MOHAMMED ATHAR BADRUDDIN KHAN ,MUMBAI V. INCOME TAX OFFICER WARD 20(2)(1), MUMBAI

ITA 5083/MUM/2024

AI Insights

The case involves Mohammed Athar Badruddin Khan, who appealed against the order of the National Faceless Appeal Centre (NFAC), which upheld the addition of Rs.2,30,59,100 under section 69A of the Income Tax Act, 1961, for the assessment year 2013-14. The addition was based on the discrepancy between the declared sale consideration of a property and its stamp duty valuation, coupled with the assessee's failure to report the property purchase in his income tax return. The Tribunal found that both the Assessing Officer and the first appellate authority did not conduct a proper enquiry and failed to appreciate the evidence provided by the assessee, necessitating a de novo adjudication.

• Duration Of Justice: 1 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Mumbai
• Assessment Year: 2013-2014
• Appeal Filed On: 30-09-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANNAVARAMKOSURI
• Assessee Lawyers: TANZIL PADVEKAR
• Keywords: Opportunity of being heard; Corroborative evidences
• Section: 147; 148

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT AND SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITA No.5083/Mum/2024 (Assessment Year: 2013-14) Mohammed Athar Badruddin Khan 26, Zia Apartment, 264 Bellasis Road, Mumbai-400 008 Vs. ITO-Ward 20(2)(1) Room No.216, 2nd Floor, Piramal Chambers, Lal Baug, Parel, Mumbai-400 012 PAN/GIR No. AAMPK 9048 G (Appellant) : (Respondent) Appellant by : Shri Tanzil Padvekar Respondent by : Shri Annavaram Kosuri Date of Hearing : 19.02.2026 Date of Pronouncement : 25.03.2026 O R D E R Per Saktijit Dey, Vice President: Present appeal by the assessee, arises out of order dated 01.08.2024 passed by the National Faceless Appeal Centre (‘NFAC’ for short), Delhi for the assessment year (A.Y. for short) 2013-14. 2. Though, the assessee, in total, has raised 18 effective grounds, however, at the very outset, ld. Counsel appearing for the assessee, on instructions, did not press ground nos. 1 to 14. An endorsement to this effect was made in the grounds of appeal separately attached to Form No. 36. In view of the aforesaid, ground nos. 1 to 14 are dismissed as not pressed. 3. In ground nos. 15 to 18, the assessee has challenged the addition of an amount of Rs.2,30,59,100/- made u/s. 69A of the Income Tax Act, 1961 (‘the Act’ for short). Printed from counselvise.com 2 ITA No. 5083/Mum/2024 (A.Y.2013-14) Mohammed Athar Badruddin Khan vs. ITO 4. Briefly the facts are, the assessee is a resident individual. The Assessing Officer (A.O. for short) received information that in the financial year relevant to assessment year under dispute, the assessee had purchased an immovable property for a declared sale consideration of Rs.2,12,00,000/- with stamp duty of Rs.23,59,100/-, total aggregating to Rs.2,35,59,100/-. He further noted that for stamp duty purpose, the stamp valuation authority has determined the value of property at Rs.3,37,00,800/-. Whereas, in the assessment year under dispute, the assessee had filed his return of income declaring income of Rs.4,78,432/-. Further, the assessee had not reported the purchase of immovable property in the return of income. 5. Basis the aforesaid facts, the A.O. formed a belief that the investment made in the purchase of immovable property remains unexplained. Further, he observed, due to difference between the declared sale consideration and the stamp duty valuation, the applicability of provisions contained u/s.56(2)(viib) of the Act needs to be examined. Based on such reasoning, the A.O. reopened the assessment u/s. 147 of the Act by issuing a notice u/s. 148 of the Act. In course of assessment proceeding, the A.O. called upon the assessee to explain the source of investment in the immovable property. In response, the assessee submitted that an amount of Rs.1,65,70,600/- was paid in cash out of accumulated capital/saving. A further amount of Rs.64,88,500/- was paid out of advance received from candidates, as the assessee was involved in manpower supply business. It was further submitted, an amount of Rs.5 lacs was paid out of loan received from one Mr. Shahnawz Khan. To establish the source of investment, the assessee furnished Wealth Tax return copies to demonstrate availability of accumulated fund. The assessee also furnished a list of candidates with their passport number, address, profession, etc. from whom he had Printed from counselvise.com 3 ITA No. 5083/Mum/2024 (A.Y.2013-14) Mohammed Athar Badruddin Khan vs. ITO received advances. The A.O., however, did not find the submission of the assessee acceptable. He observed, assessee’s story of accumulated fund and advance received from candidates is a make-believe theory, hence, not reliable. Thus, ultimately, he concluded that the source of investment in immovable property remains unexplained. Having held so, he proceeded to add an amount of Rs.2,30,59,100/- u/s. 69A of the Act. 6. Though the assessee contested the aforesaid addition by filing an appeal before the first appellate authority, however, he was unsuccessful. 7. Before us, the limited submission made by the ld. Counsel for the assessee was to the effect that neither the A.O. nor the first appellate authority have made proper enquiry and failed to apply their mind and appreciate the evidences brought on record by the assessee. He submitted, though before the departmental authorities, the assessee appeared and made part compliance, the issue requires further enquiry. He submitted, the assessee should be given further opportunity to establish the source of investment through supporting evidence. Therefore, he made a submission for restoration of the issue to the A.O. for de novo adjudication. 8. Strongly opposing the contentions of the ld. Counsel, ld. Departmental Representative (ld. DR for short) submitted, since the assessee availed sufficient opportunity before the first appellate authority and the A.O., no further opportunity should be granted to the assessee to prove source of investment. 9. We have considered rival submissions and perused the materials on record. On perusal of the respective orders of the department authorities, it is evident that the assessee Printed from counselvise.com 4 ITA No. 5083/Mum/2024 (A.Y.2013-14) Mohammed Athar Badruddin Khan vs. ITO while explaining the source of investments in the house property had stated that he is in the business of manpower supply overseas. In this context, the assessee had explained that the investment in property was made out of accumulated funds of Rs.1,65,70,600/- and advance from candidates amounting to Rs.64,88,500/-. To prove the availability of accumulation of capital/fund, the assessee has furnished copy of wealth tax return for the A.Y. 2011-12. For establishing the advance received from candidates, the assessee had furnished list of candidates with their passport number, address, nature of profession, etc. The assessment order further reveals that it is not a case where the assessee did not comply with the queries raised in course of the assessment proceeding. It may be a case where the assessee failed to make full compliance to the satisfaction of the A.O. Even in course of proceedings before first appellate authority, the assessee did participate. It is a fact on record that the assessee did file wealth tax return to prove availability of accumulation of capital/fund. Whether such accumulated capital/fund was actually available with the assessee or nor, is a subject matter of enquiry. Appropriate enquiry not only with the assessee but with the seller of the property would have enabled the assessee to cross verify assessee’s claim. It is not forthcoming whether the A.O. has made any enquiry with the seller of the property regarding the mode and manner of payment. 10. Insofar as assessee’s claim that an amount of Rs.64,88,500/- came from advance received from candidates, it is noticed that the assessee had furnished a list of candidates, containing their names, passport number, address, profession, etc. It is the case of the department that the complete address of the candidates are missing. But it is a fact that the passport numbers of the candidates are available. Therefore, the A.O. cannot totally clueless on the whereabouts of the candidates. A proper enquiry with reference to the Printed from counselvise.com 5 ITA No. 5083/Mum/2024 (A.Y.2013-14) Mohammed Athar Badruddin Khan vs. ITO passport members would have led the A.O. to verify the authenticity of assessee’s claim. The A.O., apparently, has failed to do so. Further, the A.O. has raised a doubt regarding the availability of the advance received from the candidates, as according to him the assessee might have utilized such funds for arranging tickets, visas of the candidate. Such observation of the A.O. are merely based on suspicious and doubt, rather than, any cogent material. 11. Even ld. First appellate authority has not conducted any independent enquiry to examine the veracity of assessee’s claim. He has simply relied upon the observations of the A.O. Thus, keeping in perspective the overall facts and circumstances of the case, we are of view that not only the assessee deserves an opportunity to lead further evidence to establish the source of investments in immovable property, but the departmental authority, particularly the A.O. must make a thorough enquiry with reference to the evidences furnished by the assessee. Only after completing such exercise the A.O. can proceed to take a decision on the taxability of the amount invested in the immovable property. Needless to mention, the assessee must be provided reasonable opportunity of being heard before completing the assessment. Before parting, we must make it clear that we have not expressed any opinion on the merits of the addition made. 12. In the result, the appeal is partly allowed for statistical purpose. Order pronounced in the open court on 25.03.2026 Sd/- Sd/- (Makarand V. Mahadeokar) (Saktijit Dey) Accountant Member Vice President Mumbai; Dated : 25.03.2026 Roshani, Sr. PS Printed from counselvise.com 6 ITA No. 5083/Mum/2024 (A.Y.2013-14) Mohammed Athar Badruddin Khan vs. ITO Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai Printed from counselvise.com "