KUTUBUDDIN LIYAKATALI KHAN ,MUMBAI vs. ITO INT TAX WARD 3(1)(1), MUMBAI

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ITA 1416/MUM/2025Status: DisposedITAT Mumbai17 June 2026AY 2016-176 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal admitted additional grounds of appeal which were legal and jurisdictional in nature. These grounds challenged the validity of the notice under section 148 and the assessment order being time-barred.

What were the facts?

The assessee did not file a return of income for AY 2016-17 and later filed one in response to a notice under section 148. The Assessing Officer (AO) proposed an addition of Rs. 1,50,00,000/- for unexplained investment in immovable property.

What were the issues?

The key issues were the validity of the notice issued under section 148 and whether the final assessment order was passed within the time limits prescribed by section 153 of the Act.

Which sections of the Income-tax Act were involved?

Section 69,Section 271(1)(C),Section 234A,Section 234B,Section 234C,Section 148,Section 151A,Section 144C,Section 153,Section 143(3),Section 142(1),Section 133(6)

AI-generated summary — verify with the full judgment below

IN THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI “I” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No.1416/MUM/2025 (AY: 2016-17) Kutubuddin Liyakatali Khan vs. ITO INT Tax Ward 3(1)(1), Navjivan Chawl Guru Nanak Nagar 218, Aayakar Bhavan, M. K. Road, Hill No 2, Narayan Nagar, Ghatkopar Churchgate, Mumbai-400020. West S.O, Mumbai-400086. PAN/GIR No: AVDPK9081D (Appellant) (Respondent) Assessee by Ms. Vasanti B. Patel & Mr. Nilesh Joshi Revenue by Shri Sridhar G. Menon (Sr. AR) Date of Hearing 17.06.2026 Date of Pronouncement 11.09.2026 O R D E R PER BIJYANANDA PRUSETH, AM:

These two appeal emanates from the final assessment orders passed u/s 143(3) r.w.s 144C(13) of the Income-tax Act, 1961 (in short, ‘Act’) by the ITO, Int. Tax, Ward 1(2)(1), Mumbai [in short, ‘AO’], dated 27.03.2024 for the assessment year (AY) 2016-17 pursuant to the directions issued by the Dispute Resolution Panel- 1, Mumbai-3 (DRP) vide order u/s 144C(5) dated 03.12.2024.

2.

The grounds of appeal raised by the assessee are as under:

“1. A) The learned assessing officer has erred in making the addition of Rs.53,89,625/ as unexplained investment made under section 69 of Income tax act 1961.

B) The learned Assessing officer has failed to consider explanation and submission submitted before him.

2.

The learned Assessing officer has erred in initiating penalty under section 271(1)(C) of the income tax act 1961.

3.

The learned assessing officer has erred in levy of interest under section 234A, 234B and 234C of the Income tax act 1961.”

3.

The assessee has filed addition grounds on 01.12.2025 and the amended

additional grounds are as under:

“1. The Notice dated 25th March, 2023 issued by the Income Tax Officer under section 148 of the Income tax Act, 1961 is invalid and bad in law as Income Tax Officer is not the appropriate authority for issuing the said notice. The said notice has been issued in violation of section 151A of the Income Tax Act, 1961 read with e-assessment of Income escaping Assessment Scheme 2022 and therefore as per the settled law by the decision in the case of Hexaware Technologies Ltd. vs. ACIT [2024] 464 ITR 430 (Bombay) the same is liable to be quashed.

2.

On the facts and in the circumstances of the case and in law, the final assessment order dated 24th January, 2025 passed under section 144C (13) r.w.s. 147 of the Act by the Income Tax Officer is beyond the time limit prescribed under section 153 of the Act and hence it is timed barred and is liable to be quashed.”

4.

Let us first consider the request of the assessee to admit the additional

grounds raised by the appellant. The grounds are legal and jurisdictional in nature.

The Hon’ble Supreme court in case of NTPC Ltd. vs. CIT, 229 ITR 383 (SC) has held

that the order of Tribunal u/s 254 is expressed in the widest possible terms. There

is no reason to restrict the power of the Tribunal u/s 254 only to decide the

grounds which arise from the order of the CIT (Appeals). Both the assessee as well

as the Department have a right to file an appeal/cross objection before the

Tribunal. There is no reason why the Tribunal should be prevented from

considering a question of law arising in the assessment proceedings although not

raised earlier. Undoubtedly the Tribunal will have the discretion to allow or not to allow a new ground to be raised. But where the Tribunal is only required to

consider the question of law arising from the facts which are on record in the

assessment proceedings, there is no reason why such a question should not be

allowed to be raised when it is necessary to consider that question in order to

correctly assess the tax liability of the assessee. In the instant case, the additional

grounds emanate from the facts on record and no additional facts are needed to

decide the issue. Hence, following the decision of the Hon’ble Supreme Court in

case of NTPC Ltd. vs. CIT, 229 ITR 383 (SC) and the decision of the Hon’ble

Jurisdictional High Court in case of CIT vs. Pruthvi Brokers and Shareholders PVt.

