INCOME TAX OFFICER 19 2 4 MUMBAI, MUMBAI vs. NEELAM SANJAY MEHTA, MUMBAI

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ITA 2501/MUM/2026Status: DisposedITAT Mumbai23 September 2026AY 2018-1918 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal set aside the order of the Ld. CIT(A) and restored the matter back to the file of the Assessing Officer (AO). The Tribunal noted that the CIT(A) deleted the additions by relying on a decision of the Coordinate Bench of the ITAT concerning tenancy rights, without examining the specific facts of the present case. The Tribunal observed that the CIT(A) did not send the documents filed by the assessee (agreements and other details) to the AO for a remand report or seek the AO's comments before admitting them. Furthermore, the AO's order indicated that the agreement contained a clause (LXXI) stating the allotment was made on an ownership basis, which could not be considered merely a transfer of tenancy rights. Therefore, the Tribunal concluded that the matter required detailed verification by the AO regarding the documents filed by the assessee, the terms of the agreement, and the applicability of the coordinate bench's decision to the present case. The AO was directed to pass a fresh order after carrying out necessary verification. The Tribunal clarified that this decision to restore the matter does not reflect on the merits of the dispute.

What were the facts?

The Revenue (Income Tax Officer 19 2 4, Mumbai) filed an appeal before the Income Tax Appellate Tribunal (ITAT), Mumbai Bench, against the order of the Commissioner of Income Tax (Appeals) dated February 27, 2026. The appeal pertains to Assessment Year 2018-19 and challenges the deletion of an addition of Rs. 2,00,71,200 made under Section 56(2)(x)(b) of the Income Tax Act. The assessee, Neelam Sanjay Mehta, had acquired 77.49 square metres of carpet area. The Assessing Officer (AO) made the addition considering the difference between the consideration paid (Rs. 20 lakhs) and the market value of the property (Rs. 2,50,71,200). The CIT(A) deleted this addition, relying on a decision of the ITAT concerning tenancy rights. The Revenue contended that the CIT(A) failed to appreciate the facts and the nature of the agreement, which indicated an allotment on an ownership basis, not merely tenancy rights. The assessee did not appear before the ITAT, and the appeal was decided ex parte.

What were the issues?

1. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 20,071,200 made under Section 56(2)(x)(b) of the Act, without appreciating that the provisions of that section are applicable to the assessee's case, and hence the addition is liable to be sustained (Question of law)? 2. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the assessee, Smt. Neelam Sanjay Kumar Mehta, along with Shri Sanjay Kumar Mahendra Kumar Mehta, entered into an agreement dated June 30, 2017, as incoming tenants with Ms. Shreepati Build Infra Investment Ltd. as outgoing tenant, and Ms. Shreepati Jewels R.R. Chaturvedi as the confirming party landlord (Question of fact and law)? 3. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the assessee entered into an Agreement for Permanent Alternate Accommodation wherein the consideration amount was mentioned as Rs. 20,00,000, whereas the market value for the purpose of stamp duty was mentioned as Rs. 2,50,71,200, thus Section 56(2)(x) of the Act is correctly applied (Question of fact and law)? 4. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 20,071,200 under Section 56(2)(x)(b) of the Act by relying upon the decision of the Jurisdictional ITAT Mumbai on the same set of facts in the appellant's own family members, whereas the Ld. CIT(A) has failed to consider the action of the AO which has been able to bring contrary facts and evidence on record (Question of law)? Assessee's contentions: Not recorded as the assessee did not appear. Revenue's contentions: The Ld. CIT(A) erred in deleting the addition by not appreciating that Section 56(2)(x)(b) is applicable. The CIT(A) failed to appreciate the agreement dated June 30, 2017, and the fact that the consideration was Rs. 20,00,000 while the market value was Rs. 2,50,71,200. The CIT(A) wrongly relied on a coordinate bench decision without considering contrary facts and evidence brought on record by the AO. The agreement indicated allotment on an ownership basis, not just tenancy rights.

Which sections of the Income-tax Act were involved?

Section 56(2)(x)(b)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: SHRI SANDEEP GOSAIN & SHRI JAGADISH

Pronounced: 23.09.2026

PER SHRI SANDEEP GOSAIN, JUDICIAL MEMBER:

This appeal is filed by the Department against the order of Ld. CIT APPEALS vide DIN: ITBA/NFAC/S/250/2025-26/1084230374(1) dated 27-Feb-2026 for the Assessment Year 2018-19. The Department has raised the following grounds of appeal:

1) 1. Whether on the facts and in the circumstances of the case and in law the Ld CIT A erred in deleting addition of Rs 20071200 made under section 56 2 x b of the Act without appreciating that the provisions of that section applicable to the facts of the assessees case Hence the addition is liable to be sustained 2) 2. Whether on the facts and in the circumstances of the case and in law the Ld CIT A failed to appreciate that the name of the assessee Smt Neelam Sanjay Kumar Mehta along with Shri. Sanjay Kumar Mahendra Kumar Mehta entered into an agreement dt 30 6 2017 as incoming tenants with Ms Shreepati Build Infra Investment Ltd as outgoing tenant and Ms Shreepati Jewels R.R.Chaturvedi as the owner confirming party landlord 3) 3. Whether on the facts and in the circumstances of the case and in law the Ld CIT A failed to appreciate that assessee entered into an Agreement for Permanent Alternate Accommodation wherein the consideration amount was mentioned as Rs 200000 whereas the market value for the purpose of stamp duty was mentioned as Rs 25071200 thus Section 56 2 x of the Act is correctly applied 4) 4. Whether on the facts and in the circumstances of the case and in law the Ld CIT A erred in deleting the addition of Rs 20071200 under section 56 2 x b of the Act by relying upon the decision of Jurisdictional ITAT Mumbai on the same set of facts in appellants own family members Whereas the Ld CIT A has failed to consider the action of the AO which has been able to bring contrary facts and evidence on record 5) 5. The above grounds of appeal are without prejudice and in the alternative to each other The Appellant craves leave to add alter amend modify OR delete any of the grounds of appeal

2.

None appeared on behalf of the assessee when the case was called out repeatedly. From the case records, we note that summons in this case were sent by the Registry through speed post as well as email. More than one month has passed since the summons were issued at the address provided by the assessee in Form 36; therefore, drawing an inference under the General Clauses Act, it is presumed that service of summons/notice has been duly effected.

3.

On the other hand, the Ld. DR present in the Court is ready with the arguments; therefore, we have decided to proceed with the hearing of the appeal ex parte.

4.

All the grounds raised by the Revenue are interrelated and interconnected and relate to challenging the order of the Ld. CIT(A) in deleting the additions made by the AO. Therefore, we have decided to adjudicate these grounds through the present consolidated order.

5.

We have heard the Ld. DR, perused the material placed on record, the judgments cited before us, and also the orders passed by the Revenue Authorities.

6.

From the records, we further notice that the assessee had received 77.49 square metres of carpet area in a building. Hence, it falls under the meaning of the term "property" as per the Explanation to clause (vii), which defines a property in the nature of a building within the meaning of property under the purview of section 56(2)(x)(b) of the Income Tax Act.

7.

According to the said section, the proviso clearly specifies the instances where this clause would not be applicable. Since the assessee, along with Mr. Sanjay Kumar and Mahendra Kumar Mehta, joint owners, had acquired the above property for only Rs. 20 lakhs, whereas the market value of the property was Rs. 2,50,71,200/-, the AO, while applying the principles laid down under the provisions of section 56(2)(x)(b) of the Income Tax Act, made the additions. The operative portion of the assessment order is reproduced herein below:

8.

Although the learned CIT(A), while relying on the decision of the Coordinate Bench of the ITAT, deleted the said additions, considering that the provisions of section 56(2)(x) of the Act are not applicable in the case of tenancy rights.

9.

The learned CIT(A) did not examine the facts of the present case and had categorically mentioned that the assessee filed written submissions along with a copy of the agreements and other details in support of the ground of appeal. The said documents or the copy of the agreement was not sent to the AO for seeking his remand report, nor were any comments of the Assessing Officer sought before admitting the documents mentioned in paragraph 3.2 of the order of the CIT(A).

10.

Even otherwise, as per the order of the AO, the said agreement for transfer contains paragraph No. LXXI, wherein the allotment in favour of the assessee was made on ownership basis, and thus cannot be considered as transfer of tenancy rights only.

11.

Since the facts of the present case were not at all discussed by the learned CIT(A), the additions were deleted by relying on the order of the Coordinate Bench of the ITAT.

12.

Be that as it may, without going into further merits of the grounds raised by the Revenue, we are of the view that the matter in question requires detailed verification at the end of the AO with regard to the documents filed by the assessee before the Ld. CIT(A), the terms of the agreement, and also the order passed by the Coordinate Bench of the ITAT which has been relied upon by the Ld. CIT(A) and its applicability to the facts of the present case.

13.

Therefore, we set aside the order passed by the Ld. CIT(A) and restore the matter back to the file of the AO for carrying out necessary verification of the documents being relied upon by the assessee and to pass a fresh order thereafter, considering the decision of the Coordinate Bench of the ITAT and its applicability under the facts of the case of the assessee.

14.

With these directions, the matter stands restored back to the file of the AO.

15.

Before parting, we make it clear that our decision to restore the matter back to the file of the AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the AO independently in accordance with law.

16.

In the result, the appeal of the Revenue is allowed for statistical purposes.

Order pronounced in the open court on 23.09.2026.

Sd/- Sd/- JAGADISH SANDEEP GOSAIN ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 23.09.2026 RY-SrPS 17 Copy to: INCOME TAX OFFICER 19 2 4 MUMBAI, 507 PIRAMAL CHEMBERS LALBAUG 1 PAREL MUMBAI 400012, MUMBAI-400012, MAHARASHTRA

NEELAM SANJAY MEHTA, ROOM NO 8 MARDIA B HAVAN 6TH 2 KHETWADI ROAD, MUMBAI-400004, MAHARASHTRA

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE

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