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

ITA 3351/MUM/2025

AI Insights

The case involves an appeal by Bushra Suhail Shaikh against the order of the CIT(A)/NFAC, which upheld the additions made by the assessing officer under sections 56(2)(x) and 68 of the Income Tax Act. The primary contention was regarding the addition of Rs. 4,44,390 as income, which was the difference between the declared sale consideration of a jointly purchased flat and its stamp duty valuation. The assessee argued that the difference was within the 10% safe harbor allowed under the Third Proviso to Section 50C(1) and sought a reference to the DVO for a fair market valuation. Additionally, an unexplained opening capital of Rs. 5,65,756 was also contested. The Tribunal found merit in the assessee's arguments and restored both issues to the assessing officer for a detailed examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717055 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Appeal Filed On: 13-05-2025
• Other Referred Cases: Ajay Dabra Vs Pyare Ram & Ors
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Condonation of delay; Corroborative evidences; Sale consideration of property below Jantri Value; Fair market value; Principle of natural justice; Valuation report

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI PAWAN SINGH, HON’BLE JUDICIAL MEMBER ITA No. 3351/MUM/2025 (AY: 2018-19) Bushra Suhail Shaikh Flat No. 301, Cadel Queen, A- Wing, S.V.S. Marg, Cadel Road, Mahim West, Mumbai-400016. [PAN: DSJPS1674C] Vs ITO, Ward-22(1)(6), Mumbai Piramal Chambers, Lalbaug, Mumbai – 400012. (Appellant) (Respondent ) Assessee Represented by : Shri Vimal Punmiya, CA Department Represented by : Shri Surendra Mohan, Sr. DR Date of Institution : 13.05.2025 Date of Conclusion of hearing : 21.07.2025 Date of Pronouncement of Order : 18.08.2025 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by the assessee is directed against order of Ld. CIT(A)/NFACdated 19.09.2024 for A.Y. 2018-19.The assessee has raised the following grounds of appeal: - “1. That on the facts and circumstances of the case and in law, the learned CIT(A) erred in upholding the addition of 24,44,390/- under section 56(2)(x), ignoring the exemption available for transactions under Third Proviso to Section 50C(1) inserted by Finance Act, 2018 allows a 10% safe harbor for variation between stamp duty value and actual consideration, and the transaction is specifically excluded under the proviso to section 56(2)(x). 2. That the learned CIT(A) erred in confirming the addition of ₹5,65,756/- under section 68, without properly appreciating the explanation, confirmations, and evidences submitted by the appellant regarding the source of the funds. 3. The notice of hearing was not served upon the appellant through postal mail. While it is possible that these communications may have been sent via email, they were not brought to the attention of the appellant, potentially having been directed to the spam folder, which is automatically deleted by default settings. Consequently, the appellant was unaware of the hearing, Printed from counselvise.com ITA No. 3351/MUM/2025 Bushra Suhail Shaikh 2 and was therefore unable to respond That the learned CIT(A) erred passed the order mechanically through the faceless process, resulting in denial of natural justice. 4. That the learned CIT(A) erred in confirming the action of the AO in initiating penalty proceedings under section 271AAC without proper satisfaction and application of mind. 5. That the entire assessment and appellate order suffer from legal infirmity, lack of reasoning, and violation of principles of natural justice, and hence deserve to be quashed. 6. The appellant craves leave to add, amend, alter, or withdraw any of the above grounds at the time of hearing.” 2. Brief facts of the case are that assessee is an individual, filed her return of income for A.Y. 2018-19 on 11.07.2018 declaring income of Rs. 3,44,650/-. The case was selected for scrutiny. During the assessment, the assessing officer noted that assessee has jointly purchased a residential flat bearing no. 301, A-wing, Cadel Queen “A” Co-operative Housing Society Ltd., Veer Savarkar Marg “Bala Miya Lane”, Mahim, West, Mumbai – 400016 (hereinafter referred as flat). The said flat was purchased on 08.11.2017 for a consideration of Rs. 65,00,000/-. The assessee was having 50% share in the said flat. The stamp valuation authority on the basis of ready reckoner rate, for the purpose of registration of transaction of sale of such flat determined the value of flat of Rs. 73,88,779/-. As there was difference between the value declared by the assessee and the value determined by Stamp valuation authority, the assessing officer issued show cause notice as to why difference vis-à-vis value declared by assessee and the value determined by stamp valuation authority be not added to the income of assessee. As the assessee was having 50% share, the assessing officer (AO) Printed from counselvise.com ITA No. 3351/MUM/2025 Bushra Suhail Shaikh 3 proposed to add Rs. 4,44,390/-. The assessee filed her reply and contended that the difference between the actual sale consideration and the valuation of stamp valuation authority is less than 10% and it should be ignored. The reply of assessee was not accepted by assessing officer. The assessing officer added 50% of difference vis-à-vis sale consideration shown by assessee and the value determined by stamp valuation authority, thereby assessing officer made addition of Rs. 4,44,390/-. 3. 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 Printed from counselvise.com ITA No. 3351/MUM/2025 Bushra Suhail Shaikh 4 bank account with Bank of Baroda, no amount during financial year 2016-17 was deposited. Even during demonetization period, no cash was deposited. The assessing officer treated the source of opening capital of Rs. 5,65,756/- as unexplained and charged under section 115BBE. On appeal before ld. CIT(A), the action of assessing officer was upheld. The ld. CIT(A) held that assessee failed to furnish explanation or submission of both the issues despite allowing opportunity. 4. 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. 5. I have heard the submission of ld. authorised representative (ld. AR) and the learned senior departmental representative (ld. Sr. DR) for the revenue. In support of condonation of delay, the ld. AR of the assessee submits that delay in filing appeal is neither intentional nor deliberate. The ld. CIT(A) passed the impugned order on 19.09.2024. The assessee was not aware about passing of the impugned order. Notice of hearing of appeal may have gone to spam folder which is sometime automatically deleted because of default setting. The assessee came to know about passing of impugned order only in the first week of May, 2025. The assessee on coming to know immediately took step for filing appeal before Tribunal. The ld. AR of the assessee submits that assessee is not going to be benefitted by filing appeal Printed from counselvise.com ITA No. 3351/MUM/2025 Bushra Suhail Shaikh 5 belatedly rather there is a chance to suffer adverse order. The assessee has good case on merit and is likely to succeed if delay is condoned and assessee is allowed opportunity to contest the case on merit. The ld. AR of the assessee submits that a lenient view may be taken in condoning delay. 6. 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. 7. 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 Printed from counselvise.com ITA No. 3351/MUM/2025 Bushra Suhail Shaikh 6 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. 8. 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. 9. 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 Printed from counselvise.com ITA No. 3351/MUM/2025 Bushra Suhail Shaikh 7 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. 10. 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 Printed from counselvise.com ITA No. 3351/MUM/2025 Bushra Suhail Shaikh 8 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. 11. 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. 12. In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open Court on 18.08.2025. Sd/- SH NT MEMBER PAWAN SINGH JUDICIAL MEMBER MUMBAI, DATED: 18.08.2025 Biswajit Printed from counselvise.com ITA No. 3351/MUM/2025 Bushra Suhail Shaikh 9 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order Assistant Registrar ITAT, Mumbai Printed from counselvise.com "