1986 (2) TMI 145 - AT - Income Tax

Summary

Issues:
1. Reopening of assessment under section 147(b) due to under-assessment of income from house property.
2. Interpretation of self-occupied property under section 23(2) of the Income Tax Act, 1961.
3. Discrepancy between the views of the Income Tax Officer (ITO) and the Appellate Assistant Commissioner (AAC) regarding the assessment.

Detailed Analysis:
1. The case involved the reopening of assessment under section 147(b) due to the under-assessment of income from a house property. The Income Tax Officer (ITO) estimated the income from the property at a higher value than originally assessed, citing that only a portion of the property was self-occupied by the assessee, while the rest was used by sons with independent income. The ITO applied a specific formula to determine the annual letting value (ALV) for the portion not self-occupied by the assessee.

2. The Appellate Assistant Commissioner (AAC) disagreed with the ITO's decision, stating that section 147(b) did not apply in this case and considered it a mere change of opinion by the ITO. The AAC relied on previous court decisions and legal references to support the assessee's claim that the municipal valuation should be the basis for determining the ALV of the property. The AAC also highlighted that the property had been assessed based on municipal valuation in previous assessment years, which was accepted by the department.

3. The Departmental Representative argued that the entire property was not self-occupied as per section 23(2) of the Income Tax Act, as it was also used by the assessee's sons with independent income. The Representative contended that the ITO's estimation of ALV was reasonable given the circumstances and the area of the building. The Authorized Representative (AR) for the assessee, however, maintained that any deviation from the municipal valuation by the ITO was merely a change of opinion. The AR also referenced a previous Tribunal order to support the interpretation of self-occupied property.

In conclusion, the Tribunal considered the submissions of both parties and upheld the AAC's decision, dismissing the departmental appeal. The Tribunal ruled that the entire property was to be considered self-occupied under section 23(2) of the Income Tax Act, as the sons' occupation did not negate the assessee's control over the property. Since the net income shown by the assessee was based on municipal valuation, which was deemed correct by the High Court in a previous case, there was no under-assessment, making the application of section 147(b) unnecessary in this instance.