BIHARI PARMANAND KANDHARI,MUMBAI V. ACI, CIRCLE -23(1), MUMBAI

ITA 7925/MUM/2025

AI Insights

The case involves an appeal by Bihari Parmanand Kandhari against the order of the Commissioner of Income-tax (Appeals) - National Faceless Appeal Centre, which pertained to the assessment year 2018-19. The primary contention was regarding an addition of INR 3,92,87,988 made under Section 56(2)(x) of the Income-tax Act, 1961, which was related to the undervaluation of properties. The Assessing Officer had treated the differential amount as 'Income from Other Sources' due to the significant difference between the purchase consideration and the stamp duty value. The Tribunal found that the assessee was prevented from producing necessary documents during the assessment due to non-receipt of notices, which justified the admission of additional evidence under Rule 46A.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 841868 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Appeal Filed On: 27-11-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SWAPNIL CHOUDHARI
• Assessee Lawyers: AKSHAY JAIN
• Keywords: Set aside; Additional evidence; Sale consideration of property below Jantri Value; Principle of natural justice
• Section: 56(2)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “B” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) ITA No. 7925/MUM/2025 Assessment Year: 2018-19 Bihari Parmanand Kandhari, 401, Blue Nile Chs Ltd. 24th Road, Near Tavaa Restaurant, Mumbai-400050. Vs. ACIT, Circle-23(1), R. No. 511, 5th floor, Piramal Chambers, Lalbaug, Parel, Mumbai-400012. PAN NO. AAEPK 2159 A Appellant Respondent Assessee by : Mr. Akshay Jain Revenue by : Mr. Swapnil Choudhari, Sr. DR Date of Hearing : 17/02/2026 Date of pronouncement : 23/02/2026 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 24.09.2025 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2018-19, raising following grounds: 1. That on the facts and circumstances of the case and law, the Ld. CIT (A) failed to appreciate that the Ld. AO has travelled beyond his Printed from counselvise.com jurisdiction and made an addition with respect to the issue which was not the part of limited scrutiny. 2. That on the facts and circumstances of the case and law, the Ld. CIT (A) failed to appreciate that the Ld. AO erred by making additi u/s 56(2) of the Act of Rs. 3,92,87,988/ properties. 3. That on the facts and circumstances of the case and law, the Ld. CIT (A) failed to appreciate that the Ld. AO erred by making addition u/s 56(2) of the Act without appreciating value of the aforesaid properties as on the date of allotment should be adopted instead of market value as on the date of registration. 4. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in rejecti Appellant, including the bank statement, ready reckoner rate extract on the date of allotment, and the allotment letter. 5. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in rejectin that it was unregistered. 6. That on the facts and circumstances of the case and in law, the Ld. CIT(A), based on remand report, erred in rejecting the admission of bank payment on the ground that only one entry bank statement, without Rs. 2.5 lakh each for both properties (totalling Rs. 2.5 lakh), and the single entry reflected a consolidated payment. 7. That on the facts and circumstances of the case and i Ld. CIT(A), based on the remand report, wrongly doubted the payment, without appreciating that Rs. 2.5 lakh was paid towards each of the two flats. 8. That on the facts and circumstances of the case and in law, the Ld. CIT(A), based on the reman on the mere ground that the same was nominal. 2. The central issue in this appeal pertains to an addition of ₹3,92,87,988/- made under Act, 1961 (\"the Act\"). During the assessment proceedings under Section 143(3), the Assessing Officer (AO) observed that the Bihari Parmanand Kandhari ITA No. 7925/MUM/2025 jurisdiction and made an addition with respect to the issue which was not the part of limited scrutiny. 2. That on the facts and circumstances of the case and law, the Ld. CIT (A) failed to appreciate that the Ld. AO erred by making additi u/s 56(2) of the Act of Rs. 3,92,87,988/- with respect to two 3. That on the facts and circumstances of the case and law, the Ld. CIT (A) failed to appreciate that the Ld. AO erred by making addition u/s 56(2) of the Act without appreciating the fact that the market value of the aforesaid properties as on the date of allotment should be adopted instead of market value as on the date of registration. 4. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in rejecting the additional evidence filed by the Appellant, including the bank statement, ready reckoner rate extract on the date of allotment, and the allotment letter. 5. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in rejecting the allotment letter solely on the ground that it was unregistered. 6. That on the facts and circumstances of the case and in law, the Ld. CIT(A), based on remand report, erred in rejecting the admission of bank payment on the ground that only one entry appeared in the bank statement, without appreciating that the Appellant had paid Rs. 2.5 lakh each for both properties (totalling Rs. 2.5 lakh), and the single entry reflected a consolidated payment. 7. That on the facts and circumstances of the case and i Ld. CIT(A), based on the remand report, wrongly doubted the payment, without appreciating that Rs. 2.5 lakh was paid towards each of the two flats. 8. That on the facts and circumstances of the case and in law, the Ld. CIT(A), based on the remand report, has doubted the payment on the mere ground that the same was nominal. The central issue in this appeal pertains to an addition of made under Section 56(2)(x) of the Income Act, 1961 (\"the Act\"). During the assessment proceedings under Section 143(3), the Assessing Officer (AO) observed that the Bihari Parmanand Kandhari 2 ITA No. 7925/MUM/2025 jurisdiction and made an addition with respect to the issue which 2. That on the facts and circumstances of the case and law, the Ld. CIT (A) failed to appreciate that the Ld. AO erred by making addition with respect to two 3. That on the facts and circumstances of the case and law, the Ld. CIT (A) failed to appreciate that the Ld. AO erred by making addition the fact that the market value of the aforesaid properties as on the date of allotment should be adopted instead of market value as on the date of registration. 4. That on the facts and circumstances of the case and in law, the ng the additional evidence filed by the Appellant, including the bank statement, ready reckoner rate extract 5. That on the facts and circumstances of the case and in law, the g the allotment letter solely on the ground 6. That on the facts and circumstances of the case and in law, the Ld. CIT(A), based on remand report, erred in rejecting the admission appeared in the appreciating that the Appellant had paid Rs. 2.5 lakh each for both properties (totalling Rs. 2.5 lakh), and the 7. That on the facts and circumstances of the case and in law, the Ld. CIT(A), based on the remand report, wrongly doubted the payment, without appreciating that Rs. 2.5 lakh was paid towards 8. That on the facts and circumstances of the case and in law, the d report, has doubted the payment The central issue in this appeal pertains to an addition of of the Income-tax Act, 1961 (\"the Act\"). During the assessment proceedings under Section 143(3), the Assessing Officer (AO) observed that the Printed from counselvise.com purchase consideration of the subject property was significantly lower than the value adopted by the Stamp Duty A accordingly called upon the assessee as why the addition should not be made u/s 56(2)(x) of the Income Act’). In the absence of an explanation or supporting documentation from the assessee at the assessment stage, differential amount of Sources.\" 2.1 On further appeal, the assessee filed a letter before the Ld. CIT(A) and contended that the property was booked via an agreement dated 18.10.2011 through banking channels at that time. Consequently, the assessee sought the benefit of the that where the date of agreement and the date of registration are not the same, the stamp duty value as on may be considered. 2.2 The Ld. CIT(A) though called for the remand report of the Assessing Officer, but that the assessee had failed to satisfy the \"sufficient cause\" threshold under Rule 46A. The Ld. CIT(A) reasoned that since the AO had issued specific show the agreement during the assessment was an inexcusable lapse. The relevant finding of the Ld. CIT(A) is reproduced as under: Bihari Parmanand Kandhari ITA No. 7925/MUM/2025 purchase consideration of the subject property was significantly lower than the value adopted by the Stamp Duty A accordingly called upon the assessee as why the addition should not be made u/s 56(2)(x) of the Income-tax Act, 1961 (in short ‘the In the absence of an explanation or supporting documentation from the assessee at the assessment stage, the AO treated the differential amount of Rs.3,92,87,988/- as \"Income from Other On further appeal, the assessee filed a letter before the Ld. and contended that the property was booked via an 18.10.2011, with substantial payments made through banking channels at that time. Consequently, the assessee sought the benefit of the proviso to Section 56(2), which mandates that where the date of agreement and the date of registration are not the same, the stamp duty value as on the date of the agreement The Ld. CIT(A) though called for the remand report of the , but he declined to admit this evidence, holding that the assessee had failed to satisfy the \"sufficient cause\" le 46A. The Ld. CIT(A) reasoned that since the AO had issued specific show-cause notices, the failure to produce the agreement during the assessment was an inexcusable lapse. The relevant finding of the Ld. CIT(A) is reproduced as under: Bihari Parmanand Kandhari 3 ITA No. 7925/MUM/2025 purchase consideration of the subject property was significantly lower than the value adopted by the Stamp Duty Authority. He accordingly called upon the assessee as why the addition should tax Act, 1961 (in short ‘the In the absence of an explanation or supporting documentation the AO treated the as \"Income from Other On further appeal, the assessee filed a letter before the Ld. and contended that the property was booked via an al payments made through banking channels at that time. Consequently, the assessee , which mandates that where the date of agreement and the date of registration are the date of the agreement The Ld. CIT(A) though called for the remand report of the he declined to admit this evidence, holding that the assessee had failed to satisfy the \"sufficient cause\" le 46A. The Ld. CIT(A) reasoned that since the cause notices, the failure to produce the agreement during the assessment was an inexcusable lapse. The relevant finding of the Ld. CIT(A) is reproduced as under: Printed from counselvise.com “5.3.2.1 It is fur The AO did not deny admission of this evidence. The assessee simply did not submit it during assessment. There is no persuasive sufficient cause for failure to produce this letter when the issue of undervaluation of flat was squarely under examination. Despite knowing the importance of establishing the agreement date, the assessee chose not to furnish this document earlier, nor did he indicate any inability or request more time. The proceedings provided adequ specifically invited all relevant evidence. Therefore, none of the Rule 46A conditions justify admission of this letter now. 3. We have heard the rival submissions and perused the record. The Ld. Counsel for the assessee has categorically stated before us that the notices issued during the assessment proceedings were not served upon the assessee, thereby precluding any meaningful representation before the AO and document in support of its contention that assessee had already entered into an agreement in the year 2011 for purchase of the property. 3.1 We find that the assessee was prevented by \"sufficient ca from producing the relevant documents before the Assessing Officer, accordingly the conditions of the Rule 46A are satisfied. The rigid interpretation adopted by the Ld. CIT(A) regarding Rule 46A stands in contrast to the spirit of equity and the man natural justice. 3.2 The proviso to Section 56(2)(x) is a beneficial provision intended to protect taxpayers from fluctuations in stamp duty rates between the date of agreement and final registration. To deny the Bihari Parmanand Kandhari ITA No. 7925/MUM/2025 5.3.2.1 It is further submitted that Rule 46A conditions not met. The AO did not deny admission of this evidence. The assessee simply did not submit it during assessment. There is no persuasive sufficient cause for failure to produce this letter when the issue of ation of flat was squarely under examination. Despite knowing the importance of establishing the agreement date, the assessee chose not to furnish this document earlier, nor did he indicate any inability or request more time. The proceedings provided adequate opportunity as the AOs notices and show cause specifically invited all relevant evidence. Therefore, none of the Rule 46A conditions justify admission of this letter now.” We have heard the rival submissions and perused the record. The Ld. Counsel for the assessee has categorically stated before us that the notices issued during the assessment proceedings were not served upon the assessee, thereby precluding any meaningful epresentation before the AO and producing the necessary document in support of its contention that assessee had already entered into an agreement in the year 2011 for purchase of the We find that the assessee was prevented by \"sufficient ca from producing the relevant documents before the Assessing accordingly the conditions of the Rule 46A are satisfied. The rigid interpretation adopted by the Ld. CIT(A) regarding Rule 46A stands in contrast to the spirit of equity and the man The proviso to Section 56(2)(x) is a beneficial provision intended to protect taxpayers from fluctuations in stamp duty rates between the date of agreement and final registration. To deny the Bihari Parmanand Kandhari 4 ITA No. 7925/MUM/2025 ther submitted that Rule 46A conditions not met. The AO did not deny admission of this evidence. The assessee simply did not submit it during assessment. There is no persuasive sufficient cause for failure to produce this letter when the issue of ation of flat was squarely under examination. Despite knowing the importance of establishing the agreement date, the assessee chose not to furnish this document earlier, nor did he indicate any inability or request more time. The proceedings ate opportunity as the AOs notices and show cause specifically invited all relevant evidence. Therefore, none of the Rule We have heard the rival submissions and perused the record. The Ld. Counsel for the assessee has categorically stated before us that the notices issued during the assessment proceedings were not served upon the assessee, thereby precluding any meaningful producing the necessary document in support of its contention that assessee had already entered into an agreement in the year 2011 for purchase of the We find that the assessee was prevented by \"sufficient cause\" from producing the relevant documents before the Assessing accordingly the conditions of the Rule 46A are satisfied. The rigid interpretation adopted by the Ld. CIT(A) regarding Rule 46A stands in contrast to the spirit of equity and the mandate of The proviso to Section 56(2)(x) is a beneficial provision intended to protect taxpayers from fluctuations in stamp duty rates between the date of agreement and final registration. To deny the Printed from counselvise.com assessee the opportunity to prove t agreement—especially when the non non-receipt of notices 3.3 Accordingly, we set aside the impugned order on this issue and direct the Ld. CIT(A) to: (i) Admit the additional evidence filed by the assessee under Rule 46A. (ii) Remand the matter to the Assessing Officer for a comprehensive report on the merits and veracity of the said evidence. (iii) Adjudicate granted a fair opportunit transaction is governed by the value prevalent on the date of the 2011 agreement. 3.4 While sending matter for direct the AO to verify the authenticity of the \"Agreement to Sell\" dated 18.10.2011, inter ensure it is not a backdated instrument paper's date of purchase and the vendor from whom it was sourced to ensure it aligns with the purported execution date in 2011.The core requirement of the proviso to Section 56(2)(x) is that the consideration, or a part thereof, must have been paid by way of a prescribed electronic mode on or before the date of the agreement. Bihari Parmanand Kandhari ITA No. 7925/MUM/2025 assessee the opportunity to prove the existence of such an especially when the non-production is attributed to the receipt of notices—would be to prioritize form over substance. Accordingly, we set aside the impugned order on this issue and direct the Ld. CIT(A) to: additional evidence filed by the assessee under Rule the matter to the Assessing Officer for a comprehensive report on the merits and veracity of the said Adjudicate the issue afresh, ensuring the assessee is granted a fair opportunity to substantiate the claim that the transaction is governed by the value prevalent on the date of the 2011 agreement. sending matter for remand process, the AO to verify the authenticity of the \"Agreement to Sell\" inter-alia, examining the original document to ensure it is not a backdated instrument and verifying the stamp paper's date of purchase and the vendor from whom it was sourced to ensure it aligns with the purported execution date in 2011.The ore requirement of the proviso to Section 56(2)(x) is that the consideration, or a part thereof, must have been paid by way of a prescribed electronic mode on or before the date of the agreement. Bihari Parmanand Kandhari 5 ITA No. 7925/MUM/2025 he existence of such an production is attributed to the would be to prioritize form over substance. Accordingly, we set aside the impugned order on this issue additional evidence filed by the assessee under Rule the matter to the Assessing Officer for a comprehensive report on the merits and veracity of the said the issue afresh, ensuring the assessee is y to substantiate the claim that the transaction is governed by the value prevalent on the date of he ld CIT(A) may AO to verify the authenticity of the \"Agreement to Sell\" xamining the original document to erifying the stamp paper's date of purchase and the vendor from whom it was sourced to ensure it aligns with the purported execution date in 2011.The ore requirement of the proviso to Section 56(2)(x) is that the consideration, or a part thereof, must have been paid by way of a prescribed electronic mode on or before the date of the agreement. Printed from counselvise.com The ld CIT(A) may further direct the mentioned in the 2011 agreement with the assessee's bank statements from that period directly to the seller of the property or their authorized agents as per the terms of the agreement instrument numbers (Cheque/NEFT/RTGS) match the entries in the bank’s ledger. Upon successful verification of the agreement and the advance payments, the AO shall Rate or Stamp Duty Value category and location as of valuation with the actual purchase consideration paid by the assessee. The ld CIT(A) may further direct the curative tolerance band consideration and the 2011 SDV falls within the prescribed 5% or 10% margin (as applicable retrospectively), no addition shall be warranted. 3.5 The ld CIT(A) may direct the reasonable opportunity to explain any discrepanc this verification process. The final Remand Report must be speaking, reasoned, and based on the documentary evidence provided, rather than mere conjectures. verification, the assessee is advised to produce the the AO (i) Certified Copy Bank Statements for the financial year 2011 Bihari Parmanand Kandhari ITA No. 7925/MUM/2025 ld CIT(A) may further direct the AO to cross-verify the mentioned in the 2011 agreement with the assessee's bank statements from that period; verify that the payments were made directly to the seller of the property or their authorized agents as per the terms of the agreement and ensure the amounts, da instrument numbers (Cheque/NEFT/RTGS) match the entries in Upon successful verification of the agreement and the advance payments, the AO shall ascertain the official Stamp Duty Value applicable to the specific pr category and location as of 18.10.2011 and compare this 2011 valuation with the actual purchase consideration paid by the The ld CIT(A) may further direct the AO to apply the curative tolerance band. If the difference between the purchase consideration and the 2011 SDV falls within the prescribed 5% or 10% margin (as applicable retrospectively), no addition shall be ld CIT(A) may direct the AO to provide the assessee with a reasonable opportunity to explain any discrepancies found during this verification process. The final Remand Report must be speaking, reasoned, and based on the documentary evidence provided, rather than mere conjectures. To facilitate this process , the assessee is advised to produce the Certified Copy of the 2011 Agreement to Sell for the financial year 2011-12 highlighting the Bihari Parmanand Kandhari 6 ITA No. 7925/MUM/2025 verify the payments mentioned in the 2011 agreement with the assessee's bank erify that the payments were made directly to the seller of the property or their authorized agents as nsure the amounts, dates, and instrument numbers (Cheque/NEFT/RTGS) match the entries in Upon successful verification of the agreement scertain the official Circle applicable to the specific property ompare this 2011 valuation with the actual purchase consideration paid by the AO to apply the If the difference between the purchase consideration and the 2011 SDV falls within the prescribed 5% or 10% margin (as applicable retrospectively), no addition shall be provide the assessee with a ies found during this verification process. The final Remand Report must be speaking, reasoned, and based on the documentary evidence To facilitate this process of following before of the 2011 Agreement to Sell (ii) Attested 12 highlighting the Printed from counselvise.com advance payments available) acknowledging the receipt of funds in 2011 Circle Rate Notification for October 2011. 4. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on Sd/- (KAVITHA RAJAGOPAL JUDICIAL MEMBER Mumbai; Dated: 23/02/2026 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Bihari Parmanand Kandhari ITA No. 7925/MUM/2025 (iii) Confirmation Letter from the seller (if available) acknowledging the receipt of funds in 2011 Circle Rate Notification from the relevant State Authority applicable In the result, the appeal of the assessee is allowed for ounced in the open Court on 23/02/2026. Sd/ (KAVITHA RAJAGOPAL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Bihari Parmanand Kandhari 7 ITA No. 7925/MUM/2025 from the seller (if available) acknowledging the receipt of funds in 2011 (iv) Official from the relevant State Authority applicable In the result, the appeal of the assessee is allowed for /02/2026. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "