INCOME TAX OFFICER WARD 3(2)(1) AHMEDABAD , AHMEDABAD V. SONABEN ANILKUMAR VARIYA, AHMEDABAD

ITA 1677/AHD/2025

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) which had deleted an addition made by the Assessing Officer under the head 'Long Term Capital Gain' due to a mismatch in reported and actual sale considerations. The assessee, Sonaben Anilkumar Variya, had reported a lower sale consideration in her income tax return compared to what was recorded in the departmental database. The CIT(A) accepted the assessee's explanation that the unreported amounts were from Banakhat agreements, not actual sales, and thus not taxable. The Revenue challenged this decision, leading to the current appeal where the Tribunal found procedural lapses in the CIT(A)'s decision-making process and restored the matter for a detailed examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 778282 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2020-2021
• Appeal Filed On: 31-08-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B.P. SRIVASTAVA
• Keywords: Set aside; Capital asset; Additional evidence; Capital Gains; TDS; FORM 26AS
• Section: 147; 56; 133(6)

Judgement Text

"आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ ‘A’ अहमदाबाद। अहमदाबाद। अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD ] BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER AND SHRI MAKARAND V.MAHADEOKAR, ACCOUNTANT MEMBER ITA No.1677/Ahd/2025 Asstt.Year : 2020-21 ITO, Ward-3(2)(1) Ahmedabad. Sonaben Anilkumar Variya Arhum Elegans AEC Cross Road City Naranpura Vistar SO Ahmedabad. PAN : AMWPV 5380 Q (Applicant) (Responent) Assessee by : None Revenue by : Shri B.P. Srivastava, Sr.DR सुनवाई क तारीख/Date of Hearing : 08/10/2025 घोषणा क तारीख /Date of Pronouncement: 09 /10/2025 आदेश आदेश आदेश आदेश/O R D E R PER MAKARAND V.MAHADEOKAR, AM: This appeal by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 10.06.2025, arising out of the assessment order passed by Assessment unit of the Income Tax Department [hereinafter referred to as “Assessing Officer or AO”] on 19.12.2024 u/s. 147 r.w.s. 144 r.w.s. 144B of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for the Assessment Year 2020-21. 2. Facts of the Case 2.1 The assessee filed her return of income on 21.10.2020 declaring total income of Rs.2,45,000/-. The case was selected under the e- Printed from counselvise.com ITA No.1677/Ahd/2025 2 Verification Scheme, 2021 as it was noticed that the assessee had sold immovable properties to the tune of Rs.11,40,58,500/-. Several notices under section 133(6) were issued by the Jurisdictional Assessing Officer on 15.10.2022, 29.11.2022 and 23.12.2022. Though the last notice was duly served on 27.12.2022, no compliance was made by the assessee. Further statutory notices under section 142(1), general show cause notice under section 144 and centralized communications were also issued from time to time, but no response was forthcoming from the assessee. 2.2 On examination of the return filed, it was observed that the assessee had disclosed sale consideration aggregating to Rs. 8,67,82,806/- in the schedule of capital gains along with TDS credit of Rs.7,61,085/-. However, as per the departmental database, the assessee had sold properties to (i) M/s. Gauriputra Estate Holders Pvt. Ltd. for Rs.10,70,58,500/- and (ii) M/s. Aakashdeep Farms Pvt. Ltd. for Rs.70,00,000/-, aggregating to Rs.11,40,58,500/-, against which TDS of Rs.11,40,585/- had been deducted by the purchasers. This resulted in a mismatch of Rs.2,72,75,694/- (Rs.11,40,58,500 – Rs.8,67,82,806) which remained unexplained before the Assessing Officer. In the absence of any reconciliation or explanation from the assessee, the Assessing Officer made an addition of Rs.2,72,75,694/- under the head Long Term Capital Gain and assessed the total income at Rs.2,75,20,694/-. 2.3 The assessee carried the matter in appeal before the CIT(A) against the assessment order passed under section 147 r.w.s. 144. In the course of appellate proceedings, the assessee submitted that she was an uneducated farmer who had duly disclosed sale consideration of Rs.8,67,82,806/- in her return of income under the head “Capital Printed from counselvise.com ITA No.1677/Ahd/2025 3 Gains”. It was explained that the differential amount of Rs.2,72,75,694/- reflected in Form 26AS did not represent completed sales but pertained only to Banakhat (agreement to sell) transactions which had not culminated into registered sale deeds. According to the assessee, although the purchasers had deducted TDS on such Banakhat amounts, the same did not render the transactions taxable since no transfer within the meaning of section 2(47) of the Act had taken place. The assessee also furnished a reconciliation between Form 26AS and the return of income, pointing out that transactions below Rs. 50 lakhs were not subjected to TDS and that this further explained the variation. It was emphasized that no TDS credit relating to Banakhat transactions had been claimed in the return, thereby demonstrating that the assessee never treated those transactions as taxable sales. 2.5 The CIT(A), after considering the submissions, observed that the assessee had remained non-compliant during assessment proceedings, but the reconciliation furnished in appeal was reasonable. The CIT(A) found that the amount of Rs. 8,67,82,806/- represented actual sale deeds which were duly offered to tax, whereas the balance amount of Rs. 2,72,75,694/- represented unexecuted Banakhat agreements which could not be regarded as concluded sales. On this reasoning, the CIT(A) held that the Assessing Officer was not justified in treating the differential amount as taxable long term capital gain. Accordingly, the addition of Rs. 2,72,75,694/- was deleted and the appeal of the assessee was allowed. 2.6 Aggrieved by the order of CIT(A), the Revenue is in appeal before us raising following grounds: (a) The Ld. CIT(A) erred in law and on facts by deleting the addition of Rs.2,72,75,694/- made by the AO under the head of LTCG, on account Printed from counselvise.com ITA No.1677/Ahd/2025 4 of under-reported sale consideration, despite their non-declaration in ITRs for A.Y. 2020-21 to 2022-23 and potential taxability u/s 56 or as capital gains, and violated Rule 46A by admitting additional evidence without a remand report to the AO, rendering the order unsustainable and warranting reversal with revenue implication of Rs. 2,72,75,694/- (plus interest/penalty). (b) The appellant craves leave to add, alter and /or to amend all or any the ground before the final hearing of the appeal. 3. When the appeal was called for hearing, none appeared on behalf of the assessee despite due service of notice. 4. The Learned Departmental Representative (DR) appeared and contended that the CIT(A) erred in deleting the addition without calling for a remand report from the AO despite admission of additional evidence, which is contrary to Rule 46A. The DR submitted that in the interest of justice, the matter should be restored to the file of the CIT(A) for deciding the appeal afresh after obtaining a remand report from the AO and granting due opportunity to the assessee. 5. We have carefully considered the assessment order, the order of the CIT(A), the submissions placed on record, and the contentions of the Departmental Representative. The core issue revolves around the addition of Rs. 2,72,75,694/- made by the Assessing Officer under the head “Long Term Capital Gain” on the ground of mismatch between the consideration reflected in the return of income and that available in the departmental database, which was subsequently deleted by the CIT(A). 5.1 The Assessing Officer made the addition by treating the differential amount as undisclosed sale consideration, whereas the assessee contended before the CIT(A) that the same represented Banakhat (agreement to sell) transactions which did not culminate in Printed from counselvise.com ITA No.1677/Ahd/2025 5 registered sale deeds and, therefore, did not amount to transfer under section 2(47) of the Act. The CIT(A), accepting this explanation, deleted the addition. 5.2 It is an admitted position that in respect of such Banakhat agreements, the purchasers had deducted tax at source and the same was duly reflected in Form 26AS. The deduction of tax at source creates a presumption that advance consideration had in fact been paid to the assessee. In such a situation, the crucial questions which arise and remain unanswered are: whether the Banakhat agreements were ultimately cancelled or remained operative; what was the fate of the advance amounts received by the assessee under such agreements; and how the TDS deducted on such amounts has been dealt with in the tax records. These aspects go to the root of determining whether the disputed amount is a mere advance under an unfulfilled agreement, not chargeable as capital gains, or whether it represents part of sale consideration taxable under the Act. 5.3 The CIT(A), while deleting the addition, has not called for a remand report from the Assessing Officer in terms of Rule 46A, nor has there been any proper verification of these vital facts. In our considered view, without examining these issues through factual enquiry, the true nature of the transaction cannot be established, and the deletion of the addition by the CIT(A) cannot be sustained. 5.4 Accordingly, in the interest of justice, we set aside the impugned order and restore the matter to the file of the CIT(A) with a direction to decide the appeal afresh after calling for a remand report from the Assessing Officer. The CIT(A) shall specifically verify the status of the Banakhat agreements, the treatment of the advance amounts, and the Printed from counselvise.com ITA No.1677/Ahd/2025 6 accounting of TDS deducted thereon, after affording due opportunity to the assessee. 6. In the result, the appeal of the Revenue is allowed for statistical purposes. Order pronounced in the Court on 9th October, 2025 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER Ahmedabad, dated 09/10/2025 Printed from counselvise.com "