Pramod Yadav vs Assessing Officer

PER VIKAS AWASTHY, JM:

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] dated 11.12.2025, for Assessment Year 2018-19.

The appeal is time barred by 13 days. The assessee has filed an application citing reasons causing delay in filing of appeal. After perusal of the same, I am satisfied that delay in filing of appeal is not intentional, the delay has been caused for the reasons stated in application which appears to be bonafide. Thus, delay of 13 days in filing of appeal is condoned and appeal is admitted for decision on merits.

The solitary issue in the present appeal is addition made on account of notional Annual Rental income from the 2^nd and 3^rd floor of the house owned and occupied by the assessee.

Shri Yitin Gera, appearing on behalf of the assessee narrating facts of the case submits that the assessee owns 2^nd, 3^rd and 4^th floor of a residential house at 30, Satya Niketan, Moti Bagh, New Delhi. In the period relevant to Assessment Year 2017-18, the assessee had let out the second and third floors of the house, whereas the fourth floor was self-occupied. The rental income from the second and third floors was offered to tax in the preceding assessment year. In the period relevant to the assessment year under appeal, the assessee got the second and third floors vacated for his personal use, hence, the entire residential accommodation, i.e., 2^nd to 4^th floors of the property was used by the assessee for self-occupation. Therefore, no rental income was offered to tax. The ld. AR pointed out that the Assessing Officer (AO), without considering this fact, merely on presumption that the assessee must have continued to let out the second and third floors, determined annual rental value, thereby making addition of Rs.4,41,116/-. The ld. AR representing the assessee submitted that house under question is under self-occupation of the assessee. This is the only house self-occupied by the assessee. Part of the house was let out when it was not required and the rental income was offered to tax. Aggrieved by the assessment order dated 09.02.2021, the assessee carried the issue in appeal before the CIT(A). The CIT(A) rejected the assessee’s submissions and upheld findings of the AO. Hence, the present appeal.

Per contra Shri Manoj Kumar, representing the Department vehemently defending the impugned order prayed for dismissing appeal of the assessee.

Both sides heard, orders of the authorities below examined. The assessee in his return of income has not offered any rental income to tax from self-occupied house, in the period relevant to the assessment year under appeal. This fact was explained to the AO. The AO merely on presumption determined the Annual Rental Value of the second and third floors of the house, without bringing on record any cogent evidence to show that the second and third floors of the house were indeed let out. The AO erred in holding that 2^nd and 3^rd Floor of the house are independent residential units. Where in a single building three units can be integrated into one residential unit, the same shall be considered as single residential property under self-occupation. The Tribunal and Hon'ble High Court in various decisions while granting benefit of exemption on capital gains u/s.54 or 54F of the Act have held multiple flats adjacent to each other in single building as single residential unit. Considering entire facts of the case, I find merit in the submissions of the assessee, accordingly, addition of Rs.4,41,116/- is directed to be deleted.

In the result, appeal of the assessee is allowed.