HANUMANT SHIVAJI MARKAD, PUNE,PUNE vs. ITO, WRD-8(3), PUNE, PUNE

PER Dr. DIPAK P. RIPOTE, A.M : This is an appeal filed by the Assessee against the order of the LearnedCommissioner of Income Tax (Appels) (NFAC), passed u/s. 250 of the Income Tax Act, 1961 („the Act‟) for AY 2016-17 on 01/09/2025, emanating from the Assessment Order u/s 147 r.w.s. 144B of the Act, dated 30/01/2024.

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for Rs.67,00,000/-. Ld. AR submitted that since it was a joint property Assessee‟s share was 50%. In this case notice u/s 148A(b) was issued on 24/01/2023 for AY 2016-17 with reference to the alleged sale transaction. Actually, the sale consideration is less than Rs.50,00,000/- hence after a lapse of three years from the end of the assessment year, no notice u/s 148A(b) can be issued. Hence, proceedings are bad in law.The Ld. AR relied on the decision of the Hon‟ble Gujarat High Court in the case of Vasuki Global Industrial Ltd. Vs. Principal Chief Commissioner of Income Tax (2025) 180 taxmann.com 16b (Gujarat) and the Hon‟ble Karnataka High Court in the case of Sanath Kumar Murali Vs. ITO (2023) 455 ITR 370 (Kar.).

4.1 Before going into the facts mentioned in the Notice u/s 148A(b) and Order u/s 148, we will narrate the facts noted from the Paper Book filed by the Assessee.

4.2 The Assessee has filed copy of “Agreement” dated 13 February 2016 at page 18 to 36 of the Paper book. The Ld.AR has certified that these documents were filed before CIT(A). The Assessee along with his wife Manisha Hanumant Markad (referred as Seller) has entered into Registered „Agreement‟ on 13/02/2016 with Abhijit Nikam & Balkrishn Nikam (referred as Purchaser) for Sale of Flat Number 104 of A wing of Peace valley Building ,Pimple Saudagar, Dist Pune for Rs. 67,00,000/-. At claus “b” of the said Agreement it is mentioned that Assessee along with his wife had purchased the said flat for Rs.58,57,000/- vide registered Sale deed dated 6/9/2013 from G.K. Developers.

4.2.1 Then the Assessee & his wife (as seller) entered into Registered „Deed of Assignment‟ on 2/03/2016 with Mr. Abhijeet Nikam & Balkrishn Nikam (as purchase) for Flat Number 104 of A wing of Peace valley Building, Pimple Saudagar, Dist Pune. The consideration is Rs.67,00,000/-. The 2

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said „Deed of Assignment‟ does mention about Agreement dated 13/2/2016. The said „Deed of Assignment‟ also provides dates of the payments. Copy of the „Deed of Assignment ‟ is at page 37-56 of the paper book. Ld.AR certified that the document was filed before Ld. CIT(A).

4.2.2 Thus , the Assessee and his wife were owners of Flat Number 104 of A wing of Peace valley Building ,Pimple Saudagar, Dist Pune, which was purchased by them on 6/9/2013 for Rs.58,57,500/-and the same was sold on 2/3/2026 for Rs.67,00,000/-.

4.2.3 All these facts are duly recorded in the Registered Agreement dated 13/2/2016 and „Deed of Assignment‟ dated 2/3/2016.

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5.1 Thus after reading the Order u/s 148A(d) and Notice u/s 148A(b) one can understand that the AO had arrived at the conclusion of „escapement of Income ‟only based on the Chart which was appearing on the Insight Portal of the Income Tax Department. The AO has not obtained copy of the so called Registered Documents vide which assessee has alleged to have entered into Transaction of Sale of Property twice. 4

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Ironically even during the Assessment Proceedings the AO had not obtained copies of the impugned Sale deeds.

5.2 Since the AO had not obtained the copy of the Impugned Sale Deeds, the AO could not understand that it was the same Transaction. We have at length discussed the „Agreement ‟dated 13/2/2016 & „Deed of Assignment‟ dated 2/3/2016. It is clear from the said documents that Assessee along with his wife had sold Flat 104 of A wing of Peace valley Building ,Pimple Saudagar, Dist Pune for Rs.67,00,000/- which was purchased by them for Rs.58,57,500/-.

5.2.1 Since share of the Assessee is not mentioned it has to be presumed to be 50%. Therefore, share of Assessee in the Sale Consideration of Rs.67,00,000/- would be 50% of 67,00,000/- . It means Assessee‟s share in the impugned Transaction was only Rs.33,50,000/-. However, the entire Sale Value is not the Taxable Income. Only the Capital Gain would be taxable. Therefore, one needs to reduce Purchase cost of Rs.58,57,500/- from the Sale Consideration of Rs.67,00,000/-. Therefore, the Short Term Capital Gain would have been only Rs.8,42,500/- and Assessee‟s share would have been 50% means Rs.4,21,250/. Thus, the AO was in a position to calculate Capital Gain based on the impugned „Deed of Assignment‟ of “Agreement.”. But AO has not bothered to apply his mind, not bothered to get copies of the impugned documents from Registrar‟s Office.

5.3 From the above narration it is evident that the alleged escapement was definitely Less Than Rs.50 lacs. In this case the Notice u/s 148A(b) dated 24/1/2023, Order u/s 148A(d) dated 9/3/2023 and Notice u/s 148 dated 9/3/2023 were issued for AY 2016-17 after a lapse of Three Years from the end of Assessment Year.

5.4 The Hon‟ble Bombay High Court in the case of Sunita Purushottam Virgincar & Ors. Vs. Income Tax Officer & Ors. Writ Petition No. 496 Of 2023 vide order dated Jul 4, 2024 (2024) 120 CCH 0107 (Bom-HC) has held as under : Quote, “19. The next reason cited by the Revenue for rejecting the explanation is, "Copy of the Sale Deed was not available at the time of recording of reasons". We find that even such reasoning is fallacious and not tenable in law. The information from the office of the Sub- Registrar's for any registration is duly transmitted to the respondents. The execution of such Sale Deed was already on record. In such a case if the respondents fail to 5

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take note of the document which was available for transmission to the respondents from the Sub-Registrar's office, in our view, the assumption of jurisdiction will have to be regarded as erroneous. In any case, we find that at the time of passing of the order dated 16.07.2021, the Sale Deeds (which were available) ought to have been taken into consideration. 20. For the reasons aforesaid, we are satisfied that in view of the aforesaid jurisdictional errors, the notice dated 28.05.2019 and the order dated 16.07.2021 deserve to be quashed and set aside” Unquote. In the case of the Assessee, it is evident that AO had not obtained copies of the documents. Therefore, as held by Hon‟ble Jurisdictional High Court, assumption of jurisdiction by AO was erroneous.

5.5 The Section 149 of Income Tax Act, 1961 is reproduced here as under: “Time limit for notice. 149. (1) No notice under section 148 assessment year,— shall be issued for the relevant (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of— (i) an asset; (ii) expenditure in respect of a transaction or in relation to an event or occasion; or (iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more:] Provided that no notice under section 148 April, shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of 2021, if 28 [a notice under section 148 153A or section 153C or section could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section or section 153A or section 153C , as the case may be], as they stood immediately before the commencement of the Finance Act, 2021: Provided further that the provisions of this sub-section shall not apply in a case, where a notice under section 153A , or section 153C with section 153A read , is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A , on or before the 31st day of March, 2021:”

5.6 Thus, as per Section 149, Sub-clause 1(b), no notice u/s.148 can be issued after a lapse of three years from the end of relevant assessment year, if alleged escapement is less than Rs.50 lakhs.

5.7 Hon‟ble Karnataka High Court while dismissing Appeal filed by Revenue in the case of [2025] 172 taxmann.com 290 (Karnataka)Income- tax Officerv.Sanath Kumar Murali writ APPEAL NO. 968 OF 2023 (T-IT) held as under : Quote, “ 3. Learned Counsel for the assessee, per contra, submits that merely because the concerned conveyancementions Rs.55.00 lakh, that itself 6

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cannot be taken as the income escaping assessment inasmuch as the cost ofacquisition to be deducted from it and if that is done, it would fall below the ceiling limit of Rs.50.00 lakh.This aspect of the matter, learned Counsel for the assessee submits, was considered by a Division Bench ofMadhya Pradesh High Court sitting at Jabalpur in Nitin Nema v. Office of Principal Chief CIT [2023] 155taxmann.com 276/458 ITR 690 (Madhya Pradesh) and relief has been accorded to the Assessee of the kindafter referring to the order impugned in this appeal. He also tells us that challenge to the Jabalpur Bench'sorder has attained finality at the hands of the Apex Court in SLP No(C). 38708 of 2024 on 17.09.2024 andtherefore, the order of the learned Single Judge has secured imprimatur of the Apex Court. So contending, heseeks dismissal of the appeal. 4. Having heard the learned counsel for the parties and having perused the appeal papers, we are broadly inagreement with the views of the learned Single Judge, inter alia, to the effect that while assessing the quantumof escaped income in matters like this, the amount mentioned in the registered conveyance cannot be straightaway taken without deducting the cost of acquisition therefrom. This apart, as rightly submitted by the learnedcounsel for the assessee, the Jabalpur Bench of Madhya Pradesh High Court, in the case supra, followed theimpugned order of the learned Single Judge of this Court and later the challenge by the Revenue before theApex Court of the Country has been repelled. In the above circumstances, there is no merit in the appeal and accordingly it is dismissed, costs having beenmade easy. ”Unquote.

5.8 Hon‟ble High Court of Madhya Pradesh in the case of Nitin Nema vs. Principal Chief Commissioner of Income-tax [2023] 458 ITR 690 (Madhya Pradesh) on identical issue has levied cost on the revenue while allowing Assessee‟s appeal , the relevant paragraphs of the order are as under : Quote, “ 3. The grounds raised by learned counsel for petitioner in support of challenge to the impugned order and notice are as follows: (a) The income referred to in impugned order and notice Annexures P-3 and P-4 is not income chargeable to tax but is the gross proceeds/consideration received by petitioner for sale of 16scooters during the assessment year 2016-2017 and thus the Revenue has no authority to invoke section 148A or issue notice under section 148……………………….. 6.3 Several High Courts have held that income chargeable to tax cannot be the gross receipts/consideration in any business transaction. One such decision which appears to be closest to the facts of present case is theSingle Bench decision of Karnataka High Court rendered on Sanath Kumar Murali …………………… 9. From the aforesaid discussion what comes out loud and clear is that the Revenue has failed to understand the fundamental difference between sale consideration on one hand and income chargeable to tax on the other. The Revenue despite being assisted by thousands of experts in the field of finance and taxation, has committed such elementary mistake leading to harassment to the assessee who has been compelled to file the present avoidable piece of litigation. Moreso, this Court has been compelled to decide this frivolous matter wasting its precious time and energy which could have been utilized in more pressing matters. 9.1 Thus, the Revenue deserves to be saddled with exemplary cost and correspondingly the petitioner is entitled to compensatory cost.

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5.9 In the case of the present Assessee we have explained in earlier paragraphs that alleged Escapement was less than Rs.50 lacs for AY 2016- 17. The notice u/s 148 dated 9/3/2023, was issued after a lapse of three years from the end of the Assessment Year for AY 2016-17, hence the Notice u/s 148 is bad in law. Accordingly, consequential reassessment order is void ab initio.

5.10 For all the reasons discussed above, the Ground No. 2 regarding validity of Notice u/s 148 is allowed in above terms.

Order pronounced in the open Court on 12th June, 2026

Sd/- Sd/- (VINAY BHAMORE) (Dr. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे/Pune; दिन ांक/Dated : 12-06-2026 Ravi Kumar Digitally signed by Ravi Kumar Ravi Kumar Date: 2026.06.15 13:13:32 +05'30'

आदेशकीप्रतितितिअग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी/ The Appellant 2. प्रत्यर्थी/ The Respondent 3. The concerned Pr.CIT, Pune 4. DR, ITAT, „A‟ Bench, Pune 5. ग र्डफ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकरअपीलीयअदिकरण, पुणे/ITAT, Pune

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S.No. Details Date Designation 1 Draft dictated on Sr. PS/PS 2 Draft placed before author Sr. PS/PS Draft proposed & placed before the Second 3 JM/AM Member 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS Date on which the file goes to the Office 9 Superintendent 10 Date on which file goes to the A.R. 11 Date of Dispatch of order