INCOME TAX OFFICER-12(3)(1), MUMBAI, MUMBAI vs. SAHIL RAJENDRA LODHA, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G” MUMBAI

BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI PAWAN SINGH (JUDICIAL MEMBER)

ITA No. 7977/MUM/2025 Assessment Year: 2017-18

Income Tax Officer – 12(3)(1), Sahil Rajendra Lodha, 216 Shah R.No.145, 1st Floor, Aayakar and Nahar Industrial Estate, DR Bhawan, M.K. Road, Mumbai – Vs. E. Moses Road Worli Mumbai – 400020, Mumbai 400018, Mumbai. PAN NO. AMDPL 6074 G Appellant Respondent

Assessee by : Shri Vimal Punmiya, C.A. : Shri Rajgopal Parthasarathi – SR Revenue by DR.

: 30/07/2026 Date of Hearing Date of pronouncement : 10/08/2026 ORDER PER OM PRAKASH KANT, AM

This appeal by the Revenue is directed against order dated 24.09.2025 passed by the learned Commissioner of Income-Tax (Appeals) - National Faceless Appeal Centre (Delhi) [in short, the learned CIT(A)] for Assessment Year 2017-18, raising following grounds.

“1. The appellant craves leave to add amend OR alter any ground of appeal before OR during the hearing in the interest of justice. 2. The Ld CIT(A) erred in admitting and relying upon additional evidence including bank statements of the assessee and his father 2 payment proofs and

Sahil Rajendra Lodha 2 ITA No. 7977/MUM/2025

the alleged fund trail which were never furnished before the Assessing Officer without providing opportunity under Rule 46A(3). 3. The Ld CIT(A) erred in deleting the addition of Rs 3 66 97 484 made under section 56(2)(vii)(b) without appreciating that the registered sale deed dated 27 12 2016 was the only legally 3 enforceable document of transfer and that the statutory proviso was not satisfied in absence of any registered agreement executed prior to that date and therefore stamp duty value as on the date of registration was mandatorily applicable 4. The Ld CIT(A) erred in treating an unregistered allotment letter and builder correspondence of 2010 as conclusive evidence of an agreement for transfer ignoring that such documents lack legal sanctity for determining the date of transfer for invoking the proviso to section 56(2)(vii)(b) 5. The Ld CIT(A) erred in deleting addition of Rs 3 64 00 000 under section 69 despite the assessee not furnishing bank statements fund trail OR evidence explaining the source of investment during assessment considering the low returned income and the burden of proof under section 69 remained unfulfilled 6. The Ld CIT(A) erred in placing reliance on findings in the case of the father ignoring that the assessee and his father are independent assessees in law and no evidence was furnished 6 before the Assessing Officer establishing exclusive payment OR beneficial ownership by the father therefore appellate findings in another person’s assessment cannot substitute the assessee's evidentiary burden.” 2. Briefly stated facts of the case are that the assessee, an individual, filed his return of income for the year under consideration on 26.10.2017 declaring total income of Rs.4,93,960/-. Information was received by the Assessing Officer through the Income-tax Department’s system that the assessee had acquired an immovable property during the relevant previous year. The property had been purchased for a consideration of Rs.5,02,31,016/-, whereas its value adopted for stamp-duty purposes was Rs.8,69,28,500/-. On the basis of the aforesaid information, the Assessing Officer initiated reassessment proceedings and, during the course thereof, called upon the

Sahil Rajendra Lodha 3 ITA No. 7977/MUM/2025

assessee to explain why the difference between the stamp-duty value and the declared consideration, amounting to Rs.3,66,97,484/-, should not be brought to tax under section 56(2)(vii)(b) of the Income-tax Act, 1961 [“the Act”]. The assessee explained that the property had originally been allotted on 21.09.2010 and that the consideration had been fixed at that point of time. It was submitted that the delay in obtaining the requisite commencement certificate and completion of the project resulted in registration of the property only on 27.12.2016. The assessee further stated that he was a co-owner of the property along with his father and furnished the allotment letter dated 21.09.2010 in support of the transaction. It was further contended that the stamp-duty value of the property as prevailing on the date of allotment was Rs.1,95,09,000/-, which was substantially below the agreed purchase consideration. According to the assessee, therefore, the proviso to section 56(2)(vii)(b) required the stamp- duty value as on the date of the agreement/allotment, rather than that prevailing on the date of subsequent registration, to be taken into consideration.

2.1 The Assessing Officer, however, did not accept the explanation. According to him, an allotment letter could not be equated with an agreement for sale. He further noted that although the assessee claimed that an initial payment had been made to the builder by cheque, the corresponding bank statement evidencing

Sahil Rajendra Lodha 4 ITA No. 7977/MUM/2025

the debit had not been furnished before him. The Assessing Officer consequently held that the benefit of the proviso to section 56(2)(vii)(b) was unavailable. The Assessing Officer accordingly adopted the stamp-duty value as on the date of registration and made an addition of Rs.3,66,97,484/- under section 56(2)(vii)(b).

2.2 The Assessing Officer further required the assessee to explain the source of the investment in the property amounting to Rs. 5,21,51,065/-. The assessment order records that the assessee had claimed payments aggregating to Rs.3,30,00,000/- during the year, which, according to the Assessing Officer, were disproportionate to the assessee’s returned income and remained unexplained. The Assessing Officer accordingly made a further addition of Rs.3,64,00,000/- under section 69 of the Act.

2.3 Further the Assessing Officer noticed that assessee had received interest other than interest on securities under section 194A from Moreshwar Rajaram Murab Saha Niketan for an amount of Rs. 5,40,000/-, but said income was not shown in the return of income and therefore he made addition for the said amount as income from other sources under section 56 of the Act.

2.4 In this manner the Assessing Officer assessed the total income of the assessee at Rs. 7,41,31,440/- in the assessment order dated 19/05/2023 passed under section 147 read with section 144B of the Act.

Sahil Rajendra Lodha 5 ITA No. 7977/MUM/2025

2.5 Before the learned CIT(A), the assessee reiterated that the property was jointly acquired with his father and pointed out that an identical issue concerning the very same property had arisen in the assessment of his father, Shri Rajendra Narpatmal Lodha. It was submitted that the addition under section 56(2)(vii)(b) had been deleted in the father’s case and that the Revenue’s appeal against that order had subsequently been dismissed by the Tribunal. The learned CIT(A), taking note of the fact that the very same difference between the stamp-duty value and the purchase consideration had already been considered in the assessment of the father, held that taxing the same amount again in the hands of the co-owner would result in duplication of the same income. He accordingly deleted the addition of Rs.3,66,97,484/-.

2.6 In relation to the addition under section 69, the learned CIT(A) accepted the assessee’s contention that the major portion of the consideration had actually been paid by his father and that the source thereof had already been examined in the father’s assessment. The learned CIT(A), however, noticed that a sum of Rs.25,00,000/- had admittedly been contributed by the assessee himself. The assessee furnished his bank statement before the learned CIT(A) to explain the source of the said payment, and on that basis the learned CIT(A) deleted the addition.

Sahil Rajendra Lodha 6 ITA No. 7977/MUM/2025

available on record. Before us the Revenue has not challnaged finding of ld CIT(A) on the issue of addition under income form other sources, thus, the controversy before us essentially revolve on two issues of addition. The first concerns the date relevant for determining the stamp-duty value under the proviso to section 56(2)(vii)(b); the second concerns the person who actually made the investment in the property and, consequently, the extent of the assessee’s burden under section 69.

3.1 At the outset, it would be appropriate to notice the statutory framework governing the first controversy. For the assessment year under consideration, section 56(2)(vii)(b), as it then stood, brought within the ambit of “Income from other sources” the receipt of an immovable property for a consideration lower than its stamp-duty value by the prescribed amount. The first proviso, however, carved out a specific exception where the date of the agreement fixing the consideration and the date of registration were different. In such a case, the stamp-duty value as on the date of the agreement could be adopted, subject to the further condition that the whole or part of the consideration had been paid through the prescribed banking channel on or before the date of the agreement.The legislative scheme is thus not founded merely upon the date on which the instrument of conveyance is ultimately registered. Where the transaction had already crystallised at an earlier point of time by an agreement fixing the consideration, and the statutory condition

Sahil Rajendra Lodha 7 ITA No. 7977/MUM/2025

regarding payment through banking channels is satisfied, the statute itself permits the stamp-duty value prevailing on that earlier date to be adopted.

3.2 The precise question, therefore, is not whether the registered sale deed was executed on 27.12.2016. That fact is undisputed. The real question is whether the allotment dated 21.09.2010, on the facts obtaining in the present case, constituted the agreement contemplated by the proviso and whether the statutory requirement regarding payment of consideration through banking channels stood satisfied.

3.3 From the submission of ld counsel for the assesses we find that that on this very question, the co-ordinate Bench in the case of the assessee’s father, ACIT, Circle-22(1), Mumbai v. Rajendra Narpatmal Lodha, ITA No.6971/Mum/2024, order dated 11.03.2025, concerning the very same assessment year and the very same property, decided in favour of assessee. The Tribunal (supra) considered the allotment letter dated 21.09.2010, the consideration of Rs.5,02,31,016/- stipulated therein and the payment of advance through account-payee cheque. The Tribunal thereafter examined whether such allotment could constitute an agreement for the purposes of the proviso to section 56(2)(vii)(b). The co-ordinate Bench, after noticing the decision in ITO v. Narendrakumar Jain, ITA No.3422/Mum/2024, order dated

Sahil Rajendra Lodha 8 ITA No. 7977/MUM/2025

22.08.2024, held that where the allotment letter issued by the builder fixes the consideration and contains the terms governing the acquisition, and the purchaser acts upon it by making payment through banking channels, the allotment cannot be disregarded merely because the formal registered instrument is executed subsequently. On the facts before it, the Tribunal accordingly held that the date of the allotment letter was the relevant date for applying the proviso to section 56(2)(vii)(b). The relevant finding of the Tribunal in ITA No. 6971/MUM/2024 for Assessment Year 2017-18 in the case of Shri Rajendra Narpatmal Lodha is reproduced hereinunder:

Sahil Rajendra Lodha 9 ITA No. 7977/MUM/2025

when the payments have been made through banking channels. The Ld. AO has stated that allotment letter is not a registered agreement, therefore, the value of the property has to be taken as on the date of sale registration. First of all, when builder gives an allotment letter with terms and conditions and all the rights and the value of purchase is agreed upon and assessee has acted upon by accepting the terms and conditions and starts making the agreed payment, then it is clearly covered under aforesaid proviso to section 56(2)(x) of the Act. The assessee has agreed to purchase in the year 2012 in terms of allotment letter and also made the payments before the sale was registered. Therefore, the value as on date of allotment has to be treated as stamp duty value for the purpose of aforesaid provision of section 56(2)(x) of the Act and since at that time payment made was more than the stamp duty value therefore, no addition can be made. Thus, the aforesaid finding of the Hon'ble CIT (A), which is in consonance with the provisions of the Act and the judgment of Hon'ble Bombay High Court, is upheld. Accordingly, the revenue appeal is dismissed." 8. Considering that the facts in assessee's case and respectfully following the ratio of the above decision we hold that the date of letter of allotment should be considered for the purpose of proviso to section 56(2)(vii)(b). Therefore, the addition made by the AO by considering the stamp duty value on the date of registration is not tenable and liable to be deleted. Accordingly, we see no reason to interfere with the decision of the CIT appeals in deleting the addition made by the AO.” 3.4 In view of the foregoing discussion, the legal position emerging from the decision of the co-ordinate Bench in the case of the assessee’s father is that the allotment letter dated 21.09.2010 is to be regarded as the relevant agreement for the purposes of the proviso to section 56(2)(vii)(b). The Revenue has not brought before us any distinguishing circumstance which would persuade us to take a different view in the case of the present assessee. On the contrary, the property, the date of allotment, the agreed consideration, the subsequent date of registration and the controversy regarding the applicability of the proviso are common to

