed by the assessee, it is noticed that, the rental income has now been reported in the PAN of the Trust and the earlier rental income reported in the name of the assessee has been reversed. To this extent, we can accept the arguments of the Counsel for the Assessee, but, the fact remains that, in the first round of directions, the Tribunal directed the Assessing Officer to verify the ownership of the property with relevant evidences. It was the observation of the Assessing Officer and the learned CIT(A) that, assessee could not place any evidences to prove ownership of the property in the name of the Trust. Although, the assessee has filed rental agreement dated 02.11.2017, but, said
8 ITA.No.807/Hyd./2025 rental agreement does not pertains to the assessment year under consideration and further, from the rental agreement, the ownership of the property cannot be proved. Further, the credit of the rent in the bank account of the Trust is not sufficient to held that, the rental income is belongs to or pertains to the Trust. In absence of any credible evidence including relevant details for ownership of the property, in our considered view, merely on the basis of corrected Form 26AS and bank statement that, rental income belongs to the Trust cannot be accepted. Further, the assessee has also failed to file return of income filed by the Trust admitting income in the return of income for the year under consideration. Since the assessee could not file any evidences, in our considered view, the matter needs to be set aside to the file of Assessing Officer to verify the claim of the assessee in light of any evidences that may be filed by the assessee to prove ownership of the property and also the income derived from let-out of the property is offered in the hands of the Trust. In case, the assessee is able to satisfy at least one of the condition that, ownership of property or the 9 ITA.No.807/Hyd./2025 rental income from the property has been offered in the name of the Trust, then, the Assessing Officer is directed to delete the addition made towards income from house property in the hands of the assessee.
In the result, appeal of the Assessee is allowed for statistical purposes.
Order pronounced in the open Court on 31.07.2025.