MADHU LAKHIRAM SHARMA ,MUMBAI V. ITO WARD 16(3), MUMBAI

ITA 2506/MUM/2025

AI Insights

The case involves an appeal by Madhu Lakhiram Sharma against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, which upheld the addition of Rs. 28,63,000 to the assessee's income for the Assessment Year 2017-18. This addition was initially made by the Income Tax Officer under section 56(2)(vii)(b) of the Income-tax Act, 1961, due to a discrepancy between the transaction value and the stamp duty valuation of a property. The assessee contested the addition on both factual and legal grounds, including the improper issuance of a notice under section 148 of the Act, which was deemed to have been issued without jurisdiction as it did not meet the statutory requirements for reopening the assessment after three years.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708690 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAGIRATH RAMAWAT
• Assessee Lawyers: ANIL THAKRAR
• Keywords: Sale consideration of property below Jantri Value; Reopening of assessment
• Section: 147; 148; 56(2)(vii)(b); 50C

Judgement Text

"|आयकर अपीलीय न्यायाधिकरण न्यायपीठ, म ुंबई| IN THE INCOME-TAX APPELLATE TRIBUNAL “K (SMC)” BENCH, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER & SMT. RENU JAUHRI, ACCOUNTANT MEMBER आयकर अपील सुं./ITA No. 2506/MUM/2025 (नििाारण वर्ा / Assessment Year :2017-18) Madhu Lakhiram Sharma 502, Juhu Sea Spray, Janki Kutir, Off Juhu Tara Road, Juhu, Mumbai 400049 v/s. बिाम Income Tax Officer Ward -16(1)(3, Mumbai. Aayakar Bhawan, Mumbai- 400012 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AQNPS7808M Appellant/अपीलार्थी .. Respondent/प्रनिवादी निर्ााररती की ओर से /Assessee by: Shri Anil Thakrar राजस्व की ओर से /Revenue by: Shri Bhagirath Ramawat, Sr. DR. स िवाई की िारीख / Date of Hearing 10.07.2025 घोर्णा की िारीख/Date of Pronouncement 16.07.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)/ National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as CIT(A)] dated 27.02.2025 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2017-18. 2. The assessee has raised the following grounds of appeal: “1. The Ld. AO is erred in adding a sum of Rs. 28,63,000/- U/s. 56(2)(vii)(b) of the Act. As well as the Ld. CIT(A) is also erred in upholding the aforesaid addition without appreciating the fact that the valuer’s report was provided before the Ld. AO at the P a g e | 2 ITA No. 2506/mum/2025 Madhu Lakhiram Sharma AY: 2017-18 time of assessment proceedings and also before the Ld. CIT(A), who in turn, dismissed the appeal without referring the same to the Government approved valuer. 2. The Ld. CIT(A) is erred in upholding the addition without appreciating the legal stand that, the notice under section 147 cannot be issued beyond 3 (Three) years, if escapement is below Rs. 50 lakhs. 3. The Ld. AO/Ld. CIT(A) is also erred is upholding the addition without giving opportunity to the assessee to respond to notice under section 148A of the Act. 4. The appellant request to delete the addition confirmed by the CIT(A).” 5. The appellant craves to add, alter or omit any or all of the above grounds of appeal before or at the time of hearing of the appeal.” 3. The assessee has subsequently taken the following additional ground: “6. The proceeding of re-assessment, completed u/s. 147 vide order dated 26.04.2023, is being void ab initio for the want of the jurisdiction in view of gross violation of Section 147, 148 and 151 of the Act, to be precise; (a) as reopening notice issued, in the 4th year from the end of relevant assessment year u/s. 148 respectively vide dated 08.04.2021 and 28.07.2022 being approved by the Range 8(1), Mumbai and PCIT-8, Mumbai which are not the specified authority u/s. 151 (ii) to give approval to invoke Section 148 of the Act.” 4. Brief facts are that the assessee filed return declaring total loss of Rs. 3,08,468/- for AY 2017-18 on 23.03.2018. As per the information received by the Ld. AO, the assessee had entered into an immovable property transaction for a total value of Rs. 60 lacs whereas the stamp duty valuation of the property was Rs. 88,63,000/-. Observing that the provisions of Section 50C are applicable with regard to difference of Rs. 28,63,000/-, Ld. AO held that income chargeable to tax u/s. 56(2)(vii) of the Act had escaped assessment and accordingly a notice u/s. 148 of the Act was issued. Assessment was completed after adding Rs. 28,63,000/- to the assessee’s income u/s. 56(2)(vii)(b) of the Act. Aggrieved with the order of Ld. AO the assessee preferred an appeal before Ld. CIT(A). Vide order dated 27.02.2025, Ld. CIT(A) dismissed the assessee’s appeal after holding that the addition has been rightly made in line with the P a g e | 3 ITA No. 2506/mum/2025 Madhu Lakhiram Sharma AY: 2017-18 statutory provisions. Aggrieved with order of Ld. CIT(A), the assessee has filed an appeal before the Tribunal. Besides challenging the addition on merits, the assessee has raised legal grounds regarding reopening of the assessment. 5. At the outset, Ld. AR submitted that the proceedings u/s. 148 of the Act were void ab-initio for want of jurisdiction. It has been pointed out that notice u/s. 148 of the Act, was issued on 08.04.2021 i.e. after the expiry of three years from the end of relevant assessment year i.e. AY 2017-18. As per applicable provisions, no notice can be issued after three years unless the income chargeable to tax which has escaped assessment amounts to Rs. 50 lacs or more. In this case, the amount involved is only Rs. 28,63,000/- and therefore the assessment could not have been reopened after the expiry of three years from the end of the assessment year. 6. We have heard the rival submissions and carefully considered the applicable provisions for reopening of assessment. Admittedly, the income escaping assessment is below Rs. 50 lacs and therefore in view of the amended provisions applicable with effect from 01.04.2021, the assessment could not be reopened as three years had elapsed from the end of the relevant assessment year. In view of clear legal position, we hold that the reopening was bad in law and therefore proceedings initiated vide notice u/s. 148 of the Act are hereby quashed. P a g e | 4 ITA No. 2506/mum/2025 Madhu Lakhiram Sharma AY: 2017-18 7. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 16.07.2025. Sd/- Sd/- ANIKESH BANERJEE RENU JAUHRI (न्यानयक सदस्य/JUDICIAL MEMBER) (लेखाकार सदस्य/ACCOUNTANT MEMBER) Place: म ुंबई/Mumbai दिन ुंक /Date 16.07.2025 दिव्य रमेश न ुंिग वकर/ स्टेनो आदेश की प्रनतनलनि अग्रेनित/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यानित प्रनत //True Copy// आदेशािुसार/ BY ORDER, सहायक िंजीकार (Asstt. Registrar) आयकर अिीलीय अनर्करण/ ITAT, Bench, Mumbai. "