Ghatkopar Devang Co-Operative Housing Society Limited Vs ITO (ITAT Mumbai)
Stamp-Duty Value of Redevelopment Agreement Is Not Automatically Society’s Income: ₹17.38 Crore Addition Restored for Fresh Appellate Consideration
The Mumbai Bench of the ITAT has restored the quantum and penalty appeals of a co-operative housing society involving an addition of ₹17.38 crore, which arose because the stamp-duty value of a redevelopment agreement was reported against the society’s PAN and treated by the AO as sale consideration.
The Tribunal found that the society had placed on record material indicating that it was merely a party to a redevelopment arrangement and had not received the disputed sum. In the interest of substantial justice, the ITAT directed the CIT(A) to reconsider the society’s request for condonation of delay. The connected penalty appeal u/s 270A was also restored for fresh adjudication after disposal of the quantum appeal.
Redevelopment Agreement Mistaken for Property Sale
Ghatkopar Devang Co-operative Housing Society Ltd. filed its return for AY 2023-24 declaring income of only ₹2,51,390. The case was selected for scrutiny through CASS because information relating to a property transaction of ₹17,38,15,500 appeared against the society.
During assessment, the society did not furnish an effective explanation or supporting documents. Its response was confined to an unclear one-line submission broadly stating that, according to it, there was no demand and the proceedings should be closed.
In the absence of proper compliance, the AO treated the entire sum of ₹17.38 crore as unexplained & undisclosed income under the head “Short-Term Capital Gains.”
The society later explained that the amount was not sale consideration received by it. It represented the value adopted by the stamp authority while registering documents connected with redevelopment of the society’s building.
What the ₹17.38 Crore Actually Represented
According to the society, the reported amount comprised three distinct components:
- ₹14,29,66,000 represented the stamp-duty valuation of the development agreement, computed with reference to construction cost, hardship & displacement compensation payable to members, development charges, bank guarantee and other redevelopment obligations.
- ₹1,37,49,500 represented 50% of the value of transactions independently entered into between existing flat owners and the developer for allotment of additional or extended area.
- ₹1,71,00,000 represented 50% of the agreement value of a transaction entered into between a new flat purchaser and the developer.
The society maintained that it neither received these sums nor obtained any beneficial interest in them. In the agreements between individual members, buyers & the developer, the society was included only as a confirming party because the building and redevelopment arrangement concerned its members.
Society’s PAN Used Because It Was the First Party
The society explained that the redevelopment agreement dated 27-04-2022 was executed among the society, the developer and 13 existing flat owners. Since the society was described as the first party and its PAN appeared first in the document, the stamp-registration authority apparently reported the entire value against its PAN as though it were the seller.
This reporting resulted in the Department treating the stamp-duty valuation as consideration received by the society for transfer of immovable property.
The society contended that the document was a redevelopment agreement and not a sale deed executed by it. No amount corresponding to ₹17.38 crore had been credited to its bank account. Its income & expenditure account and balance sheet also did not record any such receipt or transfer of property.
The bank statement, financial statements and copy of the agreement were tendered before the ITAT as additional evidence under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963.
First Appeal Dismissed Only on Limitation
The assessment order was passed and served on 31-01-2025. However, the society filed Form 35 only on 25-10-2025, considerably beyond the statutory period of 30 days.
The CIT(A) found that the society had not produced documentary evidence establishing sufficient cause for the delay. He therefore refused to condone the delay and dismissed the quantum appeal as non-maintainable without deciding the ₹17.38 crore addition on merits.
Before the ITAT, the society explained that its office-bearers were senior citizens who were not conversant with computer systems or online income-tax proceedings. The society’s office had also been shifted due to redevelopment work, and the employee responsible for statutory compliance had left the job. These circumstances allegedly prevented timely filing and effective compliance.
Substantive Justice Requires Reconsideration
The ITAT examined the society’s explanation and the additional documents, including the redevelopment agreement, bank statement & financial statements. It found it appropriate, in the interest of substantive justice, to restore the matter to the CIT(A).
The CIT(A) was directed to reconsider the application for condonation of delay in accordance with law. The Tribunal clarified that the CIT(A) should undertake this exercise independently and without being influenced by the ITAT’s observations regarding the merits of the underlying addition.
Since the penalty u/s 270A arose directly from the quantum addition, the penalty order was also set aside. The penalty appeal was restored to the CIT(A) for fresh decision after the quantum proceedings were adjudicated.
Both appeals were accordingly allowed for statistical purposes.
Addition Not Yet Deleted
The ITAT has not held that the ₹17.38 crore addition is legally unsustainable. It has also not finally condoned the delay. The limited direction is that the CIT(A) must reconsider the condonation request and thereafter proceed in accordance with law.
Therefore, the society must still establish the genuineness of the delay and, if admitted, prove through the redevelopment agreement and financial records that it neither transferred the alleged property nor received the reported consideration.
Author’s Comments
The case illustrates how registration data can create an enormous tax demand when the legal character of a redevelopment document is misunderstood. Stamp-duty value measures the document for State levy purposes; it does not automatically become income of every person named as a party.
The AO must identify the precise asset transferred, the person transferring it, the consideration accruing to that person and the charging provision applicable. A society’s presence as owner or confirming party cannot, by itself, make the entire redevelopment valuation its taxable capital gain.
However, the society’s casual one-line compliance during assessment and prolonged delay before the CIT(A) nearly converted a reporting mismatch into a ₹17.38 crore tax dispute. In redevelopment cases, the agreement, stamp-duty valuation worksheet, members’ agreements, bank statements & accounting entries should be reconciled at the first notice itself. A mistaken PAN mapping is curable; silence before the AO makes the cure unnecessarily expensive.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT MUMBAI
These appeals have been filed by the assessee against orders under section 250 of the Income-tax Act, 1961, [in short ”the Act”] passed by the learned Commissioner of Income-tax (Appeals), dated 20th February, 2026, for the assessment year 2023-24, relating to quantum assessment proceedings u/s 143(3) of the Act and penalty proceedings u/s 270A of the Act.
2. The assessee has raised following grounds of appeal before us, for the quantum appeal, ITA No. 4954/MUM/2026 :
1. On the facts and in the circumstances of the case and in law, the Hon’ble Commissioner of Income Tax (Appeals) erred in dismissing the Appellant’s appeal solely on the ground of delay, without condoning the delay and without adjudicating the appeal on merits.
2. The learned Assessing Officer has erred in law and on facts in treating the amount of Rs. 17,38,15,500/- reported by the Joint Sub-Registrar Office (M.S.D.), Kurla-4, as sale of property transaction and consequently assessing the same as unexplained and undisclosed income of the Appellant under the head “Short-Term Capital Gains.” The learned Assessing Officer failed to appreciate that the said figure does not represent any sale transaction undertaken by the Appellant Society nor does it constitute any income, actual or accrued, in its hands. The Hon’ble Commissioner of Income Tax (Appeals) further erred in confirming the said addition without properly appreciating the factual matrix and legal position. The bifurcations of the impugned amounts are as follows:
A. An amount of Rs. 14,29,66,000/- being value of Development agreement between Society and Developer, assessed by Sub-Registrar based on construction cost, hardship, and displacement compensation payable to members of the society, development charges, Bank Guarantee etc. for the purpose of payment of stamp duty in respect of such agreement. No income, actual or accrued, arose to the Society. Accordingly, considering this amount as Society’s taxable income is factually erroneous and legally untenable, and the addition is liable to be deleted.
B. An amount of Rs. 1,37,49,500/- being 50% of the value of a transactions independently entered into between the individual members (existing flat owners) and the developer for allotment of additional/extended area under the redevelopment scheme. The appellant-Society was merely a confirming party to these agreements. The appellant neither derived any benefit nor acquired any right or interest in these sums. Accordingly, the amounts cannot be regarded as income chargeable to tax in the hands of the Society, and the corresponding addition is unsustainable and liable to be deleted.
C. The balance amount of Rs. 1,71,00,000/- being 50% of the purchase agreement value of a transaction exclusively between new buyer of flat and the developer. The appellant-Society was merely a confirming party to the agreement and neither received nor had any right, title, or interest in the said consideration. No income, actual or accrued, arose to the Society from this transaction. Accordingly, inclusion of this amount in the Society’s taxable income is factually erroneous and legally untenable, and the addition is liable to be deleted.
3. The Appellant craves leave to add, amend, alter, modify, substitute, or withdraw any of the foregoing grounds of appeal at any time before or during the hearing, as may be deemed necessary in the interest of justice.
3. The brief facts of the case are that, the assessee is a housing society, filed its return of income on 06-11-2023 declaring total income of Rs 251,390/-. Subsequently the case was selected for scrutiny assessment through CASS, followed by notices to furnish explanations with documentary evidences, however, the assessee failed to submit any plausible evidence with explanation to clarify the transactions reflecting in its Form 26AS. Ultimately, in absence of any explanation or supporting documents, except considering part-liner submission “as per us no demand, ps close” the entire amount of Rs. 17,38,15,500/- has been treated as unexplained and undisclosed income of the assessee and added as short term capital gain of the present year.
4. The assessee being aggrieved, challenged addition before the Ld. Commissioner of Income Tax (Appeals) by filing of Form no. 35 beyond the prescribed time limit of 30 day. The Ld. CIT(A) did not found valid reasons for delay condone, hence, rejected admission.
5. Before us, the learned counsel for the assessee submitted that the Ld. CIT(A) has not condoned the delay in filing the appeal against the quantum assessment proceedings and, accordingly, dismissed the appeal as non-maintainable. The relevant finding of the Ld. CIT(A) in the quantum proceedings is reproduced as under:
3. It is clear from the above that the order u/s 143(3) was made on 31.01.2025 which got served upon the appellant on 31.01.2025 but the appeal was filed on 25.10.2025 i.e. beyond prescribed time of 30 days, whereas, the appellant was required to file appeal within 30 days as provided vide section 249(2) on receipt of order u/s 143(3). The petition of the appellant regarding late filing of appeal is carefully considered but is not acceptable on merit as the appellant has itself declared in form 35 that the order was received on 31.01.2025. The reason stated by the appellant in his petition is not a valid reason for delay and not found to be a sufficient cause for delay in filing of appeal within stipulated time limits as prescribed. The appellant did not file any documentary evidence which could substantiate the reason for delay in filing of appeal. Therefore, the contention of the appellant is without any substance in it.
6. We have heard the rival submissions and perused the material on record, and found that primary issue before us, is refusal by Ld. CIT(A) to condone the delay in filing the quantum appeal. The learned counsel for the Assessee while explaining the reasons for delay submitted that office bearers of the society are senior citizens, are not well versed with the computer system, online procedures to understand and furnish response accordingly. Also stated, that office premise of society was shifted due to development work of building compound, the employee who was looking after the compliances had also left the job. In such peculiar circumstances, the appeal before the Ld. CIT(A) could not be filed within the specified time and pursue for necessary compliance.
7. Before us, assessee submitted an application under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, for admission of additional evidence, being a copy of the agreement, executed on 27th April, 2022, between 13 flat owners, developer and the assessee-housing society, and claimed that these documents go to the root of the case.
8. It was further stated that the value of Rs.17,38,15,500/- determined by the stamp authority for development, transfer of property between existing flat owners etc, while registering the development agreement for the purpose of collecting stamp duty. This amount consists of three components:
1. Value of development – ₹14,29,66,000/-;
2. ₹1,37,49,500/-, being 50% of the value of a transaction independently entered into between the existing individual members (flat owners) and the developer for allotment of additional area under the redevelopment scheme; and
3. ₹1,71,00,000/-, also being 50% of the purchase agreement value of a transaction executed between a new buyer of a flat and the developer.
9. The assessee-society was merely a confirming party to development agreement, neither received any amount nor transferred any right or title to anyone. It, being a housing cooperative society of the building, made part of to that. The detail of name, PAN, address etc of the assessee society has been mentioned at serial number one, alongwith developer being the second party and all 13 flat owners being the third parties to the agreement.
10. It is submitted that since the assessee was the first party to the agreement, so, its PAN was considered as the seller’s PAN information under section 285BA of the Act, while uploading information by the stamp authority. Consequently, the entire value of the development agreement was treated as sale consideration of an immovable property received by the Assessee-society. However, it is evident from the development agreement executed between the flat-owner members of the society and the developer for redevelopment of the building, not for transfer of any immovable property therein, it may not construe as a sale of an immovable property by the Assessee.
11. The copy of the bank statement was placed before us to prove that the Assessee had not received any credit in its bank account in respect of the alleged transaction. Similarly, the copies of the financial statements, being the Income and Expenditure Account and Balance Sheet, do not contain any receipt or transfer of property during the year.
12. We have examined and considered the explanation and documents placed before us. In the interest of substantive justice, we deem it appropriate to restore the matter back to the file of the learned CIT(A) for reconsideration of the issue of condonation of delay in accordance with law, without being influenced by any of our observations hereinabove.
13. Further, the penalty appeal is consequent to the appeal in respect of the quantum proceedings. The order of the learned CIT(A) on the penalty matter is also set aside and restored back for deciding the same afresh after the order is passed in the quantum appellate proceedings. Accordingly, we set aside this quantum appeal.
14. In the result, both the appeals of the Assessee are allowed for statistical purposes.
Order pronounced in the open court on 15.09.2026.
