Landlord got tax notice for SBI's TDS on rent error

A landlord in Etawah, Uttar Pradesh received a tax notice for an error in tax deducted at source (TDS) on rental income from State Bank of India (SBI). The property was jointly owned by the landlord, his mother, and sister, and SBI agreed to pay rent of Rs 40.62 lakh annually. On February 5, 2020, the lease deed was signed, and the sale deed mentioned that SBI must pay the rent to all three lessors jointly. The landlord purchased a car for Rs 20.79 lakh using this income.

In February 2021, the landlord filed his income tax return (ITR) for AY 2020-2021 and declared an income of Rs 22.08 lakh. However, later he received tax notices under Section 148, Section 142(1), and reminders to reply to them. The landlord tried to explain his income sources and submitted evidence to the tax department.

The Income Tax Assessing Officer (AO) from ITO, Near Balram Singh Chauraha, Etawah, accepted the landlord's explanation for the source of funds for the car purchase but disagreed with the TDS on rent claim. The AO found that SBI deducted Rs 4.06 lakh TDS on the rent paid, but the landlord reported only one-third of the rent received from SBI. The AO held that the landlord should get one-third of the TDS credit, i.e., Rs 1.35 lakh, and prepared an assessment order on February 14, 2025.

The landlord then filed an appeal before the Income Tax Appellate Tribunal (ITAT) Agra, represented by chartered accountant Rajesh Malhotra. The case was heard by Sunil Kumar Singh and Brajesh Kumar Singh, and they passed their judgement on July 30, 2026, in favor of the landlord.