INCOME TAX OFFICER, WARD-30(5), DELHI V. SANJEEV AGGARWAL, DELHI

ITA 5555/DEL/2025

AI Insights

The case involves the Income Tax Officer, Ward-30(5), Delhi as the appellant and Sanjeev Aggarwal as the respondent, concerning the assessment year 2015-16. The primary issue was the reassessment of capital gains tax following the sale of immovable property by the assessee under a collaboration agreement for development. The Assessing Officer (AO) initially added a significant amount to the assessee's income as long-term capital gains, which was contested. The CIT(A) later found the AO's disallowance of the cost of improvements to be unjustified, leading to the dismissal of the Revenue's appeal by the Income Tax Appellate Tribunal.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 839916 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2015-2016
• Appeal Filed On: 08-09-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARPREET KAUR HANSRA
• Keywords: Business income; Additional evidence; Revised return; Reassessment proceedings; Cost of acquisition; Capital Gains
• Section: 147; 148

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F”: NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 5555/Del/2025 (Assessment Year: 2015-16) Income Tax Officer, Ward-30(5), Delhi Vs. Sanjeev Aggarwal, E2-1410, Civic Center, New Delhi (Assessee) (Respondent) PAN: AAEPA2964M Assessee by : None Revenue by: Ms. Harpreet Kaur Hansra, Sr. DR Date of Hearing 05/02/2026 Date of pronouncement 05/02/2026 O R D E R PER NAVEEN CHANDRA, A. M.: 1. This appeal of revenue is directed against the order of the ld AO giving effect order dated 26.08.2025 pertaining to AY 2015-16. 2. None appeared on behalf of the assessee. We, therefore, extensively heard the ld DR and took his assistance to understand the facts of the case. The case records were perused. 3. Briefly, the facts are that the assessee had filed his return of income for A.Y. 2015-16 on 22/01/2016, declaring total income at Rs. 1,73,16,460/- under the head income from house property, business income and income from other sources. Printed from counselvise.com ITA No. 5555/Del/2025 Sanjeev Aggarwal Page | 2 4. The AO reopened the assessment on the basis of information that the assessee had sold his immovable property vide notice u/s 148 of the Act dated 05/12/2019. In response to the notice issued, the assessee had filed his return of income for A.Y. 2015-16 on 10/12/2019 declaring total income at Rs. 4,14,95,520/-. During the course of assessment proceedings, it was observed that the assessee had purchased an agriculture land at Sikandarpur, Gurgaon on 06/04/1981. Further on 03/05/2023, the assessee entered into a collaboration agreement along with three other owners with M/s. PNV Construction Pvt. Ltd. for development agreement of commercial complex. As per this agreement, all the owners of the land got 33% of the total built up area and the developer got the rest 67%, against the cost of construction borne by the developer. Further, the assessee had received a sum of Rs. 25 Lacs as refundable interest free security deposit, as per the terms of the agreement. Further, the assessee entered into a final agreement with the same developer, in which the developer included another party M/s Saluja Construction Company Ltd. As per the agreement, the share of the owners was increased to 38%, from 33%. After that, the collaborator had allocated total area of 25,963 Sq. feet to the assessee and the collaborator had also informed the assessee, the cost of construction borne by him at Rs. 2,857/- per sq. Feet. It is pertinent to mention here that all the cost was borne by the developer to develop the above said property. As seen from the records, the sale consideration comes to Rs. 7,41,76,291/- (Rs. 2857/- per sq feet * total area allocated 25963 sq feet). Further, on the return of income filed in response to notice u/s. 148 of the Act Printed from counselvise.com ITA No. 5555/Del/2025 Sanjeev Aggarwal Page | 3 the assessee offered Rs. 2,41,90,523 /- on account of capital gain. In support of the above claim, the assessee submitted the copy of Collaboration Agreement, Copy of Final Agreement, computation of capital gain, Computation of sale price per Sq. Feet, Copy of purchase deed of original asset and Copy of Occupation Certificate etc. Therefore, the AO passed an order u/s 147 r.w.s. 144B of the Act by making addition of Rs. 4,92,39,191/- (Rs. 7,34,29,713 – 2,41,90,522) on account of long term capital gain and added it total income of the assessee. 5. We find that the assessee filed additional evidence before the CIT(A) which the CIT(A) forwarded to the AO calling for a remand report. The AO instead of analysing and investigating the evidences, contested the evidence on the basis of Rule 46A. The ld CIT(A) thereafter, considering the facts of the case, found the disallowance of the cost of improvements made by the Assessing Officer as unjustified. The CIT(A) held as under: “The assessee has furnished credible details of the cost of improvement undertaken on the property over several financial years, specifically from 1982-83 to 1993-94, which collectively amounted to 79,97,600/- (without indexation). The assessee has explained that substantial construction and renovation were carried out during these years to develop the property into a usable commercial space for conducting business activities under the name and style of M/s Sanjeev Industrial Corp. The cost of improvements claimed by the assessee includes multiple phases of construction spread over different years, such as initial building structures, subsequent extensions, reconstruction after partial demolitions by local municipal authorities, and further development in line with business requirements. These amounts, after applying the appropriate Printed from counselvise.com ITA No. 5555/Del/2025 Sanjeev Aggarwal Page | 4 indexation benefits, were calculated to aggregate 4,92,39,190/-. The indexed cost of acquisition of the land, amounting to 7,46,578/-, was also duly computed and considered. Based on these computations, the assessee declared longterm capital gains of 2,41,90,522/- in the revised return filed during the reassessment proceedings. However, by rejecting the entire claim of cost of improvements, the AO computed the total taxable long-term capital gains at 7,34,29,713/-, leading to an addition of 4,92,39,191/- over and above what was already offered by the assessee. This disallowance fails to take into account the genuine nature of the costs incurred and the detailed working submitted by the assessee, including documentary evidence such as sales tax assessment orders indicating ongoing business activity at the premises, corroborating the existence of constructed structures. After evaluating the submissions and the evidence placed on record, it is evident that the assessee’s claim for cost of improvements is reasonable and supported by sufficient material. The calculation provided by the assessee, which includes both the indexed cost of acquisition and indexed cost of improvements, results in a more accurate determination of the taxable capital gains. By ignoring these legitimate costs, the AO’s computation has artificially inflated the taxable amount. In view of these findings, the addition of 4,92,39,191/- made by the AO towards long-term capital gains is unsustainable. The assessee’s contentions on grounds 2 and 3, supported by detailed computation and acceptable evidences, are upheld. Accordingly, the appeal on these grounds is allowed in favour of the assessee. We accordingly do not find any reason to interfere with the order of the ld CIT(A), accordingly, the appeal of the revenue is dismissed. 6. We are of the considered view that the CIT(A) has appreciated the additional evidence placed before him and has arrived at a reasoned and justifiable view. We therefore find no reason to Printed from counselvise.com ITA No. 5555/Del/2025 Sanjeev Aggarwal Page | 5 interfere with the decision of the CIT(A). In result, the appeal of the revenue is dismissed. 7. In result, the appeal of Revenue in ITA No. 5555/Del/2025 is dismissed. Order pronounced in the open court on 05/02/2026. -Sd/- -Sd/- (SATBEER SINGH GODARA) (NAVEEN CHANDRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 23/02/2026 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi Printed from counselvise.com "