Sahil Rajendra Lodha 10 ITA No. 7977/MUM/2025

both cases. To this extent, the finding of the learned CIT(A) is upheld.

3.5 However, the actual stamp-duty value prevailing on 21.09.2010, as also the fulfilment of the other statutory condition relating to payment of consideration through the prescribed banking channel, being matters requiring factual verification, the issue is restored to the file of the Assessing Officer for such limited verification. The Assessing Officer shall thereafter determine the addition, if any, in accordance with law.

Sahil Rajendra Lodha 11 ITA No. 7977/MUM/2025

4.1 In the present case, the material placed before us indicates that the assessee’s father had borne the major portion of the consideration and that the source of such payment had already been examined in the father’s assessment. The Revenue has not placed any material before us demonstrating that the amount paid by the father was, in substance, the assessee’s undisclosed investment or that the assessee had provided the funds to his father for making such payments.

4.2 To that extent, the learned CIT(A) was justified in taking note of the findings recorded in the father’s assessment. Such reliance does not amount to treating the two assessees as one taxable person. It merely recognises an evidentiary fact concerning the source of payment for the very same property. If the Department has accepted, in the assessment of the father, that the corresponding payments were made by him out of explained sources, the same payment cannot, without further material, be simultaneously characterised as an unexplained investment of the son.

4.3 The position is, however, materially different in respect of the sum of Rs.25,00,000/- which, on the facts recorded by the authorities, represents the assessee’s own contribution towards the acquisition. The burden of explaining the nature and source of that investment consequently rests upon the assessee.

Sahil Rajendra Lodha 12 ITA No. 7977/MUM/2025

The learned CIT(A) deleted the addition even in respect of this amount on the strength of a bank statement furnished before him. The Revenue has specifically challenged this action on the ground that such material was not before the Assessing Officer and that the requirements of Rule 46A were not complied with.

4.4 We find substance in this limited grievance of the Revenue. Once evidence which was not before the Assessing Officer is relied upon for granting relief to the assessee, the procedural safeguards embodied in Rule 46A cannot be rendered otiose. The issue is not merely whether the bank statement appears, on its face, to explain the source. The Assessing Officer is entitled to examine the document, verify the corresponding entries, trace the stated source and place his factual response on record.

4.5 The assessee has stated that the sum of Rs.10,00,000/- paid on 28.06.2017 was sourced from the opening balance and other credits in his bank account, whereas the further sum of Rs.15,00,000/- paid on 30.03.2017 was stated to have been received by way of repayment of a loan from one Manoj Kumar Vyas. These are factual assertions capable of verification from the banking record and supporting material.

4.6 In the circumstances, we consider it appropriate, in the interest of substantial justice, to restore the limited issue of the source of the assessee’s own investment of Rs.25,00,000/- to the

Sahil Rajendra Lodha 13 ITA No. 7977/MUM/2025

file of the Assessing Officer. The Assessing Officer shall examine the bank statement and the supporting material furnished by the assessee, verify the corresponding credits and payments and determine, in accordance with law, whether the source of the entire amount of Rs.25,00,000/- stands satisfactorily explained. Since we have restored the issue of examining Rs. 25 lakh to the file of the AO, the relevant ground Nos.5 and 6 of the appeal of the Revenue are allowed partly for statistical purposes.

Order pronounced in the open Court on 10/08/2026.

Sd/- Sd/- (PAWAN SINGH) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 10 /08/2026 M. Ranganath Vittal , Sr. P.S.

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file.

BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai