MANOJ PURUSHOTTAM BHADRA,MUMBAI vs. ITO-20(2)(1), MUMBAI

आदेश / ORDER PER MAKARAND VASANT MAHADEOKAR, AM: This appeal by the assessee, along with the Stay Application, is directed against the order dated 23.10.2025

2 ITA No. 9143/Mum/2025 S.A. No. 1/Mum/2026 Manoj Purushottam Bhadra passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi[hereinafter referred to as "CIT(A)"], under section 250 of the Income-tax Act, 1961[hereinafter referred to as "the Act"], arising out of the assessment order dated 13.03.2024 passed by the Assessing Officer under section 147 read with sections 144 and 144B of the Act for Assessment Year 2015–16. 2. The assessee has also filed a Stay Application seeking stay of recovery of outstanding demand of Rs.43,02,863/-. Since both the appeal and the Stay Application arise out of the same impugned order and involve common issues, the same were heard together and are being disposed of by this consolidated order. Facts of the Case 3. The case of the assessee was reopened on the basis of information available on the Insight Portal indicating that the assessee had purchased immovable property valued at Rs.76,93,500/- and had received professional fees of Rs. 75,000/-, aggregating to Rs.77,68,500/-. It was further noticed that the assessee had not filed return of income for the relevant assessment year. Accordingly, proceedings under section 147 were initiated after issuance of notice under section 148A(b) dated 19.03.2022 and subsequent notice under section 148 dated 18.04.2022.

3 ITA No. 9143/Mum/2025 S.A. No. 1/Mum/2026 Manoj Purushottam Bhadra 4. In response, the assessee submitted computation of income, bank statements and related details. It was explained that the assessee was physically disabled and had not been able to comply with tax matters. It was further submitted that the property was purchased for Rs. 40,00,000/- and not Rs. 76,93,500/- and that the investment was made out of own funds and interest-free loans from family members. The assessee also admitted income of Rs.1,39,925/- under the head business and profession and Rs.9,50,000/- under the head income from other sources. 5. The Assessing Officer held that the assessee failed to satisfactorily explain the source of investment and other transactions. The return filed under section 148 was treated as invalid. Accordingly, addition of Rs.40,00,000/- was made under section 69 as unexplained investment, Rs.1,39,925/- was assessed as income from business and profession, and Rs.9,50,000/- was assessed under the head income from other sources. The total income was determined at Rs.50,89,925/-. Penalty proceedings under sections 271(1)(c) and 271F were also initiated. 6. Aggrieved, the assessee preferred appeal before the learned CIT(A). During appellate proceedings, the assessee filed detailed written submissions challenging the validity of reopening as well as additions on merits. It was contended that reopening was based on mere information without independent application of

4 ITA No. 9143/Mum/2025 S.A. No. 1/Mum/2026 Manoj Purushottam Bhadra mind, that the notice under section 148 was barred by limitation, that approval under section 151 was mechanical, and that the notice was issued without jurisdiction under the faceless scheme. On merits, the assessee reiterated that the source of investment was explained through family loans and own funds, that the receipt of Rs.9,50,000/- was hardship compensation being capital in nature, and that the income of Rs.1,39,925/- had already been offered. 7. The learned CIT(A) upheld the reopening holding that the Assessing Officer had valid “reason to believe” based on tangible material. It was further held that the reopening was within limitation under section 149(1)(b) as the alleged escaped income exceeded Rs.50,00,000/-. The contention regarding sanction under section 151 was rejected. On merits, the CIT(A) upheld the addition of Rs.40,00,000/- under section 69 for failure to establish creditworthiness and genuineness of sources. The addition of Rs.9,50,000/- was also confirmed on the ground that the assessee failed to substantiate the claim of capital receipt and deduction. The addition of Rs.1,39,925/- was also upheld. 8. The assessee has filed the present Stay Application seeking stay of recovery of outstanding demand of Rs.43,02,863/-. It has been stated that no amount has been paid against the demand and that the assessee is facing financial hardship. It has further been submitted that the assessee is a physically disabled person suffering from 80% disability and lacks sufficient liquidity to

5 ITA No. 9143/Mum/2025 S.A. No. 1/Mum/2026 Manoj Purushottam Bhadra discharge the demand. It is also stated that a strong prima facie case exists on jurisdictional issues including invalid reopening, limitation and mechanical sanction, and that balance of convenience lies in favour of granting stay.

