Percentage of Ownership Absent in Sale Deed: ITAT upholds addition made on Self-Occupied House Property in hands of Husband [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) upheld the addition made on the self-occupied house property in the hands of the husband due to the absence of a percentage of ownership in the sale deed. When a search was conducted in Adam Smith Group of cases under section 132 of the Income Tax Act, 1961, and the residential premises of the assessee, Shivani Madan, were also covered, a notice under section 153A of the Act was issued on 26.04.2019 and duly served. The assessee responded by filing a return on 14.08.2019, declaring income of Rs. 21,09,800/-. Search material revealed the purchase of the first, second, and third floor of the property for Rs. 3.50 crores in joint ownership with the husband of the assessee. During the assessment proceedings, the Assessing Officer asked the assessee via a note sheet entry dated 09.12.2019 to explain why income from the aforementioned property should not be charged to tax under the head "income from house property." The assessee submitted that the property is a single unit owned by her husband. Her name in the sale deed is only for security purposes, and she contributed Rs. 20 lacs only during AY 2011-12. The AO did not accept the explanation and assessed the annual letting value at 8% of the cost of the property as shown in the sale deed, computing income from house property. Aggrieved, the assessee filed an appeal before the CIT(A), who dismissed the appeal. Thereafter, the assessee filed another appeal before the tribunal. The assessee's representative, Sahil Sharma, argued that the assessee made an investment of 5.4%, amounting to Rs. 20 lacs. However, it is customary to include the wife's name in the sale deed. The property is in the name of both husband and wife, but the amount contributed by the wife is only 5.4% of the total investment. Therefore, taxing 50% of the house property income in the hands of the assessee is not justified. H.K. Choudhary, the Department representative, argued that ownership in the property is determined as per the mutation records. The sale deed nowhere specified the share of the co-owners. Therefore, the share of co-owners is not ascertainable. Hence, no name has been mentioned, and the entire consideration of Rs. 3.50 crores was paid by the vendee, namely both the co-owners, husband and wife. It was observed that the sale deed and the co-ownership are evidenced therein, but there is no specification of shares of the husband and wife in the sale deed. Therefore, relying upon the decision in Allahabad High Court in Saiyad Abdulla’s case, it must be held that the husband and wife purchased equal shares, and therefore, the Revenue is justified in bringing to tax 50% of the income from house property in the hands of the assessee. After observing the submissions of both parties, the two-member bench of Anil Chaturvedi ( Accountant Member ) and Astha Chandra ( Judicial Member ) upheld the addition made on self-occupied house property in the hands of the husband due to the absence of a percentage of ownership in the sale deed. Keywords: Absent, Percentage, Ownership, Sale Deed, ITAT, upholds, addition, Self-Occupied , House Property, Husband Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates