DARAIUS HOMI BILIMORIA ,MUMBAI V. COMMISSIONER OF INCOME TAX (APPEAL)-55, MUMBAI

ITA 2593/MUM/2025

AI Insights

The case involves Daraius Homi Bilimoria, a non-resident Indian, who appealed against the order of the National Faceless Appeal Centre (NFAC) / CIT(A), Mumbai, which was dated 25.10.2023 for the assessment year 2019-20. The primary contention was regarding the incorrect assessment of capital gains on the sale of a residential property, where the entire sale consideration was treated as short-term capital gain without proper consideration of the purchase cost and other allowable deductions. The assessee argued that the CIT(A) failed to address several procedural and substantive issues, including the non-receipt of notices and the inability to respond due to technical issues with the new income tax portal. The ITAT found merit in the assessee's arguments and admitted additional evidence that was not considered by the lower authorities, leading to the decision to remand the case back to the assessing officer.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 652654 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2019-2020
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANNAVARAMKOSURI
• Assessee Lawyers: NITESH JOSHI
• Keywords: Condonation of delay; Additional evidence; Fair market value; Cost of acquisition; Capital Gains; TDS; Valuation report
• Section: 144

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER & SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No. 2593/MUM/2025 (AY : 2019-20) (Physical hearing) Daraius Homi Bilimoria C/o HFK Madan, 308, Apeejay House, 130, Shahid Bhagatsingh Marg, Mumbai – 400001. [PAN No. AACPB4087E] Vs Commissioner of Income Tax (Appeals) -55, Mumbai. Appellant / Assessee Respondent / Revenue Assessee by Shri Nitesh Joshi, Advocate Revenue by Shri Annavaram Kosuri, Sr. DR Date of hearing 16.06.2025 Date of pronouncement 17.06.2025 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by assessee is directed against the order of National Faceless Appeal Centre (NFAC) / Ld. CIT(A), Mumbai dated 25.10.2023 for assessment year (AY) 2019-20. The assessee has raised following grounds of appeal: “1. The learned CIT(A) on a general basis stated that grounds 1 to 5 of the appeal are partly allowed. At no stage did he point out which grounds of appeal were allowed and which ones failed. The CIT(A) failed to appreciate that the notices were sent to an email address of an accountant who had closed down business and hence the emails were not forwarded to the assessee so that the notices issued by the AO could be responded to. The CIT(A) failed to appreciate that the new email address was informed by way of change on portal, in all communications by AR, in Form 35 and continued to address all notices and orders to an outdated email which was not accessible. The new income tax portal introduced in June 2021 did not function and when it was started it was with limited functionality and did not allow assesses to logon to the portal, file returns, respond to notices, file applications, etc and a similar situation albeit at the reduced scale continues today. The CIT(A) failed ITA No. 2593/Mum/2025 Daraius Homi Bilimoria 2 to appreciate that it was not possible to take screenshots of each time the portal created difficulties. 2. The learned CIT(A) called for a remand report, for which report the AO called for details from the AR but the CIT(A) failed to share the remand report with the assessee or his AR to enable them to rebut the contentions of the AO and furnish further documentation to satisfy the tax authorities. 3. The learned CIT(A) failed to appreciate that if the AO issuing the remand report was not satisfied with the documents submitted by the appellant he should have asked for clarifications, explanations or additional documents. 4. The learned CIT(A) failed to appreciate that there were factual inaccuracies in the remand report, which report was based on the same set of documents available with the CIT(A) and could have been verified. To illustrate, the entire chain of how the appellant came into possession of the property was enumerated in the document, the complete bank statement of HDFC bank for the entire financial year was available, the valuation report was rejected without any substantial basis, and so on. 5. The learned CIT(A) failed to appreciate that if the sale value was not acceptable and as Index II was missing reference could have been made to the valuation officer under section 55A. 6. The learned CIT(A) failed to appreciate that even a short term capital gain would have a purchase cost and to take the entire sale value as capital gain was incorrect and inappropriate. 7. The learned CIT(A) failed to appreciate and upheld the erroneous assumptions made by the AO in treating the entire sale consideration as a short term capital gain. Even a short term gain will have a purchase cost and to treat the entire sales consideration as a gain is a fallacious assumption. 8. The ld. CIT(A) failed to ask the assessee or the AR to produce documents to evidence the inaccuracies in the remand report.” 2. The assessee vide application dated 10.06.2025 raised following additional grounds of appeal: “9. That the Appellant ought to have been assessed on a total income of Rs. 2,06,56,250 as offered in the return of income as against the amount of Rs. 7,10,89,270 as assessed by the AO. ITA No. 2593/Mum/2025 Daraius Homi Bilimoria 3 10. That the capital gains arising on transfer of residential flat ought to be treated as giving rise to long term capital gains. 11. That the Appellant ought to have been allowed to substitute the cost of acquisition of the said property by the fair market value as on 01.04.2001 in accordance with section 55(2)(b) of the Income-tax Act (the Act). 12. That the Appellant ought to have been allowed to index the cost of acquisition as determined hereinabove in accordance with the second proviso below section 48 of the Act. 13. That, for the purposes of computing the said capital gains, deduction ought to have been allowed of Rs. 14,09,020 as expenditure incurred wholly and exclusively in connection with such transfer in accordance with section 48(i) of the Act. 14. That the capital gains so determined ought to have been charged to tax at the rate of 20% in accordance with section 112 of the Act.” 3. Brief facts of the case are that assessee is non-resident Indian, filed his return of income for A.Y. 2019-20 on 07.08.2019 declaring income of Rs. 2.06 crore. The case of assessee was selected for scrutiny. One of the reason for scrutiny was verified the claim of refund. During the assessment, the assessing officer noted that in Schedule CG of Part B of Income Tax Return (ITR), the assessee has shown Long Term Capital Gain (LTCG) of Rs. 2.04 crore. Long Term Capital Gain is shown on sale of immovable property and sale consideration of such asset/ property is shown at Rs. 7.90 crore. The assessee has claimed cost of acquisition at Rs. 4.90 crore and expenses wholly and exclusively with connection of transfer of Rs. 14.09 lacs. Total TDS was shown at Rs. 1.70 Crore. Out of total TDS of Rs. 1.70 crore the assessee has claimed refund of Rs. 1.21 crore. To verify such fact, the assessing officer issued notice to the assessee with regard to the claim of long term capital gain, details of property, working of capital gain with copies ITA No. 2593/Mum/2025 Daraius Homi Bilimoria 4 of documents of purchase and sale and the details of income from other sources. The assessing officer recorded that despite service of notices dated 29.05.2021, 02.07.2021 and 15.07.2021, the assessee made no compliance. The assessing officer passed draft assessment order under section 144C(2) on 28.09.2021 and asked the assessee either to make acceptance of the draft assessment within 30 days or to file any objection. The assessing officer recorded that no such objection was filed by assessee. The assessing officer thereby disallowed Rs. 5.04 crore and added back to the total income. The assessing officer treated the entire sale consideration as Short Term Capital Gain (STCG). 4. Aggrieved by the additions in the assessment order, the assessee filed appeal before ld. CIT(A). Before ld. CIT(A), the assessee filed details written submission vide submission dated 18.07.2022. In the submission, the assessee stated that assessee is resident of Australia, thus, for the purpose of income tax, the assessee is non-resident Indian. During FY 2018-19, he sold residential property being ancestral home i.e. Flat no. 19 at Aryan Mahal, Churchgate, Mumbai and executed transfer deed on 18.06.2018. The flat was sold at a total consideration of Rs. 7.09 crore. The property was purchased by his father in 1953. As the property was acquired prior to 01.04.2001, the assessee appointed valuer to determine value of property as on 01.04.2001. The valuer estimated the value of property at Rs. 1.75 crore as on 01.04.2001 and indexation cost of the property was worked out at Rs. 4.90 crore. Being a non-resident Indian, the assessee appointed various persons to assist him for sale of property and he incurred expenses of Rs. 14,09,020/- ITA No. 2593/Mum/2025 Daraius Homi Bilimoria 5 , which consists of legal fees of Rs. 3,54,723/-, brokerage of Rs. 8,36,620/-, valuation fees of Rs. 53,454/- and professional fees of Rs. 1,64,223/- after taking indexation cost of expenditure, the assessee has shown long term capital gain of Rs. 2.04 crore which was offered to tax. During the assessment, the assessing officer issued various notices, such notices was not received by the assessee. The notices were issued to the e-mail id [e-mail] which was created by his accountant who was filed return for AY 2019-20. The assessee was not having any knowledge about such e-mail id and the said accountant has not informed. Such notices were come to the notice of assessee when new accountant was engaged for AY 2021-22 and on ITBA portal, such notices were found. The assessee before ld. CIT(A) filed copy of transfer deed, valuation report, details of expenditure incurred with connection of sale, bank statement and computation of income. The assessee stated that there was no melafide or deliberate intention to avoid the notice of assessing officer. The assessee prayed for restoring the matter back to the assessing officer for re-examination of his case. 5. The submission and various evidences furnished by assessee was treated as additional evidence by ld CIT(A) and were admitted for his consideration. The submissions of assessee were forwarded to the assessing officer for his remand report. The assessing officer furnished his remand report dated 18.11.2022. In the remand report, the assessing officer objected for admission of additional evidence by raising objection that assessee was given sufficient opportunity during assessment but assessee could not produce any documentary evidence. On merit of various evidences, the assessing officer ITA No. 2593/Mum/2025 Daraius Homi Bilimoria 6 objected that transfer deed furnished by assessee is un-registered document. No stamp duty is paid on registered agreement. On genuineness of valuation, the assessing officer submitted that valuation report does not contend specific CTS number and reference of ready reckoner was not referred. The assessee asked to furnish such reference but assessee failed to submit. In absence of such details correct cost of acquisition may not be determined. For the claim of inheritance of asset, the assessing officer stated that assessee has not produced any evidence. For amount of consideration, the assessing officer (AO) stated that bank account is not provided to prove the genuineness of receipt of sale consideration. Copy of remand report was provided to the assessee for his comment. The ld. CIT(A) recorded that assessee did not furnish any comment or rejoinder against the remand report. 6. The ld. CIT(A) on the basis of adverse remark in the remand report held that assessee has not controverterted the finding of assessing officer in the remand report. The additional evidence of assessee was admitted but the assessee could not establish the veracity of additional evidence during the appellate proceedings. Thus, the assessee has not established ownership of the immovable property, cost of acquisition, year of acquisition and expenses incurred wholly and exclusively with connection of transfer of property. On the basis of aforesaid observation, the ld. CIT(A) upheld the addition made in the assessment order. Further, aggrieved the assessee has filed present appeal before Tribunal. ITA No. 2593/Mum/2025 Daraius Homi Bilimoria 7 7. We have heard the submissions of learned Authorised Representative (ld. AR) of the assessee and the ld. Senior Departmental Representative (ld. Sr. DR) for the Revenue and have gone through the orders of lower authorities carefully. At the outset of hearing, the ld. AR of the assessee fairly submits that impugned order was passed by ld. CIT(A) on 25.10.2023, however, the present appeal is filed only on 15.04.2025, thus, there is delay of 471 days in filing appeal before Tribunal. The assessee has filed application for condonation of delay. The delay in filing appeal is neither intentional nor deliberate but for the reasons beyond the control of assessee. The assessee is residing in Australia and for the purpose of taxation, the assessee is non- resident Indian. The ld. AR of the assessee submits that assessment was completed under section 144 on 02.11.2021. No physical notice was served upon the assessee nor was copy of assessment served upon the assessee. The assessee came to know about passing of the assessment order when a penalty proceeding under section 270A was commenced and his new accountant has learnt such orders on ITBA (Income Tax Business Application) Portal. Notice during assessment was allegedly sent on [e-mail] which were of his earlier accountant. The impugned order passed by ld. CIT(A) was also sent on the same e-mail id though at the time of filing appeal before ld. CIT(A), the assessee provided e-mail id “[e-mail]” however, no such was order was received by assessee. When his new accountant find the order of ld. CIT(A) on ITBA portal on 11.04.2025, the present appeal was filed immediately. In fact, from the date of knowledge the appeal is filed in time. The ld. AR submits that ITA No. 2593/Mum/2025 Daraius Homi Bilimoria 8 assessee has good case on merit and would suffer prejudice if delay in filing appeal is not condoned. The ld. AR of the assessee prayed for condoning the delay and to consider the appeal of assessee on merit. 8. On merit, the ld. AR of the assessee submits that he has already explained the reason for non-compliance of assessing officer. However, before ld. CIT(A), the assessee filed detailed written submission as well as all evidence to substantiate the facts about inheritance of asset (flat), cost of acquisition of property, value of asset as on 01.04.2001 and the cost of expenses and improvement. The additional evidence was admitted by ld. CIT(A). Additional evidence was forwarded to the assessing officer. Once the additional evidence was admitted, the assessing officer has no jurisdiction to object such admission of additional evidence. On additional evidence, the assessing officer made certain adverse remark that transfer document is not registered document and that assessee has not furnished CTS no. And that no CTS no is mentioned in valuation report. The ld. AR submits that assessee could not make comment in response to remand report as new Chartered Accountant was appointed by assessee. The assessee being a non-resident was dependent on professional who was appointed by him to take care of his case. However, facts remain the same that property was transfer through registered document. The assessee has now filed application for additional evidence vide application dated 10.06.2025. In the application for additional evidence, the assessee specifically stated that after filing present appeal, the assessee made thorough search and find copy of registered sale deed/transfer deed along with copy of Index-II (working of stamp valuation ITA No. 2593/Mum/2025 Daraius Homi Bilimoria 9 made by Stamp Valuation Authority). The assessee is also filing clarification from registered valuer about CTS no. that stamp duty ready reckoner in 2001 does not shows CTS no however, the boundaries of the land of the area where the asset is located, are mentioned. The assessee is also filed document of ownership issued by Aryan Mahal Co-operative Society wherein the name of assessee was mutated in place of his Father. Mother of assessee has also died and his Sister has signed registered sale deed of transfer of asset as confirming party. So far as details of bank statement is concerned, the assessee is furnishing the relevant bank statement of HDFC Bank from 01.04.2017 to 31.03.2018 showing the receipt of consideration and the expenses incurred by assessee. The ld. AR submits that assessee is residing in Australia from last 30 years and facing certain challenges in representing before assessing as well as before appellate authorities. Now all such documents are gathered and are filed before Tribunal in the form of additional evidences. The ld. AR of the assessee submits that all aforesaid documents are vital and have direct relevance to fact in issue. All aforesaid documents may be admitted as additional evidence. 9. On additional ground of appeal, the ld. AR of the assessee submits that additional grounds of appeal are raised to point out real controversy raised in the present appeal. No new facts are required to be brought on record for adjudicating additional ground of appeal. All facts and necessary for adjudicating additional ground of appeal are emanating from the orders of lower authorities. Such additional grounds of appeal may be admitted for adjudication. ITA No. 2593/Mum/2025 Daraius Homi Bilimoria 10 10. On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) for the Revenue, on the plea of condonation of delay submits that he left the issue on the discretion of the bench. On merit of the case, the ld. Sr. DR for the revenue submits that despite admitting additional evidences by ld CUIT(A), the assessee was allowed ample opportunity by assessing officer to prove the veracity of the evidences but the assessee failed to substantiate veracity of such additional evidence. The assessing officer during the remand proceedings asked the assessee to produce bank statement, ownership document and registered document about transfer of asset but the assessee failed to provide such evidences. On additional ground of appeal, the ld. Sr. DR for revenue submits that bench may take decision as per discretion. However, on admission of additional evidence, the ld. Sr. DR submits that assessee was given ample opportunity by lower authorities but assessee failed to produce such evidence. The assessee has not fulfilled the condition of Rule 27 of Income Tax (Appellate Tribunal) Rules 1963. 11. In the rejoinder submission, the ld. AR of the assessee submits that assessee has filed copy of registered sale deed / transfer deed, copy of bank statement evidencing receipt of sale consideration and the expenses incurred by assessee as well as the clarification by registered valuer about not mentioning CTS no in his report. The ld. AR fairly submits that all such documents were not verified by lower authorities; therefore, matter may be restored back to the file of assessing officer for verification of fact and passing the order afresh. ITA No. 2593/Mum/2025 Daraius Homi Bilimoria 11 12. We have considered the rival submissions of both the parties. Firstly, we are considering the plea of assessee for condonation of delay in filing appeal. Before us, the ld. AR of the assessee vehemently argued that assessee is a non-resident Indian and residing in Australia from last 30 years. The assessment was completed under section 144. The assessee on coming to know about the addition in the assessment order filed appeal before ld. CITI(A). At the time of filing appeal, the assessee provided e-mail address [e-mail] and the impugned order was not served through such e-mail. Such fact is not specifically controverted by Sr. DR for the Revenue. Rather, the ld. Sr. DR fairly submits that on the plea of condonation of delay, the bench may take decision as per its discretion. Considering the fact that impugned order was not served through e-mail prescribed on Form – 35 and the fact that assessee is a non-resident and was dependent upon his consultant taking care of his tax litigation. Further, keeping in view that when technical consideration and cause of substantial justice is kept against each other, cause of substantial justice may be preferred. Thus, keeping in view the aforesaid facts of the present case, the delay in filing appeal is condoned. Now, adverting to other aspect of the case. 13. Now, we are considering the admissions of additional grounds of appeal. On perusal of additional ground of appeal, we find that no new relief either on facts or law is raised in the additional ground of appeal. Facts relating to additional ground of appeal are emanating from the order of lower authorities. Therefore, considering the fact that no new facts are to be brought on record for adjudicating the additional ground of appeal, therefore, ITA No. 2593/Mum/2025 Daraius Homi Bilimoria 12 additional ground of appeal are also admitted for adjudication. Now, adverting to merits of the case. 14. We find that assessment was completed under section 144 on 02.11.2021. The assessing officer while passing the assessment order held that assessee failed to provide details of long term capital gain with copies of sale and purchase of asset. Before ld. CIT(A), the assessee filed detailed written submission with various evidences to substantiate the long term capital gain and the expenses incurred wholly and exclusively related with the sale of property. The additional evidences were admitted by ld. CIT(A). On admitting the additional evidence, the assessing officer was directed to furnish his remand report. The assessing officer furnished his remand report vide letter dated 18.11.2022. In the remand report, the assessing officer not only objected to the admission of additional evidences but also objected to the veracity of evidences. On transfer deed, the AO objected that same is not a registered document. Against valuation report of asset as on 01.04.2021, the AO objected that it does not contend CTS no. On ownership, the AO officer objected that assessee has not furnished cogent documentary evidence. And about payment of sale consideration, the AO objected that bank statement is not furnished. 15. Now before us, the ld. AR of the assessee has filed all such evidences along with copy of application for admission of evidence. We find that additional evidence consists of copy of registered sale deed 18.06.2018 along with working of payment of stamp duty as per ready reckoner (Index II), clarification regarding CTS number in valuation report, certificate/allotment ITA No. 2593/Mum/2025 Daraius Homi Bilimoria 13 letter from Aryan Mahal Co-operative Housing Society to substantiate ownership and copy of bank statement from 01.04.2017 to 31.03.2018 anf01.04.2018 to 31.03.2019 to substantiate the receipt of sale consideration in his bank and details of various expenses incurred by assessee. In our view, all such evidences are vital and have direct relevance for determination of real controversy involved in the present appeal; therefore, all such evidences are admitted. Considering the fact that such aforesaid evidences were not examined and verified by assessing officer, therefore, the matter is restored back to the file of jurisdictional assessing officer to carry out verification of all such aforesaid document and passed the order afresh in accordance with law. Needless to direct that before passing the assessment order afresh, the assessing officer shall allow reasonable and fair opportunity to the assessee. The assessee is also directed to be more vigilant in future in making timely compliance and providing necessary information and evidence to the assessing officer. In the result, the various grounds of appeal raised by the assessee are allowed for statistical purpose. 16. In the result, the appeal of assessee is allowed for statistical purpose. Order pronounced in the open Court on 17/06/2025. Sd/- PRABHASH SHANKAR ACCOUNTANT MEMBER Sd/- PAWAN SINGH JUDICIAL MEMBER MUMBAI, Dated: 17/06/2025 Biswajit ITA No. 2593/Mum/2025 Daraius Homi Bilimoria 14 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 "