NAUSHAD ESSA MEMON,MUMBAI vs. INT TAX WARD 3(2)(1), MUMBAI

This appeal filed by the assessee is directed against the final assessment order dated 13.03.2026 passed by the Assessing Officer under section 147 read with section 144C(13) of the Income-tax Act, 1961 (“the Act”), pursuant to the directions dated 24.02.2026 issued by the learned Dispute Resolution Panel-2, Mumbai (“DRP”) under section 144C(5) of the Act, for the assessment year 2017-18.

The assessee has raised the following grounds of appeal:

Brief facts of the case are that the assessee is a non-resident individual who had not filed his original return of income for the year under consideration. On the basis of information regarding purchase of an immovable property for a consideration of ₹52,92,000, proceedings under section 147 of the Act were initiated. In response to the notice issued under section 148 of the Act, the assessee filed his return of income declaring total income of ₹1,47,980.

During the assessment proceedings, the Assessing Officer noticed that the property was registered on 22.12.2016 for a consideration of ₹52,92,000, whereas its stamp duty value was ₹96,92,000. The assessee contended that the property was initially booked in March 2012, a letter of allotment was issued on 19.06.2013 and the entire agreed consideration had been paid by 25.08.2014. It was, therefore, claimed that the stamp duty value as on the earlier date was required to be adopted in terms of the proviso to section 56(2)(vii)(b) of the Act.

The Assessing Officer referred the property to the Departmental Valuation Officer, who determined its fair market value as on 22.12.2016 at ₹88,75,134. Accordingly, the difference of ₹35,83,134 between the 2

The assessee filed objections before the DRP. The DRP rejected the assessee’s claim for application of the proviso to section 56(2)(vii)(b), observing that the benefit of the proviso was available only where the consideration, or a part thereof, had been paid through the prescribed banking channels on or before the date of the agreement. According to the DRP, the assessee had not satisfactorily substantiated compliance with this condition. The DRP further observed that the letter of allotment relied upon by the assessee did not constitute a concluded and enforceable agreement for sale. Pursuant to the directions of the DRP, the Assessing Officer passed the final assessment order determining the total income at ₹37,31,114 after making an addition of ₹35,83,134 under section 56(2)(vii)(b) of the Act.

When the appeal was called for hearing, none appeared on behalf of the assessee. There was also no application seeking adjournment. We, therefore, proceeded to dispose of the appeal after hearing the learned Departmental Representative and on the basis of the material available on record.

The learned Departmental Representative relied upon the directions of the DRP and the final assessment order. He submitted that the assessee had failed to place sufficient documentary evidence establishing that the consideration, or any part thereof, was paid through the prescribed banking channels on or before the date of the alleged agreement. He accordingly supported the addition made by the Assessing Officer.

The assessee claims that the property was booked in March 2012, that the allotment letter dated 19.06.2013 confirmed the transaction and that the entire agreed consideration was paid by 25.08.2014 through banking channels, whereas the property was registered only on 22.12.2016. The DRP rejected this claim principally on the ground that the assessee had not substantiated, with supporting evidence, fulfilment of the statutory condition concerning payment through banking channels.

In our considered view, the applicability of the proviso is essentially dependent upon verification of the agreement or allotment letter, the date on which the consideration was fixed, the payment schedule and the mode of payment. These are factual matters which can be properly determined after examining the allotment letter, bank statements, receipts issued by the developer and other contemporaneous evidence. In the interest of justice, we deem it appropriate to grant the assessee one more opportunity to substantiate his claim before the Assessing Officer.

We accordingly set aside the final assessment order on this limited issue and restore the matter to the file of the Assessing Officer for fresh examination. The Assessing Officer shall verify:

If the assessee satisfies the statutory conditions, the Assessing Officer shall adopt the stamp duty value as on the date of the agreement fixing the consideration and recompute the addition, if any, in accordance with law. If the assessee fails to establish fulfilment of the conditions, the Assessing Officer shall decide the issue on the basis of the material available on record. The assessee is directed to furnish all relevant documents and extend full cooperation. Needless to state, the Assessing Officer shall afford a reasonable opportunity of hearing to the assessee and pass a speaking order in accordance with law.

In the result, the appeal filed by the assessee is allowed for statistical purposes.