Bengali Hindu landlord split ₹1.89 cr rental income between HUF and personal ITR, then got a tax notice — here’s why
A ₹1.89-crore rental income case turned into a legal dispute over whether a Bengali Hindu could report part of the earnings under a Hindu Undivided Family (HUF) for tax purposes. While the taxpayer cleared his position, the income tax department rejected the claim, citing the difference in schools of Hindu law.
This case concerns Devranjan Mittra, a resident of South Delhi, who had earned ₹1.89 crore as rent in AY 2023-24 from properties held in his individual capacity and as an HUF. He declared ₹1.45 crore of the rental income in his HUF’s return and offered the remaining amount to tax in his individual ITR.
Mittra’s return was subsequently picked up for scrutiny under the income tax department’s computer-assisted scrutiny selection (CASS) system after his Form 26AS reflected higher rental receipts than what he reported.
Why was the assessee’s HUF claim rejected?
Indian Hindus primarily follow two schools of law, which include Mitakshara and Dayabhaga. In West Bengal and Assam, Hindus follow the Dayabhaga school of law, while the rest of India follows the Mitakshara.
During the income tax proceedings, the assessing officer (AO) said that Mittra could not report the rental income in the HUF return as he belonged to the Bengali community, which follows the Dayabhaga school of Hindu law. According to the AO, since this school does not recognise the concept of HUF, the entire rental income should be treated as Mittra’s individual income.
The Commissioner of Appeals CIT(A) agreed with the tax officer’s opinion and upheld the decision, but mainly because Mittra had failed to produce any details, documents or submissions at the appellate stage. Aggrieved by the decision, the matter reached Income Tax Appellate Tribunal (ITAT), Delhi.
Assessee dies, wife continues his tax case
Mittra passed away before the judgement was delivered, so his wife, Sagorika Mittra, continued the case on his behalf. She ultimately won the case before the ITAT Delhi on July 10, 2026.
When the case came before the ITAT Delhi, Sagorika argued that their Bengali HUF had existed for several decades and had also been recognised by the income tax department during that period.
She also explained how their Bengali HUF came into existence. According to Sagorika, the HUF was formed following a family partition. This partition was also accepted under Section 171 of the Income Tax Act, 1961, and since then, their Bengali HUF had consistently been assessed as a separate taxable entity.
The assessee’s wife also argued that if the income tax department taxed the same rental income again in Mittra’s individual tax assessment, then it would lead to double taxation, which would be unfair.
ITAT Delhi observed that the tax department had not cited any judicial precedent to support its conclusion that a Bengali governed by the Dayabhaga School cannot constitute an HUF. After relying on previous judgements in similar cases, the tribunal deleted the addition made in Mittra’s hands while granting liberty to the AO to examine the matter in the HUF’s assessment, if required under law.
“Tax authorities have not relied any judicial precedent. However, we find that Hon’ble Calcutta High Court in CIT Vs. PN Talukdar (1982) 135 ITR 628 (Cal) and in CIT Vs. Dr. A.K. Basu (1991) (91) CTR (Cal 155) recognized the existence of hindu undivided family as an accessible unit by relying the decision of Hon’ble Supreme Court in CWT Vs. Smt. Champa Kumari Singhi & Others (1972) AIR 2119. Thus, we are inclined to set aside the findings of tax authorities. The grounds raised by Devranjan Mittra are sustained. The appeal is allowed. The Assessing Officer is directed to delete the additions with a liberty to make additions in the hands of HUF as per law,” the tribunal said in its ruling.
