BUSHRA SUHAIL SHAIKH ,MUMBAI vs. INCOME TAX OFFICER WARD -22(1)(6), MUMBAI

The assessing officer (AO) further noted that in the balance sheet for the end of 31.03.2008, the assessee has shown opening capital of Rs. 5,65,756/- and claimed as source of investment in flat. However, in the return of income for earlier assessment year i.e. AY 2017-18, the assessee has shown income of Rs. 2,44,878/-. In the computation of income, the assessee has shown income from other sources. However, in the return for A.Y. 2018-19, the assessee has shown income from business and other sources. The assessee was asked to explain the credit bearing in her balance sheet with supporting evidence. In response to show cause notice, the assessee submitted that she is doing the business of perfume at a small level at her residence from last 10 years and earn certain profit in last 10 years. She saved certain funds from the profit and trading of perfume. The assessee furnished details of net profit for eight preceding assessment year. The explanation and submission of assessee was not accepted by AO. The AO held that submission of assessee is not supported by any documentary evidence. The opening capital as on 31.03.2018 is not supported by any books maintained by assessee. In the bank account with Bank of Baroda, no amount during financial year 2016-17 was deposited. Even during demonetization period, no cash was deposited.

Further aggrieved the assessee has filed present appeal before Tribunal. I find that impugned order was passed by ld. CIT(A) on 19.09.2024, however, the present appeal is filed before Tribunal only on 13.05.2025, thus, there is delay of 236 days in filing appeal before Tribunal. The assessee has filed application for condonation of delay along with her affidavit.

On merit, in support of ground no. 1 which relates to addition under section 56(2)(x) of Rs. 4,44,390/-, the ld. AR of the assessee submits that there is difference of Rs. 4,44,390/- on the 50% share, vis a vis the value declared by assessee and his co-owner and the value determined by stamp valuation authority. The assessing officer has not referred the matter to the District Valuation Officer (DVO) for determination of fair market value of flat on the date of registration of transaction. The stamp valuation authority assessed the value of assets merely on the basis of ready reckoner rate without ascertaining various factors like location or various amenities or adverse factors affecting the potential value asset. The assessing officer may be directed to refer the matter to DVO for obtaining valuation report and to pass order accordingly. In support of ground no. 2, the ld. AR of the assessee submits that the assessing officer has not appreciated the explanation furnished by assessee, therefore, ground no. 2 may also be restored to assessing officer for allowing one more opportunity to further explained the source of opening capital.

On the other hand, the ld. Sr. DR for the revenue, firstly opposed the plea of condonation of delay. The ld. Sr. DR for the revenue submits that assessee has not shown any reasonable and plausible explanation for condoning the delay. To support his contention the ld. Sr. DR for the revenue relied upon the decision of Hon’ble Supreme Court in Ajay Dabra Vs Pyare Ram & Ors in Civil Appeal in Special Leave Petition (C) No.15793 & 15848 of 2019 and submitted that when time period is prescribed under law, the period must act in accordance with this stipulated period. And when no sufficient reason is shown, the delay may not be condoned.

Against ground no. 1, the ld. Sr. DR for the revenue submits that assessee has not raised any plea for making reference to DVO, thus, such prayer of the assessee may not be accepted at this stage. So far as ground no. 2 is concerned, the ld. Sr. DR submits that assessee failed to explain the source of opening capital; therefore, appeal may be dismissed on all three issues.

I have considered the rival submissions of both the parties and perused the record carefully. Firstly, I shall decide the plea of condonation of delay raised by assessee. I find that impugned order was passed by ld. CIT(A) on 19.09.2024. However, the present appeal is filed on 13.05.2025, thus, there is delay of 236 days in filing appeal. Before me, the ld. AR of the assessee vehemently urged that assessee could not realised about issuance of various notices or passing of impugned order by ld. CIT(A) and that the assessee realised about dismissal of appeal in May, 2025 and that appeal was filed immediately. Such contention of assessee is supported by her affidavit. On considering the overall facts of the case and keeping in view the fact that assessee is really interested in pursuing her appeal on merit; the delay in filing appeal is condoned. Even otherwise, it is well settled principle of law, so far as law of limitation is concerned that when technical consideration and cause of substantial justice, are kept again each other, cause of justice may be preferred unless there is gross negligence in filing appeal.. So far as reliance in case law in Ajay Dabra vs Pyare Ram & Ors (supra) by ld. Sr. DR is concerned, I find that the ratio of said decision is not applicable on the facts of the present case. The Hon’ble Supreme Court in said case held that appellant in the said case was unable to give sufficient explanation and delay can only be condoned when sufficient reasons are shown. However, in the present appeal the assessee has explained the delay. Hence, with this additional observation, the delay in filing appeal is condoned. Now adverting the merits of the case.

Ground no. 1 relates to addition under section 56(2)(x)(b), I find that assessee purchased a residential flat and declared sale consideration of Rs. 65.00 lakh. The stamp valuation authority determined the value of flat at Rs. 73,88,775/-. The assessing officer made addition of Rs. 50% of difference vis-à-vis sale consideration declared by assessee and his co-owner and the value determined by stamp valuation authority. Admittedly, before making the addition under section 56(2)(x), the assessing officer has not obtained the report of DVO. Before me, the ld. AR of the assessee vehemently urged that matter may be referred to DVO for estimation of fair market value as the additions in his case was made on the basis of legal fixation on account of difference between the ready reckoner rate and actual sale consideration shown by assessee. It is also the plea of ld. AR of the assessee that Stamp Valuation Authority valued the assets simply on the basis of ready reckoner rate without considering various other factors which may affects the potential value of the assets. Therefore, considering the plea of ld AR of the assessee that the assessing officer has not obtained the report of DVO, the matter is restored back to the file of assessing officer with the direction to make reference to DVO for estimation of fair market value of flat on the date of purchase by assessee and his co-owner and to pass the order afresh in accordance with law. Needless to direct that before passing the order afresh, the assessing officer shall provide opportunity of hearing to the assessee. In the result, ground no. 1 is allowed for statistical purpose.

So far as the addition on account of opening capital is concerned, which is the subject matter of ground No.2, the ld. AR of the assessee also urged that explanation of assessee was not considered by lower authorities on the ground that such opening capital is not supported by evidence and he prayed for allowing one more opportunity. Considering the fact that lower authorities made addition for the want of proper explanation, therefore, this ground of appeal is also restored back to the file of assessing officer with the direction to allow one more opportunity to the assessee to explain the opening capital.

In the result, appeal of the assessee is allowed for statistical purpose.