RANCHODBHAI KARAMSHIBHAI DHAMI,RAJKOT V. ITO, WARD-1(2)(2), RAJKOT, RAJKOT

ITA 431/RJT/2024

AI Insights

The case involves Ranchhodbhai Karamshibhai Dhami, the appellant, who contested an order from the National Faceless Appeal Centre (NFAC) confirming an addition of short-term capital gain under section 50C of the Income Tax Act, 1961. The appellant, engaged in land development, reported a significant discrepancy between the sale value of properties and their assessed value by the stamp valuation authority, leading to a substantial tax assessment. The CIT(A) dismissed the appellant's appeal due to non-compliance with notices, which the appellant claimed were not received. The Tribunal found that the principles of natural justice were not adequately followed and restored the case to the CIT(A) for a de novo adjudication.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34325 (ITAT-RAJKOT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIMANYU SINGH YADAV; LD.
• Assessee Lawyers: M.N. MANVAR; LD
• Keywords: Set aside; Opportunity of being heard; Sale consideration of property below Jantri Value; Salary income; Principle of natural justice; Competent authority; Non compliance
• Section: 143(3); 50C; 20

Judgement Text

"ITA-431/RJT/2024 (AY-2012-13) Ranchhodbhai Vs. ITO Ward-1(2)(2), Rajkot. 1 IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, AM. & DIESH MOHAN SINHA, JM आयकरअपीलसं./ITA No. 431/RJT/2024 (Ǔनधा[रणवष[ / Assessment Year: (2012-13) (Hybrid Hearing) Ranchodbhai Karamshibhai Dhami. M. N. Manvar & Co. CA, 504, Star Plaza, Nr. Circuit House, Phulchhab Chowk, Rajkot. Vs. ITO Ward-1(2)(2), Rajkot. èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AABTS8458H (Appellant) (Respondent) Appellant by : Shri M. N. Manvar, Ld. AR Respondent by : Shri Abhimanyu Singh Yadav, Ld. Sr. DR Date of Hearing : 19/ 12/2024 Date of Pronouncement : 20 /01/2025 आदेश / O R D E R PER DINESH MOHAN SINHA, JM: Captioned appeal filed by the assessee is directed against the order passed by the National Faceless Appeal Centre [(in short “NFAC/Ld.CIT(A)”] vide order dated 01/05/2024, which in turn assessment order passed by Ld. Assessing Officer u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short “the Act”). 2. Grounds of appeal raised by the assessee are as followed: 1). CIT(A)-NFAC erred in Law and facts in confirming the addition of short term capital gain made by AO Rs. 29,56,695/- u/s 50C of the Income Tax Act, 1961 (the act) for the income in the nature of business ITA-431/RJT/2024 (AY-2012-13) Ranchhodbhai Vs. ITO Ward-1(2)(2), Rajkot. 2 Rs. 1,22,770/- from sale of industrial plots jointly owned by the appellant and other 4 (Four) Co- owners. 2) The appellant craves leave to add, alter, modify or substitute any ground of appeal at the time of hearing. 3. Facts of the case are that assessee is engaged in the business of land developing and also having rent and salary income. Assessee filed his return of income for A. Y. 2012-13 on 28/03/2013 by declaring total income of Rs. 2,80,200/-. During the year under consideration, the assessee has entered into the sale transaction worth Rs. 14, 99,000/-. However the value of the properties for the purpose of the section 50C of the I.T. Act, 1961 is Rs. 1,23,38,782/- which give rise to difference of Rs. 1,08,39,782/- which attracts the provision of section 50C of the I.T. Act, 1961, since the sale value as per sale deed and value adopted or assessed by the stamp valuation authority for the purpose of the payment of stamp duty in respect of the transfer of above properties. Total share of the assessee in the section 50C of the I.T. Act, 1961 value comes to Rs. 36,13,264/-. Therefore the proceedings u/s 147 of the I. T. Act was initiated by the Ld. AO. 4. Assessment was framed u/s 143(3) r.w.s. 147 of the Act treating the transaction made as unexplained and undisclosed and also penal action as per Act shall be initiated. Assessee’s income was assessed at Rs. 32,36,900/- with an addition of Rs. 29,56,695/- u/s 50C. 5. Aggrieved by the order of the Ld. AO assessee carried the matter to the Ld. CIT(A). Ld. CIT(A) has dismissed the appeal of the assessee on account of non compliance with the notices issued during the proceedings. ITA-431/RJT/2024 (AY-2012-13) Ranchhodbhai Vs. ITO Ward-1(2)(2), Rajkot. 3 6. Aggrieved by the order passed by the Ld. CIT(A) assessee is in appeal before us. 7. During the course of hearing the Ld. Counsel for the assessee submitted that assessee is a joint owner of a property with four other co-owners and the notices issued by the Ld. CIT(A) for the hearing could not be complied since no notices were served on assessee. However Ld. Counsel for the assessee requested for one more opportunity to explain the case before the lower authority. 8. On the contrary Ld. Sr. DR for the revenue relied on the order of the Ld. CIT(A). However Ld. DR had not objected to the prayer of the assessee. 9. We have heard the matter and perused the record before us we note that six notices were issued by the Ld. CIT(A) for the hearings and final opportunity was given to the assessee on 25/04/2024 but the assessee had not responded to the notices. We note that order of the Ld. CIT(A) speaks about the issue of the notice but not about the service of the same notices upon the assessee. We further note that Ld. CIT(A) dismissed the appeal on ground that assessee had not filed any evidence or details in support of his claim. Assessee is having salary and rental income. The return of income was filed by the assessee with the department and assessee had taken permission from the competent authority in respect of land is not agricultural land. Assessee is a land developer and sold part of a property. It is brought to our notice that in the other co-owners’ case transaction was recorded as business transaction and income as business income. We note that assessee could not plead his case successfully before the ld. CIT(A). We note that it is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being ITA-431/RJT/2024 (AY-2012-13) Ranchhodbhai Vs. ITO Ward-1(2)(2), Rajkot. 4 heard to contest his case. Therefore, without delving much deeper into the merits of the case, in the interest of justice, we restore the matter back to the file of Ld. CIT(A) for de novo adjudication and pass a speaking order after affording sufficient opportunity of being heard to the assessee, who in turn, is also directed to contest his stand forthwith. Therefore, we deem it fit and proper to set aside the order of the ld. CIT(A) and restore the matter back to the file of the ld. CIT(A) for fresh adjudication after providing due opportunity to the assessee. 10. The appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 20/01/2025. Sd/- Sd/- (A. L. SAINI) (DINESH MOHAN SINHA) ACCOUNTANT MEMBER JUDICIAL MEMBER Rajkot Ǒदनांक/ Date:20/01/2025 Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr. CIT 5. DR/AR, ITAT, Rajkot 6. Guard File By Order Assistant Registrar/Sr. PS/PS ITAT, Rajkot "