RAJNIKANT RAICHAND SHAH,AHMEDABAD V. THE ITO, WARD-1(3)(1), AHMEDABAD

ITA 1326/AHD/2024

AI Insights

This case involves an appeal by Rajnikant Raichand Shah against the order of the Commissioner of Income Tax (Appeals), which confirmed the re-opening of his assessment under section 147 of the Income Tax Act and the subsequent additions and disallowances made by the Assessing Officer. The primary contention was regarding the validity of the reassessment and the additions made as undisclosed capital gains from the sale of property. The Tribunal found that the reassessment was based on a factual inaccuracy regarding the non-disclosure of capital gains, as the assessee had indeed disclosed the transaction in his original return. The Tribunal noted that the Assessing Officer had not adequately considered the assessee's submissions and directed a re-examination of the case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 774937 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 05-07-2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJENKUMAR M VASAVDA
• Assessee Lawyers: M K PATEL
• Keywords: Revised return; Reassessment proceedings; Corroborative evidences; Cost of acquisition; Onus to prove; Reopening of assessment; Capital Gains; Deduction for capital gain
• Section: 147; 144; 54F

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.1326/Ahd/2024 (Assessment Year: 2015-16) Rajnikant RAichand Shah, A/4, Pratik Apartment, 5, Suketu Society, Navrangpura, Ahmedabad-380009 Vs. Income Tax Officer, Ward-1(3)(1), Ahmedabad [PAN No.BEPPS4575E] (Appellant) .. (Respondent) Appellant by : Shri M K Patel, Advocate Respondent by: Shri Rajenkumar M Vasavda, Sr. DR Date of Hearing 12.08.2025 Date of Pronouncement 02.09.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 22.03.2024 passed for A.Y. 2015-16. 2. At the outset, we observe that the appeal is time barred by 45 days. The delay of 45 days is condoned on due consideration of facts of assessee’s case and owing to causing no perceptible prejudice to other side. 3. The assessee has raised the following grounds of appeal: “(1) That on facts and in law the learned NFAC has grievously erred in confirming the re-opening the assessment u/s 147 of the Act, which is based on reasons recorded, which are contrary to the facts on record, and therefore the entire re-opening of assessment is invalid and void-ab-initio. Printed from counselvise.com ITA No. 1326/Ahd/2024 Rajnikant Raichand Shah vs. ITO Asst.Year –2015-16 - 2– (2) That on facts and in law the learned NFAC has grievously erred in confirming the addition of Rs. 40,32,000/- in respect of gross amount received on sale of property as Undisclosed Capital Gains, while totally ignoring the submissions and evidences filed before AO and NFAC. (3) That on facts and in law the learned NFAC has grievously erred in confirming the disallowance of claim of cost of acquisition of Rs. 50,895/- and deduction of Rs. 41,00,000/- u/s. 54F of the Act made while computing the Long Term Capital Gains. (4) The appellant craves leave to add, alter, amend any ground of appeal.” 4. The brief facts of the case are that the assessee initially filed the original Income Tax Return (ITR) on 19.05.2015 for AY 2015-16, declaring a total income of Rs. 5,02,380/-. In this return, the assessee had claimed an exemption of Rs. 41,00,000/- under section 54F of the Income Tax Act (Act) on account of capital gains arising from the transfer of a tenancy right. However, the assessee filed a revised ITR in which the assessee altered the above claim and apportioned the exemption between sections 54F and 54EC of the Act, claiming a sum of Rs. 27,51,587/- under section 54EC of the Act and Rs. 12,29,518/- under section 54F of the Act. The Assessing Officer initiated re-assessment proceedings. The Assessing Officer observed that despite this change, no justification or reason for the alteration in the claim was provided by the assessee. Moreover, the assessee did not disclose any immovable property investment details in Schedule AL of the ITR, even though the total income exceeded Rs. 25 lakhs, which mandates such disclosure. During reassessment proceedings, Assessing Officer noted that the assessee did not cooperate, he failed to furnish details of the capital gain computation, investment evidence under sections 54F or 54EC, or any sale/investment dates or documents. The Assessing Officer observed that despite issuance of repeated notices and Printed from counselvise.com ITA No. 1326/Ahd/2024 Rajnikant Raichand Shah vs. ITO Asst.Year –2015-16 - 3– opportunities of hearing, the assessee remained unresponsive and uncooperative, and accordingly, the Assessing Officer passed the assessment order on ex-parte basis under section 144 of the Act on the basis of material available on record. In absence of any supporting evidence for claim of exemption and due to the change in stand without any explanation, the Assessing Officer held that the entire amount of Rs. 40,32,000/- received from the transfer of “tenancy rights” was taxable as long-term capital gain. 5. In appeal before us CIT(Appeals), the assessee reiterated that the reopening of the assessment was based on factually incorrect grounds, and submitted that the reassessment order was invalid. However, the CIT(A) held that the reassessment proceedings were validly initiated and rightly completed under law. The CIT(Appeals) observed that the assessee not only failed to explain the revised stand on capital gain exemptions but also did not submit any documentary evidence either at the assessment stage or during appellate proceedings to support the claims under section 54EC or 54F of the Act. Since the burden of proof lies entirely on the assessee to substantiate exemption claims under the Act, the CIT(A) held that the assessee had failed to discharge this onus. In absence of any proof or valid explanation, the AO was justified in computing capital gains on the entire sale consideration of Rs. 40,32,000/-. Accordingly, the CIT(A) confirmed the addition made by the AO and dismissed the appeal. 6. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. In the present case, Printed from counselvise.com ITA No. 1326/Ahd/2024 Rajnikant Raichand Shah vs. ITO Asst.Year –2015-16 - 4– the reassessment proceedings were initiated on the ground that the assessee had not disclosed capital gains arising from the sale of property amounting to Rs. 40,32,000/-. However, on perusal of the original return of income filed by the assessee and submissions made before the lower authorities, we observe that the assessee had in fact disclosed the full value of sale consideration in “Schedule CG” of the return of income filed under section 139(1) of the Act, along with a claim of exemption under section 54F of the Act. The Assessing Officer, however, proceeded to complete the reassessment ex parte under section 144 read with section 147 of the Act, primarily on the ground that the assessee did not furnish necessary supporting evidence for the exemption claims, and had changed his stand in the revised return without explanation. While the CIT(A) confirmed the action of the Assessing Officer, the assessee has consistently maintained that he had disclosed the transaction in the original return, and that the basis of reopening was factually incorrect. Moreover, it is also evident from the record that various submissions and replies filed by the assessee during the reassessment proceedings have not been duly considered or addressed by the Assessing Officer. Accordingly, in the interest of justice and considering the fact that the assessee had disclosed the transaction in the original return of income and the reassessment has proceeded without properly adjudicating the assessee's explanation or verifying supporting documents, we are of the considered view that the matter requires re- examination. Therefore, the matter is hereby directed to be restored to the file of the jurisdictional Assessing Officer with a direction to examine the claim of the assessee afresh, after affording adequate opportunity of being Printed from counselvise.com ITA No. 1326/Ahd/2024 Rajnikant Raichand Shah vs. ITO Asst.Year –2015-16 - 5– heard and after considering all the submissions and documentary evidence that the assessee may file in support of his claim under section 54F and/or section 54EC of the Act. The assessee is also directed to fully cooperate in the proceedings and furnish all relevant details and evidence within the time granted by the Assessing Officer. 7. Accordingly, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 02/09/2025 Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 02/09/2025 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 29.08.2025 (Hon’ble Member dictated on his dragon software) 2. Date on which the typed draft is placed before the Dictating Member 29.08.2025 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 02.09.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement 02.09.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S 02.09.2025 7. Date on which the file goes to the Bench Clerk 02.09.2025 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………… 10. Date of Dispatch of the Order…………………………………… Printed from counselvise.com "