MOHAMMED RAUF FAROOK KHAN,THANE vs. INCOME TAX OFFICER WARD 1(1), THANE

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ITA 4015/MUM/2025Status: DisposedITAT Mumbai13 October 2025AY 2016-178 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the appellate order passed by the CIT(A) was non-speaking, as the grounds of appeal were not adjudicated clearly. The CIT(A) failed to independently apply his mind and evaluate the facts and circumstances, thereby disregarding principles of natural justice. The Tribunal noted that Section 250(6) mandates that the order of the Commissioner (Appeals) shall be in writing, stating the points for determination, the decision thereon, and the reasons for the decision. It also highlighted that the CIT(A) has the power under Section 250(4) to make further inquiry or direct the AO to do so. Since the CIT(A) did not decide the appeal on merits, the Tribunal set aside the appellate order and restored the matter to the AO for de novo adjudication. The assessee was granted an adequate opportunity of hearing and liberty to file additional evidence. Both parties agreed to this proposition. The Tribunal clarified that this decision does not reflect on the merits of the dispute.

What were the facts?

The assessee, Mohammed Rauf Farook Khan, filed an appeal against the order dated 21.04.2025 passed by the CIT(A)/NFAC, Delhi. This order pertained to an assessment order dated 09.02.2024 passed by the Assessing Officer (AO) under section 147 read with section 144B of the Income-tax Act, 1961, for Assessment Year 2016-17. The AO had assessed the total income at Rs.99,24,310/- as against the returned income of Rs.3,88,494/-. The dispute arose from the purchase of an immovable property for Rs.55,87,500/-. The AO treated Rs.51,87,500/- as unexplained investment under section 69 and added the difference between the stamp value (Rs.99,32,500/-) and the consideration (Rs.43,45,000/-) as income from other sources. The CIT(A) upheld both additions. The assessee contended that the AO's action under section 147 was barred by limitation as his share in the property was less than Rs.50 lakh, and that the AO had wrongly stated that no return was filed.

What were the issues?

1. Whether the assessment proceedings initiated under Section 147 of the Income-tax Act, 1961, are barred by limitation, considering the assessee's share in the impugned property does not exceed the monetary threshold of Rs.50,00,000/- as stipulated under Section 149(1)(b)? The assessee argued that the AO erroneously considered the entire property value, ignoring the co-ownership by his wife and his proportionate share, which falls below the threshold. The revenue did not record specific arguments on this point but suggested remanding the case. 2. Whether the purported 'Reasons' for initiating reassessment proceedings under Section 148 of the Act demonstrate due application of mind by the AO and evidence of income escaping assessment? The assessee contended that the 'Reasons' lacked application of mind and did not establish that any taxable income had escaped assessment. 3. Whether the AO erred in applying the provisions of Section 50C and Section 56(2)(x) when the assessee had paid advance on an agreement for sale in 2012, and the guidance value was less than the purchase value? The assessee argued that a registered agreement is not essential, and the agreement signed by both parties is sufficient. The revenue did not record specific arguments on this point but suggested remanding the case.

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 149,Section 148,Section 69,Section 50C,Section 56(2)(x),Section 250(6),Section 250(4),Section 251(1)(a),Section 251(1)(b)

AI-generated summary — verify with the full judgment below

Before: SHRI PAWAN SINGH & SHRI PRABHASH SHANKAR

For Appellant: Shri Madhukeshwar Hegde, CA
For Respondent: Shri Annavaran Kasuri,(Sr. AR)
Hearing: 20.08.2025Pronounced: 13.10.2025

PER PRABHASH SHANKAR [A.M.] :- The present appeal arising from the appellate order dated 21.04.2025is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)"] pertaining to assessment order passed u/s.147 r.w.s 144B of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 09.02.2024 for the Assessment Year [A.Y.] 2016-17. Page 2

2.

The grounds of appeal are as under:

1.

The Order of the Authorities below, in so far as these are against the assessee, is opposed to law, weight of the evidence, probabilities, facts and circumstances of the Appellant's case.

2.

The appellant denies himself to be liable to be assessed on a total income of Rs.99,24,310/- as against returned income of Rs.3,88,494/- as per the facts and circumstances of the case.

3.

A The order passed by the learned Assessing Officer is barred by limitation under section 149 of the Income-tax Act, 1961, as the income alleged to have escaped assessment does not exceed the monetary threshold of Rs.50,00,000/-. The learned AO has erroneously considered the entire value of the immovable property while computing the limit under section 149, despite the fact that the property was jointly purchased and the nameof the co-owner (the appellant's wife) is clearly mentioned in the registered sale deed. The appellant's share in the investment is proportionate and falls below the specified threshold, and therefore, the extended time limit under section 149(1)(b) is not applicable. Hence, the initiation of proceedings and the order passed thereunder are bad in law and liable to be quashed. B. The assessing officer has not appreciated that the purported ‘Reasons' are No ‘Reasons' in the eyes of Law. The so called ‘Reasons' evidently do not show any application of mind on part of the ‘AO' much less evidence to show that 'satisfaction' has been arrived by the ‘AO' to show that any Income liable for Tax has escaped Assessment warranting recourse to Notice under section 148 of the Act. C. The learned AO has wrongly stated that the appellant did not file the return of income whereas the appellant has filed the return of income and received the intimation u/s 143(1) as well. D. The learned AO has misled himself in stating that the source of payment made towards purchase of an immovable property remains unexplained when the appellant has filed return of income for the past several years and paid for the purchase from the advance received from the buyers in the subsequent sale of the property. Entire payment need not be made in the year of purchase.

4.

A. The learned AO has erred in applying the provisions of Section 50C and Section 56(2)(x) when the appellant had paid advance on agreement for sale in 2012 through bank wherethe guidance value was less than the purchase value. B. The learned CIT(A) misled himself in interpreting that “registered agreement" is needed whereas the agreement signed by both the Page 3 parties is sufficient to prove that there was an agreement as on the said date.

5.

Brief facts are that the assessee filed the return for the relevant year declaring a total income of Rs.3,91,810/-. Subsequently, action u/s 148 of the Act was taken based on information was received by the AO which suggested during the year under consideration, the assessee purchased an immovable property for a consideration of Rs.55,87,500/- from M/s Tejdeep Developers for Rs 55,87,500/- which was registered at Sub-Registrar, Thane 5 on 19.05.2015. The assessee was issued notice u/s 142(1) dated 10.10.2023 requesting to furnish the source towards purchase of immovable property alongwith the copy of the bank account statement which was used to make the payments towards the purchases and also highlight the payments made. However, the assessee submitted a copy of TJSB Bank account where in the debits were Rs 31,519/- during the FY 2015-16 and also a copy of SBI bank account statement where in the debits were Rs 28,25,387/-. Out of the total debits in SBI account, only amount of Rs 4,00,000/- was paid to the seller. The assessee had also submitted a copy of purchase deed of the said property wherein the total consideration is Rs 55,87,500/-. Hence, as the source for purchase had been explained by the assessee only to the extent of Page 4 source for purchase had been explained by the assessee only to the extent of Rs.4,00,000/- the remaining amount Rs.51,87,500/- was treated as Unexplained investment u/s.69 of the Income tax Act.

4.

On verification of records, it was also noticed that stamp value of the property was Rs 99,32,500/-. Total consideration declared was Rs.55,87,500/-. The difference between the Stamp Value of the property and Total consideration is Rs.43,45,000/-. Hence, as the assessee had not submitted clear evidence towards the source for purchase of immovable property and the difference in stamp value and the consideration exceeded 10% of the consideration, the difference amount was added as income from other sources. Both the additions were upheld by the ld.CIT(A).

5.

Before us, it was contented by the ld.AR that action u/s 147 of the Act was not correct as the percentage of assessee's share in the impugned property was less that Rs 50 lakh. The objection raised before the authorities was not considered. On merits, it was submitted that most of the payments already made and only Rs 4 lakh was paid during the year. Per contra the ld.DR has submitted that the assessee did not furnish complete details on the issues involved either before the AO or the ld.CIT(A). He suggested that the case may be remanded to the AO. Page 5

6.

We find that the appellate order has been passed in non- speaking manner as the grounds of appeal have not been adjudicated clearly. No independent application of mind is discernible from the appellate order as the ld.CIT(A) has completely failed to evaluate the points of consideration so as to give his own decision on objective

analysis of all relevant facts and circumstances of the case in utter disregard to the principles of natural justice and fair play.

7.

In the light of above facts, we are of the considered opinion that the ld.CIT(A) has not decided the appeal on merits which is contrary to the mandate of section 250(6) of the Act. The same is reproduced here under for your ready reference: "(6) The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision."

7.

1 A bare perusal of above provision makes it clear that the CIT(A) is bound to dispose of the appeal before him on merits. Once an appeal is preferred before him, then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the AO to make further inquiry and report the result of the same to him as per section 250(4) of the Act. Section 251(1)(a) and (b) of the Act provide Page 6 that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. The appellate order is therefore, deficient in this regard.

8.

During the course of hearing, we proposed to send the appeal back to the file of the AO in the light of above discussion that as the assessee was not provided adequate opportunity of being heard and granting fresh opportunity to the assessee to advance his arguments/submissions before the AO so as to provide details in connection with the merits of the case and additional evidences, if any to support his contentions. Both the sides did not object to this proposition. It may be stated here that the assessee before us has requested for admission of additional evidence stating that he could not submit the same before the AO due to certain unavoidable reasons. Accordingly, in the substantial interest of justice, we set aside the appellate order and restore the entire matter back to the AO for passing the appellate order de novo after allowing adequate opportunity of hearing to the assessee. The assessee is also given liberty to file any additional evidence before the AO in support of his contentions.

9.

Before parting, we may make it clear that our decision to restore the matter back to the file of the ld.CIT(A) shall in no way be construed Page 7 as having any reflection or expression on the merits of the dispute, which shall be adjudicated by him independently and in accordance with law.

10.

In the result, the appeal is allowed for statistical purposes. Order pronounced in the open court on 13/10/2025. PAWAN SINGH (न्यायिक सदस्य / JUDICIAL MEMBER) Place: मुंबई/Mumbai दिनांक / Date 13.10.2025 Lubhna Shaikh / Steno PRABHASH SHANKAR (लेखाकारसदस्य/ACCOUNTANT MEMBER) आदेश की प्रतिलिपि अग्रेषित/

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