JAYESHKUMAR BALDEVBHAI PATEL,AHMEDABAD V. THE INCOME TAX OFFICER, WARD-4(2)(2), AHMEDABAD

ITA 595/AHD/2024

AI Insights

This case involves an appeal by Jayeshkumar Baldevbhai Patel against the order of the Commissioner of Income Tax (Appeals), which upheld the addition of Rs.2,01,60,785 as long-term capital gains on the sale of inherited agricultural land. The land, located in Vastral, Ahmedabad, was sold for Rs.7.91 crores, and the assessee did not initially file a return, believing his income was below the taxable limit. The Assessing Officer reopened the case under section 147 of the Income Tax Act, 1961, due to the non-disclosure of income from the sale. The assessee contested the valuation used for calculating capital gains, which was based on a report from a registered valuer and a Departmental Valuation Officer's assessment. The Tribunal found both valuations inadequate and directed a fresh examination of the property's valuation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 793543 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 02-04-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Additional evidence; Sale consideration of property below Jantri Value; Fair market value; Cost of acquisition; Reopening of assessment; Capital Gains; Principle of natural justice; Valuation report; Reason to believe
• Section: 147; 148; 271(1)(c); 54F

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before: DR. BRR Kumar, Vice President And Shri Siddhartha Nautiyal, Judicial Member Jayeshkumar Baldevbhai Patel F-103, Satyamev Vista S.G. Road, Gota, Ahmedabad-382481 Gujarat PAN: BFFPP7156F (Appellant) Vs The ITO Ward-4(2)(2), Ahmedabad (Respondent) Assessee Represented: Shri Vivek Chavda, A.R. Revenue Represented: Shri Abhijit, Sr. D.R. Date of hearing : 14-08-2025 Date of pronouncement : 23-09-2025 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This appeal is filed by the Assessee as against the appellate order dated 15.02.2024 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the assessment order passed under section 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2014-15. ITA No: 595/Ahd/2024 Assessment Year: 2014-15 Printed from counselvise.com I.T.A No. 595/Ahd/2024 A.Y. 2014-15 Jayeshkumar Baldevbhai Patel vs. ITO 2 2. The assessee has raised the following Grounds of Appeal: 1.1 The order passed u/s. 250 on 15.02.2024 for A.Y.2014-15 by NFAC, Delhi upholding the addition of Rs.2,01,60,785 made by AO is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the eccentric facts and evidence available with regard to the impugned additions. 1.3 The Ld. CIT(A) has grievously erred in law and on facts in not carrying out any inquiry with regard to the applicability of the provisions of Income tax Act and thereby violated the principle of natural justice. Therefore, the appellant shall be granted opportunity to produce additional evidences. 2.1 The Ld. CIT(A) has grievously erred in law and or on facts in upholding the reopening u/s 147 of the Act. 2.2 That in the facts and/or in the law, the Ld. CIT(A) ought not to have upheld the reopening u/s 147 of the Act. 3.1 The Ld. CIT(A) has grievously erred in law and on facts in upholding the addition of Rs.2,01,60,785 being capital gain on sale of land. 3.2 That the Ld. CIT(A) ought not to have upheld addition of Rs.2,01,60,785 being capital gain on sale of land. 3.3 The Ld. CIT(A) has erred in law and or on facts in upholding the cost of acquisition at Rs.5,17,700 as against Rs.4,41,73,377 taken by the appellant. 3.4 That the Ld. CIT(A) ought not to have upheld the cost of acquisition at Rs.5,17,700 as against Rs.4,41,73,377 taken by the appellant. 3.5 The Ld. CIT(A) has erred in law and or on facts in upholding the sale consideration at Rs.4,51,34,400 as against Rs.3,95,50,000 taken by the appellant. 3.6 That the Ld. CIT(A) ought not to have upheld the cost of acquisition at sale consideration at Rs.4,51,34,400 as against Rs.3,95,50,000 taken by the appellant. 4.1 The Ld. CIT(A) has grievously erred in law and or on facts in not granting opportunity of being heard via video conferencing. 4.2 The Ld. CIT(A) has failed to appreciate that granting opportunity of being heard via video conferencing facility is mandatory in the new regime of Faceless appeal process. Printed from counselvise.com I.T.A No. 595/Ahd/2024 A.Y. 2014-15 Jayeshkumar Baldevbhai Patel vs. ITO 3 4.3 The Ld. CIT(A) ought to have granted opportunity of being heard via videoconferencing. It is therefore prayed that the addition made by Ld. AO and upheld by the CIT(A) may please be deleted in the interest of natural justice and considering the eccentric facts of the case. 3. The brief facts of the case are that the assessee, Shri Jayeshkumar Baldeobhai Patel, did not file his return of income for the Assessment Year 2014-15. On scrutiny of the AIR and ITS data available with the Income Tax Department, the Assessing Officer noticed that the assessee had sold immovable property during the relevant financial year for a total sale consideration of Rs.7.91 crores, but had failed to file a return disclosing the capital gains from the said transaction. This led the Assessing Officer to believe that income had escaped assessment due to the assessee’s failure to file the return and disclose