INCOME TAX OFFICER-16(2)(1), MUMBAI, MUMBAI V. BHAVINI KARTIK MEHTA, MUMBAI

ITA 5266/MUM/2025

AI Insights

The case involves an appeal by the Revenue against the order of the Ld. Commissioner of Income-tax (Appeals) - National Faceless Appeal Centre, Delhi, which had deleted additions made by the Assessing Officer regarding unexplained investments and differential stamp duty value. The Assessing Officer had initially made these additions based on the difference between the stamp duty value and the consideration mentioned in the sale agreement of a property purchased by the assessee, Bhavini Kartik Mehta. The Tribunal noted that the CIT(A) had not adhered to the procedural requirements of Rule 46A while admitting additional evidence from the assessee, leading to the decision to remand the case for a fresh assessment.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 835651 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2026
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 25-08-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LEYAQAT ALI AAFAQUI
• Assessee Lawyers: VIPUL SHAH
• Keywords: Set aside; Opportunity of being heard; Additional evidence; Reassessment proceedings; Unexplained investment; Sale consideration of property below Jantri Value; Cost of acquisition; Principle of natural justice; Procedural lapse
• Section: 147; 148; 144; 56(2)(vii)(b); 69

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. 5266/MUM/2025 Assessment Year: 2017-18 Income-tax Officer-16(2)(1), Room No. 443, 4th floor, Aayakar Bhavan, M.K. Road, Churchgate, Mumbai-400020. Vs. Bhavini Kartik Mehta, 1/C-1404, Whispering Palms, Lokhandwala Township, Akurli Road, Kandivali (E), Mumbai-400101. PAN NO. AIXPM 9940 Q Appellant Respondent Assessee by : Mr. Vipul Shah Revenue by : Mr. Leyaqat Ali Aafaqui, Sr. DR Date of Hearing : 16/12/2025 Date of pronouncement : 09/02/2026 ORDER PER OM PRAKASH KANT, AM This appeal by the Revenue is directed against order dated 11.06.2025 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2017-18, raising following grounds: 1. Whether in the facts and circumstances of the case the learned CIT(A) was right in deleting the addition of Printed from counselvise.com Rs.36,32,297/ appreciating the fact that the required details were not filed before the AO in spite of numerous opportunities given during the assessment proceedings? 2. Whether in the facts and circ learned CIT(A) was right in deleting the addition of unexplained investment of Rs.88,20,000/ Act without appreciating the fact that the required details were not filed before the AO in spite of numerous opportu 3. Whether in the facts and circumstances of the case the learned CIT(A) was justified in admitting the additional evidence during the appellate proceedings without allowing a reasonable opportunity to the Rule 46A of the Income Tax Rules, 1962 OR remanding back the issue back to the file of the JAO? 2. Briefly stated, the facts of the case are that filed her return of income for the assessment year under consideration on 16.03.2018, declaring a total income of ₹3,45,910/- on a presumptive basis. Subsequently, based on information available with the Assessing Officer, it was noticed that the assessee had purchased an immovable property for a consideration of ₹88,20,000/ had adopted a value of duty. 2.1 On the basis of the aforesaid information, the Assessing Officer formed a belief that (i) income of difference between the stamp duty value and the consideration mentioned in the sale agreement, and (ii) income of representing the cost of acquisition of the flat, had escaped assessment within the meaning of section 14 Rs.36,32,297/-u/s.56(2)(vii)(b) of the I.T. Act without appreciating the fact that the required details were not filed before the AO in spite of numerous opportunities given during the assessment proceedings? Whether in the facts and circumstances of the case the learned CIT(A) was right in deleting the addition of unexplained investment of Rs.88,20,000/- u/s.69 of the I.T. Act without appreciating the fact that the required details were not filed before the AO in spite of numerous opportunities given during the assessment proceedings? Whether in the facts and circumstances of the case the learned CIT(A) was justified in admitting the additional evidence during the appellate proceedings without allowing a reasonable opportunity to the Assessing Officer in violation of Rule 46A of the Income Tax Rules, 1962 OR remanding back the issue back to the file of the JAO? Briefly stated, the facts of the case are that filed her return of income for the assessment year under ideration on 16.03.2018, declaring a total income of on a presumptive basis. Subsequently, based on information available with the Assessing Officer, it was noticed that the assessee had purchased an immovable property for a 8,20,000/-, whereas the stamp duty authority had adopted a value of ₹1,24,52,297/- for the purpose of stamp On the basis of the aforesaid information, the Assessing Officer formed a belief that (i) income of ₹36,32,997/ difference between the stamp duty value and the consideration mentioned in the sale agreement, and (ii) income of representing the cost of acquisition of the flat, had escaped assessment within the meaning of section 147 of the Income Bhavini Kartik Mehta 2 ITA No. 5266/MUM/2025 u/s.56(2)(vii)(b) of the I.T. Act without appreciating the fact that the required details were not filed before the AO in spite of numerous opportunities given during umstances of the case the learned CIT(A) was right in deleting the addition of u/s.69 of the I.T. Act without appreciating the fact that the required details were not filed before the AO in spite of numerous nities given during the assessment proceedings? Whether in the facts and circumstances of the case the learned CIT(A) was justified in admitting the additional evidence during the appellate proceedings without allowing a Assessing Officer in violation of Rule 46A of the Income Tax Rules, 1962 OR remanding back Briefly stated, the facts of the case are that the assessee e- filed her return of income for the assessment year under ideration on 16.03.2018, declaring a total income of on a presumptive basis. Subsequently, based on information available with the Assessing Officer, it was noticed that the assessee had purchased an immovable property for a , whereas the stamp duty authority for the purpose of stamp On the basis of the aforesaid information, the Assessing 36,32,997/-, being the difference between the stamp duty value and the consideration mentioned in the sale agreement, and (ii) income of ₹88,20,000/-, representing the cost of acquisition of the flat, had escaped 7 of the Income-tax Printed from counselvise.com Act, 1961 (“the Act”). Accordingly, after following the procedure prescribed under the amended provisions of section 148 of the Act and after considering the material available on record, the Assessing Officer issued a notice under sect 2.2 As the assessee failed to respond to the said notice, the Assessing Officer passed an order under section 148A(d) of the Act dated 27.07.2022 and thereafter issued notice under section 148 of the Act. 2.3 The assessee again did proceedings initiated under section 147 of the Act. Consequently, the Assessing Officer framed an ex 147 read with section 144 of the Act on 16.05.2023, making the following additions: (a) 56(2)(vii)(b) of the Act, being the differential stamp duty value; and (b) ₹88,20,000/- as unexplained investment under section 69 of the Act, being the cost of acquisition of the flat. 3. Aggrieved, the assessee carried t Ld. Commissioner of Income authority, the assessee explained the circumstances under which she could not comply with the notices issued by the Assessing Officer. It was submitted that were being managed by her husband, late Shri Kartik Nagendra Mehta, who unfortunately passed away at a young age on Act, 1961 (“the Act”). Accordingly, after following the procedure prescribed under the amended provisions of section 148 of the Act and after considering the material available on record, the Assessing Officer issued a notice under section 148A(b) of the Act. As the assessee failed to respond to the said notice, the Assessing Officer passed an order under section 148A(d) of the Act dated 27.07.2022 and thereafter issued notice under section 148 of The assessee again did not comply with the reassessment proceedings initiated under section 147 of the Act. Consequently, the Assessing Officer framed an ex-parte assessment under section 147 read with section 144 of the Act on 16.05.2023, making the following additions: (a) ₹36,32,297/- as income under section 56(2)(vii)(b) of the Act, being the differential stamp duty value; and as unexplained investment under section 69 of the Act, being the cost of acquisition of the flat. Aggrieved, the assessee carried the matter in appeal before the Ld. Commissioner of Income-tax (Appeals). Before the first appellate authority, the assessee explained the circumstances under which she could not comply with the notices issued by the Assessing Officer. It was submitted that all financial affairs of the assessee were being managed by her husband, late Shri Kartik Nagendra Mehta, who unfortunately passed away at a young age on Bhavini Kartik Mehta 3 ITA No. 5266/MUM/2025 Act, 1961 (“the Act”). Accordingly, after following the procedure prescribed under the amended provisions of section 148 of the Act and after considering the material available on record, the ion 148A(b) of the Act. As the assessee failed to respond to the said notice, the Assessing Officer passed an order under section 148A(d) of the Act dated 27.07.2022 and thereafter issued notice under section 148 of not comply with the reassessment proceedings initiated under section 147 of the Act. Consequently, parte assessment under section 147 read with section 144 of the Act on 16.05.2023, making the as income under section 56(2)(vii)(b) of the Act, being the differential stamp duty value; and as unexplained investment under section 69 of the he matter in appeal before the Before the first appellate authority, the assessee explained the circumstances under which she could not comply with the notices issued by the Assessing all financial affairs of the assessee were being managed by her husband, late Shri Kartik Nagendra Mehta, who unfortunately passed away at a young age on Printed from counselvise.com 14.08.2018. It was contended that upon receipt of notices, the assessee had sought time to furnish th before such details could be filed, the Assessing Officer proceeded to pass the assessment order. 3.1 It is an admitted position that before the Ld. CIT(A), the assessee filed additional evidence. This is evident from Form No. wherein column No. 12 specifically records that documentary evidence, other than what was produced before the Assessing Officer, was filed in terms of Rule 46A of the Income 1962. The relevant column No. 12 of said form No. 35 is reproduced as under: 12 Whether any documentary evidence other than the evidence produced during the course of proceedings before the Income tax Authority has been filed in terms of Rule 46A 12.1 If reply to 12 is Yes, furnish the list of such documentary evidence 3.2 However, the Ld. CIT(A), while granting relief on merits, did not follow the procedure prescribed under Rule 46A, namely, forwarding the additional evidence to the Assessing Officer for examination, objections, and comments. 3.3 On merits, the Ld. CIT(A) deleted both the additions by holding that: (i) the provisions of the proviso to section 56(2)(vii)(b) were applicable, since the agreement for purchase of the flat preceded the date of registration and substantial consideration h through banking channels well before the year of registration; 14.08.2018. It was contended that upon receipt of notices, the assessee had sought time to furnish the requisite details; however, before such details could be filed, the Assessing Officer proceeded to pass the assessment order. It is an admitted position that before the Ld. CIT(A), the assessee filed additional evidence. This is evident from Form No. wherein column No. 12 specifically records that documentary evidence, other than what was produced before the Assessing Officer, was filed in terms of Rule 46A of the Income The relevant column No. 12 of said form No. 35 is reproduced Whether any documentary evidence other than the evidence produced during the course of proceedings before the Income tax Authority has been filed in terms of Rule 46A If reply to 12 is Yes, furnish the list of such documentary However, the Ld. CIT(A), while granting relief on merits, did not follow the procedure prescribed under Rule 46A, namely, forwarding the additional evidence to the Assessing Officer for examination, objections, and comments. On merits, the Ld. CIT(A) deleted both the additions by holding that: (i) the provisions of the proviso to section 56(2)(vii)(b) were applicable, since the agreement for purchase of the flat preceded the date of registration and substantial consideration h through banking channels well before the year of registration; Bhavini Kartik Mehta 4 ITA No. 5266/MUM/2025 14.08.2018. It was contended that upon receipt of notices, the e requisite details; however, before such details could be filed, the Assessing Officer proceeded to It is an admitted position that before the Ld. CIT(A), the assessee filed additional evidence. This is evident from Form No. 35, wherein column No. 12 specifically records that documentary evidence, other than what was produced before the Assessing Officer, was filed in terms of Rule 46A of the Income-tax Rules, The relevant column No. 12 of said form No. 35 is reproduced Whether any documentary evidence other than the evidence produced during the course of proceedings before the Income- Yes If reply to 12 is Yes, furnish the list of such documentary However, the Ld. CIT(A), while granting relief on merits, did not follow the procedure prescribed under Rule 46A, namely, forwarding the additional evidence to the Assessing Officer for On merits, the Ld. CIT(A) deleted both the additions by holding that: (i) the provisions of the proviso to section 56(2)(vii)(b) were applicable, since the agreement for purchase of the flat preceded the date of registration and substantial consideration had been paid through banking channels well before the year of registration; Printed from counselvise.com hence, the stamp duty value as on the date of agreement was required to be adopted; and (ii) the entire purchase consideration of ₹88,20,000/- could not be treated as unexplained section 69 of the Act in the assessment year under consideration, as the payments were made over several earlier financial years and were duly supported by documentary evidence and bank statements. 4. We have carefully considered the rival perused the material available on record. regard to the fact that the assessee had filed additional evidence before the Ld. CIT(A). It is equally undisputed that the said additional evidence was admitted and relied while granting relief to the assessee. 4.1 However, Rule 46A mandates that where additional evidence is admitted, the Assessing Officer must be afforded a reasonable opportunity to examine such evidence and to rebut the same. The procedure prescribed under Rule 46A is mandatory in nature and is rooted in the principles of natural justice. Any order passed in violation thereof cannot be sustained. 4.2 In the present case, the Ld. CIT(A) has admittedly not followed the procedure laid d merits. This procedural lapse vitiates the appellate order, notwithstanding the merits of the case. hence, the stamp duty value as on the date of agreement was required to be adopted; and (ii) the entire purchase consideration of could not be treated as unexplained investment under section 69 of the Act in the assessment year under consideration, as the payments were made over several earlier financial years and were duly supported by documentary evidence and bank We have carefully considered the rival submissions and perused the material available on record. There is no dispute with regard to the fact that the assessee had filed additional evidence before the Ld. CIT(A). It is equally undisputed that the said additional evidence was admitted and relied upon by the Ld. CIT(A) while granting relief to the assessee. However, Rule 46A mandates that where additional evidence is admitted, the Assessing Officer must be afforded a reasonable opportunity to examine such evidence and to rebut the same. The ocedure prescribed under Rule 46A is mandatory in nature and is rooted in the principles of natural justice. Any order passed in violation thereof cannot be sustained. In the present case, the Ld. CIT(A) has admittedly not followed the procedure laid down under Rule 46A before granting relief on merits. This procedural lapse vitiates the appellate order, notwithstanding the merits of the case. Bhavini Kartik Mehta 5 ITA No. 5266/MUM/2025 hence, the stamp duty value as on the date of agreement was required to be adopted; and (ii) the entire purchase consideration of investment under section 69 of the Act in the assessment year under consideration, as the payments were made over several earlier financial years and were duly supported by documentary evidence and bank submissions and There is no dispute with regard to the fact that the assessee had filed additional evidence before the Ld. CIT(A). It is equally undisputed that the said upon by the Ld. CIT(A) However, Rule 46A mandates that where additional evidence is admitted, the Assessing Officer must be afforded a reasonable opportunity to examine such evidence and to rebut the same. The ocedure prescribed under Rule 46A is mandatory in nature and is rooted in the principles of natural justice. Any order passed in In the present case, the Ld. CIT(A) has admittedly not followed own under Rule 46A before granting relief on merits. This procedural lapse vitiates the appellate order, Printed from counselvise.com 4.3 In view of the above facts and circumstances appropriate to set aside the impugned order of the restore the matter to his file with a direction to adjudicate the issues afresh, strictly in accordance with law, after complying with the provisions of Rule 46A and after affording due opportunity of being heard to the Assessing Officer as 4.4 The grounds of appeal of the Revenue are accordingly allowed for statistical purposes. 5. In the result, the appeal of the Revenue is allowed for statistical purposes. Order pronounced in the open Court on Sd/- (KAVITHA RAJAGOPAL JUDICIAL MEMBER Mumbai; Dated: 09/02/2026 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// 4.3 In view of the above facts and circumstances appropriate to set aside the impugned order of the restore the matter to his file with a direction to adjudicate the issues afresh, strictly in accordance with law, after complying with the provisions of Rule 46A and after affording due opportunity of being heard to the Assessing Officer as well as to the assessee. The grounds of appeal of the Revenue are accordingly allowed for statistical purposes. In the result, the appeal of the Revenue is allowed for ounced in the open Court on 09/02/2026. Sd/ (KAVITHA RAJAGOPAL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Bhavini Kartik Mehta 6 ITA No. 5266/MUM/2025 4.3 In view of the above facts and circumstances, we deem it appropriate to set aside the impugned order of the Ld. CIT(A) and restore the matter to his file with a direction to adjudicate the issues afresh, strictly in accordance with law, after complying with the provisions of Rule 46A and after affording due opportunity of well as to the assessee. The grounds of appeal of the Revenue are accordingly allowed In the result, the appeal of the Revenue is allowed for /02/2026. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "