BEAUTIFUL AGRO PRODUCTS PRIVATE LIMITED,MUMBAI vs. CENTRAL CIRCLE 3(1), MUMBAI, KAUTILYA BHAVAN, MUMBAI

आदेश / O R D E R PER PRABHASH SHANKAR [A.M.]:- The present appeal emanating from the appellate order dated 17.10.2025 is preferred by the assessee against the order passed by the Learned Commissioner of Income Tax, Appeal, CIT (A) 51, Mumbai [hereinafter referred to as “CIT(A)”] pertaining to the assessment order passed u/s. 147 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 03.12.2024 for the Assessment Year [A.Y.] 2016-17.

ITA NO. 9309/Mum/2025; Beautiful Agro Products Pvt. Ltd. 2. Grounds of Appeal 1. The Ld. Assessing Officer has grossly erred both in law and in facts by passing an order u/s 148A without providing sufficient opportunity of being heard to the Appellant. 2. The Ld. Assessing Officer has grossly erred both in law and in facts by issuing notice and passing order u/s 148A beyond the limitation period provided in the Act. 3. Section 147 and 148: That the Ld. Assessing Officer has grossly erred both in law and in facts by passing assessment order without considering the documents furnished. 4. Section 250: That the Ld. CIT(A) has erred in law and in facts by not considering the cost of improvement at the time of computation of Capital Gains. Additional Grounds of Appeal: 1. Section 148A: That the Ld. Assessing Officer has grossly erred both in law and in facts by passing an order u/s 148A without attaching copy of approval of specified authority. The appellant submits that the Learned Assessing Officer has erred in law and on facts in passing the order under section 148A(d) and issuing notice under section 148 without enclosing the copy of mandatory prior approval of the specified authority as required under section 151 of the Income-tax Act, 1961. Accordingly, the appellant submits that Ld. Assessing Officer is bound by CBDT Instruction mentioned above and it was not optional. If copy of approval from specified authority is as good as approval not received. In the present case, the order passed under section 148A(d) does not enclose any documentary evidence of approval granted by the specified authority. In the absence of attachment of sanction as required under the Act, the assumption of jurisdiction under section 148 is contrary to law, and therefore the notice issued under section 148, the order passed under section 148A(d), and the consequent reassessment proceedings are liable to be quashed as being void ab initio. 3. In this regard, it is submitted that the additional grounds raised are legal in nature and go to the root of the matter. Legal Ground can be raised at any stage of the appellate proceedings. 4. Facts culled from the assessment order reveal that the assessee, a company did not file the original return of income for the relevant year.The AO had information from Departmental sources that the assessee had sold immovable property worth Rs. 58,00,000/- on 28.03.2016.On the basis of materials available on record, considering the assessee‟s submission in this regard and after due consideration of facts, an order u/s 148A (d) of the Act was passed on 19.04.2023 with the prior approval of Specified Authority as

ITA NO. 9309/Mum/2025; Beautiful Agro Products Pvt. Ltd. per section 151 of the Act. He observed that in this case the information received represented the sale consideration received by the assessee. The gain arising out of this transaction was not determinable in the absence of documentary evidences submitted by the assessee. Since the cost was not ascertainable and in the absence of assessee proving the cost, it was taken at Nil and therefore, the capital gains was taken at Rs. 58,00,000/- which was in the form of either deposits in bank account or cash available to assessee, which was an asset qualifying the requirements u/s 149(1)(b) of the Act. The assessee filed return of income for the concerned year on 26.07.2024 in response to notice u/s 148 dated 19.04.2023 in which it submitted a computation sheet showing the sale consideration received amounting to Rs. 58,00,000/- but no supporting document had been submitted to prove the cost of acquisition and the cost of improvement i.e.invoice, proof of payment etc. Further, the assessee had not furnished any supporting documents like proof of payment, bank statement to evidence the payment regarding cost of acquisition of the property despite the fact that the same was specifically sought. The assessee had itself stated that funding for improvements derived from company funds and director contributions, partly in cash but no supporting documents were furnished. He concluded that the assessee failed to furnish audited financial statement or any other supporting document to substantiate the claim made in return of income. Accordingly, the cost of acquisition was taken as nil as no supporting documents to substantial cost of acquisition and cost of improvement had been furnished and the sale consideration amounting to Rs.