full and true material facts. Accordingly, the case was reopened under section 147 of the Income Tax Act, and notice under section 148 was issued on 31.03.2019. In response, the assessee filed his return of income on 03.10.2019, declaring a long-term capital loss of Rs.12,03,937/-, based on a valuation report obtained from a registered valuer, which took the fair market value of the property as on 01.04.1981 at Rs.300/- per sq.mt. However, the Assessing Officer found that the valuation report lacked supporting data, such as comparable sales and justification for the rate adopted. Hence, the Assessing Officer referred the matter to the District Valuation Officer (DVO), who assessed the fair market value of the land on 01.04.1981 at only ₹5,17,000/-, much lower than what was claimed by the assessee. A show cause notice was then issued to the assessee, Printed from counselvise.com I.T.A No. 595/Ahd/2024 A.Y. 2014-15 Jayeshkumar Baldevbhai Patel vs. ITO 4 proposing to adopt the DVO’s valuation and to recompute the capital gains. The assessee filed a detailed reply contesting the DVO’s valuation and challenged the reliance by the Assessing Officer on stamp duty value instead of actual consideration. The assessee reiterated that the land was inherited and the premium paid to convert it from agricultural to non-agricultural use should also be factored into the computation. Despite these submissions, the Assessing Officer found the reply unsatisfactory and proceeded to finalize the assessment based on the DVO’s report. Accordingly, the assessee computed the long-term capital gain considering the DVO’s fair market value of Rs.5,17,000/- as on 01.04.1981 and after deducting proportionate premium paid and exemption claimed under section 54F of the Act. The revised computation resulted in Long Term Capital Gain of Rs.2,01,60,785/-, which was added to the total income of the assessee. Penalty proceedings under section 271(1)(c) were also initiated for concealment of income. 4. In the appeal filed by the assessee before the CIT(Appeals), after reviewing the facts and legal position, CIT(Appeals) upheld the action of the AO in reopening the case. It was observed that the reopening was based on credible information and supported by a valid \"reason to believe\" that income had escaped assessment, especially considering that no return was filed despite a high-value transaction. Since the reopening was initiated within four years from the end of the relevant assessment year and all procedural requirements were fulfilled, the CIT(A) found no error in the issuance of notice under Section issued notice u/s 148 of the Act. Regarding the addition of capital gains, the CIT(A) concurred with Printed from counselvise.com I.T.A No. 595/Ahd/2024 A.Y. 2014-15 Jayeshkumar Baldevbhai Patel vs. ITO 5 the AO's reliance on the DVO’s report and noted that the assessee failed to provide a credible or evidence-based valuation to support his claim of a capital loss. Given the disparity between the self- assessed value and the DVO's estimate, and the fact that the stamp duty value was even higher than the declared sale consideration, the CIT(A) held that the computation of long-term capital gains by the AO was correct and justified under law. Accordingly, the appeal of the assessee was dismissed in its entirety, and both the reopening of the assessment and the addition of Rs.2,01,60,785/- on account of long-term capital gains were upheld. 5. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. Before us, the Counsel for the assessee submitted that the assessee is an individual and is primarily engaged in agricultural activities and transactions giving rise to capital gains. He did not file a return of income for the Assessment Year 2014–15, under the genuine belief that his income was below the taxable limit. During the assessment proceedings, the Assessing Officer observed that the assessee had sold ancestral agricultural land located in Vastral, Ahmedabad for Rs.7.91 crores, jointly held with his brother. The assessee’s share from this transaction was Rs.3.95 crores, and he had received this land upon the death of his mother in 2013. For the purpose of calculating capital gains, the assessee submitted a valuation report from an approved valuer, Shri P. K. Desai, who valued the land at Rs.47,04,300/- as on 01.04.1981, resulting in an indexed cost of Rs.4.41 crores. Further, the assessee had paid Rs.3.61 crores towards land conversion charges to convert the agricultural land Printed from counselvise.com I.T.A No. 595/Ahd/2024 A.Y. 2014-15 Jayeshkumar Baldevbhai Patel vs. ITO 6 into non-agricultural land, which was a precondition from the buyer. However, the AO did not accept this valuation and referred the matter to the District Valuation Officer (DVO). The assessee objected to the DVO’s valuation, on the ground that the DVO used sale instances from Odhav, a locality that is significantly distant from Vastral, where the land is actually situated. In contrast, the assessee's valuer considered relevant and comparable factors including location, market trends, land dimensions, and legal aspects specific to the Vastral area. Despite this, the AO restricted the cost of acquisition to Rs.24.27 lakhs as against the assessee’s claim of Rs.2.20 crores, resulting in a significant capital gain. The AO further noted that the stamp duty value (SDV) of the property was Rs. 9.02 crores, while the declared sale consideration was Rs.7.91 crores. The assessee clarified that although the sale deed was executed later, the agreement to sell had been entered into before 18.04.2011, the date on which the SDV rates were revised in Gujarat. Due to the time-consuming nature of the land conversion process, there was a delay between the agreement and execution. Despite this, the AO adopted the SDV and took the assessee’s share of consideration as Rs.4.51 crores instead of Rs.3.95 crores. On this basis, the AO made an addition of ₹2.01 crores as long- term capital gains. The assessee challenged this assessment before the CIT(A) and submitted that the AO had ignored the peculiar facts of the case, including the ancestral nature of the property, the pre-SDV agreement, and the genuine valuation obtained from a local registered valuer. He also pointed out that the DVO’s report was arbitrary and not based on relevant comparable sales. Despite these submissions, the CIT(A) dismissed the appeal without Printed from counselvise.com I.T.A No. 595/Ahd/2024 A.Y. 2014-15 Jayeshkumar Baldevbhai Patel vs. ITO 7 appreciating the circumstances and without affording the assessee an opportunity of personal hearing through video conferencing, which is mandated under the faceless appeal scheme. 6. In response, the Ld. DR placed reliance on the observations made by the Assessing Officer and Ld. CIT(Appeals) in their respective orders. The Ld. DR submitted that on a perusal of the valuation report submitted by the assessee, it is seen that the same is clearly erroneous since it does not contain any comparable sales instances. In fact, at page 5 of the assessee’s Valuation Report, the Valuer has itself stated that “few comparable sale instances are available”. Therefore, it is evident that there is no reasonable basis given by in the Valuation Report submitted by the assessee, for arriving at the average rate of Rs. 300 per square metre as on 01.04.1981. 7. We have carefully considered the rival submissions and perused the material available on record. In so far as the grounds raised by the assessee challenging the reopening of assessment under Section 147 of the Income Tax Act are concerned, we find that the Assessing Officer had sufficient material in the form of credible AIR/ITS data indicating that the assessee had sold immovable property during the relevant financial year for a substantial consideration but failed to file a return of income. This, in our view, constituted a valid \"reason to believe\" that income had escaped assessment. Further, since the reopening was initiated within four years from the end of the relevant assessment year and the necessary approvals under Section 151 were obtained, we do not Printed from counselvise.com I.T.A No. 595/Ahd/2024 A.Y. 2014-15 Jayeshkumar Baldevbhai Patel vs. ITO 8 find any infirmity in the action of the Assessing Officer in reopening the assessment. Accordingly, the grounds of appeal relating to the validity of reopening are dismissed. 8. With respect to the addition on account of long-term capital gains, we note that the assessee had relied on a Valuation Report dated 27.10.2017 from a registered valuer to determine the fair market value of the land at Rs.300 per sq. metre. However, a perusal of the said Valuation Report reveals that no supporting comparable sales instances were provided. In fact, at page 5 of the report, the valuer himself has stated that only a few comparable instances are available, but no details of such transactions were actually included in the Valuation Report. Hence, the basis for adopting ₹300 per sq. metre appears to be arbitrary and unsupported by evidence. On the other hand, the Departmental Valuation Report prepared by the District Valuation Officer has adopted sale instances of plots located in other areas such as Odhav, which, according to the assessee, are not comparable to the land situated in Vastral due to locational differences. We find merit in the assessee’s contention that the DVO’s reliance on remote sale instances without considering location-specific factors may not result in a fair valuation. However, given the inadequacy of the assessee’s own Valuation Report, we are unable to accept the assessee’s claim in its current form either. In view of the above, we are of the considered opinion that the issue of valuation requires fresh examination. Accordingly, the matter is restored to the file of the Assessing Officer with a direction to reconsider the issue afresh. The assessee is directed to submit a revised Valuation Printed from counselvise.com I.T.A No. 595/Ahd/2024 A.Y. 2014-15 Jayeshkumar Baldevbhai Patel vs. ITO 9 Report clearly specifying and giving comparable sale instances relevant to the location of the impugned property. The Assessing Officer shall consider the assessee’s objections to the Departmental Valuation Report and thereafter pass a reasoned order in accordance with law. 9. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 23 -09-2025 Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad : Dated 23/09/2025 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद Printed from counselvise.com "