NATVERBHAI KIKABHAI PATEL,SURAT V. ACIT,CIRCLE INT. TXN, VADODARA

ITITA 2/SRT/2024

AI Insights

The case involves Natwarbhai Kikabhai Patel, who appealed against the assessment order for the assessment year 2016-17, which included an addition of Rs. 4,18,883 as long-term capital gain from the sale of immovable property. The property in question was agricultural land in Vesu, Surat, which was co-owned and sold by Patel and his co-owners. The primary contention was the cost of acquisition per square meter used for calculating capital gains, with Patel arguing for a higher valuation based on previous appellate orders, which was not accepted by the Assessing Officer and the Dispute Resolution Panel. The Tribunal's decision to accept Patel's valuation was based on the similarity to a family member's case, which had been valued higher by the CIT(A).

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 106879 (ITAT-SURAT)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 10-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Other Referred Cases: Union of India vs. Rajeev pencil, Alkaben Patel vs. ITA No. 2770/Ahd/2014, Sumatilal Chotalal Shah vs. 124 ITR 862
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: RAJESH UPADHYAY
• Keywords: Fair market value; Cost of acquisition
• Section: 147; 148

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./IT(IT)A No. 02/SRT/2024 (AY 2016-17) (Physical court hearing) Natwarbhai Kikabhai Patel, 64, Patel Faliyu, Bhartana, Vesu, Surat -395 0097 [PAN : BNDPP924 K] बनाम Vs Assistant Commissioner of Income tax, Circle, International Taxation, Vadodara, Room No. 202, Old GEB Building, Aayakar Bhawan Baroda, अपीलाथŎ/Appellant ŮȑथŎ /Respondent िनधाŊįरती की ओर से /Assessee by Shri Rajesh Upadhyay, AR राजˢ की ओर से /Revenue by Shri Mukesh Jain– Sr-DR सुनवाई की तारीख/Date of hearing 10.03.2025 उद ्घोषणा की तारीख/Date of pronouncement 10.03.2025 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the assessment order passed under section 147 rws 144C(13) dated 26.02.2024, passed in pursuance of direction Dispute Resolution Penal-2 (DRP-2) Mumbai dated 26.02.2024. The assessee has raised the following grounds of appeal:- “1. Ld. AO and CIT/DRP-2 , Mumbai, has erred in law and on fact to make an addition of Rs. 4,18,883/- on account of alleged LTCG for sale of immovable property being Block No. 67, Moje: Vesu Surat by taking cost of acquisition as on 01.04.1981 at Rs. 77.80 Per square meter as against appellants cost of acquisition at Rs. 100/- per square meter ignoring the fact and law that cost taken by the appellant is based on several appellate orders needs to be accepted. 2. Ld. ITO (International Tax) Surat has erred in law and on facts to reopen appellant assessment for AY 2016-17 and issue of notice under section 148 in contravention of provisions of law. Natwarbhai Kikabhai Patel IT(IT) A No. 02/2024 AY 2016-17 2 2. Vide application dated 17.12.2024 the assessee has raised following additional grounds of appeal: “1. On the facts and in the circumstances of the case and in law, the ld CIT(A) erred in not holding the notice under section 148 as invalid and bad in law without appreciating the facts that when notice under section 148 of the act was issued. The period of three years, approval was required to be taken as per provisions of amended section 151 of the act from Principal Chief Commissioner or Principle Director General or Chief Commissioner or Director- General of Income Tax and not from Principal Commissioner of income tax and as laid down by Hon’ble Supreme Court in case of Union of India versus Rajeev pencil in Civil Appeal No. 8629 of 2024. 2. The ld CIT(A)/NFAC erred in not holding that notice under section 148 issued on 27th July 2022 is barred by limitation as it was issued beyond the time limit surviving under the income tax act read with TOLA.” 3. Rival submission of both the parties have been heard and record perused. we find that the assessee has raised additional ground of appeal but no submission was made at the time of submissions, thus such additional ground of appeal is treated as not pressed. On other grounds of appeal, the Ld. Authorized Representative (Ld.AR) of the assessee submits that during relevant financial year 2016-17, assessee sold agricultural land along with his other co-owners. The assessee was having 12.50% share in the land. The land was situated at R.S. (Block) No. 67 of Vesu Surat. As the land was acquired prior to 1981, therefore, the assessee for the purpose of cost of acquisition, in order to compute the capital gain on sale of share, adopted fair market value of said land at the rate of Rs. 100/- per square meter as on 01.04.1981. The assessee computed capital on his share of Rs. 63,15,035/-. The assessing officer made a reference to the departmental valuation officer (DVO) for determination of fair market value as on 1st April 1981. The DVO, estimated fair market value Natwarbhai Kikabhai Patel IT(IT) A No. 02/2024 AY 2016-17 3 of said land at 77.80 per square metre ₹ as on 01.04.1981. On the basis of the report of DVO, the assessing officer recomputed the capital gain at Rs. 67,33,868/- and thereby added 4,18,833/- as additional long-term capital gain to the income of assessee. As the income of the assessee was assessed by Special Ward of International Taxation, therefore, the assessee was served with draft assessment dated 29.05.2023. The assessee exercised his option of filing objection before Dispute Resolution Penal (DRP). The ld penal of DRP confirmed the action of Assessing officer vide their directions dated 26.02.2024. On receipt of direction of ld DRP, the Assessing Officer passed final assessment dated 26.02.2024, which is under appeal before this Tribunal. The ld AR of the assessee submits that one of the family member of assessee namely Kirit Kumar Patel (PAN: BINPP 5370 A) also sold his land in same locality that is out of R.S. No. 89/1, 89/2 of Vesu, Surat. Similar additions were made against said assessee on the basis of report of DVO dated 16.03.2016, wherein same rate of land was estimated by DVO, i.e. Rs. 77.80/- per square meter. However, on further appeal before ld CIT(A), the rate of land was directed to be consider @ Rs. 115/- per square meter. The ld CIT(A) while passing order relied on the decision of Surat Tribunal in Alkaben Patel in ITA No. 2770/Ahd/2014 dated 21.05.2018 and Jurisdictional High Court in Sumatilal Chotalal Shah (124 ITR 862). The copy of order ld CIT(A) in said appeal is filed at page no. 33 to 37 of paper book. The ld AR of the assessee submits that the assessee has considered the rate @ Rs. 100/- per square meter on the basis of decision of Kirit Kumar decided by ld CIT(A) in his case. Natwarbhai Kikabhai Patel IT(IT) A No. 02/2024 AY 2016-17 4 The rate adopted by the assessee may be accepted and Assessing Officer be directed accordingly. 4. On the other hand, the learned Commissioner of income tax/ Departmental Representative (CIT-DR) for the revenue supported the order of DRP. The ld CIT-DR for the revenue submits that all submissions of the assessee was considered by ld. Panel of DRP. The ld DRP in their finding has categorically held that the assessee has not shown similarity in his land as well as land of Kirit Kumar Patel. The assessee is relying upon decision of CIT(A), however, the penal of DRP consist of three Senior CITs. 5. We have considered the rival submission of both the parties and have gone through the order of lower authorities carefully. We find that though assessee has raised additional ground of appeal, but at the time of submission no specific submission either for admission of additional ground of appeal or on ground No. 2 of the original appeal. Therefore, additional ground of appeal and original ground No. 2 of appeal are treated as not pressed. However, on considering the submissions on merits other ground of appeal, we find that assessee while computing capital gain has adopted rate of Rs. 100/- per square meter as on 01.04.1981 on the basis of case of Kirit Kumar (supra) a family member of assessee. Such fact was brought to the notice of penal of ld DRP. However, such contention of the assessee was not accepted by ld DRP, by taking view that the assessee failed to demonstrate as to how, the case of the assessee is similar to the case of Kirit Kumar Patel (supra). The ld DRP also recorded that case of Kirit Kumar Patel (supra) was related with the appeal for AY 2013-14. In our view, such observation of ld DRP is wrong. The issue for Natwarbhai Kikabhai Patel IT(IT) A No. 02/2024 AY 2016-17 5 consideration was not the assessment years, rather estimation of fair market value as on 01.04.1981. Physical position or locations of various Revenue survey numbers of Village Vesu, in 1981 may not be at much variation. Thus, considering overall facts and circumstances of the facts, we direct to accepted the value of impugned land as on 01.04.1981 @ Rs. 100/- and verify the working of capital gain and allow relief to the assessee. in the result, the Ground No. 1 of the appeal is allowed. 6. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 10/03/2025. Sd/- Sd/- (BIJAYANANDA PRUSETH) (PAWAN SINGH) लेखा सद˟/Accountant Member Ɋाियक सद˟/Judicial Member सूरत / Surat Dated: 10/03/2025 Self/ dragon* 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 "