TEJESH NARAYAN PAWAR,MUMBAI vs. INCOME TAX OFFICER 41 (4) (4), KAUTILYA BHAVAN

During the reassessment proceedings, the assessee did not furnish a return of income in response to the notice under section 148 of the Act, despite a reminder issued by the Assessing Officer on 18.04.2023. A show-cause notice dated 21.04.2023 was thereafter issued proposing to complete the assessment on the basis of the material available on record. In response, the assessee submitted that the property had originally been purchased under an agreement dated 24.08.2005 for a consideration of ₹2,00,000/-, which had been paid to the seller at that time. It was explained that the property could not be registered in 2005 owing to restrictions imposed by the Nagari Niwara Federation and that registration was subsequently completed in 2016-17 after the restrictions were relaxed. The assessee contended that the transaction pertained to the financial year 2005-06 and that the difference between the original consideration and the stamp duty value prevailing at the time of registration arose merely on account of appreciation in property prices over the intervening period.

Aggrieved by the assessment order, the assessee preferred an appeal before the National Faceless Appeal Centre (NFAC), reiterating that the property had been purchased in 2005 and that the subsequent registration in 2016 was only a procedural formality. The appeal was taken up for fresh consideration pursuant to the order dated 08.10.2025 passed by the ITAT, Mumbai Bench, in ITA No. 5158/Mum/2025. During the appellate proceedings, the assessee furnished written submissions along with supporting documents, including the original agreement executed in 2005, evidence of payment of consideration, the registered agreement executed in 2016 recording the earlier payments and possession, and a 5

The assessee contended that the proviso to section 56(2)(vii)(b) of the Act permitted adoption of the stamp duty value prevailing on the date of the agreement fixing the consideration, rather than the date of registration, particularly where the consideration or part thereof had been paid through a mode other than cash on or before the date of the agreement. Reliance was also placed on certain judicial precedents concerning the date of accrual of rights under an agreement to sell and the applicability of the aforesaid provision. Without prejudice, the assessee submitted that, since the property had been jointly purchased with a co-purchaser, any addition, if warranted, should be restricted to his proportionate share.

The learned CIT(A), after considering the assessee’s submissions, the assessment order and the material available on record, observed that the assessee had not satisfactorily explained the circumstances resulting in the delay in registration and had failed to substantiate his claim to its satisfaction. The learned CIT(A) held that the Assessing Officer was justified in treating the difference between the stamp duty value and the stated purchase consideration as taxable under section 56(2)(vii)(b)(ii) of the Act. Accordingly, the addition of 6

Ld. CIT(A) while deciding the appeal of assessee had observed as under: “6.1.4 I have carefully considered the grounds of appeal, the submissions filed by the appellant, the assessment order passed under section u/s 147 r.w.s. 144 r.w.s. 144B of the Act, and the material available on record. The appellant assessee was accorded sufficient and ample opportunity to represent its case but the appellant assessee failed to explain the reasons/circumstances under which he was prohibited to register the property for 10 years from 01.09.2005 as per the agreement submitted by the appellant even after the payment was made to seller and the appellant was absolute owner of the property and also holding possession of the property from the date of registration of agreement. Since, the assessee did not provide any satisfactory explanation or documents in support of his claim at the assessment stage as well as appellate proceedings. Further, it was established that the assessee purchased immovable property for a consideration which was less than the stamp duty value. Therefore, the AO is fully justified by making addition of the difference between stamp duty value and purchase consideration i.e. Rs.28,18,000/- under the provisions of section 56(2)(vii)(b)(ii) of the Act, in the hands of the appellant assessee for the year under consideration. In this condition, the addition made by AO was factually and legally correct and the pleas of the appellant on this issue are dismissed being devoid of any merits. As per facts of the case, the addition made by the AO is upheld and the grounds of appellant are dismissed being devoid of any merits.”

Aggrieved by the impugned decision of Ld. CIT(A), the assessee is in appeal before us.

At the outset, counsel for the assessee, AR, submitted that the assessee had entered into an agreement dated 24 August 2025, a copy of which is placed on page 53 of the assessee’s paper book. The property came under the possession of the assessee. As per the said agreement, it is also amended that the assessee was

The Ld. Sr. DR, representing the revenue supported the orders of the revenue authorities and submitted that, although the assessee has not furnished any information before the lower authorities, those authorities are inclined to decide the issue based on the facts and material on record. Consequently, the impugned orders cannot be deemed erroneous. Further information and evidence submitted by the assessee to the Tribunal, consisting of agreements to justify allotment and its payment was completed in year 2005, requires examination and

We have considered the rival submissions and perused the material on record. Admittedly, in the present case, the assessee was non‑compliant both before the Ld. AO and before the Ld. CIT(A). Even after the Tribunal’s direction in first round of proceedings, the assessee remains oblivious and has not complied with the notices issued by Ld. CIT(A), accordingly the and the order was passed on an ex parte basis. Furthermore, evidently, the assessee submits certain evidence for the first time before the Tribunal to establish the assessee’s claim, such documents must be verified and examined by the lower authorities before a decision is made. From assessment we can find out that the assessee responded to the show-cause notice dated 21.04.2023, after many reminders wherein the assessee has submitted that the property was purchase during the year 2005-06 but not registered due to some rule of Nagari Niwara Federation and registered during the year 2016-17 when the rules were relaxed. However further information required by the AO was not furnished.

Be that as it may, since the order impugned before us has been passed on ex parte basis, in the interest of justice, since the assessee has not provided critical information and explanations to the lower authorities, we deem it appropriate to refer this matter back to the file of the Ld. CIT(A) for fresh

Our view is duly supported by judgement of the Hon’ble Bombay High Court’s decision in the case of Commissioner of Income Tax vs. Premkumar Arnjundas Luthra (Huf) [(2016) 69 taxmann.com 407 (Bombay)]. The relevant findings of the Hon’ble Bombay High Court are extracted as follows: "8. From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the AO to make further inquiry and report the result of the same to him as found in Sec. 250 of the Act. Further, Sec. 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Sec. 251(1)(a) and (h) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-s. (2) of s. 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal unders. 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact w.e.f. 1st June, 2001 the power of the CIT(A) to set aside the order of the AO and restore it to the AO for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) are co-terminus with that of the AO i.e. he can do all that A.O could do. Therefore, just as it is not open to the AO to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the s. 251(1)(a) and (b) and Explanation to Sec. 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act."

In the backdrop of the observations and deliberations, the appeal of the assessee is restored to the file of the learned CIT(A) for fresh adjudication, 10

Resultantly, the appeal of assessee stands allowed for statistical purposes, in view of our observations.