BHAVIN RAMESH CHANDRA PATEL ,MUMBAI V. ACIT, CENTRAL CIRCLE 2, THANE

ITA 8531/MUM/2025

AI Insights

The case involves Mr. Bhavin Rameshchandra Patel, who appealed against the orders of the Learned Commissioner of Income Tax (Appeals) and the Assessing Officer concerning the assessment years 2017-18 and 2018-19. The primary issues revolved around the addition made under section 56(2)(vii)(b) of the Income Tax Act, 1961, and disallowances under section 37(1). The assessee contested that the land purchased was agricultural and beyond the scope of the mentioned section, and also challenged the disallowance of certain expenses. The Tribunal noted the assessee's non-compliance in the first appellate proceedings and decided to remand the case for a de novo assessment, providing the assessee another opportunity to present his case.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 840194 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 11-12-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SWAPNIL CHOUDHARI
• Assessee Lawyers: AJAY R. SINGH
• Keywords: Business income; Opportunity of being heard; Principle of natural justice
• Section: 147; 56(2)(vii)(b); 133A; 37(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI OM PRAKASH KANT, AM AND MS. KAVITHA RAJAGOPAL, JM ITA Nos.8531 & 8532/Mum/2025 (Assessment Years: 2017-18 & 2018-19) Mr. Bhavin Rameshchandra Patel, 12-a Laxmisagar, Sai Section, Ambernath, Maharashtra- 421503 Vs. Assistant Commissioner, Central Circle 2, Qureshi Mansion, Gokhale Road, Thane, Maharashtra- 400602 PAN: AJPPP5121M (Appellant) : (Respondent) Assessee by : Shri Ajay R. Singh, AR Respondent by : Shri Swapnil Choudhari, Sr. AR Date of Hearing : 18.02.2026 Date of Pronouncement : 27.02.2026 O R D E R Per KavithaRajagopal, JM: The captioned appeals are filed by the assessee, challenging the order of the Learned Commissioner of Income Tax [‘Ld. CIT(A)’ for short] passed u/s. 250 of the Income Tax Act, 1961 (‘the Act') pertaining to the Assessment Year (‘A.Y.’ for short) 2017-18 & 2018- 19. As the facts are identical, we hereby pass a consolidated order by taking ITA No.8531/M/2025 pertaining to A.Y. 2017-18 as the lead case. 2. The assessee has raised the following grounds of appeal: “1. The learned CIT(A) erred in deciding the appeal ex-parte without providing effective opportunity of being heard. 2. The learned CIT(A) erred in claiming that various 250 notices are issued but has failed to consider whether such notices are received by the appellant. Printed from counselvise.com ITA Nos.8531 & 8532/Mum/2025 Mr. Bhavin Rameshchandra Patel 2 3. The learned CIT(A) erred in upholding the addition of Rs.1,35,94,200/-made under section 56(2)(vii)(b) without appreciating that the land purchased was agricultural land and therefore outside the scope of property covered by the said section. 4. The learned CIT(A) failed to appreciate that the land in question is agricultural land situated beyond 8 kms from municipal limits supported by purchase agreement and factual position and therefore section 56(2)(vii)(b) has no application. 5. The learned CIT(A) erred in confirming the disallowance of expenses amounting to Rs.4802939/- under section 37(1) despite the assesse maintaining books of account and having submitted ledger details before the AO 6. The learned CIT(A) erred in dismissing the ground relating to non-issue of mandatory notice u/s 143(2) despite the assesse having filed a return of income rendering the assessment void ab initio. 7. The learned CIT(A) erred in deciding the appeal ex-parte without providing effective opportunity of being heard. 8. The assesse craves leave to add, amend alter or withdraw any ground at the time of hearing.” 3. Brief facts of the case are that the assessee is an individual and had filed his return of income dated 29.03.2018 declaring total income at Rs.1,65,42,060/- after claiming deduction under chapter VIA of the Act and out of business income and income from other sources and the same was processed u/s 143(1) of the Act. Pursuant to a survey action u/s 133A of the Act carried out in assessee’s case in the month of February, 2018, it was observed that the assessee along with six other members had entered into a purchase agreement with M/s. Navjeevan Education Society with its trustee Mr. Ramchandra Shivaji Sawant on 10.01.2017 for a property situated at Mouje-Dahivali for a total sale consideration of Rs.5,20,00,000/- which according to the Learned Assessing Officer (‘AO’ for short) the market value of the said property was Rs.9,73,14,000/-. The Ld. AO sought for details pertaining to the said transaction as being an inadequate consideration paid by Printed from counselvise.com ITA Nos.8531 & 8532/Mum/2025 Mr. Bhavin Rameshchandra Patel 3 the assessee against the market value of the property. After duly considering the assessee’s submission the Ld. AO passed the assessment order dated 22.09.2021 u/s 147 of the Act determining the total income at Rs.3,49,39,199/- after making an addition of Rs.1,35,94,200/- u/s 56(2)(vii)(b) of the Act and disallowance of Rs.48,02,939/- u/s 37(1) of the Act towards the expenses claimed by the assessee against the sale of plot. 4. Aggrieved, the assessee was in appeal before the first appellate authority who vide an ex-parte order dated 28.11.2025 had upheld the addition made by the Ld. AO on the ground that the assessee has failed to substantiate his claim by sufficient documentary evidences inspite of several opportunities extended. 5. Aggrieved, the assessee is in appeal before us, challenging the order of the Ld. CIT(A) on the aforementioned grounds. 6. We have heard the rival submissions and perused the materials available on record. It is observed that the assessee has been non-compliant throughout the first appellate proceeding where the Ld. AO is said to have issued notice of hearing on various dates specified by the Ld. CIT(A) in his impugned order and hence dismissed the grounds raised by the assessee stating that the assessee has failed to substantiate his claim as to whether the land purchased was an agricultural land or not, for which section 56(2)(vii)(b) of the Act whether applicable for the said property along with various other issues, due to lack of any supporting documentary evidences filed by the assessee. Printed from counselvise.com ITA Nos.8531 & 8532/Mum/2025 Mr. Bhavin Rameshchandra Patel 4 7. Before us, the Learned Authorised Representative (‘Ld. AR’ for short) for the assessee prayed that one more opportunity be given to the assessee to substantiate his claim before the Ld. AO for the reason that the assessee has got a good case on the merits of the issue and further contended that there was no negligence on the part of the assessee in complying with the proceeding before the first appellate authority as the assessee had genuine reasons for his non-compliance. 8. The Learned Departmental Representative (‘Ld. DR’ for short) objected for remanding this issue to the Ld. AO for the reason that the assessee was given sufficient opportunity before the lower authorities and further relied on the order of the authorities below. 9. On the above facts of the case, we deem it fit to extend the assessee with one more opportunity to substantiate his claim before the Ld. AO with sufficient documentary evidences, by adhering to the principles of natural justice and in the interest of justice dispensation. Hence, we remand this issue to the file of the Ld. AO with a direction that the assessee also should co-operate with the assessment proceeding without any undue delay from his side and the Ld. AO shall in accordance with law pass a denovo assessment order after giving sufficient opportunity to the assessee. 10. In the result, the appeal filed by the assessee is hereby allowed for statistical purpose. Printed from counselvise.com ITA Nos.8531 & 8532/Mum/2025 Mr. Bhavin Rameshchandra Patel 5 11. The finding given in this appeal will apply mutatis mutandis to other appeal in ITA No.8532/M/2025 as well and hence the same is also hereby allowed for statistical purpose. 12. In the result, both the appeals filed by the assessee are allowed for statistical purpose. Order pronounced in the open court on 27.02.2026 Sd/- Sd/- (OM PRAKASH KANT) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated: 27.02.2026 * Kishore, Sr. P.S. Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai Printed from counselvise.com "