ITA NO. 9309/Mum/2025; Beautiful Agro Products Pvt. Ltd. 58,00,000/-was added to the total income of the assessee under the head of Capital gain. 5. Aggrieved, the assessee filed further appeal before the ld.CIT(A) agitating the addition made by the AO.A request was also made for admission of additional evidences u/r 46A of IT Rules.During appellate proceedings, the assessee produced certain documents, including a copy of the purchase deed dated 07.09.2005 evidencing the purchase price of Rs.9,20,000/- and bank statement showing payment of Rs.9,00,000/- through banking channels. The appellant also submitted details and statements relating to cost of improvement incurred in P.Y. 2005–06 and 2013–14, stating that the relevant vouchers could not be produced earlier due to the expiry of the statutory record-retention period of six years as per section 44AA read with Rule 6F. The ld.CIT(A) examined the submissions and the material placed on record observed that capital gains could not be computed by ignoring the element of cost of acquisition, once the fact of ownership and transfer of the capital asset is not in dispute. The AO was, therefore, not justified in taking the cost of acquisition at „Nil‟ merely on the ground that the assessee did not furnish the documents in time. Moreover, the assessee had furnished evidence to show that the purchase deed was submitted to the AO who however, had taken no cognisance of the same. The purchase deed and bank statements produced clearly established that the property was acquired by the assessee in F.Y. 2005–06 for a consideration of Rs.9,20,000/-. Accordingly, this amount was to be recognized as the cost of acquisition for the purpose of computation of capital gains, subject to indexation benefit as per the second proviso to section 4

ITA NO. 9309/Mum/2025; Beautiful Agro Products Pvt. Ltd. 48 of the Act. With respect to the cost of improvement, the assessee had claimed that certain renovation and construction expenses were incurred in F.Y. 2005–06 and F.Y. 2013–14 amounting to Rs.12,32,330/- and Rs.10,17,070/- respectively. The ld.CIT(A) on perusal of the details and bills furnished in support of the same observed that the documents submitted were of a very general and vague nature and do not inspire confidence regarding their genuineness. The so called invoices and statements did not bear the full address of the property or site where the alleged improvement work was carried out, nor do they specify the nature and extent of the work undertaken. Further, no independent corroborative evidence such as bank statements, payment vouchers, contractor agreements, or receipts acknowledging payment has been produced. The assessee had also failed to furnish any confirmation from the vendors or service providers who purportedly carried out the improvement work. In the absence of such basic and verifiable particulars, the claim could not be accepted merely on the strength of self-prepared statements or unsubstantiated bills. Accordingly,he held that the authenticity and genuineness of the alleged cost of improvement remain unproved, and therefore, the same could not be allowed as a deduction while computing the capital gains under section 48 of the Act. The AO was directed to recompute the capital gains as per law after allowing the cost of acquisition of Rs.9,20,000/- to the assessee. 6. Before us, the ld.AR has contended that under the new reassessment regime introduced, prior approval of the specified authority before passing order under section 148A(d) and issuance of notice under section 148 is a 5

