DHARMESH KANUBHAI PATEL,SURAT V. INCOME TAX OFFICER, WARD-2(3)(1), AAYKAR BHAVAN, MAJURA GATE, SURAT, SURAT

ITA 173/SRT/2024

AI Insights

The case involves Dharmesh Kanubhai Patel, who appealed against the order of the National Faceless Appeal Centre (NFAC), which confirmed the addition of Rs. 87,86,742 as long-term capital gain from the sale of agricultural land. The land was sold during the financial year 2013-14, and the assessee had claimed the indexation cost as of 01.04.1981. The Assessing Officer, without the DVO's report at the time of assessment, adopted a lower valuation rate and computed higher capital gains. The Tribunal found that both the lower authorities had not considered the DVO's report and allowed the appeal, restoring the matter to the Assessing Officer for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472215 (ITAT-SURAT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Other Referred Cases: CIT vs. Mitesh Impex
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: P. M. JAGASHETH
• Keywords: Set aside; Opportunity of being heard; Revised return; Fair market value; Capital Gains; Valuation report
• Section: 143(3); 54B

Judgement Text

" आयकर अपीलीय अिधकरण, सूरत Ɋायपीठ, सूरत IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 173/SRT/2024 (AY 2014-15) (Physical court hearing) Dharmesh Kanubhai Patel 59, Patel Street, AT Post Kosad, Tal-Choryasi, Dist. Surat-394 107 [PAN : ASCPP 6161 F] बनाम Vs Income Tax Officer, Ward- 2(3)(1), Surat, Aaykar Bhavan, Majura Gate, Surat-395001 अपीलाथŎ/Appellant ŮȑथŎ /Respondent िनधाŊįरती की ओर से /Assessee by Shri P. M. Jagasheth, CA राजˢ की ओर से /Revenue by Shri Mukesh Jain– Sr-DR सुनवाई की तारीख/Date of hearing 01.01.2025 उद ्घोषणा की तारीख/Date of pronouncement 01.01.2025 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of National Faceless Appeal Centre, Delhi [for short to as “NFAC/Ld.CIT(A)] dated 29.12.2023 for assessment year (AY) 2014-15, which in turn arises out of assessment order passed by Assessing Officer under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 26.12.2016. The assessee has raised the following grounds of appeal:- “1.On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of Rs.87,86,742/- as long term capital gain in one agriculture land sold by the appellant at Moje Kosad, R.S.No.22/2,Block No.306, Khata No.1174 by not accepting the value as on 01.04.1981 on the basis on the government ITA No.173/SRT/2024 (A.Y.14-15) Dharmesh K. Patel 2 approved valuer’s valuation report by contending that the value taken as on 01.04.1981 is on higher side. 2. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition without referring to the valuation to DVO, Surat and made addition at his own. 3. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in taking value as on 01.04.1981 for the said land at average on the basis of sale instances available with the Ld. A.O. 4. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has not offered adequate opportunities to hear the case and passed ex-arte order and hence the case may please be set aside and restored back to the CIT(A) or Ld.A.O. 5. It is therefore prayed that the above addition may please be deleted as learned Members of the Tribunal may deem it proper. 6. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal.” 2. Rival submission of both the parties heard and record perused. The Ld. Authorized Representative (Ld.AR) of the assessee submits that during relevant financial year 2013-14, the assessee has sold ancestral agricultural land at Moje Kosad, R.S. No.22/2, Block No.306, Khata No.1174 along with other co-owners for a consideration of Rs.4.39 crores. The assessee is having share of 24.58%. The assessee while filing his return of income has shown Long Term Capital Gains (in short, ‘LTCG’) of Rs.18,97,552/-. Since the asset was acquired prior to 01.04.1981, the assessee for the purpose of calculation of capital gains shown the indexation cost as on 01.04.1981 at Rs. 89,10,500/- ITA No.173/SRT/2024 (A.Y.14-15) Dharmesh K. Patel 3 . The Assessing Officer made a reference to Departmental Valuation Officer (in short, ‘DVO’) for estimation of fair market value of asset as on 01.04.1981. The report of DVO was not received till the passing of assessment order. The Assessing Officer on his adopted the rate of land @ 5.00/- per meter and computed capital gains at Rs.87,86,472/-. The Ld.CIT(A) confirmed the action of Assessing Officer in ex parte order dated 29.12.2013 without considering the report of DVO or by seeking any remand report from Assessing Officer. The assessee could not contest the proceedings before ld CIT(A), as previous consultant of assessee has withdrawn his authority and new consultant engaged by him has not received notice of hearing of appeal. Thus, both the lower authorities have not considered the report of DVO. The Ld. AR of assessee submits that now he has filed application in the form of affidavit for making additional claim of exemption under section 54B, which was not raised Assessing Officer or before Ld.CIT(A). The assessee has invested capital gain in purchase of new agriculture land within the time prescribed in law. The assessee is entitled to raise additional claim before First Appellate Authority in view of various decisions of Hon’ble jurisdictional High Court including in case of CIT vs. Mitesh Impex (2014) 46 taxmann.com 30 (Guj)/[2014] 225 Taxman 168 (Guj) (Mag.)[2014] 367 ITR 85 (Guj)/[2014] 270 CTR 66(Guj) [02-04- 2014]. The Ld. AR of the assessee submits that since he has raised additional claim for the first time before Tribunal. Furthermore, neither the Assessing Officer has considered the report of DVO nor the report of Government Registered Valuer. Therefore, in all fairness, matter may be restored back to the file of Assessing Officer after admitting the additional claim raised by ITA No.173/SRT/2024 (A.Y.14-15) Dharmesh K. Patel 4 assessee, with the direction to Assessing Officer to pass fresh assessment order in accordance with law after considering the Registered Government Valuer, report of DVO and objection raised by assessee. The Ld. AR of the assessee submits that he undertakes on behalf of assessee to be more vigilant and making timely compliance before lower authorities as and when called for. 3. On the other hand, Ld. Sr-DR for the Revenue supported the order of lower authorities. Ld. Sr-DR for the Revenue submits that matter may be restored back to the file of Ld.CIT(A), who will be in a better position to appreciate or re-appreciate of the facts and claim of assessee under section 54B. 4. We have considered the rival submissions of both the parties and have gone through order of lower authorities carefully. We find that during assessment, Assessing Officer made reference to DVO for estimate of Fair Market Value of asset as on 01.04.1981. Admittedly report of DVO was not received by Assessing Officer before completion of assessment. We find that Assessing Officer on his wisdom adopted the value of land/asset as on 01.04.1981 @ Rs.5/- per meter (wrongly mentioned at Rs.5.00/- per square feet). The Assessing Officer after adopting the value of asset as on 01.04.1981 Rs.5.00/- per re-computed the capital gains and made addition of capital gains at Rs.87,86,472/-. Admittedly the appeal of assessee was dismissed ex parte order by Ld.CIT(A). Now before us, assessee has raised additional ground of appeal by making fair request that by admitting additional claim of section 54B, the matter may be restored back to the file of Assessing Officer for further ITA No.173/SRT/2024 (A.Y.14-15) Dharmesh K. Patel 5 verification of claim under section 54B and further to consider the report of DVO and report of Government Registered Valuer. 5. We find that Hon’ble jurisdictional High Court in case of Mitesh Impex (supra) held that Appellate Authorities have discretion to permit additional claim which was available when return was filed. Keeping in view, the legal position that Assessing Officer is not empowered to accept additional claim in absence of revised return though such discretion is vested with the Appellate Authority. Therefore, keeping in view of the fact that assessee has sold ancestral agricultural land and have claimed to have purchase another agricultural land and claiming exemption under section 54B of the Act. Therefore, additional claim of assessee is admitted subject to verification of fact by Assessing Officer. Further, considering the fact that report of DVO was not available at the time passing assessment order and ld CIT(A) has confirmed the action of Assessing Oficer. Therefore, matter is restored back to the file of Assessing Officer to consider the report of DVO and the report of Government Registered Valuer and to pass fresh order in accordance with law. The assessee is at liberty to file objection, if any, against the report of DVO, if so desire. Needless to direct Assessing Officer before passing the order afresh, the Assessing Officer shall give reasonable opportunity of being heard to assessee and to file requisite as required and explanation and evidence as and when called for. 6. As we have already admitted additional claim raised by assessee under section 54B of the Act, therefore, Assessing Officer is also directed to consider the claim of assessee and after verification of fact pass order in accordance with ITA No.173/SRT/2024 (A.Y.14-15) Dharmesh K. Patel 6 law. In the result, the grounds of appeal raised by the assessee is allowed for statistical purposes. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 01/01/2025. Sd/- Sd/- (BIJAYANANDA PRUSETH) (PAWAN SINGH) लेखा सद˟/Accountant Member Ɋाियक सद˟/Judicial Member सूरत / Surat Dated: 01/01/2025 Dkp Outsourcing Sr.P.S* आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to :  अपीलाथŎ/ The Appellant  ŮȑथŎ/ The Respondent  आयकर आयुƅ/ CIT  िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, सूरत/ DR, ITAT, SURAT  गाडŊ फाईल/ Guard File // True Copy // By order/आदेश से, सहायक पंजीकार आयकर अपीलीय अिधकरण, सूरत "