SANTOSH MOHAN PATOLE,MUMBAI vs. INCOME TAX OFFICER - 34(3)(2), MUMBAI, MUMBAI

On the facts and in the circumstances of the case, and in law, the order u/s. 144 r. w. s. 147 dated 09.12.2019 is bad in law in as much as no Document Identification No. (DIN) is mentioned in the said order as per mandate of CBDT's Circular No.19 of 2019. The appellant, therefore, prays that the impugned assessment order be quashed. 2. On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) erred in directing the Ld. AO to charge tax on long term capital gain of Rs.30,00,000/- allegedly earned by the appellant on surrender of Tenancy Right. The Ld. CIT(A) failed to appreciate and ought to have held that since the appellant had surrendered its tenancy rights vide agreement dated 20.09.2011, capital gains, if any, was chargeable to tax in AY 2012-13 and not AY 2013-14, ie. year under consideration. The appellant, therefore, prays that the aforesaid addition be deleted. Your appellant craves leave to alter, modify, amend or delete any of the above grounds of appeal, or to add one or more new ground(s), as may be necessary.” Brief facts of the case are as under: 2. The assessee is an individual. The assessee did not file Return of Income for A Y 2013-14. As per Information available on NMS Portal of ITD System, the assessee had purchased a property at Rs. 40.00 lacs. The Ld.AO thus had reason to believe that, income has escaped assessment. The assessee was thus issued notice u/s. 148 on 26/03/2019. 2.1 As the notices issued by the Ld.AO went unattended, addition of Rs. 40,00,000/- was made in the hands of the assessee being unexplained money which was not offered to tax. Aggrieved by the order of the Ld.AO assessee is in appeal before the Ld.CIT(A).

Before the Ld.CIT(A) the assessee submitted that, he was a tenant of residential property in a building at Vile Parle (East), which was inherited by him after death of his father. It was further submitted that, during F.Y. 2011-12, the building where assessee resided was selected for SRA Scheme. Thus the assessee received of Rs. 70.00 lacs as compensation from builder against surrender of his tenancy rights. 3.1 The assessee submitted that, he purchased a property for Rs. 40.00 lacs from the said compensation. He further submitted documentation to prove the source of income for property purchased at Rs. 40.00 lacs during the year under consideration 3.2 The Ld.CIT(A) on going through the submissions of the assessee observed and held as under : “4.2. Aggrieved with the order, the assessee instituted the present appeal, where the only Ground taken was against the treatment of Rs. 40,00,000/- as Unexplained Investment, as concluded by the AO in the assessment order. 4.3. During the appeal proceedings, the assessee submitted his explanation, along with the documentary evidences on 20/02/2023. In such reply, the assessee claimed that he was a tenant at the premises at Room No. 13A, Gora Kaka Kala Kaka Chawal (Subhash Nagar), Vileparle East. The said Tenancy Right was inherited by him since the death of assessee’s father in the year 1989. The said property was under the ownership of M/s. Mid City Housing Pvt. Ltd. During FY 2011-12, the said premises went for re-development. During the said period, the assessee requested the owner to provide him with a permanent alternate accommodation, in lieu of surrender of his Tenancy Rights. However, the owner was unable to provide proper permanent alternate accommodation to the appellant and thus, in lieu of surrender of the Tenancy Right, the owner agreed to pay the appellant a consideration of Rs. 70,00,000/-. Accordingly, the appellant entered into an agreement with Mid City Housing (P) Ltd. for surrender of the Tenancy Rights against the compensation of Rs. 70,00,000/- on 20/09/2011. The assessee also submitted the copy of bank statement, maintained by him jointly with Mrs. Neeta Santosh Patole (Wife of the assessee), wherefrom it is seen that on 09/02/2012, a cheque issued by Mid City Housing (P) Ltd. was deposited in his bank account and the assessee paid Rs. 20,00,000/- to Mrs. Fatemah Mukadam, who is the seller of the property purchased by the assessee, which 4 ITA 5810/Mum/2024 A.Y. 2013-14

On the contrary, the Ld.DR submitted that, the Ld.CIT(A) was well within the juri iction to bring to tax the balance consideration received by the assessee that was not invested under any of the applicable provisions under the Act. He submitted that assessee could not have left scot free and not pay tax at all on the balance consideration received by him upon He thus vehemently supported the orders passed by the Ld.CIT(A). I have perused the submissions advance by both sides in the light of the records placed before this Tribunal. 6. It is noted that, the assessment was reopened based on information to verify whether transaction value of Rs. 40lacs escaped assessment within the meaning of section 147 of the Act. No doubt the Ld. CIT(A) could have verified the remaining 30Lacs that was not part of the reasons to reopen. However, 30 lacs formed part of the same financial transaction from where Rs. 40 lacs was invested by the assessee u/s. 54F. Be that as it may, the Ld. CIT(A) should have issued notice u/s. 251(2) before making addition in the hands of the assessee. The Ld. CIT(A) did not follow the due process of law before enhancing the assessment in the hands of the assessee. I therefore do not find any merit in the addition made by the Ld. CIT(A). Accordingly grounds raised by the assessee stands allowed.