VIPENDRA RAVINDRA MANDAL,THANE V. INCOME TAX OFFICER- WARD 22(3)(6), MUMBAI

ITA 1819/MUM/2025

AI Insights

The case involves an appeal by Vipendra Ravindra Mandal against the order of the Commissioner of Income-tax (Appeals) - National Faceless Appeal Centre, which upheld the reassessment order passed by the Assessing Officer. The reassessment was based on the sale of an immovable property by the assessee, which was not reported in the income tax return. The Assessing Officer issued a notice under Section 148A(b) of the Income Tax Act, 1961, following which a reassessment order was passed. The primary contention in the appeal was the validity of the notice under Section 148, which the assessee argued was issued beyond the statutory time limit. The Tribunal, referencing the judgment of the Madhya Pradesh High Court in Nema v. PCIT, held that the income chargeable to tax does not include the gross sale consideration and found the reassessment proceedings to be unsustainable in law.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 773394 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Assessment Year: 2016-2017
• Appeal Filed On: 18-03-2025
• Other Referred Cases: Nema v. PCIT (2023) 458 ITR 690 (MP), Rohit Kumar v. ITO (W.P.(C) No. 2830/2022)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAGIRATH RAMAWAT
• Assessee Lawyers: V.P.KOTHARI
• Keywords: Opportunity of being heard; Reassessment proceedings; Cost of acquisition; Reopening of assessment; Capital Gains; TDS
• Section: 148; 54

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “K (SMC)” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAJ KUMAR CHAUHAN (JUDICIAL MEMBER) ITA No. 1819/MUM/2025 Assessment Year: 2016-17 Vipendra Ravindra Mandal, 405, Orchid Wing-F Lodha Crown, Taloja Bypass Road, Kohni B.O. Khoni, Thane-421204. Vs. ITO Ward 22(3)(6), Piramal Chamber, Mumbai-400012. PAN NO. ALEPM 8472 H Appellant Respondent Assessee by : Mr. V.P. Kothari Revenue by : Mr. Bhagirath Ramawat, Sr. DR Date of Hearing : 13/08/2025 Date of pronouncement : 22/09/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 28.01.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2016-17, raising following grounds: 1. The learned CIT(A) NFAC has erred in law and on facts in dismissing the Ground No.1 in respect of the limitation for issue of Notice u/s 148 as provided u/s 149(1)(A) of Income Tax Act, 1961 without properly considering the interpretation of the law and judicial decisions relied by the appellant. Printed from counselvise.com 2. The learned CIT(A) NFAC has erred in law and on facts in dismissing the Ground No.3 in respect of allow of Indexed improvement cost / expenses as claimed by the appellant without properly considering the facts and evidence submitted. 2. Briefly stated, the facts of the case are that the assessee did not file any regular return of income for the assessment year under consideration. Based on information received through the Insight Portal maintained by the Income “Risk Management Strategy Central Board of Direct Taxes (CBDT), the Assessing Officer (hereinafter “AO”) noted that the assessee had sold an immovable property for a consideration of return of income. Consequently, a notice under Section 148A(b) of the Income-tax Act, 1961 (hereinafter “the Act”) was issued, calling upon the assessee to explain the income arising from the sale of the said property. As there was no compliance on t assessee, the AO, after obtaining due approval from the prescribed authority, passed an order under Section 148A(d) of the Act and thereafter issued a notice under Section 148 of the Act requiring the assessee to file a return of income. return declaring long property and claimed deduction under Section 54 of the Act. In computing the said gains, the assessee reduced the indexed cost of acquisition as well as the ind consideration. Vipendra Ravindra Mandal ITA No. 1819/MUM/2025 2. The learned CIT(A) NFAC has erred in law and on facts in dismissing the Ground No.3 in respect of allowing the deduction of Indexed improvement cost / expenses as claimed by the appellant without properly considering the facts and submitted. Briefly stated, the facts of the case are that the assessee did not file any regular return of income for the assessment year under consideration. Based on information received through the Insight Portal maintained by the Income-tax Department under the he “Risk Management Strategy – Non-filing of Return” formulated by the Central Board of Direct Taxes (CBDT), the Assessing Officer (hereinafter “AO”) noted that the assessee had sold an immovable property for a consideration of ₹71,00,000/-, yet had not fi Consequently, a notice under Section 148A(b) of tax Act, 1961 (hereinafter “the Act”) was issued, calling upon the assessee to explain the income arising from the sale of the said property. As there was no compliance on t assessee, the AO, after obtaining due approval from the prescribed authority, passed an order under Section 148A(d) of the Act and thereafter issued a notice under Section 148 of the Act requiring the assessee to file a return of income. In response, the assessee filed a return declaring long-term capital gains on the sale of the said property and claimed deduction under Section 54 of the Act. In computing the said gains, the assessee reduced the indexed cost of acquisition as well as the indexed cost of improvement from the sale Vipendra Ravindra Mandal 2 ITA No. 1819/MUM/2025 2. The learned CIT(A) NFAC has erred in law and on facts in ing the deduction of Indexed improvement cost / expenses as claimed by the appellant without properly considering the facts and Briefly stated, the facts of the case are that the assessee did not file any regular return of income for the assessment year under consideration. Based on information received through the Insight tax Department under the head formulated by the Central Board of Direct Taxes (CBDT), the Assessing Officer (hereinafter “AO”) noted that the assessee had sold an immovable , yet had not filed a Consequently, a notice under Section 148A(b) of tax Act, 1961 (hereinafter “the Act”) was issued, calling upon the assessee to explain the income arising from the sale of the said property. As there was no compliance on the part of the assessee, the AO, after obtaining due approval from the prescribed authority, passed an order under Section 148A(d) of the Act and thereafter issued a notice under Section 148 of the Act requiring the response, the assessee filed a term capital gains on the sale of the said property and claimed deduction under Section 54 of the Act. In computing the said gains, the assessee reduced the indexed cost of exed cost of improvement from the sale Printed from counselvise.com 2.1 In the reassessment order dated 25.01.2024, the AO, in the absence of supporting documentary evidence, disallowed the indexed cost of improvement of long-term capital gain. The AO, however, allowed the claim of deduction under Section 54 of the Act and also allowed deduction of ₹75,000/- towards interest on borrowed capital. 2.2 On appeal, the ld. CIT(A) granted partial deduction claimed under Section 54, but sustained the disallowance of the indexed cost of improvement. additions sustained by the Ld. CIT(A) before the Income-tax Appellate Tribunal (IT as reproduced above. 3. Before us, the Ld. Counsel for the assessee filed a Paper Book containing pages 1 to 57. 4. In relation to Ground No. 1, it was submitted by learned counsel that the income chargeable to tax in the present below the monetary threshold of issuance of notice under Section 148 of the Act beyond a period of three years in terms of Section 149(1)(b). Reliance was placed on the judgment of the Hon’ble Madhya Pradesh High Court Nema v. PCIT (2023) 458 ITR 690 (MP), wherein it was held that the “income chargeable to tax” does not mean the gross sale consideration. It was argued that after giving effect to the indexed Vipendra Ravindra Mandal ITA No. 1819/MUM/2025 In the reassessment order dated 25.01.2024, the AO, in the absence of supporting documentary evidence, disallowed the indexed cost of improvement of ₹21,35,398/- while computing the term capital gain. The AO, however, allowed the claim of deduction under Section 54 of the Act and also allowed deduction of towards interest on borrowed capital. On appeal, the ld. CIT(A) granted partial relief in respect of the deduction claimed under Section 54, but sustained the disallowance of the indexed cost of improvement. Aggrieved with the additions sustained by the Ld. CIT(A), the assessee is in appeal tax Appellate Tribunal (ITAT) raising the grounds as reproduced above. Before us, the Ld. Counsel for the assessee filed a Paper Book containing pages 1 to 57. In relation to Ground No. 1, it was submitted by learned counsel that the income chargeable to tax in the present below the monetary threshold of ₹50 lakhs as prescribed for issuance of notice under Section 148 of the Act beyond a period of three years in terms of Section 149(1)(b). Reliance was placed on the judgment of the Hon’ble Madhya Pradesh High Court (2023) 458 ITR 690 (MP), wherein it was held that the “income chargeable to tax” does not mean the gross sale consideration. It was argued that after giving effect to the indexed Vipendra Ravindra Mandal 3 ITA No. 1819/MUM/2025 In the reassessment order dated 25.01.2024, the AO, in the absence of supporting documentary evidence, disallowed the while computing the term capital gain. The AO, however, allowed the claim of deduction under Section 54 of the Act and also allowed deduction of relief in respect of the deduction claimed under Section 54, but sustained the Aggrieved with the the assessee is in appeal AT) raising the grounds Before us, the Ld. Counsel for the assessee filed a Paper Book In relation to Ground No. 1, it was submitted by learned counsel that the income chargeable to tax in the present case was 50 lakhs as prescribed for issuance of notice under Section 148 of the Act beyond a period of three years in terms of Section 149(1)(b). Reliance was placed on the judgment of the Hon’ble Madhya Pradesh High Court in Nitin (2023) 458 ITR 690 (MP), wherein it was held that the “income chargeable to tax” does not mean the gross sale consideration. It was argued that after giving effect to the indexed Printed from counselvise.com cost of acquisition/improvement and deduction under Sec the Act, the resultant taxable income in the present case was below ₹50 lakhs. Therefore, the issuance of notice under Section 148 on 15.03.2023, pertaining to assessment year 2016 the permissible three 5. Per contra, learned Departmental Representative (DR) submitted that information received regarding the sale of an immovable property for by the assessee who had not filed any return of income. return of income was filed and the assessee didn’t comply to notice u/s 148A(b) of the Act, ascertain whether, acquisition/improvement would be less than ₹50 lakhs. It was contended that the decision in Nitin Nema (supra) was distinguishable, as in that case the assessee had duly responded to the notice under Section 148A(b) and furnished computation showing taxable income below whereas, in the present case, the assessee neither filed a regular return of income nor responded to the statutory notices. 6. We have considered the rival submissions and perused the material on record. The core issue is whether the impugned no under Section 148 was issued beyond the limitation prescribed under Section 149(1)(b) of the Act. For ease of reference, the provision is extracted as under: Vipendra Ravindra Mandal ITA No. 1819/MUM/2025 cost of acquisition/improvement and deduction under Sec the Act, the resultant taxable income in the present case was below 50 lakhs. Therefore, the issuance of notice under Section 148 on 15.03.2023, pertaining to assessment year 2016-17, was beyond the permissible three-year limit and thus void. Per contra, learned Departmental Representative (DR) submitted that information from a credible source received regarding the sale of an immovable property for by the assessee who had not filed any return of income. return of income was filed and the assessee didn’t comply to notice u/s 148A(b) of the Act, the AO had no record or material to ascertain whether, after allowing credit for indexed cost of acquisition/improvement or deductions if any , the taxabl 50 lakhs. It was contended that the decision in (supra) was distinguishable, as in that case the assessee had duly responded to the notice under Section 148A(b) and furnished computation showing taxable income below whereas, in the present case, the assessee neither filed a regular return of income nor responded to the statutory notices. We have considered the rival submissions and perused the material on record. The core issue is whether the impugned no under Section 148 was issued beyond the limitation prescribed under Section 149(1)(b) of the Act. For ease of reference, the acted as under: Vipendra Ravindra Mandal 4 ITA No. 1819/MUM/2025 cost of acquisition/improvement and deduction under Section 54 of the Act, the resultant taxable income in the present case was below 50 lakhs. Therefore, the issuance of notice under Section 148 on 17, was beyond Per contra, learned Departmental Representative (DR) credible source had been received regarding the sale of an immovable property for ₹71 lakhs by the assessee who had not filed any return of income. Since no return of income was filed and the assessee didn’t comply to notice the AO had no record or material to after allowing credit for indexed cost of , the taxable income 50 lakhs. It was contended that the decision in (supra) was distinguishable, as in that case the assessee had duly responded to the notice under Section 148A(b) and furnished computation showing taxable income below ₹50 lakhs, whereas, in the present case, the assessee neither filed a regular return of income nor responded to the statutory notices. We have considered the rival submissions and perused the material on record. The core issue is whether the impugned notice under Section 148 was issued beyond the limitation prescribed under Section 149(1)(b) of the Act. For ease of reference, the Printed from counselvise.com [Time limit for notices under sections 149. (1) No notice under section 148 (a) if three years and three months have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years and three months, but not more than five years and three months, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence related to any asset or expenditure or transaction or entries which show that the income chargeable to tax, which has escaped assessment, amounts to or is likely to amount to fifty lakh rupees or more. (2) No notice to show cause under assessment year,- (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years, but not more t relevant assessment year unless the income chargeable to tax which has escaped assessment, as per the information with the Assessing Officer, amounts to or is likely to amount to fifty lakh rupees or more.] 6.1 On a plain reading, it is evident that where the alleged escapement of income represented in the form of an asset is less than ₹50 lakhs, a notice under Section 148 can be issued only within a period of three years from the end of the relevant assessment year. The CIT(A), while placing reliance on the decision of the Hon’ble Delhi High Court in 2830/2022), observed that at the stage of recording reasons, the AO can only proceed on the basis of the material available, and in the absence of a return or other details, may reasonably take the entire sale consideration as the amount of i assessment. The CIT(A) further held that an assessee cannot take advantage of his own default in failing to file a return, and thereafter, upon reopening, claim that the taxable income would be Vipendra Ravindra Mandal ITA No. 1819/MUM/2025 Time limit for notices under sections 148 and 148A. section 148 shall be issued for the relevant assessment year, if three years and three months have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); if three years and three months, but not more than five years and three months, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence any asset or expenditure or transaction or entries which show that the income chargeable to tax, which has escaped assessment, amounts to or is likely to amount to fifty lakh rupees or more. (2) No notice to show cause under section 148A shall be issued for the relevant if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); if three years, but not more than five years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment, as per the information with the Assessing Officer, amounts to or is likely to amount to fifty lakh rupees or more.] On a plain reading, it is evident that where the alleged escapement of income represented in the form of an asset is less 50 lakhs, a notice under Section 148 can be issued only within a period of three years from the end of the relevant ent year. The CIT(A), while placing reliance on the decision of the Hon’ble Delhi High Court in Rohit Kumar v. ITO 2830/2022), observed that at the stage of recording reasons, the AO can only proceed on the basis of the material available, and in the absence of a return or other details, may reasonably take the entire sale consideration as the amount of income which has escaped assessment. The CIT(A) further held that an assessee cannot take advantage of his own default in failing to file a return, and thereafter, upon reopening, claim that the taxable income would be Vipendra Ravindra Mandal 5 ITA No. 1819/MUM/2025 shall be issued for the relevant assessment year,- if three years and three months have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); if three years and three months, but not more than five years and three months, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence any asset or expenditure or transaction or entries which show that the income chargeable to tax, which has escaped assessment, amounts to or is likely shall be issued for the relevant if three years have elapsed from the end of the relevant assessment year, unless han five years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment, as per the information with the Assessing Officer, amounts On a plain reading, it is evident that where the alleged escapement of income represented in the form of an asset is less 50 lakhs, a notice under Section 148 can be issued only within a period of three years from the end of the relevant ent year. The CIT(A), while placing reliance on the decision Rohit Kumar v. ITO (W.P.(C) No. 2830/2022), observed that at the stage of recording reasons, the AO can only proceed on the basis of the material available, and in the absence of a return or other details, may reasonably take the entire ncome which has escaped assessment. The CIT(A) further held that an assessee cannot take advantage of his own default in failing to file a return, and thereafter, upon reopening, claim that the taxable income would be Printed from counselvise.com below ₹50 lakhs so as to render the pr CIT(A) accordingly rejected the contention of the assessee observing as under: “5.7 In the present case it is seen that at the time of reopening of assessment, the alleged escapement was Rs 71,00,000 which is more than 50 lakhs. return of income for the year and therefore, with due respect to the various judicial decision that the income chargeable to tax cannot be the gross receipts/consideration in any business transaction, AO not have known or worked out the capital gain as there was no information available with the AO in the form of return etc. Therefore, I am of the considered view that AO was correct in assuming the whole of the transaction as undisclosed and as incom appellant has the responsibility of filing the appeal within the due date and disclosing the transaction and income in the return of income but it failed to do so. An assessee cannot be allowed to take undue advantage of his own wr reopening claim that even if the total transaction was above Rs 50 lakhs, the income out if it less than Rs 50 lakhs and on technicalities be allowed to claim that the reopening is invalid. Hence, the appeal on this ground is thus treated 6.2 In the present case, the AO issued a notice under Section 148A(b) giving the assessee an opportunity to explain the income corresponding to the sale consideration of was forthcoming. In such contrary material, proceeded to treat the full sale consideration as income that had escaped assessment. The order under Section 148A(d) was passed with the prior approval of the specified authority under Section 151 of th Section 148 was issued accordingly. in the order u/s 148A(d) under: Vipendra Ravindra Mandal ITA No. 1819/MUM/2025 50 lakhs so as to render the proceedings invalid. CIT(A) accordingly rejected the contention of the assessee observing 5.7 In the present case it is seen that at the time of reopening of assessment, the alleged escapement was Rs 71,00,000 which is more than 50 lakhs. It may be noted that as the appellant had not filed return of income for the year and therefore, with due respect to the various judicial decision that the income chargeable to tax cannot be the gross receipts/consideration in any business transaction, AO not have known or worked out the capital gain as there was no information available with the AO in the form of return etc. Therefore, I am of the considered view that AO was correct in assuming the whole of the transaction as undisclosed and as income chargeable to tax. The appellant has the responsibility of filing the appeal within the due date and disclosing the transaction and income in the return of income but it failed to do so. An assessee cannot be allowed to take undue advantage of his own wrongi.enot filing return of income and on reopening claim that even if the total transaction was above Rs 50 lakhs, the income out if it less than Rs 50 lakhs and on technicalities be allowed to claim that the reopening is invalid. Hence, the appeal on ground is thus treated as dismissed.” In the present case, the AO issued a notice under Section 148A(b) giving the assessee an opportunity to explain the income corresponding to the sale consideration of ₹71 lakhs. No response was forthcoming. In such circumstances, the AO, having no contrary material, proceeded to treat the full sale consideration as income that had escaped assessment. The order under Section 148A(d) was passed with the prior approval of the specified authority under Section 151 of the Act, and the notice under Section 148 was issued accordingly. The relevant observation made 148A(d) of the Act by the AO is reproduced as Vipendra Ravindra Mandal 6 ITA No. 1819/MUM/2025 oceedings invalid. The Ld. CIT(A) accordingly rejected the contention of the assessee observing 5.7 In the present case it is seen that at the time of reopening of assessment, the alleged escapement was Rs 71,00,000 which is more It may be noted that as the appellant had not filed return of income for the year and therefore, with due respect to the various judicial decision that the income chargeable to tax cannot be the gross receipts/consideration in any business transaction, AO could not have known or worked out the capital gain as there was no information available with the AO in the form of return etc. Therefore, I am of the considered view that AO was correct in assuming the whole e chargeable to tax. The appellant has the responsibility of filing the appeal within the due date and disclosing the transaction and income in the return of income but it failed to do so. An assessee cannot be allowed to take undue ongi.enot filing return of income and on reopening claim that even if the total transaction was above Rs 50 lakhs, the income out if it less than Rs 50 lakhs and on technicalities be allowed to claim that the reopening is invalid. Hence, the appeal on In the present case, the AO issued a notice under Section 148A(b) giving the assessee an opportunity to explain the income 71 lakhs. No response circumstances, the AO, having no contrary material, proceeded to treat the full sale consideration as income that had escaped assessment. The order under Section 148A(d) was passed with the prior approval of the specified e Act, and the notice under The relevant observation made of the Act by the AO is reproduced as Printed from counselvise.com “Order under clause (d) of section 148A of the Income In this case Information the Risk Management Strategy formulated by CBDT on Insight Portal maintained by the Income Tax Department under the Head RMS (Risk Management Strategy F.Y. 2015-16 (Α.Υ. 2016 section 148, such information provided by Risk Management Strategy (RMS) constitutes/ suggest income chargeable to tax has escaped assessment for A.Y. 2016 2. In this case, the information is available Information code Information description AIR-007 Sold immovable property valued at Rs. 30,00,000 or more TDS-194IA (R) TDS Statement consideration on sale of immovable property (Section 194IA 2.1. In view of the above and verification of status of Return Of Income filed by the assessee from e filed its return of income. No assessment has been made earlier u/s 143(3)/147/144 of the year under consideration, the assessee undertook above mentioned financial transactions wherein gross financial implication is Rs.71,00,000/ the Return Of Income for the relevant year that the assessee has not offered the receipts from sale of immovable property of Rs. 71,00,000/ under consideration. Further, an opportunity of being heard vide Showcause notice u/s 148A(b)of the I.T. Act along with information of insight portal dated 08.02.2023. The said notice was sent to the assessee through e through Speed Post requiring it to furnish along with supporting documentary evidence with respect to the transactions as cited above, to this office by 17.02.2023. This notice was duly served upon the assessee. Vide the above said Vipendra Ravindra Mandal ITA No. 1819/MUM/2025 “Order under clause (d) of section 148A of the Income Act, 1961 In this case Information has been received in accordance with the Risk Management Strategy formulated by CBDT on Insight Portal maintained by the Income Tax Department under the Head RMS (Risk Management Strategy-Non filing of Return) for 16 (Α.Υ. 2016-17). In view of the explanation 1 to section 148, such information provided by Risk Management Strategy (RMS) constitutes/ suggest income chargeable to tax has escaped assessment for A.Y. 2016-17. 2. In this case, the information is available as under: ormation description F.Y. Sold immovable property valued at Rs. 30,00,000 or 2015-16 TDS Statement - Sales consideration on sale of immovable property (Section 2015-16 2.1. In view of the above information available with this office and verification of status of Return Of Income filed by the assessee from e-filing portal, it is found that the assessee is not filed its return of income. No assessment has been made earlier u/s 143(3)/147/144 of the IT. Act. It is seen that during the year under consideration, the assessee undertook above mentioned financial transactions wherein gross financial implication is Rs.71,00,000/-. Since, the assessee has not filed the Return Of Income for the relevant year, it is clearly evident that the assessee has not offered the receipts from sale of immovable property of Rs. 71,00,000/- as income for the year under consideration. in accordance with section 148A(b) of the I.T. Act, an opportunity of being heard was provided to the assessee, vide Showcause notice u/s 148A(b)of the I.T. Act along with information of insight portal dated 08.02.2023. The said notice was sent to the assessee through e-filing Portal and also through Speed Post requiring it to furnish the relevant details along with supporting documentary evidence with respect to the transactions as cited above, to this office by 17.02.2023. This notice was duly served upon the assessee. Vide the above said Vipendra Ravindra Mandal 7 ITA No. 1819/MUM/2025 “Order under clause (d) of section 148A of the Income-tax has been received in accordance with the Risk Management Strategy formulated by CBDT on Insight Portal maintained by the Income Tax Department under the Non filing of Return) for he explanation 1 to section 148, such information provided by Risk Management Strategy (RMS) constitutes/ suggest income chargeable to tax Amount (in Lakhs) 71 71 information available with this office and verification of status of Return Of Income filed by the filing portal, it is found that the assessee is not filed its return of income. No assessment has been made earlier IT. Act. It is seen that during the year under consideration, the assessee undertook above mentioned financial transactions wherein gross financial . Since, the assessee has not filed , it is clearly evident that the assessee has not offered the receipts from sale of as income for the year in accordance with section 148A(b) of the I.T. Act, was provided to the assessee, vide Showcause notice u/s 148A(b)of the I.T. Act along with information of insight portal dated 08.02.2023. The said notice filing Portal and also the relevant details along with supporting documentary evidence with respect to the transactions as cited above, to this office by 17.02.2023. This notice was duly served upon the assessee. Vide the above said Printed from counselvise.com showcause notice the assessee was also asked a subject transactions amount shall not be treated as income of the year under concerned and why the order u/s 148A(d) of the IT Act should not be passed and subsequently the notice under section 148 of the Act should not be issued to you on the of information which suggests that income chargeable to tax has escaped assessment in your case for the FY 2015 relevant to AY 2016 However, till date no response has been received from the assessee against the opportunity provided u/s 148A(b Income tax Act, which establishes that assessee has no explanation for issue discussed above. The assessee has not filed its ITR despite having high value of financial transaction involving evasion of tax. It is also evident from information available with Assessing Officer that the income chargeable to tax for A.Y.2016 Accordingly, it is concluded that this is a fit case for issuing notice u/s 148 of the I.T. Act. 5. Further, it is to be mentioned that th of Rs. 71,00,000/ account represents in the form of asset as per provisions of Section 149(1) of the I.T. Act. 6. The Order u/s. 148A(d) is passed with the prior approval of the specified aut Mumbai) u/s. 151 of the Income Tax Act, 1961. The Notice u/s. 148 of the Income Tax Act for reopening of the assessment proceedings for A.Y. 2016 6.3 In the case of Nitin Nem Pradesh High Court observed that revenue authorities are not supposed to consider sale consideration of the property as income chargeable to tax. The relevant finding of the Hon’ble High Court is reproduced as under: “9. From the clear is that the Revenue has failed to understand the fundamental difference between sale consideration on one hand and income chargeable to tax on the other. The Revenue despite being assisted by thousands of and taxation, has committed such elementary mistake leading Vipendra Ravindra Mandal ITA No. 1819/MUM/2025 showcause notice the assessee was also asked as to why the subject transactions amount shall not be treated as income of the year under concerned and why the order u/s 148A(d) of the IT Act should not be passed and subsequently the notice under section 148 of the Act should not be issued to you on the of information which suggests that income chargeable to tax has escaped assessment in your case for the FY 2015 relevant to AY 2016-17. However, till date no response has been received from the assessee against the opportunity provided u/s 148A(b Income tax Act, which establishes that assessee has no explanation for issue discussed above. The assessee has not its ITR despite having high value of financial transaction involving evasion of tax. It is also evident from information able with Assessing Officer that the income chargeable to tax for A.Y.2016-17 has escaped assessment mentioned above. Accordingly, it is concluded that this is a fit case for issuing notice u/s 148 of the I.T. Act. 5. Further, it is to be mentioned that the escapement to the tune of Rs. 71,00,000/- from sale proceeds credited into bank account represents in the form of asset as per provisions of Section 149(1) of the I.T. Act.” 6. The Order u/s. 148A(d) is passed with the prior approval of the specified authority (Pr. Chief Commissioner of Income Tax, Mumbai) u/s. 151 of the Income Tax Act, 1961. The Notice u/s. 148 of the Income Tax Act for reopening of the assessment proceedings for A.Y. 2016-17 is issued accordingly In the case of Nitin Nema vs. PCIT (supra) the Hon’ble Madhya Pradesh High Court observed that revenue authorities are not supposed to consider sale consideration of the property as income chargeable to tax. The relevant finding of the Hon’ble High Court is reproduced as under: aforesaid discussion what comes out loud and clear is that the Revenue has failed to understand the fundamental difference between sale consideration on one hand and income chargeable to tax on the other. The Revenue despite being assisted by thousands of experts in the field of finance and taxation, has committed such elementary mistake leading Vipendra Ravindra Mandal 8 ITA No. 1819/MUM/2025 s to why the subject transactions amount shall not be treated as income of the year under concerned and why the order u/s 148A(d) of the IT Act should not be passed and subsequently the notice under section 148 of the Act should not be issued to you on the basis of information which suggests that income chargeable to tax has escaped assessment in your case for the FY 2015-16 However, till date no response has been received from the assessee against the opportunity provided u/s 148A(b) of the Income tax Act, which establishes that assessee has no explanation for issue discussed above. The assessee has not its ITR despite having high value of financial transaction involving evasion of tax. It is also evident from information able with Assessing Officer that the income chargeable to 17 has escaped assessment mentioned above. Accordingly, it is concluded that this is a fit case for issuing e escapement to the tune from sale proceeds credited into bank account represents in the form of asset as per provisions of 6. The Order u/s. 148A(d) is passed with the prior approval of hority (Pr. Chief Commissioner of Income Tax, Mumbai) u/s. 151 of the Income Tax Act, 1961. The Notice u/s. 148 of the Income Tax Act for reopening of the assessment (supra) the Hon’ble Madhya Pradesh High Court observed that revenue authorities are not supposed to consider sale consideration of the property as income chargeable to tax. The relevant finding of the Hon’ble High Court is aforesaid discussion what comes out loud and clear is that the Revenue has failed to understand the fundamental difference between sale consideration on one hand and income chargeable to tax on the other. The Revenue despite experts in the field of finance and taxation, has committed such elementary mistake leading Printed from counselvise.com to harassment to the assessee who has been compelled to file the present avoidable piece of litigation. More so, this Court has been compelled to decide this frivo precious time and energy which could have been utilized in more pressing matters. 9.1 Thus, the Revenue deserves to be saddled with exemplary cost and correspondingly the petitioner is entitled to compensatory cost. 6.4 The ratio laid down by the Hon’ble Madhya Pradesh High Court in Nitin Nema (supra) makes it abundantly clear that, for the purposes of determining the monetary limit of income escaping assessment under section 149(1)(b) of the Act, it is the which is to be reckoned, and not the gross receipts. In the present case, it is an admitted position that the net income likely to have escaped assessment falls below the threshold of Consequently, no notice under section 148 of the Act coul be issued against the assessee for reopening an assessment beyond the period of three years. 6.5 The statutory threshold of income escaping assessment continues to operate, notwithstanding the fact that the assessee proceedings under section 148A. During the reassessment proceedings, the assessee categorically explained that the net income likely to have escaped was less than learned CIT(A), however, placing Hon’ble Delhi High Court in the stage of recording reasons, the Assessing Officer was justified in Vipendra Ravindra Mandal ITA No. 1819/MUM/2025 to harassment to the assessee who has been compelled to file the present avoidable piece of litigation. More so, this Court has been compelled to decide this frivolous matter wasting its precious time and energy which could have been utilized in more pressing matters. 9.1 Thus, the Revenue deserves to be saddled with exemplary cost and correspondingly the petitioner is entitled to compensatory cost.” The ratio laid down by the Hon’ble Madhya Pradesh High Court (supra) makes it abundantly clear that, for the purposes of determining the monetary limit of income escaping assessment under section 149(1)(b) of the Act, it is the which is to be reckoned, and not the gross receipts. In the present case, it is an admitted position that the net income likely to have escaped assessment falls below the threshold of Consequently, no notice under section 148 of the Act coul be issued against the assessee for reopening an assessment beyond the period of three years. The statutory threshold of ₹50,00,000/- in respect of net income escaping assessment continues to operate, notwithstanding the fact that the assessee did not make a representation during the proceedings under section 148A. During the reassessment proceedings, the assessee categorically explained that the net income likely to have escaped was less than ₹50,00,000/ learned CIT(A), however, placing reliance on the judgment of the Hon’ble Delhi High Court in Rohit Kumar v. ITO (supra), held that at the stage of recording reasons, the Assessing Officer was justified in Vipendra Ravindra Mandal 9 ITA No. 1819/MUM/2025 to harassment to the assessee who has been compelled to file the present avoidable piece of litigation. More so, this Court has lous matter wasting its precious time and energy which could have been utilized in 9.1 Thus, the Revenue deserves to be saddled with exemplary cost and correspondingly the petitioner is entitled to The ratio laid down by the Hon’ble Madhya Pradesh High Court (supra) makes it abundantly clear that, for the purposes of determining the monetary limit of income escaping assessment under section 149(1)(b) of the Act, it is the net income which is to be reckoned, and not the gross receipts. In the present case, it is an admitted position that the net income likely to have escaped assessment falls below the threshold of ₹50,00,000/-. Consequently, no notice under section 148 of the Act could validly be issued against the assessee for reopening an assessment beyond in respect of net income escaping assessment continues to operate, notwithstanding did not make a representation during the proceedings under section 148A. During the reassessment proceedings, the assessee categorically explained that the net 50,00,000/-. The reliance on the judgment of the (supra), held that at the stage of recording reasons, the Assessing Officer was justified in Printed from counselvise.com treating the entire sale consideration as income escaped, in the absence of further details. 6.6 We are, however, guided by the principle laid down by the Hon’ble Supreme Court in ITR 192 (SC), wherein it was held that if two views are possible on the interpretation of law, the view favorable to th be adopted. Respectfully following the above dictum of the Hon’ble Supreme Court, we prefer to adopt the view taken by the Hon’ble Madhya Pradesh High Court in supports the assessee’s case. 6.7 In the light of the admitted factual position that the net income chargeable to tax, represented in the form of assets, is below the monetary threshold of notice under section 148 of the Act could have been issued. Accordingly, the reassessment proceedings initiated in the case of the assessee are held to be unsustainable in law. Ground No. 1 of the assessee’s appeal is, therefore, allowed. 6.8 Since we have already held the reassessment proceedings as unsustainable in law the consequen required to be adjudicated and same is rendered infructuous. Vipendra Ravindra Mandal ITA No. 1819/MUM/2025 treating the entire sale consideration as income escaped, in the details. We are, however, guided by the principle laid down by the Hon’ble Supreme Court in CIT v. Vegetable Products Ltd. ITR 192 (SC), wherein it was held that if two views are possible on the interpretation of law, the view favorable to the assessee should be adopted. Respectfully following the above dictum of the Hon’ble Supreme Court, we prefer to adopt the view taken by the Hon’ble Madhya Pradesh High Court in Nitin Nema (supra), which directly supports the assessee’s case. ght of the admitted factual position that the net income chargeable to tax, represented in the form of assets, is below the monetary threshold of ₹50,00,000/-, we hold that no notice under section 148 of the Act could have been issued. ssessment proceedings initiated in the case of the assessee are held to be unsustainable in law. Ground No. 1 of the assessee’s appeal is, therefore, allowed. Since we have already held the reassessment proceedings as unsustainable in law the consequent ground on merit is not required to be adjudicated and same is rendered infructuous. Vipendra Ravindra Mandal 10 ITA No. 1819/MUM/2025 treating the entire sale consideration as income escaped, in the We are, however, guided by the principle laid down by the CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC), wherein it was held that if two views are possible on e assessee should be adopted. Respectfully following the above dictum of the Hon’ble Supreme Court, we prefer to adopt the view taken by the Hon’ble (supra), which directly ght of the admitted factual position that the net income chargeable to tax, represented in the form of assets, is , we hold that no notice under section 148 of the Act could have been issued. ssessment proceedings initiated in the case of the assessee are held to be unsustainable in law. Ground No. 1 of Since we have already held the reassessment proceedings as t ground on merit is not required to be adjudicated and same is rendered infructuous. Printed from counselvise.com 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on Sd/- (RAJ KUMAR CHAUHAN JUDICIAL MEMBER Mumbai; Dated: 22/09/2025 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// Vipendra Ravindra Mandal ITA No. 1819/MUM/2025 In the result, the appeal of the assessee is allowed. nounced in the open Court on 22/0 (RAJ KUMAR CHAUHAN) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Vipendra Ravindra Mandal 11 ITA No. 1819/MUM/2025 In the result, the appeal of the assessee is allowed. /09/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "