MOHAMMED AYUB MAINUDDIN SHAIKH,MUMBAI vs. INCOME TAX OFFICE, INT TAX WARD 4(2)(1), MUMBAI, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE MS. SUCHITRA RAGHUNATH KAMBLE, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER IT(IT)A No. 2301/MUM/2025 Assessment Year: 2016-17 Mohammed Ayub Mainuddin vs Income Tax Officer, INT Tax Shaikh Ward 4(2)(1), Mumbai Premier Exotica I, E wing, 203, Aayakar Bhavan, Premier Road, Off. Lal Bahadur Churchgate, Mumbai Shashtri Marg, Kurla, Mumbai 400002 400070 PAN: (CALPS3314L) Appellant Respondent Present for: Appellant by : Shri. Ajinkya M. Vaishampayan, C.A. Respondent by : Shri. Krishna Kumar, Sr. DR Date of Hearing : 18.09.2025 Date of Pronouncement : 16.12.2025 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the final assessment order of ld. ITO (Intl. Tax) Ward 4(2)(1) Mumbai-3 vide Order No. ITBA/AST/S/147/2024-25/10701239464(1) dated 16.12.2024 passed pursuant to the Directions of the Dispute Resolution Panel u/s. 144C(5) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 06.12.2024, for AY 2016-17.

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144B r.w.s. 144C and r.w.s. 156) of the Income Tax Act, 1961 by the learned AO is bad in law. 2) The learned AO has erred in law and on facts in passing the order without following the provision of Act and Rules made thereunder and well settled case laws. 3) The Learned AO further erred in initiating penalty proceedings under Section 274 read with Section 271(1)(c) of the Act, despite the fact that the assessment order is itself not sustainable in law. 4) The Appellant assessee further craves leave to add, alter or amend any of the above grounds relied upon before the final disposal of the appeal.”

2.1. Assessee has also filed revised grounds of appeal vide submission dated 04.09.2025. Accordingly, revised grounds are reproduced as under which shall be considered for adjudication: “Following grounds of appeal are taken without prejudice to each other: On facts and in law: 1) The Assessee requests to condone the unintentional delay of 37 days in filing the appeal, caused due to medical reasons as undertaken in the Affidavit and admit the same for disposal on merits. 2) The Ld. Assessing Officer erred in assessing the income at Rs.25,22,090/-. 3) The Ld. Assessing Officer erred in issuing Notice u/s 148 of the Act, in violation of the provisions of Section 149(1)(b), as: a. The agreement value of the property did not exceed Rs.50,00,000/-AND b. The amount of difference between agreement value and value for stamp duty purposes as envisaged u/s 56(2)(vii) did not exceed Rs.50,00,000/- c. This fact was brought to the notice of the Id. Assessing Officer vide reply to notice u/s 148A(b) only. 4) The impugned Assessment Order is bad in law as the addition of Rs.25,07,500/-u/s 56(2)(vii) and Rs. 14,586/- u/s 56 are made for reasons other than those recorded while issuing notice u/s 148A(b) and Notice u/s 148 as well as without making addition of Rs.68,07,000/- as

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unexplained investment u/s 69 as per Notice u/s 148A(b) and 148 of the Act. 5) The Ld. Assessing erred in making addition u/s 56(2)(vii) at Rs.25,07,500/- by not considering the Allotment Letter as Agreement fixing the amount of consideration and 1 proviso to the section.” 2.2. Sole thrust of the ld. Counsel of the assessee is on the legal issue in respect of violation of provisions of Section 149(1)(b) which rendered the notice issued u/s. 148 and the impugned reassessment order thereafter, as bad in law, liable to be quashed.

2.3. Registry has noted a delay of 32 days in filing the present appeal before the Tribunal for which petition for condonation of delay along with affidavit is placed on record in the paper book. From the perusal of the same, it is noted that newly born son of the assessee aged merely 2 months was undergoing certain adverse medical conditions. Also, his spouse because of medical conditions faced by the newly born son was under labor and mental stress. Assessee could not lay his hands on the filing of the appeal in the prescribed limitation. The delay is of 32 days which has been adequately explained by the assessee in his petition. Accordingly, considering the overall factual matrix and the circumstances as explained, we condone the brief delay of 32 days and take up the matter for adjudication

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initiated were under the new regime of reassessment introduced by the Finance Act, 2021. Accordingly, an order u/s.148A(d) was passed dated 08.03.2023, subsequent to which notice u/s. 148 was issued of the same date.

3.1. Assessee filed his return of income reporting total income at NIL, in response to the said notice issued u/s. 148. Statutory notices were issue on the assessee to which submissions were made which included copy of passport, payment details to builder for purchase of immovable property, copy of bank account statement, purchase deed and his employment details. From the perusal of the purchase deed, ld. AO observed that total cost of immovable property purchased by the assessee is Rs.46,70,000/-, comprising of agreement value of Rs.42,99,500/- and stamp duty of Rs.3,40,500/- as well as registration charges of Rs. 30,000/-. From the details furnished by the assessee in respect of bank account statement, ld. AO accepted the explanation to the extent of Rs. 39,22,682/- and proposed addition of the balance amount of Rs. 7,47,318/-, since assessee could not explain the nature and source of this balance amount for making investment in the immovable property. He thus, applied provisions of Section 69 to make this addition. Further, he applied the provisions of Section 56(2)(vii)(b) by noting that assessee purchased the immovable property for a consideration of Rs. 42,99,500/- for which the stamp duty value recorded in the registered purchase deed is Rs. 68,07,000/-. According to him, since the stamp duty value exceeds the cost of acquisition by an amount of Rs. 25,07,500/- it is liable to be taxed under the provisions of Section 56(2)(vii)(b), for which he proposed the addition. He also noted that assessee had received interest income of Rs. 14,586/- from his bank account with Punjab National Bank which was also proposed to be added under the provisions of Section 56. Thus, a draft order u/s.

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144C(1) was passed dated 13.03.2024, whereby the proposed total assessed income of the assessee was computed as under by including the three proposed addition discussed above:

Sr. Particulars of Income Amount in Rs. Amount in Rs. No. 1 Add: 7,47,318 1. Addition u/s. 69 of the Act (as discussed in para4) 2. Income from other sources 25,07,500 (as discussed in para 5) 3. Income from other sources (as discussed in para 6) 14,586 32,69,404 Gross Total Income 32,69,404 Rounded off to 32,69,400 4. Before the ld. Dispute Resolution Panel (DRP), assessee made extensive submissions including additional evidences which were considered. Ld. DRP gave its directions to delete the addition of Rs. 7,47,318/- as this was out of purview of proceedings for AY 2016-17 under consideration and rejected the objection raised by assessee for the proposed addition of Rs.25,07,500/- u/s. 56(2)(vii)(b). It did not give any direction in respect of proposed addition for the interest income from the bank account amounting to Rs. 14,586/-. Ld. AO passed final assessment order pursuant to the directions given by the ld. DRP u/s. 144C(13) r.w.s. 147, whereby the total income was assessed at Rs.25,22,090/- which comprised of the two additions i.e. of Rs. 25,07,500/- u/s. 56(2)(vii)(b) and of Rs. 14,586 towards interest income u/s. 56.

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from the end of the assessment year under consideration i.e. AY 2016- 17, since notice u/s. 148 can be issued beyond the periods of three years from the end of the relevant AY only if escapement of income from assessment is of Rs. 50 lacs or more. In this respect, reference was made to the provisions of Section 149 for which the relevant part is reproduced for ready reference: "149. Time limit for notice. "(1) No notice under section 148 shall be issued for the relevant assessment year, - (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (a) [(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:]"

5.1. From clause (b) of Section 149(1), it is noted that there is a bar on issuing notice u/s. 148 beyond the period of three years and not more than 10 years unless ld. AO has in his possession, books of accounts or other documents or evidence which reveal escapement of income chargeable to tax amounting to Rs. 50 lacs or more.

5.2. In the present case before us, notice u/s. 148 is dated 08.03.2023. The assessment year under consideration is AY 2016-17 for which the period of three years expires on 31.03.2020. Also, the quantum of addition made by the ld. AO in the final assessment order pursuant to the directions given by ld. DRP is of Rs.25,22,090/-, details of which

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are already noted above. This addition is certainly less than the threshold of Rs. 50 lacs prescribed under the aforesaid section.

5.3. Keeping the facts of the case as noted above and the provisions of Section 149 discussed above, the reopening proceedings initiated by ld. AO by issuing notice u/s. 148 and thereafter, making the reassessment is not in accordance with the provisions of the Act, liable to be quash. Accordingly, we quash the notice issued u/s. 148 as well as the reassessment order passed thereafter making an addition of Rs.25,22,090/-. For fortifying our finding, we refer to the decision of Hon’ble High Court of Delhi in the case of Ganesh Dass Khanna vs. ITO in writ petition (C.N. 11527/2022 and C.M. Application No. 34097/2022 dated 10.11.2023) which held in favor of the assessee after taking into consideration the decision of the Hon’ble Supreme Court in the case of Union of India and Others vs. Ashish Agarwal dated 04.05.2022. Relevant finding by the Hon’ble Court in this respect is extracted below for ready reference: “53.3. In sum, the sense that one gets upon a holistic reading of the backdrop in which the new regime for reopening assessments was enacted is that where escapement of income was below Rs.50 lakhs, the normal period of limitation. i.e., three (03) years was to apply. In comparison, the extended period of ten (10) years would apply in serious tax evasion cases where there was evidence of concealment of income of Rs.50 lakhs or more in the given period. 53.4. The State, perhaps, did not deem it worthwhile to chase assessees beyond three (03) years, where the alleged escaped income was less than Rs.50 lakhs. These aspects concerning legislative policy come through if one were to read the relevant provisions of the statute referred to above in the background of the speech of the Finance Minister and the Memorandum. Conclusion: 54. Therefore, having regard to the foregoing discussion, we are of the opinion that the impugned actions, which include orders passed under Section 1484(d) and the consequent notices issued under Section 148 of

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the amended 1961 Act, concerning AY 2016-17 and AY 2017-18 cannot be sustained. It is ordered accordingly. 55. Furthermore, the reference made in paragraphs 6.1 and 6.2(ii) of the Instruction dated 11.05.2022, to the extent it propounds the "travel back in time" theory, is declared bad in law. 56. The writ petitions are disposed of in the aforesaid terms."

Order pronounced in the open court on 16.12.2025.

Sd/- Sd/- [Suchitra Raghunath Kamble] [Girish Agrawal] Judicial Member Accountant Member Dated:16.12.2025. Divya Ramesh Nandgaonkar Stenographer Copy to: 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai