SOMABHAI M BHOI,AHMEDABAD V. THE ITO, WARD-5(3)(1), AHMEDABAD

ITA 2101/AHD/2024

AI Insights

The case involves Somabhai Mangabhai Bhoi, an unrepresented assessee, who sold two immovable properties during the assessment year 2018-19 but did not file a return of income. The AO, upon discovering this, reopened the case and assessed the income ex parte, adding the sale proceeds as income under 'long term capital gains'. The CIT(A) upheld this decision due to the absence of any representation from the assessee. The assessee, citing illiteracy and lack of understanding of tax laws, filed a delayed appeal to the Tribunal, which was allowed. The Tribunal found merit in re-evaluating the nature of the sold properties and directed the AO to reassess the case, providing the assessee an opportunity to present his case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717095 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2018-2019
• Appeal Filed On: 12-12-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUDHAKAR VERMA
• Assessee Lawyers: PARIN SHAH
• Keywords: Capital asset; Reasonable cause; Capital Gains
• Section: 142(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE: SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER आयकर अपील सं./I.T.A. No. 2101/Ahd/2024 (िनधा[रण वष[ / Assessment Year : 2018-19) Somabhai Mangabhai Bhoi 3/5 Bhoi Vas, Vastral Gam, Water Tank Daskroi, Ahmedabad – 382418, Gujarat बनाम/ Vs. The ITO Ward-5(3)(1), Ahmedabad Öथायी लेखा सं./जीआइआर सं./PAN/GIR No. : CELPB7158D (Appellant) .. (Respondent) अपीलाथȸ ओर से /Appellant by : Shri Parin Shah, AR Ĥ×यथȸ कȧ ओर से/Respondent by : Shri Sudhakar Verma, DR Date of Hearing 03/06/2025 Date of Pronouncement 20/08/2025 (आदेश)/ORDER PER SMT. ANNAPURNA GUPTA, AM: The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), (hereinafter referred to as “CIT(A)”), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi dated 15.04.2024 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2018-19. Printed from counselvise.com ITA No. 2101/Ahd/2024 [Somabhai M. Bhoi vs. ITO] A.Y. 2018-19 - 2 – 2. Orders of the authorities below reveal that both before the AO & Ld. CIT(A) the assessee remained unrepresented. The AO was in possession of information that the assessee had sold two immovable properties during the year for substantial sums but had not filed any return of income for the impugned year i.e. A.Y. 2018-19. Accordingly, he proceeded to reopen the case of the assesee following the procedure as prescribed under law, but, no response of the assessee was received and accordingly, he assumed jurisdiction to reopen the case of the assessee and, thereafter, framed assessment on the assessee ex parte to the best of his judgment on the basis of information available on record. Noting that the assessee had sold two properties for a consideration of Rs.63,67,500/-, he added the entire amount as income of the assessee under the head ‘long term capital gains’. The assessee though filed an appeal before the Ld. CIT(A), however, in the absence of any representation on behalf of the assessee before him, he upheld the order of the AO. 3. The present appeal, therefore, has been filed before us against the order passed by the Ld. CIT(A). The registry has marked the appeal to be delayed for filing of 165 days. The statement of facts filed by the assessee before the Ld. CIT(A) in Form No.35 reveals the assessee to have stated that he is an individual engaged in the activity of farming. He alongwith his brother had sold two agricultural lands during the year. They had no other income other than agricultural income and since they Printed from counselvise.com ITA No. 2101/Ahd/2024 [Somabhai M. Bhoi vs. ITO] A.Y. 2018-19 - 3 – were non-filer of return of income living in rural areas and were uneducated, they had no knowledge of the intricacy of law and therefore did not understand the various notices issued u/s.148 & 142(1) of the Act and, therefore, the assessment proceedings remained completely uncomplied with. The Ld. Counsel for the assessee stated that the reasons for non-compliance of proceedings by the assessee before the AO also attributed to the delay in filing of the present appeal before us as also to the non-participation of the assessee in appellate proceedings. He contended that the assessee was uneducated, illiterate and living in rural area and, therefore, being unaware of the intricacy of law and the technology used therein, he was unable to participate both in the assessment proceedings and the First Appellate proceedings and as a consequence, delayed filing of the present appeal before us by 165 days. Ld. Counsel for the assessee pleaded that being a poor farmer with the only source of income being agricultural income, the assessee would be greatly prejudiced against if the delay is not condoned and addition made to his income by the AO of Rs.63,67,500/- confirmed. He pleaded that this would result in great financial distress to the assessee and requested, therefore, for the condonation of delay. Ld. DR vehemently objected to the same. 4. We have noted the aforestated pleadings of the assessee being illiterate, living in rural area not familiar with tax laws and its intricacies, being mentioned in the Statement of facts filed to Printed from counselvise.com ITA No. 2101/Ahd/2024 [Somabhai M. Bhoi vs. ITO] A.Y. 2018-19 - 4 – the Ld. CIT(A) in Form No.35. We are inclined therefore to take a view that there was sufficient and reasonable cause with the assessee for the delay in filing the present appeal before us. The Ld. DR has been unable to point out any factual infirmity in the pleadings of the assessee that he was an uneducated, illiterate farmer living in a rural area and, therefore, could neither participate in the assessment nor First Appellate proceedings. It is a fact on record that no other source of income has been identified by the AO except capital gain from sale of two immovable properties i.e. land owned by the assessee which he himself admits too, but contends that due to non-participation in the proceedings before the authorities below, he was unable to demonstrate that the capital gains earned by him was not liable to tax since the lands were rural agricultural lands. In view of the same, we consider it to be a fit case to condone the delay of 165 days in filing of present appeal before us, in the interest of justice, accordingly, condone the delay. 5. Further, as noted above in the facts of the case, the assessee has been held amenable to pay tax on capital gain earned by him on the sale of land. The case of the assessee is that the land is rural agricultural land and thus not a capital asset as defined u/s 2(1$) of the Act. That therefore there was no question of any capital gain accruing to the assessee on the sale of the said asset. Further, we find that in the absence of any assistance to the authorities below, they were unable to arrive at a finding of the Printed from counselvise.com ITA No. 2101/Ahd/2024 [Somabhai M. Bhoi vs. ITO] A.Y. 2018-19 - 5 – nature of the land sold, whether rural agricultural land or not. In the light of the same, we consider it fit to restore the issue back to the file of the AO for re-considering the issue of capital gain earned by the assessee. The AO is directed to give due opportunity of hearing to the assessee before passing the order. The Ld. Counsel for the assessee has given his oral undertaking that the assessee will not abuse the process of law anymore. 6. In the result, appeal filed by the assessee is allowed for statistical purposes. This Order pronounced on 20/08/2025 Sd/- Sd/- (T.R. SENTHIL KUMAR) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 20/08/2025 S. K. SINHA True Copy आदेश कȧ Ĥितिलǒप अĒेǒषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. संबंिधत आयकर आयुƠ / Concerned CIT 4. आयकर आयुƠ(अपील) / The CIT(A)- 5. ǒवभागीय Ĥितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड[ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad Printed from counselvise.com "