VIPUL BHAGWANDAS RAJPUT,MUMBAI vs. I.T.0 19(3)(1), MUMBAI

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ITA 2514/MUM/2026Status: DisposedITAT Mumbai09 July 2026AY 2019-202014 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal decided that the CIT(A) erred in upholding the reopening of assessment. The grounds raised by the assessee regarding the validity of the notice under section 148 and the assumption of jurisdiction were found to be substantial.

What were the facts?

The assessee purchased a property during FY 2017-18, with the Stamp Duty Authority valuing it at Rs. 1,06,81,500/-, while the assessee claimed the cost as Nil. The assessee contended the property was received in 2007 due to redevelopment, not purchased in the disputed year.

What were the issues?

The key issues were the validity of the reopening notice under section 148, the assumption of jurisdiction by the AO, and the applicability of Section 54 for capital gains exemption.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 144B,Section 54

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “F” BENCH, MUMBAI

Before: SHRI PAWAN SINGH, JM & SHRI ARUN KHODPIA, AM

For Appellant: Shri Bharat Kumar, CA
For Respondent: Shri Vibhor Badoni, Sr. DR
Hearing: 09.07.2026

आयकरअपीलीयअिधकरण�ायपीठमुंबईम�। IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI PAWAN SINGH, JM & SHRI ARUN KHODPIA, AM I.T.A. No.2514/Mum/2026 (Assessment Year: 2019-20) Vipul Bhagwandas Rajput ITO 19(3)(1), Mumbai 101st Floor, Shreepati Castle Piramal Chambers, Dr. SS Rao Marg, Vs. Khetwadi Main Road, Mumbai, Parel, Mumbai-400012 Girgaon S.O, Mumbai-400004 PAN: AAAPR6766Q Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

Assessee by : Shri Bharat Kumar, CA Revenue by : Shri Vibhor Badoni, Sr. DR : 25.06.2026 Date of Hearing : 09.07.2026 Date of Pronouncement

O R D E R Per Arun Khodpia, AM: This appeal is preferred by the assessee, against the order of the Commissioner of Income Tax Appeals, National Faceless Appeal Centre (NFAC), Delhi [in short, “the Ld. CIT(A)”], dated 28.01.2026 for the Assessment Year (AY) 2019-20, which in turnarises from the assessment order under section 147 r.w.s 144B of the Income Tax Act, 1961 [in short, “the Act”] dated 11.03.2024, passed by Assessment Unit, Income Tax Department [in short, “the Ld.AO”].The grounds of appeal raised by the assessee are as under: “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the action of the Ld. Assessing Officer in issuing notice under

ITA No. 2514/Mum/2026 Vipul Bhagwandas Rajput section 148(b) of the Income-tax Act, 1961, even though such notice was founded on incorrect and unsubstantiated facts, specifically pointed out and denied by the appellant, thereby vitiating the very assumption of jurisdiction for reopening. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the action of the Ld. Assessing Officer in issuing notice under section 148(d) of the Income-tax Act, 1961 on the basis of certain information which was never confronted to or shared with the appellant during the proceedings under section 148(b), thereby violating the principles of natural justice and rendering the reassessment proceedings bad in law. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the reopening of the assessment even though the alleged escapement of income/tax is admittedly less than Rs. 50,00,000/-, thereby disregarding thestatutory monetary threshold and rendering the assumption of jurisdiction for reopening invalid and bad in law. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the validity of the impugned notice issued under section 148 by the Jurisdictional Assessing Officer (JAO), even though, in terms of the applicable scheme and CBDT directions, such notice could have been validly issued only by the Faceless Assessing Officer (FAO), thereby rendering the notice and all consequential proceedings without authority of law and void ab initio. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the stand of the Ld. Assessing Officer without properly appreciating the undisputed fact that the subject property was originally allotted to the appellant in the year 2007, thereby leading to an incorrect appreciation of the timing, nature and taxability of the transaction and vitiating the impugned reassessment. 6. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in bringing to tax a sum of Rs. 1,06,83,100/- as long-term capital gains. 7. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not providing benefit of section 54 of the Act. 8. The appellant reserves the right to add to, alter, amend, modify, delete or substitute any of the above grounds of appeal, and to raise such further or other grounds as may be considered necessary or expedient at or before the time of hearing of this appeal.”

2.

Brief facts of the case: The assessee is an individual engaged in the business of coaching centers and tuitions, filed his return of income for AY 2019- 20 on 11.07.2019, declaring total income of Rs.6,12,500/-. The issue for re- opening was that the assessee has purchased a property during the financial year

ITA No. 2514/Mum/2026 Vipul Bhagwandas Rajput (FY) 2017-18 and the value of property as per Stamp Duty Authority was Rs.1,06,81,500/- whereas the cost of assessee was Nil. In response to aforesaid issue, the assessee submitted that there was no purchase of immovable property in the FY 2018-19, the subjected property that is Room No.8, 15 Ground Floor Marker Building, Mumbai-400004 was in use of the assessee prior to redevelopment and that fact is duly recorded in the sale deed also.

3.

It is further clarified that the property was undertaken for redevelopment as per rules framed by the Government of Maharashtra and the builder gave accommodation in new building for the property held by the assessee prior to the redevelopment and the possession was received in year 2007. It is also clarified by the assessee that the old property under redevelopment was given by the assessee in 2005 and the new property has been provided to assessee on 16th January, 2007. However, the agreement was registered with Registrar on 5th December, 2018 by the redeveloper for which the assessee had not paid any consideration but the valuation was done only for the stamp duty purpose. It is submitted that the actual transaction was executed in 2007 but merely the registration has taken place in 2018. To substantiate the aforesaid aspects, the assessee has furnished following documents before the Ld. AO: a) Copy of Sale Deed. b) Calculation of Capital Gains. c) Computation of Income for A.Y.2018-19 and 2019-20. d) Profit & Loss Account and Balance Sheet for the A.Y.2018-19 and 2019-20. e) Bank Accounts for the A.Y. 2019-20. f) Letter of Possession.

ITA No. 2514/Mum/2026 Vipul Bhagwandas Rajput 4. The assessee, on the basis of aforesaid submissions, requested the Ld. AO that there was no income escaped assessment during the AY 2019-20, therefore, the proceeding initiated needs to be dropped.

5.

The Ld. AO after considering the submissions of assessee has observed that the assessee was using the property Room No.8, 15 Ground Floor Marker Building, Mumbai-400004. The property was taken for redevelopment and the builder provided the assessee with a new accommodation. Since the agreement was registered in 05.12.2018, the assessee’s contention that the transaction pertains to FY 2007 for the possession of the property was taken by him, such contention of assessee is not acceptable as the property has been transferred to assessee during the year under consideration vide agreement of permanent alternate accommodation dated 05.12.2018. Regarding assessee’s contention that the property has not been actually purchased by him, but the same has been given to him in lieu of old property without any consideration, the Ld. AO referred to provisions of section 247 of the Act, according to which the transfer in relation to capital asset includes the sale, exchange or relinquishment of the asset. Therefore, the word ‘exchange’ is also covered under the definition of transfer of the capital asset.

6.

It is observed by the Ld. AO that provisions of section 56(2)(ii) are clearly applicable in the present case and that Ld. AO further issued a notice u/s 133(6)

ITA No. 2514/Mum/2026 Vipul Bhagwandas Rajput to the Joint Sub-Registrar, Mumbai City-3 to enquire into the issue and whether the assessee had purchased or taken any ownership of the said property during the year. The response of Joint Sub-Registrar was that - “In this regard, we have searched out our computerized records but not found documents registered of mentioned property instead we found one document registered by him i.e., document no.9496-2018 dated 05.12.2018, copy of the above registered document is attached herewith.”

7.

On perusal of the copy of agreement provided by the Joint Sub-Registrar, it is observed that the assessee had made an agreement of new flat between Shreepati Castle (AOP) (R.R. Chaturvedi) being developer in lieu of surrender of tenancy right since the assessee is a tenant, he received permanent alternate accommodation on ownership basis from the developer for a consideration shown as Nil. Since the assessee has acquired a new property due to surrender of his tenancy right in this said premises, the permanent accommodation was received on ownership basis. The assessee has entered into transaction of purchase of immovable property from the developer. The purchases are made for a consideration of surrender of tenancy right, hence the cost of acquisition was shown at Nil. However, the market value of the premises was Rs.1,06,81,500/- thus, the difference in the market value and the agreement value needs to be added u/s 56(2)(x) of the Act.

8.

Further, it is noticed by the Ld. AO that the assessee has sold the same property during the year under consideration at a consideration of 5

ITA No. 2514/Mum/2026 Vipul Bhagwandas Rajput Rs.1,06,00,000/- on which the assessee has claimed an indexed cost of acquisition of Rs.1,14,54,872/- and, therefore, has claimed a Capital Loss of Rs.8,54,872/-. The Ld. AO was not satisfied with the aforesaid working of Long- Term Capital Loss computed by the assessee taking the cost of acquisition as per Fair Market Value (Ready Reckoner Rate 2006) treated the acquisition of property in 2006. Ld. AO observed that the property has been sold by the assessee on 17.12.2018 as per agreement dated 17.12.2018 to M/s. PinkY Haresh Mehta whereas as held by the Ld. AO in earlier portion of his order that the property was acquired by the assessee during the year under consideration only and no consideration was paid by the assessee for acquisition of the same as the assessee has been given the aforesaid immovable property in lieu of an old property in which he was a tenant. The Ld. AO accordingly proposed an addition of Rs.1,06,00,000/- in the hands of assessee, the amount of consideration received by the assessee with no deduction as to the cost of acquisition which is treated at Nil by the Ld. AO and have made an addition of Rs.1,06,00,000/- to the income of the assessee. The income of assessee has thereafter been recomputed as under: Income as per ITR Rs.6,12,500/- Addition: as discussed in para-6 above. Rs.1,06,83,100 Addition: as discussed in para-6 above. Rs.1,06,00,000/- Total Assessed income Rs. 2,18,95,600/-

ITA No. 2514/Mum/2026 Vipul Bhagwandas Rajput 9. The assessee being aggrieved with the aforesaid order of Ld. AO, has preferred an appeal before the Ld. CIT(A), who after deliberation has decided the issue party in favour of assessee by deleting the addition of Rs.1,06,00,000/- and by sustaining the addition of Rs.1,06,83,100/-. The findings of Ld. CIT(A) are extracted as under: “Although the assessment year was prior to the amendment which included cost of acquisition of tenancy rights as NIL (section 55(2)(a) of income tax Act), the ratio is that the relinquishment of tenancy rights is taxable. The amendment in section 55 had made the issue clear. It is observed that the alternate rental accommodation was permanently assigned to the assessee, the value of which was determined at Rs.10683100/- by the registering authority. The property thus acquired is against the relinquishment of tenancy rights. The relinquishment of tenancy rights is to be treated as capital gains. However, in this case the assesee received property worth Rs.10683100 as consideration. The AO added the amount of Rs.10683100 u/s 56(2)(x) being income from other sources. However, the amount should have been treated as Long term Capital Gains on relinquishment of tenancy rights. It is further held that the tenancy payments were made to enjoy the premises for the respective months and hence cannot be treated as cost of acquisition. It is also held that since the new property acquired is a commercial property, no deduction u/s 54F is allowable.The next issue is that the above mentioned property was sold for a consideration of Rs.106,00,000/- to Shri Pinki Haresh Mehta. Since the property was acquired under the relinquishment of tenancy rights and the value taxed under Capital Gains, the cost of acquisition of the property is 106,83,100/- plus incidental costs of registration etc.. The resultant sale of the property would therefore be short term capital loss to the assessee. In view of the above AO is directed to treat the amount of 1,06,83,100 as Long term Capital gain arising out of sale of tenancy rights. Addition of Rs.106,83,100/- is upheld although under a different head of income. The second addition of Rs.1,06,00,000/- is deleted. The substantial grounds are partly allowed.”

10.

Being dissatisfied with the aforesaid decision of Ld. CIT(A) by partly sustaining the additions made by the Ld. AO, the assessee is in appeal before us in the present case.

11.

At the outset, Ld. AR of the assessee raised a legal issue that the notice u/s 148A(b) of the Act was not correct being issued on the basis of unsubstantiated facts, which were specifically pointed out and denied by the assessee before him, 7

ITA No. 2514/Mum/2026 Vipul Bhagwandas Rajput therefore, the assumption of jurisdictionfor re-opening remains vitiated in the eyes of law. Ld. AR also challenged the issue with the submission that the basis of certain information which was never confronted to or shared with the assessee during the proceedings u/s 148A(b) was a violation principle of natural justice which renders the re-assessment proceedings bad in law. Ld. AR drew our attention to the order u/s 148A(d) dated 31st March, 2023 wherein it is categorically mentioned by the Ld. AO after conducting enquiries by issuance of notice u/s 133(6) to the Joint Sub-Registrar of Assurance, Mumbai City-3 on 15th March, 2023 regarding the transaction of alleged purchase of immovable property by the assessee towards which the Stamp Duty Authority had responded that after verification of their computerized records, they have not found document registered for the mentioned property instead they found one document registered by the assessee in DOC No.9496-2018 dated 05.12.2018.

12.

Ld. AR placed his reliance on the decision of Hon’ble Delhi High Court in the case of Catchy Prop-Build (P.) Ltd. v. ACIT [2022] 145 taxmann.com 510 (Delhi)(HC)wherein the Hon’ble Court has held as under: “Where Assessing Officer issued on assessee notice under section148A(b) seeking to initiate reassessment proceedings on account of some transactions of purchase and sale of shares undertaken by it and thereafter passed order under section 148A(d) holding that company 'M' was not sound so as to make an investment of Rs. 3 crores to purchase ase shares sha of company 'B' and so source of investment remained unexplained, as in notice under section 148A(b) assessee was never asked to explain source of funds that were used by 'M' to purchase shares of 'B', impugned notice as well as order were to be quashed.”

ITA No. 2514/Mum/2026 Vipul Bhagwandas Rajput 13. It is submitted that, the information available with the Ld. AO which is reproduced in the notice u/s 148A(b) was regarding Flat No.1103 Floor No.11 VA Majala Building Name Lodha Estrella B Wing, Block No. New Caffe Parade Wadala, Mumbai other details one car parking, whereas while in the proceedings u/s 133(6) the Registrar has denied of such transaction of property by the assessee and has provided details of another transactions in the name of assessee for some other property which is relied upon by the AO, however, such information was never provided to the assessee before initiating the assessment proceedings. Therefore, there was a gross violation of principle of natural justice as the assessee was not provided with the information, which was used against it for re-opening assessment.

14.

Under such circumstances, the decision in the case of Catchy Prop-Build (P.) Ltd.(supra) squarely applies in the present case and the re-opening assessment notice and orders in the process are against the mandate of law, thus are liable to be set aside.

15.

Per contra, Ld. DR vehemently supported the orders of Revenue Authorities.

16.

We have considered the rival submissions, perused the material available on record and the case laws relied upon by the assessee. Admittedly in the present case, the assessee was show-caused by a notice u/s 148A(b) of the Act

ITA No. 2514/Mum/2026 Vipul Bhagwandas Rajput dated 27.02.2023, with the allegation that the assessee has purchased an immovable property for Nil consideration however, the market value as per stamp duty of the said property was Rs.1,06,81,500/-. The details of property purchased are mentioned in the order shows that the subjected property is Flat No.1103 Floor No.11th Floor, ‘Lodha Estrella’‘B’ Wing, Block No. New Caffe Parade Wadala, Mumbai on 12.05.2018. In response, the assessee denied any such transaction of purchase as an owner or as a joint holder/stockholder of any right in the property mentioned in the notice u/s 148A(b) of the Act. Ld. AO to verify the aforesaid aspect has issued a notice u/s 133(6) to Sub-Registrar where the Sub-Registrar confirmed that no document related to the specified property were found to be registered in the name of assessee. However, one transaction bearing no.9496 of 2018 dated 05.12.2018 was found in the name of assessee.

17.

Based on the information received from the Office of Sub-Registrar, the Ld. AO proceeded with against the assessee without issuing a fresh information to the assessee regarding the transaction dated 05.12.2018 for which the information was provided from the Office of Sub-Registrar. It was an allegation by the assessee that once the address of alleged property was denied by the Sub- Registrar and a new transaction and property had come into picture, the action of Ld. AO with regard to a different property without issuing a fresh notice u/s 148A(b) was contrary to the scheme of section 148A, whereas the provisions of Act mandates that the assessee should have provided a specific and meaningful

ITA No. 2514/Mum/2026 Vipul Bhagwandas Rajput opportunity of being heard on a precise information suggesting escapement of income. The jurisdiction assumed by the Ld. AO on a particular set of facts cannot continue while the set of facts are completely changed, unless a fresh notice with fresh information is provided to the assessee. Assessee therefore, was deprived of the opportunity to rebut in terms of new allegations, therefore, the jurisdiction u/s 148 was not validly assumed by the Ld. AO.

18.

In the present case, while the allegation was regarding property situated at Lodha Estrella, Caffe Parade Wadala, Mumbai whereas the transaction entered into by the Ld. AO was regarding property situated at ‘Shreepati Castle’ represented by R.R. Chaturvedi are different properties, the information relied upon by the Ld. AO has been rendered being non-existent and thus cannot be treated as a valid information so as to act upon. The notice u/s 148A(b) was issued without any independent application of mind or verification of correctness of facts by the Ld. AO. The Ld. AO has merely acted as a conduit on borrowed satisfaction without verification of or examination of facts, therefore, the notice u/s 148A(b) dated 27th February, 2023 issued on the basis of incorrect information was void ab initio, bad in law and liable to be set aside.

19.

It was the submission that the entire proceedings, initiated u/s 148A(b), 148A(d) and consequential notice u/s 148 are bad in law without jurisdiction and liable to be quashed, which in turn vitiates the entire assessment proceedings and,

ITA No. 2514/Mum/2026 Vipul Bhagwandas Rajput therefore, the impugned order passed u/s 147 r.w.s 144B dated 11.03.2024 is liable to be quashed.

20.

On this aspect, the relevant case laws placed by the Ld. AR are referred as under: (i) BIC Cello (India) (P.) Ltd. vs. Assistant Commissioner of Income Tax [2024] 160 taxmann.com 474 (Bombay) “Where Assessing Officer issued ed reopening notice on ground that as per AIR information assessee had deposited cash of Rs. 3.73 crores in its bank account and assessee-company submitted that there was deposit of only Rs. 1.87 crores which represented cash sales and was offered to tax, since Assessing Officer without examining details of cash deposited had recorded reasons for reopening, impugned reopening notice was to be set aside” (ii) Catchy Prop-Build (P.) Ltd. v. ACIT [2022] 145 taxmann.com 510 (Delhi)(HC)

21.

We find substance in the contentions raised by the assessee through counsel before us that the information relied upon by the Ld. AO had subsequently changed, however, the same was not provide to the assessee for his rebuttal, neither a fresh notice u/s 148A(b) was issued on account of change in information as informed by the Joint Sub-Registrar in response to notice u/s 133(6) of the Act. The Ld. AO was under obligation to inform the assessee regarding change of information through proper communication without which the principle of natural justice remainsviolated, which is not permissible under the settled principles of law. We thus, in terms of aforesaid deliberations are of the considered view that upon change of information received by the Ld. AO, the information ought to have brought to the knowledge of assessee for proper and 12

ITA No. 2514/Mum/2026 Vipul Bhagwandas Rajput fair response and compliance, which in the present case was absent on the part of the Ld. AO. We draw support from the order of Hon’ble Delhi High Court in the case of Catchy Prop-Build (P.) Ltd.(supra),wherein the Hon’ble High Court had quashed the assessment based on issuance of notices u/s 148A(b), order u/s 148A(d) and notice u/s 148 of the Act, as the order u/s 148A(d) of the Act was passed on a completely different ground whereas the reason/information which was changed after issuance of notice u/s 148A(b) was not emerging from the show-cause notice, therefore, the assessee was not provided with proper opportunity to reply to the authorities as the specific charge/allegation/basis in the show-cause notice to suggest that income has escaped assessment and the grounds on the basis of which the impugned order has been passed, were never put to assessee before the passing of order making it impossible for the assessee to counter the same.

22.

We accordingly, respectfully following the observations of Hon’ble Delhi High Court in the case of Catchy Prop-Build (P.) Ltd.(supra)having parity of facts and circumstances in the present case, set aside the notice u/s 148A(b), the order u/s 148A(d) and notice u/s148 of the Act and consequently direct to quash the impugned order u/s 147 r.w.s 144B dated 11.03.2024, which cannot sustain in the eyes of law.

23.

Since we have quashed the assessment in the present case on the basis of legal contention raised by the assessee, the substantive addition in the hands of 13

ITA No. 2514/Mum/2026 Vipul Bhagwandas Rajput assessee has been rendered untenable. Therefore, any other contention raised by the assessee may be on merits or legal aspects,becomes academic and does not call for any adjudication.

24.

In view of aforesaid observations, the appeal of assessee stands allowed in above terms. Order pronounced in the open court on 09-07-2026.

Sd/- Sd/- (PAWAN SINGH) (ARUN KHODPIA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Dated : 09-07-2026. Ankit K., Sr. PS

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

BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai

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