SAPNA MAHESH BALANI,PUNE vs. INCOME TAX OFFICER IT WARD 1 PUNE, PUNE

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ITA 984/PUN/2026Status: DisposedITAT Pune14 August 2026AY 2016-1717 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the notice under Section 148 was issued beyond the limitation period prescribed under Section 149(1)(b) as the alleged escapement of income was below Rs. 50,00,000/-. The Tribunal also noted that the Assessing Officer had not properly verified the information before issuing the notice.

What were the facts?

The assessee, a resident of the Netherlands, purchased a property in India. The property deed was registered in FY 2015-16, but payments were made from 2009 onwards. The assessee did not receive notices due to an outdated email ID on her PAN and claimed the reassessment proceedings were invalid.

What were the issues?

Whether the reassessment proceedings were validly initiated, considering the limitation period and proper service of notice. Whether the Assessing Officer had sufficient material to conclude that income exceeding Rs. 50,00,000/- had escaped assessment.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 148,Section 148A,Section 149(1)(b)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE

Before: MS. ASTHA CHANDRA & SHRI Dr. DIPAK P. RIPOTE

For Appellant: Shri Suhas Kulkarni &
For Respondent: Ms. Bhavya I.V., Jt. CIT

आदेश /ORDER

PER Dr. DIPAK P. RIPOTE, A.M : This is an appeal filed by the assessee against the Assessment Order passed u/s 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (‘the Act’) for Assessment Year (AY) 2016- 17 on 05.12.2025.

Submission of Ld. AR:

2.

The Ld. AR filed written submissions which are as under : “The appellant is resident of Netherland since 1983. As the PAN was obtained at very initial stage of PAN introduction, no e-mail ID was associated with PAN. Even the address on the PAN belongs to a person who helped the appellant to obtain PAN. During FY 2015-16, as the appellant was not having taxable income in India, no return of income was filed.

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The assessment for AY 2016-17 was reopened on the basis available on NMS schedule that appellant has purchased a property in India of ₹65,20,000/-. Though the property was purchased earlier and payments were made from 2009 onwards, the deed got registered in FY 2015-16. The deed itself contains various dates of payments.

As no email ID was associated with the PAN, the appellant did not receive any notice. A screen shot of the ITBA is enclosed in paper book (# Page 15 of the paper book).

Subsequently the appellant became aware of the existence of the assessment proceedings, when she attempted to log in to the Income Tax portal in connection with the sale of another immovable property. As soon as she came to know about the ongoing proceedings, she immediately replied to the notice mentioning about non receipt of notice and requested for more time to comply.

However, the assessing officer has not taken any cognizance of the said notice. Being not aware of the faceless proceedings and time barring dates, she was busy in collecting the documents within which the assessing officer completed the assessment and added entire amount of ₹65,20,000/- as her income.

Being aggrieved the appellant filed objection before DRP.

During the proceedings the appellant did mention her residential status of Netherlands and regarding non service of notice u/s 148.

The appellant, before the DRP submitted the following documents as additional evidence:

(i) In the statement of fact, the appellant made submission about her residential status as well as stated that the amount invested in flat is gifted by her husband who transferred the funds directly to the builder in Pune through his bank in Curacao, ABN AMRO (later merged into RBC Royal Bank). The statement of facts is mentioned in DRP order page 4.

(ii) The appellant also submitted the affidavit in this regard as additional evidence. The same was submitted before DRP. The same is also being submitted before your honour today

(iii) The appellant also enclosed copy of agreement (# Page 16 of Paper book). The payment schedule of the said property is mentioned on page 41 of the paper book. The schedule itself demonstrates that the payment during the relevant financial year is only 12,56,305/- and

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therefore the notice u/s 148 being issued beyond three years of the transaction is bad in law.

(iv) Further as regards confirmation of such payment from the respective Bank, the appellant tried to get the data from respective bank however RBC Royal Bank stated that they don't keep the data prior to 10 years (# Page 79 of Paper book).

(v) The DRP called for a remand report. The remand report as submitted by the AO is also incorporated in DRP order at Page 7. Assessing officer thereafter submitted a remand report, whereby the assessing officer has not disputed that the payments were made prior to FY 2014- 15, however stated that payments are unverified in absence of bank statement (# Page 9 of DRP). While making this bald statement, the AO has completely disregarded the bank's written communication regarding availability of data prior to 10 years. In fact, his remand report is silent on this issue.

(vi) Keeping in view of the report the appellant in the rejoinder to the reminder submitted PAN of the builder and requested the department to collect the requisite details (# Page 10 of DRP order).

(vii) Subsequently the appellant made his own efforts to gather the ledger extract of the appellant in the books of the builder. The same were submitted before DRP demonstrating the payments made to the builder in various years (# Page 10 of DRP).

(viii) He in the report submitted before DRP stated that payment details match with the schedule given by the appellant (# Page 16 of the DRP), however the assessing officer took the objection that the said extract is not on the letter head of the builder (# Page 17 of the paper book).

(ix) The appellant thereafter again submitted the ledger extract on the letter head of the builder along with his seal and signature (# DRP Page 23 and 24).

(x) The assessing officer again sent a report stating that: It is pertinent to mention here that assessee has not been able to produce the bank statements of her husband and substantiate the source of purchase till date. The onus is on the assessee to substantiate source of funds which has not been proved. This has been remarked in previous remand reports and the same remains unsubstantiated even today (# Page 27 of paper book).

Despite the appellant having placed on record her residential status, the affidavit, the agreement, the payment schedule, the builder's ledger extracts, and despite the remand report itself

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acknowledging that the payments were made prior to FY 2014-15, the Hon'ble DRP, disregarding the documentary evidence and the appellant's submissions, proceeded to dismiss the objections.

Aggrieved by such dismissal and the consequent addition of the entire property value of Rs.65,20,000/- as income, the appellant has preferred the present appeal before the Hon'ble appellate authority. The appellant has raised various grounds related to legal issues as well as on merit. Legal grounds

 Invalid service of notice under section 148 or subsequent notices → jurisdictional defect. Ground No. 1

 Violation of principles of natural justice due to non-appreciation of sufficient cause for non-response → procedural/legal infirmity. Ground No.2

As regards invalidity of notice, the appellant wishes to rely on

Mrs. Chitra Supekar If there is no valid service of notice under section Bombay HC 148, the reassessment proceedings are null and WRIT PETITION void NO.15580 OF 2022 Harjeet Surajprakash In absence of service of notice before the last date Girotra Bombay HC envisaged under section 149 of the Act for such WRIT PETITION purpose, the Assessing Officer could not have NO.513 OF 2019 proceeded further with the reassessment proceedings. His consequential steps of attempting to serve the notices of scrutiny assessment were of no consequence. Reopening of assessment was invalid. No valid assessment thereon could have been framed. Nitin Jain Hon'ble Delhi Having regard to the demonstration of factual Hon'ble ITAT ITA matrix on behalf of the assessee and in the light of No.1775/Del/2024 judicial view available in this regard, we find merit in the plea of the assessee that impugned re- assessment order framed in consequence of notice issued under s. 148 which was never served, to be regarded as nonest and bad in law Lok Developers Where Assessing Officer issued a notice under Bombay HC 149 section 148 to assessee on secondary email taxmann.com 93 address when there was a primary email address available, there was nothing wrong with assessee's refusal to participate in proceeding vitiated by valid service of notice

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 Escapement below 50 lakhs; notice under section 148 barred by limitation under section 149(1)(b) jurisdictional ground. Ground No. 3 As regards notice is issues beyond three years, where escapement of income is below 50 lacs, the appellant wishes to rely on Prakash Babulal Bhandari In this case, we are of the considered Hon'ble ITAT Ahemadabad view that there was an evident non- TS-812-ITAT-2025(Ahd)] application of mind by the Assessing Officer on the information available on record and the Assessing Officer did not carry out the necessary analysis of the information available with him so as to ascertain whether the income which is likely to escape assessment, is in excess of Rs.50,00,000/- Accordingly, in light of the above facts, we are of the view that notice issued by the Assessing Officer under Section 148A of the Act is barred by limitation Naresh Balchandrarao In the light of this undisputed position, it Shinde Bombay HC 146 would be futile to require the petitioner to taxmann.com 66 face proceedings under section 148 of the Act of 1961. The material on record that was placed before the Assessing Officer warranted consideration especially in the light of the fact that the document relied was a registered sale deed. Sanath Kumar Murli Once an amount is below Rs.50.00 lakh Karnataka HC TS-120-HC- is ascertained the assessment cannot be 2025(KAR) reopened beyond 3 years. The Hon'ble High court has allowed the benefit of cost of acquisition which was not before ASSESSING OFFICER

Submission of Ld. DR:

3.

The Ld. DR relied on the order of the Assessing Officer (AO) and the Ld. CIT(A).

Findings and analysis: 4. We have heard both the parties and perused the record. In ground No. 3 raised by the assessee, the assessee has stated

ITA No.984/PUN/2026 that notice u/s 148 of the Act is without jurisdiction as alleged escapement of income is below Rs.50,00,000/- for AY 2016-17.

5.

We have perused the order u/s 148A(d) of the Act dated 26.04.2023 which is at page Nos. 12 to 14. The said order u/s 148A(d) was approved by the Pr. Chief Commissioner of Income Tax (IT) on 25.04.2023 for AY 2016-17. On perusal of the said order u/s 148A(d) of the Act, it is noticed that the Assessing Officer had information received on INSIGHT Portal of Income Tax Department, describing purchase of immovable property. The said chart or table appearing in the order u/s 148A(d)of the Act is reproduced as under :

6.

Thus, only based on the above chart, the Assessing Officer has reached to the conclusion that income more than Rs.50,00,000/- has escaped assessment.

7.

However, on reading order u/s 148A(d), it is evident that the Assessing Officer was not having copy of the Registered Sale Deed vide which the assessee has purchased the impugned property. During the proceedings, the assessee has filed copy of Registered Agreement dated 15.12.2015 between M/s. Krome Promoters & Developers, Pune and the assessee for purchase of

ITA No.984/PUN/2026 Flat No. C-702 having carpet area 1369 Sq. Ft. in the project called Krome Citroena. The said agreement was also filed before the Dispute Resolution Panel (DRP). On perusal of the agreement it is observed that the assessee had made payment for purchase of the said flat starting from 2009. Schedule of payments is part of the agreement, which is scanned and reproduced here as under :

8.

Thus, major payments were made by the assessee in earlier years. In this case, had the Assessing Officer obtained copy of Registered Sale Deed from the Registrar, the Assessing

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Officer would have understood that payments made during the year are only Rs.12,56,305/-. In this case, the Assessing Officer has issued notice u/s 148 of the Act for AY 2016-17 on 26.04.2023. Thus, admittedly, notice u/s 148 was issued for AY 2016-17 after a lapse of 3 years from the end of the assessment year.

9.

Section 149 of the Act is reproduced here under : Time limit for notice. 149. (1) No notice under section 148 shall be issued for the relevant assessment year,— (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); [(b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of— (i) an asset; (ii) expenditure in respect of a transaction or in relation to an event or occasion; or (iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more:]

10.

Thus, as per section 149(1)(b) of the Act, after a lapse of three years from the end of the assessment year the Assessing Officer can issue Notice u/s 148 ONLY IF Assessing Officer has in his possession books of accounts, or other documents which reveal that Income Chargeable to tax in the form of an Asset has escaped Assessment which amounts to or likely to amounts to Fifty Lacs rupees. In the case of the assessee on carefully reading the Order u/s 148A(d) of the Act , it is evident that the Assessing Officer had No Evidence in the Form of Books of Accounts or other documents, to arrive at a prima-facia conclusion that Income Chargeable to tax amounting to Rs.50,00,000/- or more has escaped assessment. The AO has

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merely relied on the Chart appearing in the INSIGHT PORTAL of the Income Tax Department. The said chart has already been reproduced by us in the order, the said Chart cannot be called as an Evidence demonstrating income escaping assessment. The AO has passed the Order u/s148A(d) without obtaining copy of the impugned ‘Agreement to Sale’, had the AO obtained copy of the impugned Agreement to Sale the AO could have understood that payments made during the year were only Rs.12,56,305/-. The amounts appearing in the INSIGHT Portal cannot be presumed to be income escaping assessment without verifying basic facts. In this context the CBDT vide InstructionF.No.299/10/2022-Dir(lnv.III)/647dated 22/08/2022 has specified as under : Quote, “3). Further, it is re-emphasized that- Before initiating proceedings under Section 148/147 of the Act, any information available on data-base/portal of Department shall be verified before drawing any adverse inference against the taxpayers. It is not out of place to mention here that the information made available/data uploaded by the reporting entities may not be fully accurate due to inter alia, error of human nature technical nature, etc. Therefore, due verification may be carried out and opportunity of being heard be given to the taxpayer before initiating proceedings under Section 148/147 of the Act. The supervisory authorities are hereby advised to keep an effective supervision so Instructions/Guidelines/Circulars/SOPs are duly followed by the Assessing Officers in their charge.”Unquote. The said Instruction of CBDT is available in public domain.

The Hon’ble Bombay High Court in the case of Sunita 11. Purushottam Virgincar & Ors. Vs. Income Tax Officer & Ors. Writ Petition No. 496 Of 2023 vide order dated Jul 4, 2024 (2024) 120 CCH 0107 (Bom-HC) has held as under : Quote, “19. The next reason cited by the Revenue for rejecting the explanation is, "Copy of the Sale Deed was not available at the time of recording of reasons". We find that even such reasoning is fallacious and not tenable in law. The information from the office of the Sub- Registrar's for any registration is duly transmitted to the respondents.

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The execution of such Sale Deed was already on record. In such a case if the respondents fail to take note of the document which was available for transmission to the respondents from the Sub-Registrar's office, in our view, the assumption of jurisdiction will have to be regarded as erroneous. In any case, we find that at the time of passing of the order dated 16.07.2021, the Sale Deeds (which were available) ought to have been taken into consideration. 20. For the reasons aforesaid, we are satisfied that in view of the aforesaid jurisdictional errors, the notice dated 28.05.2019 and the order dated 16.07.2021 deserve to be quashed and set aside” Unquote. In the case of the Assessee, it is evident that AO had not obtained copies of the documents.

Hon’ble Karnataka High Court while dismissing Appeal 12. filed by Revenue in the case of [2025] 172 taxmann.com 290 (Karnataka)Income-tax Officer v. Sanath Kumar Murali writ APPEAL NO. 968 OF 2023 (T-IT) held as under : Quote, “ 3. Learned Counsel for the assessee, per contra, submits that merely because the concerned conveyance mentions Rs.55.00 lakh, that itself cannot be taken as the income escaping assessment inasmuch as the cost of acquisition to be deducted from it and if that is done, it would fall below the ceiling limit of Rs.50.00 lakh. This aspect of the matter, learned Counsel for the assessee submits, was considered by a Division Bench of Madhya Pradesh High Court sitting at Jabalpur in Nitin Nema v. Office of Principal Chief CIT [2023] 155taxmann.com 276/458 ITR 690 (Madhya Pradesh) and relief has been accorded to the Assessee of the kind after referring to the order impugned in this appeal. He also tells us that challenge to the Jabalpur Bench'sorder has attained finality at the hands of the Apex Court in SLP No(C). 38708 of 2024 on 17.09.2024 and therefore, the order of the learned Single Judge has secured imprimatur of the Apex Court. So contending, he seeks dismissal of the appeal. 4. Having heard the learned counsel for the parties and having perused the appeal papers, we are broadly in agreement with the views of the learned Single Judge, inter alia, to the effect that while assessing the quantum of escaped income in matters like this, the amount mentioned in the registered conveyance cannot be straightaway taken without deducting the cost of acquisition therefrom. This apart, as rightly submitted by the learned counsel for the assessee, the Jabalpur Bench of Madhya Pradesh High Court, in the case supra, followed the impugned order of the learned Single

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Judge of this Court and later the challenge by the Revenue before the Apex Court of the Country has been repelled. In the above circumstances, there is no merit in the appeal and accordingly it is dismissed, costs having been made easy.”Unquote.

13.

Hon’ble High Court of Madhya Pradesh in the case of Nitin Nema vs. Principal Chief Commissioner of Income-tax [2023] 458 ITR 690 (Madhya Pradesh) on identical issue has levied cost on the revenue while allowing Assessee’s appeal , the relevant paragraphs of the order are as under : Quote, “3. The grounds raised by learned counsel for petitioner in support of challenge to the impugned order and notice are as follows: (a) The income referred to in impugned order and notice Annexures P-3 and P-4 is not income chargeable to tax but is the gross proceeds/consideration received by petitioner for sale of 16scooters during the assessment year 2016-2017 and thus the Revenue has no authority to invoke section 148A or issue notice under section 148……………………….. 6.3 Several High Courts have held that income chargeable to tax cannot be the gross receipts/consideration in any business transaction. One such decision which appears to be closest to the facts of present case is the Single Bench decision of Karnataka High Court rendered on Sanath Kumar Murali …………………… 9. From the aforesaid discussion what comes out loud and clear is that the Revenue has failed to understand the fundamental difference between sale consideration on one hand and income chargeable to tax on the other. The Revenue despite being assisted by thousands of experts in the field of finance and taxation, has committed such elementary mistake leading to harassment to the assessee who has been compelled to file the present avoidable piece of litigation. Moreso, this Court has been compelled to decide this frivolous matter wasting its precious time and energy which could have been utilized in more pressing matters. 9.1 Thus, the Revenue deserves to be saddled with exemplary cost and correspondingly the petitioner is entitled to compensatory cost. 10. Consequently, this petition stands allowed in the following terms: (I) The impugned order dated 25-3-2023 under section 148 A (d) of IT Act vide Annexures P-3 and P-4 are quashed.”Unquote.

ITA No.984/PUN/2026 14. In the case of the assessee we have already mentioned that the AO has apparently not verified the impugned Agreement, rather at the time of issue of notice apparently the AO was not having copy of the said Agreement.

15.

Therefore, respectfully following the Hon’ble High Court (supra), we hold that as per section 149, the AO had no jurisdiction to issue notice u/s 148 of the Act, as the alleged income escaping assessment for the year is less than Rs.50Lacs, hence, the notice u/s 148 is bad in law. Accordingly, consequential assessment order is also bad in law. Accordingly, ground No. 3 raised by the assessee is allowed.

16.

Coming to the merits of the addition, AO in the assessment order has added entire amount of Rs.65,20,000/-. Assessee had filed appeal before Dispute Resolution Panel (DRP), assessee also filed evidences regarding payments. DRP called for remand report from the Assessing Officer on the submission made by the assessee. DRP adjudicated the issue vide order dated 17.11.2025. DRP has included remand reports and assessee’s submission in the order. On perusal of the assessee’s submission and remand report of the AO it is observed that assessee had filed copy of ledger extract of assessee’s account in the builder’s book duly signed by the partner of the builder. The said ledge account is at page No. 22- 24 of DRP’s order. On perusal of the said ledger account it is absolutely clear that amounts were paid by Mr. Mahesh Balani through banking channel in US Dollar. The entry appearing in the ledger extract of the builder is reproduced here as under :

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ITA No.984/PUN/2026

ITA No.984/PUN/2026

17.

Thus, it is evidentially clear from the ledger extract that payments were made by Mahesh Balani in US Dollar. The AO in his remand report is stated as under : “5. On going through the ledger extract provided by M/s. Krome Promoters & Builders, Pune in the name of Shri Mahesh Balani i.e. the husband of assessee, it is seen that the payment details as reflected in copy of agreement bearing number 10188/2015 dated 15/12/2015 of flat number C-702 are tallying with the ledger extract in the name of husband of the assessee. These payment details are tabulated as under:

It is seen in the ledger extract that the source of investment was the payments made by husband of the assessee Shri Mahesh Balani through cheques which were deposited in the bank accounts of builder held with HDFC bank & IDBI bank. The assessee in her submission has highlighted that the builder has provided the ledger extract from his books of accounts on his letter head and that is signed by the partner also. Further, the assessee along with other flat owners are trying to get the bank statements for those periods when the amounts were credited however it is not feasible now in view of police action against the builder.

The assessee has filed written submission and stated that there is an FIR (First Information Report) filed by one of the society member against the builder and its partners for various non compliances in the scheme on 19th Aug, 2025 and police has seized the offices and has

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confiscated the data / computers and therefore the builders are not in a position to access the same at present. A copy of FIR has been enclosed for reference. It is pertinent to mention here that assessee has not been able to produce the bank statements of her husband and substantiate the source of purchase till date. The onus is on the assessee to substantiate source of funds which has not been proved. This has been remarked in previous remand reports and the same remains unsubstantiated even today. In view of the aforesaid remarks, the case may be decided by the Honourable DRP on merits.”

18.

Thus, AO has accepted that payments were made prior to FY 2015-16 by Mahesh Balani through ABN Amro Bank. Ridiculously the AO states that assessee has failed to produce copy of Bank statement of Mahesh Balani. The assessee had submitted that the bank stated that they do not maintain such record. Even otherwise once it is established that payments were made through remittance by Mr. Mahesh Balani, how can that amount be added in the hands of the assessee.

19.

In these facts and circumstances of the case, once assessee had established that payments were made through remittance in US Dollar, through banking channel the onus casted on assessee is fulfilled. The AO has cursorily rejected assessee’s submission. Once, assessee had fulfilled her onus, the burden shifted to AO. The AO has not brought on record any evidence to prove that assessee had earned that income in India. In these facts and circumstances of the case, the assessee had explained the source of entire payments for purchase of flat. Hence, there is no merit in the addition made by the AO of Rs.65,20,000/- Accordingly, AO is directed to delete the addition made in the assessment order. Accordingly, ground Nos. 4 and 5 raised by the assessee are allowed.

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20.

Ground No. 6 is general in nature, hence requires no adjudication.

21.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open Court on 14th August, 2026

Sd/- Sd/- (MS. ASTHA CHANDRA) (Dr. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे/Pune; दिन ांक/Dated : 14-08-2026 Digitally signed by Ravi Kumar Ravi Kumar Ravi Kumar Date: 2026.08.14 16:10:59 +05'30' आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent 3. The concerned Pr. CIT, Pune 4. DR, ITAT, ‘B’ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune

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