Tenancy recognised in prior proceedings limits assessment to actual rent and bars notional self-occupancy income.

Consistent recognition of a tenancy in prior proceedings, together with the will and surrounding record, meant the estate's property could not be treated as self-occupied on the material before the ITAT. As the tenant's possession was established and the challenge to the lease arrangement could not be reopened in the present proceedings, the assessable rental income was confined to the actual rent received. No notional income on account of self-occupancy was justified.

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Issues: Whether the rental income from property No. 3, South End Road, New Delhi was assessable in the hands of the estate of late Smt. Abnash Kaur at more than the actual rent of Rs. 1,500 per month, and whether any notional income on account of self-occupancy could be added.

Analysis: The property had a long history of being treated in earlier proceedings as let out on rent, and the surrounding record, including the will and prior adjudications, supported the existence of tenancy rights in favour of Smt. Adarsh Kaur Gill. The challenge to the lease arrangement could not be re-opened on merits in the present proceedings in view of the prior litigation history and the High Court's refusal to entertain the declaration claim on limitation grounds. The estate was not shown to be self-occupied by the heirs, and the material on record showed possession by a tenant under the existing tenancy arrangement. In these circumstances, the assessment could not extend beyond the actual rent received, and no notional self-occupancy addition was justified.

Conclusion: The rental income assessable in the hands of the estate was confined to Rs. 1,500 per month, and the addition of notional income for self-occupancy was unsustainable.

Final Conclusion: The Revenue's challenge failed, the assessee side succeeded on the principal tax issue, and the order of the first appellate authority was affirmed.

Ratio Decidendi: Where a tenancy is consistently recognised in prior proceedings and the property is not shown to be self-occupied, the estate can be assessed only on the actual rent and no notional self-occupancy income can be added.

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