Absence of formation of independent and valid reasons to suggest that income chargeable to tax has escaped assessment 1. That on the facts and in the circumstances of the case and in law, the reassessment proceedings initiated and the assessment order passed thereunder are wholly without jurisdiction, illegal and void- ab-initio, in as much as the ld. Assessing Officer (“AO”) and upheld by CIT(A), initiated reassessment proceedings on the basis of defective, erroneous and non-existent reasons, without forming any independent and bona-fide reasons that income chargeable to tax has escaped assessment. 2. That on the facts and in the circumstances of the case and in law, ld AO and CIT(A) erred that reassessment was initiated solely on an incorrect and arbitrary allegation that the escaped income exceeded INR 50,00,000 by mechanically aggregating the agreement value of INR 40,00,000 and the fair market value of INR 36,93,500 pertaining to the same transaction, for which there is neither any provision of law nor principle of logic that permits simultaneous consideration or clubbing of both the values for determining the escaped income. Such artificial aggregation to cross the threshold of INR 50,00,000 is legally impermissible, factually untenable, thereby rendering the reassessment proceedings void-ab-initio. Notice issued under section 148 of Income Tax Act, 1961 (“the Act”) is barred by limitation 3. That on the facts and in the circumstances of the case and in law, the ld. AO erred and upheld by CIT(A), in re-opening the assessment u/s 147 of the Act, by issue of the notice u/s 148 of the Act dated

6 ITA No. 9143/Mum/2025 S.A. No. 1/Mum/2026 Manoj Purushottam Bhadra 18.04.2022 on the ground of barred by limitation. The ld. AO has failed to demonstrate that the conditions of either section 149(1)(a) and/or 149(1)(b) of Act have been fulfilled. Therefore, on this count alone, the notice u/s 148 of the Act and the entire consequential reassessment proceedings u/s 147 of the Act be held to be bad-in- law and void-ab-initio. Notice issued under section 148 of the Act is without proper sanction 4. That on the facts and in the circumstances of the case and in law, the ld. AO erred and upheld by CIT(A), erred in framing the assessment u/s 147 r.w.s 144B of the Act by issuing notice u/s 148 of the Act dated 18-04-2022 on the basis of mechanical approval granted by PCCIT, without appreciating that sanctioning authority u/s. 151 of the Act has to be satisfied on the reason recorded, thereby not following the mandatory procedure of assessment as laid down by the Income Tax Act 1961 making the assessment completed on 13-03-2024 to be bad-in-law. The order framed on 13- 03-2024 be held to be bad-in-law and void-ab-initio. Notice issued under section 148 of the Act is not in accordance with the scheme notified by CBDT in accordance with section 151A of the Act 5. That on the facts and in the circumstances of the case and in law, the ld. AO erred and upheld by CIT(A), in re-opening the assessment u/s 147 of the Act, by issue of the notice u/s 148 of the Act dated 18-04-2022 as the said notice u/s 148 of the Act is without jurisdiction as the same is not issued in accordance with „Faceless Jurisdiction of Income-Tax Authorities Scheme, 2022‟ and „e- Assessment of Income Escaping Assessment Scheme, 2022.‟ Therefore, on this count alone, the notice u/s 148 of the Act and the entire consequential reassessment proceedings u/s 147 of the Act be held to be bad-in-law and void-ab-initio. Violation of principles of natural justice 6. That on the facts and in the circumstances of the case and in law, the ld. CIT (A) erred in disposing of the appeal without affording the Appellant a reasonable and effective opportunity of being heard,

