LALITKUMAR BABULAL JAIN,MUMBAI vs. ITO - WARD 42(1)(2), MUMBAI

THE ORDER IS BAD IN LAW, ILLEGAL AND WITHOUT JURISDICTION

VIOLATION OF PRINCIPLES OF NATURAL JUSTICE

ADDITION OF RS. 53,19,300/- AS ALLEGED LONG - TERM CAPITAL GAINS

LIBERTY The Appellant craves leave to add, alter, delete or modify all or any the above ground at the time of hearing. 2. The brief facts of the case are that the assessee, an individual, filed his return of income for A.Y. 2018-19 on 15.07.2018 declaring total income of ₹96,440/-. The Assessing Officer received information from the Sub-Registrar Office, Mumbai regarding transfer of tenancy rights and selected the case for compulsory scrutiny. During the assessment proceedings, the Assessing Officer issued notices dated 18.01.2021 and 26.03.2021 and examined the details furnished by the assessee. The Assessing Officer noticed that the assessee was holding tenancy rights in Room No.47, 4th Floor, 95A Dhirubhai Parekh Marg, Kalbadevi Road, Mumbai and had transferred those rights under a tripartite agreement dated 29.11.2017 to Shri Kanhaiya Vagtajji Purohit. According to the assessee, no consideration was received for the transfer. However, Form No.61A showed that the stamp-duty value of the tenancy rights was ₹53,19,300/-.

The Assessing Officer was of the view that the tenancy rights constituted a capital asset and the provisions of section 50D of the Act were applicable since, according to the Assessing Officer, the consideration received on transfer was not ascertainable. The Assessing Officer further observed that the property was situated at a prime location in Mumbai, the monthly rent was only ₹750/-, and the assessee had transferred the tenancy rights to a third party instead of surrendering them to the owner. The Assessing Officer therefore held that the assessee must have received some consideration for giving up the tenancy rights, though the assessee denied receipt of any amount. Since the assessee had not furnished details regarding the manner and cost of acquisition of the tenancy rights, the Assessing Officer took the cost of acquisition at Nil under section 55(2) of the Act. The Assessing Officer thereafter took the stamp-duty value of ₹53,19,300/- as the fair market value/full value of consideration under section 50D and computed the entire amount as long-term capital gain. The Assessing Officer accordingly made an addition of ₹53,19,300/- and computed the total income at ₹54,15,740/-.

The assessee carried the matter in appeal before the learned CIT(Appeals), NFAC. The learned CIT(Appeals), observed that several opportunities had been given to the assessee during the appellate proceedings but the assessee had not filed any submission, evidence or request for adjournment. The learned CIT(Appeals) reproduced a table of notices and held “No compliance” against each opportunity. The learned CIT(Appeals) thereafter examined the assessment order on the basis of the material available on record and agreed with the Assessing Officer that the assessee had transferred valuable tenancy rights, section 50D of the Act was applicable and that, in the absence of details regarding the cost of acquisition, the cost was liable to be taken at Nil under section 55(2) of the Act. The learned CIT(Appeals) therefore found no reason to interfere with the addition of ₹53,19,300/- and dismissed all the grounds raised by the assessee.

The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.

We have heard the learned representatives and perused the material placed before us. At the time of hearing, the learned counsel for the assessee drew our attention to page 31 of the Paper-Book and submitted that the assessee had, in fact, filed certain details/submissions before the learned CIT(Appeals) on 15.10.2025. It was submitted that these details were filed before the CIT(Appeals) but were not taken into consideration while passing the impugned order dated 18.03.2026.

We find that this aspect requires verification. The learned CIT(Appeals), in para 4.3 of the impugned order, has observed that the assessee did not comply with any of the notices issued during the appellate proceedings. At serial no.5 of the table reproduced in the appellate order, the learned CIT(Appeals) has shown the date of notice as 18.10.2025, the date fixed for hearing as 15.10.2025, and the response as “No compliance”. Apart from this, the learned counsel has specifically placed before us material which as par the assessee had been filed on 15.10.2025. Therefore, the finding of the learned CIT(Appeals) that there was no compliance on that date needs to be reconsidered after examining the electronic record and the documents relied upon by the assessee.

In these circumstances, in the interest of justice, we are hereby inclined to restore the matter to the file of the learned CIT(Appeals) for de novo adjudication. The learned CIT(Appeals) shall verify whether the assessee had filed the submissions/details dated 15.10.2025, the material referred to at page 31 of the Paper-Book, and shall take the same into consideration while deciding the appeal. The learned CIT(Appeals) shall thereafter decide all the grounds raised by the assessee afresh on merits, after giving reasonable opportunity of hearing to the assessee.

Accordingly, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court 18.09.2026.