Ltd., 349 ITR 336 (Bom.), the additional grounds are admitted and will be decided

at the relevant place in this order.

5.

Facts of the case, in brief, are that the assessee had not filed return of

income for AY 2016-17. Subsequently, he filed return of income in response to notice u/s 148 of the Act, declaring total income at Rs.1,63,800/-. After issuance

of statutory notices u/s 143(3) and 142(1) of the Act and show cause notice, the

AO passed draft order u/s 144C(1) of the Act proposing variation of Rs.1,50,00,000/-. The assessee had purchased immovable property for a

consideration of Rs.1,50,00,000/-. The AO also issued notices u/s 133(6) of the

Act to the counter party and sub-Registrar to provide details and relevant documents. In response to the notice, the assessee submitted only the bank

statement without explaining the source of funds in the said account. Due to non- 3 cooperation of the assessee and failure to explain that source of the money, the

AO treated Rs.1,50,00,000/- as unexplained investment u/s 69 r.w.s. 115BBE of

the Act in the draft order u/s 144C(1) of the Act.

6.

Aggrieved with the violation in the draft order, assessee filed objections

before the DRP-1, Mumbai. The DRP found that the total payments of

Rs.1,50,00,000/- pertained to different financial years from FY 2013-14 to 2017-

18.

During the previous year relevant to the AY 2016-17, the payment through

Bombay Mercantile Co-operative Bank Ltd. was Rs.53,89,625/-. Subsequently, the

assessee submitted that there were payments made through savings bank

account to the extent of Rs.10,99,825/- from the savings bank account of the

assessee. On examination of the bank statement and submission of the assessee,

the DRP noted that assessee has not satisfactorily explained the source of the

sums credited in the bank account maintained with Bombay Mercantile Co-

operative Bank Ltd. Therefore, the impugned sum of Rs.53,89,625/- invested

during the year was held to be from unexplained sources of cash and deposits.

Accordingly, addition of Rs.53,89,625/- was sustained. Subsequently, the AO

passed order u/s 144C(13) r.w.s. 147 of the Act on 24.01.2025 by making addition

of Rs.53,89,625/- u/s 69 r.w.s. 115BBE of the Act towards unexplained investment

in purchase of immovable property.

7.

Aggrieved by the above order of AO, the assessee filed appeal before the Tribunal. The Ld. AR filed paper book including the details submitted before the

lower authorities. It was submitted that while deciding the objections, the DRP

has not considered the payments made through Savings Bank account which is extracted at page 13 of the order u/s 144C(5) of the Act. The Ld. AR has filed a

compilation regarding the source of investment in immovable property, as per

which Rs.10,99,625/- pertains to the payment from the Savings Bank account of the assessee. These payments have not been considered by the DRP.

8.

We have heard both sides and perused the materials on record. We find

that the payments of Rs.10,99,625/- from the Saving Bank account to the builder

have not been considered by the lower authority. Hence, the matter is remanded

back to the DRP for verification and decision as per law after granting adequate

and reasonable opportunity of being heard to the assessee. The remaining

addition of Rs.42,90,000/- [Rs.53,89,625/- (-) Rs.10,99,625/-] is confirmed.

9.

Ground No.2 pertains to initiation of penalty u/s 271(1)(c) of the Act. This

ground is premature and does not require adjudication.

10.

Ground No.3 pertains to levy of interest u/s 234A, 234B and 234C of the

Act. These are consequential and mandatory in nature. The AO is directed to levy

interest after giving effect to this order.

11.

Further, as discussed earlier, the appellant has filed additional grounds of

appeal which are legal in nature. In these grounds, the appellant has challenged 5 the validity of jurisdiction assumed by the ITO to issue notice u/s 148 of the Act.

The appellant has also raised ground stating that the order u/s 144C(13) r.w.s. 147

of the Act was time barred and is liable to be quashed. We find that these issues

have been raised for the first time before the Tribunal. The assessee had not

raised any objection regarding these issues before the AO or DRP. Hence, we

consider it proper to remand back the matter to DRP for decision after granting

adequate and reasonable opportunity of being heard to the assessee. The

grounds are allowed for statistical purpose.

12.

In the result, the appeal is partly allowed.

Order is pronounced on 11.09.2026.

Sd/- Sd/- (SAKTIJIT DEY) (BIJYANANDA PRUSETH) VICE PRESIDENT ACCOUNTANT MEMBER *Aniket Chand; Sr. PS MUMBAI Date: 11.09.2026 Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, MUMBAI 6. Guard File

By Order

Assistant Registrar ITAT, MUMBAI

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