7 ITA No. 9143/Mum/2025 S.A. No. 1/Mum/2026 Manoj Purushottam Bhadra despite a specific request made by the Appellant in terms of Notification No. S.O. 5429(E) dated 28.12.2021. The impugned order has thus been passed in violation of the principles of natural justice and the statutory procedure prescribed, rendering the appellate proceedings and the order passed thereunder legally unsustainable. Addition of INR 40,00,000 as undisclosed investment u/s 69 of the Act 7. That on the facts and in the circumstances of the case and in law, the ld. AO and upheld by CIT(A), erred in making addition of Rs. 40,00,000/- out of Rs. 50,89,925/-, by holding the appellant to have made unexplained investment of Rs. 40,00,000/-. The ld. AO and CIT(A) erred in appreciating the fact that the assessee had explained the complete source of funds. The addition of Rs.40,00,000/- on the above count being not warranted by facts and in law may kindly be deleted. Addition of INR 9,50,000 as capital receipt on account of hardship compensation 8. That on the facts and in the circumstances of the case and in law, the ld. AO and upheld by CIT(A), erred in making addition of Rs.9,50,000/- out of Rs. 50,89,925/-, under the head income from other sources not appreciating that the ld. AO ought to have taken cognizance of the fact that the receipt from hardship compensation arising out of redevelopment is a capital receipt not chargeable to tax. The provisions of section 56 dealing with Income chargeable under the head Income from Other Sources were not attracted to the facts of the matter and therefore the addition was also legally incorrect and bears deletion on that account. Addition of INR 1,39,925 as business income 9. That on the facts and in the circumstances of the case and in law, the ld. AO and upheld by CIT(A), erred in making addition of Rs. 1,39,925/- out of Rs. 50,89,925/-, under the head Income from Business & Profession not appreciating the fact that the detailed documentary evidence relating to the same were submitted during reassessment proceedings.

8 ITA No. 9143/Mum/2025 S.A. No. 1/Mum/2026 Manoj Purushottam Bhadra 10. The ld.AO has erred in leying interest u/s 234A/B/C of the Act without appreciating the fact that the total income is below the maximum amount not chargeable to income tax. 11. The grounds of appeal raised are independent and without prejudice to each other. 12. The appellant craves leave to add, alter, amend, delete and/or vary any of the above grounds of appeal/relief claimed at any time before the decision of the appeal. 10. During the course of hearing before us, the learned Authorised Representative (AR) of the assessee submitted that the entire reassessment proceedings are without jurisdiction and liable to be quashed at the threshold. It was contended that the very foundation of reopening is based on factually incorrect and non-existent material, inasmuch as the Assessing Officer has proceeded on an erroneous assumption that the alleged escaped income amounted to Rs.76,93,500/- by mechanically aggregating the agreement value of Rs.40,00,000/- and the stamp duty value of Rs.36,93,500/- pertaining to the same property. It was submitted that such aggregation is impermissible in law and demonstrates complete non-application of mind. In support of the same, the learned AR invited our attention to the copy of Index–II placed at page No. 40 of the paper book and submitted that the figure of Rs.76,93,500/- referred to in the reasons recorded is factually incorrect and misleading.

9 ITA No. 9143/Mum/2025 S.A. No. 1/Mum/2026 Manoj Purushottam Bhadra Assessment Year 2015–16 expired on 31.03.2019. The learned AR submitted that the case could fall within the extended period under section 149(1)(b) only if the alleged escaped income exceeded Rs.50,00,000/-. However, in the present case, the actual transaction value being Rs.40,00,000/-, the threshold condition is not satisfied. It was contended that the Assessing Officer has artificially inflated the figure by aggregating two values merely to invoke the extended limitation, which is impermissible in law. 12. The learned AR placed reliance on the decision of the Hon’ble Bombay High Court in the case of Cherian Nallathu Abraham Annamma vs. ITO [2025] 179 taxmann.com 433 to contend that the notice issued under section 148 dated 18.04.2022 itself is invalid in law. It was submitted that the Hon’ble High Court, following the decision of the Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal, has categorically held that for Assessment Year 2015–16, all notices issued under section 148 after 01.04.2021 are liable to be dropped. 13. The learned Departmental Representative (DR), on the other hand, relied upon the orders of the Assessing Officer and the learned CIT(A). However, during the course of hearing, the learned DR fairly conceded that the issue relating to validity of notice issued under section 148 for Assessment Year 2015–16 on 18.04.2022 stands covered by the binding judicial precedents,

10 ITA No. 9143/Mum/2025 S.A. No. 1/Mum/2026 Manoj Purushottam Bhadra including the decision of the Hon’ble jurisdictional High Court relied upon by the assessee. The learned DR, therefore, did not seriously controvert the legal position canvassed by the learned AR on the jurisdictional aspect. 14. We have heard the rival submissions and perused the material available on record. The primary issue which arises for our consideration is the validity of the reassessment proceedings initiated under section 147 of the Act pursuant to notice issued under section 148 dated 18.04.2022 for Assessment Year 2015– 16.From the facts on record, it is not in dispute that the impugned notice under section 148 has been issued on 18.04.2022. It is also an admitted position that the assessment year involved is A.Y. 2015–16. The assessee has challenged the reopening primarily on the ground that the same is barred by limitation and is based on incorrect and non-existent material. 15. On careful examination of the reasons recorded, it is evident that the Assessing Officer has proceeded on the footing that the alleged escaped income amounts to Rs.76,93,500/-. However, as rightly pointed out by the learned AR, and as borne out from the Index–II placed on record, the said figure is nothing but an aggregation of the agreement value of Rs.40,00,000/- and the stamp duty value of Rs.36,93,500/- pertaining to the same transaction. Such aggregation of two values relating to a single transaction is neither supported by any provision of the Act nor by any accepted principle of taxation. The formation of belief

11 ITA No. 9143/Mum/2025 S.A. No. 1/Mum/2026 Manoj Purushottam Bhadra based on such incorrect factual premise clearly reflects non- application of mind.

“The revenue has categorically made a concession that for assessment year 2015-16 they would drop all notices issued under section 148 after 1-4-2021. Once this is the position, it is appropriate that the notice under section 148 dated 5-4-2022, and the consequential assessment order, notice of demand, penalty notices/orders as well as the recovery notices be quashed and set aside.” (para 11) 18. The above proposition has not been disputed by the learned DR, who has fairly conceded that the issue stands covered by the binding precedent of the Hon’ble jurisdictional High Court.

12 ITA No. 9143/Mum/2025 S.A. No. 1/Mum/2026 Manoj Purushottam Bhadra 19. In view of the aforesaid facts and the binding judicial precedent, we hold that the notice issued under section 148 dated 18.04.2022 is without jurisdiction and liable to be quashed. Consequently, the reassessment order passed under section 147 read with sections 144 and 144B of the Act is also liable to be set aside. 20. Since we have quashed the reassessment proceedings on the preliminary jurisdictional issue, the grounds raised on merits do not require adjudication and are rendered academic. Stay Application: 21. In view of our decision in the quantum appeal quashing the reassessment proceedings and consequential demand, the Stay Application filed by the assessee seeking stay of recovery of demand of Rs.43,02,863/- becomes infructuous and is dismissed as such. 22. In the result, the appeal of the assessee is allowed and the Stay Application is dismissed as infructuous. Order pronounced in the open court on 05.05.2026.

Sd/- Sd/- (AMIT SHUKLA) (MAKARAND VASANT MAHADEOKAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 05/05/2026 Dhananjay, Sr.PS

13 ITA No. 9143/Mum/2025 S.A. No. 1/Mum/2026 Manoj Purushottam Bhadra आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. संबंधधत आयकर आयुक्त / The CIT(A) 4. आयकर आयुक्त(अपील) / Concerned CIT धिभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, मुम्बई / DR, ITAT, Mumbai 5. 6. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, सत्याधपत प्रधत //True Copy// 1. उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीिीय अतिकरण, मुम्बई / ITAT, Mumbai