TATIPARTI SATYANARAYANA,VISAKHAPATNAM vs. INCOME TAX OFFICER, WARD-1(1), VISAKHAPATNAM

This appeal is filed by the assessee against the order of Learned Commissioner of Income Tax (Appeals)-1, Coimbatore [hereinafter in short “Ld.CIT(A)”] vide DIN & Order No. ITBA/APL/S/250/2024-

Brief facts of the case are that, assessee filed his return of income on 21.10.2022 by admitting a total income ofRs. 48,15,750/-. While filing the return of income assessee declared one property as Self-occupied and other two properties as let out and has accordingly declared rental income received by the assessee. However, it was noticed that assessee has wrongly filled up notional value of rent with respect of self-occupied property but has declared net Nil income with respect to the self-occupied property. The CPC, Bangalore while processing the return of income found that assessee has not taken an amount of Rs.18,52,306/- as income from self-occupied property while computing the total income of the assessee and has intimated the discrepancy vide letter dated 05.06.2023 to the assessee regarding the adjustment to be made by the CPC, Bangalore. However, assessee has failed to respond to the notice. Thereafter the CPC, Bangalore included the amount of Rs.18,52,306/- while passing the intimation order under section 143(1) of the Act.

The learned Commissioner of Income Tax (Appeals) failed to appreciate that the appellant admitted only 'Nil' income in respect of self- occupied property and therefore CPC erred in making addition towards annual value of such self-occupied house property 4. Any other ground that may be urged at the time of appeal hearing.”

Ground Nos. 1 and 4 are general in nature and needs no adjudication.

Ground Nos. 2 and 3 relates to holding the adjustment by the CPC, Bangalore for Rs.18,52,306/- made by the CPC in the intimation under section 143(1) of the Act. Ld. Authorised Representative [hereinafter “Ld.AR”] submitted that assessee has mistakenly declared notional income while filing the return of income, even though the property was self-occupied by the assessee for more than ten years. Ld.AR reiterated that in the previous years annual value was accepted by the Department as NIL. Ld.AR submitted that during the impugned assessment year, assessee has wrongly declared in return of income which is erroneous and needs to be deleted. Ld.AR also referred to section 23(2) of the Act stating that annual value of the house which is in occupation of Page No. 3

Per contra, Ld. Departmental Representative [hereinafter in short “Ld.DR”] submitted that the CPC, Bangalore has provided an opportunity to the assessee to file its objection before confirming the additions. Ld. DR further submitted that the assessee ought to have filed a revised return by declaring the annual value as NIL with respect to self-occupied property. In the absence of filing of revised return of income by the assessee, the addition made by way of intimation under section 143(1) of the Act by the CPC needs to be sustained.

We have heard both the sides and perused the material available on record. It is an admitted fact that the assessee has declared annual lettable value with respect to the self-occupied property while filing the return of income for the A.Y.2022-23. Section 23(1) of the Act is reproduced below for the sake of reference: -

On the plain readding of Section 23(1) of the Act, it can be observed that annual value of the property shall be deemed to the sum for which the property might reasonably be expected to let out from year to year. However, section 23(2) of the Act specifies that where the property consists of a house or part of a house which is in the occupation of the owner for the purpose of his own residence, the annual value for such house or part of the house shall be taken to be NIL. The contention of the Ld.AR is that the assessee is occupying the property for the purpose of his own residence and hence the value should be taken as NIL. Merely on the technical ground that the annual lettable value has been wrongly filled while filing the return of income cannot be the ground to assess the income of the property occupied by the owner for the purpose of his own residence. We therefore direct the Ld. AO / CPC, Bangalore to delete the addition of Rs.18,52,306/- being the annual lettable value wrongly declared by Page No. 5

In the result, appeal of the assessee is allowed.