ITA NO. 9309/Mum/2025; Beautiful Agro Products Pvt. Ltd. mandatory jurisdictional requirement. However, in the present case, neither the order under section 148A(d) nor the notice under section 148 enclosed any documentary evidence of approval granted by the specified authority. It was further submitted that non consideration of assessee's reply resulted into artificial escapement exceeding Rs.50 lakhs.The reassessment proceedings in the present case had been initiated beyond three years from the end of the relevant Assessment Year by invoking section 149(1)(b) on the allegation that income escaping assessment amounted to 58,00,000/-.The AO mechanically treated the entire sale consideration as escaped income without considering the mandatory provisions of section 48 of the Act.Subsequently, during assessment proceedings, the assessee furnished the registered purchase deed dated 07.09.2005 along with supporting bank statements evidencing cost of acquisition.But the Assessing Officer had grossly erred in not considering the reply filed by the assessee.Thus, it was evident that had the AO properly considered assessee‟s reply and documents at the threshold stage itself, the alleged escapement would have automatically reduced below ₹50,00,000/- and consequently the extended limitation period under section 149(1)(b) could never have been invoked.Besides,the AO cannot ignore statutory deductions and artificially assume jurisdiction under section 149 merely by adopting gross sale consideration as income.The assessee had duly provided all relevant details and supporting documents before the Assessing Officer; however, the he failed to consider the same and mechanically ignored the evidences placed on record.It is further argued that it had furnished documents and explanations in support of cost of improvement incurred in relation to the 6

ITA NO. 9309/Mum/2025; Beautiful Agro Products Pvt. Ltd. immovable property. The ld.CIT(A), while accepting the indexed cost of acquisition and directing re-computation of capital gains, failed to appreciate that section 48 specifically mandates deduction not only of cost of acquisition but also cost of improvement while computing capital gains.The ld.DR on the other hand, contested the admission of additional grounds and also relied on the orders of the lower authorities on merits of the addition. 7. We have carefully considered the factual matrix of the case. It is quite evident that the AO made the impugned addition mainly on account of lack of proper compliance by the assessee which did not file the original return of income within the due date. In so far as the impugned transaction is concerned, the AO adopted the sale of consideration of the immovable property as the amount of taxable capital gains in absence of any detail regarding the actual cost of acquisition. The ld.CIT(A) however,took into consideration the figure of Rs 9.20 lakh on the basis of submissions made before him but did not allow any benefit further as the assessee claimed substantial amount as cost of improvement.The appellate authority found that the claim was not supported with any cogent documentary evidence.The assessee before us,has pleaded that adequate opportunity of hearing was not accorded to it by both the lower authorities.However,we also find that the assessee has not given any satisfactory reply regarding non furnishing of relevant details and documents before them either.The assessee has also filed request for admission of various additional grounds of appeal without adducing any reason for non furnishing of them before the lower authorities.It is claimed that the said grounds being legal in nature go into the 7

ITA NO. 9309/Mum/2025; Beautiful Agro Products Pvt. Ltd. very root of the validity of the proceedings u/s 148 of the Act and also on the consequential assessment order.

7.1 Considering the totality of the above discussion,we find that all the issues being legal issues and the merits of the addition require proper adjudication and consideration by the lower authorities for which the assessee is required to furnish such evidence as required to strengthen its case.Therefore,we find it appropriate to set aside the appellate order and restore entire matter to the file of the AO for de novo framing of assessment order.Needless to state, he would allow reasonable opportunity of hearing to the assessee in this regard who would attend the assessment proceedings and give necessary cooperation to the Assessing officer to complete the assessment in fair and judicious manner.The assessee is also granted liberty to adduce any additional ground or evidence is support of its contentions. Accordingly,the grounds of appeal are allowed for statistical purposes.

Order pronounced in the open court on 30/06/2026.

Sd/- Sd/- AMIT SHUKLA PRABHASH SHANKAR (न्याययक सदस्य /JUDICIAL MEMBER) (लेखाकार सदस्य/ACCOUNTANT MEMBER)

Place: म ुंबई/Mumbai ददनाुंक /Date 30.06.2026

ITA NO. 9309/Mum/2025; Beautiful Agro Products Pvt. Ltd. Soumili Das / PS

आदेश की प्रयियलयि अग्रेयिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant प्रत्यर्थी / The Respondent. 2. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file.

सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER,

उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीअयधकरण