Two Property Documents, One Flat: ₹2.20 Crore Addition and Three Penalties Deleted

Jaishri Pande Vs ITO (ITAT Mumbai)

Summary: Two entries in the tax department’s information system showed property transactions of ₹1.10 crore each, on different dates. The Assessing Officer treated them as two purchases by Jaishri Pande and added ₹2.20 crore as unexplained investment under section 69. The Mumbai Tribunal examined the registered documents and found that they related to one flat and one purchase. It deleted the addition as well as three penalties arising from the same proceedings.

The decision also addresses a separate procedural issue. Pande’s appeals before the Commissioner (Appeals) had been dismissed as late, without consideration of their merits. The Tribunal accepted her explanation for the delay and decided the case itself because the registered instruments and bank records provided a clear answer to the dispute.

How One Purchase Became a ₹2.20 Crore Addition

Pande, a senior citizen, had not filed a return for assessment year 2016–17. Information flagged under the Risk Management System showed an immovable property transaction of ₹1.10 crore dated 18 September 2015 and another of the same amount dated 5 November 2015. Assuming these were separate purchases, the Assessing Officer reopened the case.

There was no response to the assessment notices. The Assessing Officer completed an ex parte assessment on 29 February 2024 under section 147 read with section 144 and added the aggregate ₹2.20 crore under section 69. Penalties of ₹66 lakh under section 271(1)(c), ₹20,000 under section 271(1)(b), and ₹5,000 under section 271F followed.

Pande appealed against the assessment and all three penalties, but the appeals were filed late. The Commissioner (Appeals) refused to condone the delay and dismissed them without examining whether the property addition was correct.

Why the Delay Was Condoned

Pande explained that she was not living at the address appearing in her PAN records when the notices were sent. The final show-cause notice had been claimed to have been served by affixture at that address. She stated on oath that she had not received the notices or known of the proceedings. She also said that she was not registered on the income tax e-filing portal until 25 September 2025 and first learned of the demands from a departmental communication dated 4 February 2026. She then obtained the records and pursued appeals.

The Tribunal found this explanation bona fide. There was no material showing that she had personally received the notices or otherwise learned of the proceedings earlier. Her sworn account was consistent with the assessment record, which showed no compliance throughout the proceedings. The Tribunal also considered that she had no apparent advantage in delaying appeals against a substantial demand.

Relying on the principles in Collector, Land Acquisition v. Mst. Katiji and N. Balakrishnan v. M. Krishnamurthy, the Tribunal held that the length of delay was not decisive; the acceptability of the explanation was. It condoned the delay in all four appeals.

The Registered Documents Showed One Transaction

The two dates came from an Agreement for Sale dated 18 September 2015 and a Deed of Assignment dated 5 November 2015. The later deed expressly referred to the earlier agreement. Both concerned Flat No. 107, B-Wing, Progressive’s Celebrity, CBD Belapur, Navi Mumbai. The receipt forming part of the registered records acknowledged total consideration of ₹1.10 crore from Pande and her son, Manu Pande, for that same flat.

There was no second property in the registered record and no second payment of ₹1.10 crore. The Tribunal held that the department’s two entries reflected connected documents or stages of a single purchase. Adding them together had mechanically doubled the alleged investment.

The source of the actual consideration was also documented. An ICICI Bank housing-loan statement identified Manu Pande as the principal borrower and his mother as a co-applicant. It recorded a loan of ₹1,09,71,988, disbursed in two tranches for the same property. The loan and registered purchase documents corresponded. Pande’s inclusion as a joint holder and co-applicant did not establish that she had invested her own unexplained money.

For a section 69 addition in her hands, the department needed material showing an investment made by her from an unexplained source. It had none. The Tribunal therefore deleted the ₹2.20 crore addition on two grounds: the transaction had been counted twice, and the source of the single purchase was explained by the housing loan.

Why the Tribunal Decided the Merits Itself

Since the Commissioner (Appeals) had dismissed the appeals on limitation, the Tribunal could have sent them back for a merits decision. It chose to decide them because the registered instruments and certified bank statement were clear, and the Revenue identified no discrepancy requiring further factual enquiry. The Tribunal expressly grounded this course on the particular documentary facts of the case.

It did not decide Pande’s separate objections to the validity of reopening. Once the full addition was deleted on merits, that challenge would provide no further relief and was left open.

Author’s Comments

The ruling illustrates the risk of treating two reported documents as two investments without matching their property descriptions, parties, consideration and payment trail. An Agreement for Sale followed by a Deed of Assignment may produce two information entries while recording only one acquisition.

The penalty outcomes followed the distinct findings. The ₹66 lakh concealment penalty lost its basis when the entire addition was deleted. The ₹20,000 non-compliance penalty failed because the Tribunal accepted that Pande had no effective knowledge of the notices, providing reasonable cause under section 273B. The ₹5,000 non-filing penalty failed because, after deletion of the addition, the Revenue had shown no independent income requiring her to file a return. All four appeals were allowed.

Cases Discussed

• Collector, Land Acquisition v. Mst. Katiji & Others, [1987] 167 ITR 471 (SC) — Relied upon by the Tribunal while condoning the delay. The Supreme Court principle that an ordinarily prudent litigant does not benefit from filing an appeal late and that substantial justice should prevail over technical considerations was applied in accepting the assessee’s bona fide explanation.
• N. Balakrishnan v. M. Krishnamurthy, [1998] 7 SCC 123 (Supreme Court) — Relied upon for the principle that the length of delay is not decisive and that the material consideration is the acceptability and bona fides of the explanation for the delay.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

The aforesaid four appeals have been preferred by the same assessee for Assessment Year 2016–17 against separate orders passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, arising from the assessment framed under section 147 read with section 144 of the Income-tax Act, 1961 and the consequential penalties levied under sections 271(1)(c), 271(1)(b) and 271F of the Act. Since all these appeals arise from the same assessment proceedings and involve a common and interlinked set of facts, they were heard together and are being disposed of by this consolidated order. The respective proceedings comprise the quantum addition of ₹2,20,00,000 made under section 69, penalty of ₹66,00,000 levied under section 271(1)(c), penalty of ₹20,000 levied under section 271(1)(b) and penalty of ₹5,000 levied under section 271F of the Act.

2. The facts leading to the quantum addition are that the assessee, an individual and a senior citizen, had not filed her return of income for the year under consideration. On the basis of information flagged under the Risk Management System, the Assessing Officer noticed two entries relating to purchase of immovable property, one for ₹1,10,00,000 dated 18.09.2015 and another for an identical amount dated 05.11.2015. Proceeding on the premise that these represented two distinct purchases made by the assessee, the Assessing Officer reopened the assessment and issued notice under section 148 on 26.03.2023. The notices under section 142(1) dated 22.11.2023 and 28.12.2023 were stated to have been uploaded on the e-filing portal and the final show-cause notice dated 24.01.2024 was stated to have been served by affixture. As there was no compliance, the assessment was completed ex parte under section 147 read with section 144 vide order dated 29.02.2024, treating the aggregate amount of ₹2,20,00,000 as unexplained investment under section 69. Consequentially, penalty proceedings under sections 271(1)(c), 271(1)(b) and 271F were also initiated and culminated in the respective penalties referred to above.

3. The assessee challenged the assessment as well as the three penalty orders before the learned CIT(A). All the appeals were filed belatedly. It was explained that the assessee was not residing at the address appearing in her PAN records; the postal communications sent to that address had not been received by her; and the subsequent service claimed to have been effected by affixture was also at an address where she was not residing during the relevant period. It was further explained that the assessee was not registered on the income-tax e-filing portal at the material time and registered herself on the portal for the first time only on 25.09.2025. According to the assessee, effective knowledge of the assessment, the penalty orders and the consequential demands was acquired only upon receipt of a departmental communication dated 04.02.2026, whereafter she took immediate steps to ascertain the details of the proceedings, obtain the relevant records and avail the statutory appellate remedies. The learned CIT(A), however, declined to condone the delay, observing that the assessee had not furnished a cogent explanation for not attending to the earlier electronic communications and that the appeals had been filed after a substantial lapse of time. Accordingly, all four appeals were dismissed as non-maintainable without adjudicating either the quantum addition or the penalties on merits.

4. Before us, the learned counsel submitted that the delay was occasioned by circumstances entirely beyond the assessee’s knowledge and control. Our attention was drawn to the affidavit of the assessee, wherein she has affirmed that during the relevant period she was residing at Flat No. 107, B-Wing, Progressive’s Celebrity Cooperative Housing Society, Plot No. 71, Sector 15, CBD Belapur, Navi Mumbai, and not at the address appearing in her PAN records, namely E-96, ONGC Colony, Vidya Vihar (East), Mumbai. She has further affirmed that she neither received the statutory notices nor had any knowledge of the proceedings or the alleged service by affixture, and that she was not registered on the income-tax e-filing portal until 25.09.2025. It was submitted that immediately after acquiring knowledge of the outstanding demands on 04.02.2026, the assessee acted with reasonable expedition and pursued the appellate remedies. On the merits of the addition, the learned counsel submitted that the Agreement for Sale dated 18.09.2015 and the Deed of Assignment dated 05.11.2015 did not represent two independent purchases but were two instruments forming part of the same transaction concerning one property having a total consideration of ₹1,10,00,000. It was further submitted that the property had principally been purchased by the assessee’s son, Shri Manu Pande, through a housing loan obtained from ICICI Bank; the assessee was merely included as a joint holder and co-applicant; and no part of the consideration represented any unexplained investment made by her. The learned CIT DR, on the other hand, relied upon the orders of the authorities below and supported the dismissal of the appeals on account of delay as well as the addition and penalties arising from the assessment.

5. We have heard the rival submissions and perused the material placed on record. At the outset, we find that the explanation furnished by the assessee for the delay is bona fide and stands supported by the attending circumstances as well as her sworn affidavit. The assessment order itself records that there was no compliance throughout the proceedings and that the final show-cause notice was served by affixture. There is no material demonstrating that the assessee personally received any of the notices or otherwise acquired actual knowledge of the proceedings at the relevant time. The categorical assertion that she was not residing at the address appearing in the PAN records, was not registered on the e-filing portal until 25.09.2025 and became aware of the demands only on receipt of the departmental communication dated 04.02.2026 has not been rebutted through any independent material. The assessee is a senior citizen who had no independent source of taxable income and had not been regularly filing returns of income. Immediately after acquiring knowledge of the proceedings, she took steps to obtain the orders and pursue the remedies available under the Act. Her conduct does not indicate conscious inaction, negligence or an intention to allow the limitation to expire, nor could she have derived any conceivable advantage by delaying appeals against an assessment resulting in a demand exceeding ₹2 crore and three consequential penalties.

6. The expression “sufficient cause” cannot be construed in a manner which converts a rule of limitation into an instrument for foreclosing adjudication despite the existence of a bona fide and reasonable explanation. The Hon’ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji & Others [1987] 167 ITR 471 (SC) has emphasised that an ordinarily prudent litigant does not stand to benefit by lodging an appeal belatedly and that, when substantial justice and technical considerations are placed in opposition, the cause of substantial justice deserves to be preferred. Likewise, in N. Balakrishnan v. M. Krishnamurthy [1998] 7 SCC 123, it has been held that the length of delay is not decisive and that what is material is the acceptability and bona fides of the explanation. In the present case, the explanation covers the material period, is supported by an affidavit and is consistent with the circumstances recorded in the assessment order itself. We are, therefore, satisfied that the assessee was prevented by sufficient cause from filing the appeals before the learned CIT(A) within the prescribed period. Accordingly, the delay in all four appeals is condoned and the appeals are admitted for adjudication on merits.

7. Ordinarily, where the first appellate authority dismisses an appeal solely on the ground of limitation without adjudicating the substantive grounds, the matter may be restored to that authority for a decision on merits. However, remand is neither an inexorable rule nor a ritualistic necessity. Where the dispute turns upon documents which are unambiguous, emanate from registered or certified records and require no elaborate factual investigation, the Tribunal, being the final fact-finding authority, would be justified in deciding the issue instead of prolonging the proceedings through another round of remand. In the present case, the controversy rests upon the registered Agreement for Sale, the registered Deed of Assignment, the receipt acknowledging the sale consideration and the certified housing-loan statement issued by ICICI Bank. These documents go to the root of the addition, are intrinsically connected with the transaction forming the subject matter of the reassessment, and furnish a complete and readily ascertainable answer to the inference drawn by the Assessing Officer. The learned CIT DR has not pointed out any discrepancy in the identity of the property, the registered instruments or the bank record which may necessitate any further factual enquiry. We, therefore, consider it appropriate to adjudicate the quantum appeal on merits rather than remit a small and clearly ascertainable factual issue for another round of proceedings.

8. On examining the registered instruments, we find that the Agreement for Sale dated 18.09.2015 and the Deed of Assignment dated 05.11.2015 do not represent two independent purchases. The Deed of Assignment expressly records that it was executed in furtherance of the Agreement for Sale dated 18.09.2015, which had already been registered with the Sub-Registrar, Thane-6, under Serial No. TNN6-5138-2015. Both instruments concern the very same residential premises, namely Flat No. 107, B-Wing, in the building known as “Progressive’s Celebrity,” situated at Plot No. 71, Sector 15, CBD Belapur, Navi Mumbai. The receipt forming part of the registered documentation acknowledges a total sale consideration of ₹1,10,00,000 from the assignees, Shri Manu Pande and Smt. Jaishri Pande, towards the full and final consideration of the same flat. There is no reference in the registered record to the purchase of a second property or to payment of another consideration of ₹1,10,00,000. Thus, the two entries appearing in the information system represented two connected instruments or stages of one and the same property transaction and could not have been aggregated as two separate investments. The addition of ₹2,20,00,000 consequently proceeds from a manifest duplication of the same transaction merely because the Agreement for Sale and the consequential Deed of Assignment were registered or reported on different dates.

9. Even insofar as the actual consideration of ₹1,10,00,000 is concerned, its source stands duly explained by the certified housing-loan statement issued by ICICI Bank. The statement identifies Shri Manu Pande as the principal borrower and the assessee as the co-applicant, refers to the same property and records a sanctioned and disbursed housing loan of ₹1,09,71,988. The loan was sanctioned on 29.09.2015 and disbursed in two tranches of ₹50,90,235 and ₹58,81,753, aggregating to ₹1,09,71,988. The dates of sanction and disbursement, cheque particulars, amount of the loan and description of the property correspond with the contemporaneous purchase documents. The registered receipt also records the manner in which the sale consideration was discharged. The documentary trail, therefore, establishes that substantially the entire consideration was sourced through an institutional housing loan obtained by the assessee’s son, who was the principal borrower and the first named purchaser. The mere fact that the assessee was included as a joint holder in the property and as a co-applicant in the loan documentation does not lead to the conclusion that the investment emanated from her independent or undisclosed funds.

10. Section 69 can be invoked only where an investment made by the assessee is found to be unrecorded and the assessee either offers no explanation regarding its nature and source or the explanation offered is found to be unsatisfactory. Before an addition can be fastened upon a particular assessee, there must be some positive material demonstrating that the investment was made by that assessee and emanated from funds belonging to her. The mere appearance of the assessee’s name as a joint holder in a registered instrument cannot, without examination of the payment trail, justify attribution of the entire investment to her, particularly when contemporaneous banking records identify the son as the principal borrower and disclose the institutional source from which the consideration was substantially funded. In the present case, no material has been brought on record to show that the assessee made any payment towards the purchase from an unexplained source. On the contrary, the registered instruments establish a single transaction of ₹1,10,00,000 and the certified bank statement explains the source of the consideration through the housing loan obtained by her son. The addition is thus unsustainable on two independent counts: first, the same property transaction has been counted twice, resulting in an artificial enhancement of the alleged investment from ₹1,10,00,000 to ₹2,20,00,000; and secondly, the source of the actual consideration stands explained by contemporaneous and verifiable bank records. The addition does not emanate from any positive evidence of an unexplained investment made by the assessee, but from a mechanical aggregation of two registered documents pertaining to the same property. We accordingly direct the Assessing Officer to delete the addition of ₹2,20,00,000 made under section 69. The quantum appeal is, therefore, allowed.

11. The assessee has also challenged the validity of the reassessment proceedings under section 147 on the grounds of absence of valid jurisdictional foundation, lack of independent application of mind and non-compliance with the statutory requirements governing reassessment. Since we have examined the documentary evidence and deleted the entire addition on merits, adjudication of the jurisdictional challenge would not afford any further substantive relief to the assessee. The said ground is, therefore, left open and treated as academic in the present appeal. The ground relating to levy of interest under sections 234A, 234B and 234C is consequential, and the Assessing Officer is directed to recompute the same, if any, while giving effect to this order.

12. We now take up the penalty of ₹20,000 levied under section 271(1)(b) for the alleged failure to comply with the notices issued under section 142(1). The material before us shows that the assessee was not residing at the address appearing in the PAN records, was not registered on the e-filing portal at the relevant time and had no effective knowledge of the notices. The final show-cause notice was claimed to have been served by affixture at an address where, as affirmed on oath, the assessee was not residing. A failure to comply with a notice can attract penalty under section 271(1)(b) only where such default is without reasonable cause. Section 273B expressly provides that no penalty shall be imposable where the assessee establishes that there was reasonable cause for the failure. A person cannot consciously or deliberately comply with a notice which never came to her knowledge. The very circumstances which have been accepted by us while condoning the delay equally constitute reasonable cause for the alleged non-compliance. The default was neither deliberate nor contumacious and, therefore, the penalty of ₹20,000 levied under section 271(1)(b) is directed to be deleted.

13. Insofar as the penalty of ₹5,000 levied under section 271F is concerned, the undisputed case of the assessee is that she had no independent source of income and no income chargeable to tax during the relevant previous year. The Revenue has not brought any material on record, apart from the impugned addition under section 69, to show that her total income before giving effect to deductions under Chapter VI-A exceeded the maximum amount not chargeable to tax so as to attract an obligation to furnish a return under section 139(1). Since the entire addition made under section 69 has been deleted and there is no independent material establishing that the assessee was otherwise statutorily required to furnish a return of income, the essential foundation for levy of penalty under section 271F ceases to exist. Even otherwise, the absence of any independent taxable income, the assessee’s bona fide belief that she was not required to file a return and the circumstances surrounding the non-receipt of statutory communications furnish reasonable cause within the meaning of section 273B. Accordingly, the penalty of ₹5,000 levied under section 271F is also directed to be deleted.

14. The remaining appeal concerns the penalty of ₹66,00,000 imposed under section 271(1)(c) with reference to the addition of ₹2,20,00,000 made under section 69. The penalty has no independent factual basis apart from the quantum addition. We have already found that the addition arose because the same property transaction was counted twice and that the source of the actual consideration stood duly explained through the housing loan obtained by the assessee’s son. Once the entire quantum addition has been deleted, no income survives with reference to which concealment of particulars or furnishing of inaccurate particulars could be alleged. The substratum of the penalty having disappeared, the penalty of ₹66,00,000 levied under section 271(1)(c) cannot survive and is accordingly directed to be deleted.

15. Before parting, we may clarify that our decision is founded upon the peculiar and incontrovertible documentary facts obtaining in the present case. The registered instruments establish only one property transaction; the total consideration acknowledged in the registered record is ₹1,10,00,000; the certified bank statem273ent identifies the assessee’s son as the principal borrower and records disbursement of a housing loan of ₹1,09,71,988 in relation to the same property; and there is no material showing any unexplained investment by the assessee. A remand in such circumstances would merely prolong the proceedings without serving any meaningful adjudicatory purpose. Accordingly, the addition of ₹2,20,00,000 made under section 69 and the penalties levied under sections 271(1)(c), 271(1)(b) and 271F are deleted.

16. In the result, all four appeals filed by the assessee are allowed.

Order pronounced in the open Court on 23rd September, 2026.