SUDHIRBHAI SUKHABHAI PATEL L/H. OF BHIKHIBEN SUKHABHAI PATEL,SURAT V. ITO, WARD-2(3)(1), SURAT, SURAT

ITA 308/SRT/2024

AI Insights

The case involves Sudhirbhai Sukhabhai Patel, the legal heir of Bhikhiben Sukhabhai Patel, who appealed against the order of the Commissioner of Income Tax (Appeals) concerning the assessment year 2012-13. The primary issues revolved around the reopening of the assessment under section 147, the non-admission of additional evidence regarding improvement expenses and deduction under section 54B, and the initial computation of long-term capital gains which was later rectified by the CIT(A). The Tribunal found that the CIT(A) erred in not admitting the additional evidence and directed a re-evaluation of the claims.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 26757 (ITAT-SURAT)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-11-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 21-03-2024
• Other Referred Cases: Jute Corporation of India Ltd. vs. CIT, 187 ITR 688 (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVISH BHATT
• Assessee Lawyers: P. M. JAGASHETH
• Keywords: Set aside; Additional evidence; Principle of natural justice; Valuation report
• Section: 147; 148; 250; 54B; 13

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.308/SRT/2024 Assessment Year: (2012-13) (Physical Hearing) Sudhirbhai Sukhabhai Patel, Legal heir of Bhikhiben Sukhabhai Patel, 10, Shree Ram Colony, Dabholi Road, Surat – 395004. Vs. The ITO, Ward – 1(3)(5), Surat èथायीलेखासं./जीआइआरसं./PAN/GIR No: AAOHS1619D (Appellant) (Respondent) Appellant by Shri P. M. Jagasheth, CA Respondent by Shri Ravish Bhatt, Sr. DR Date of Hearing 11/11/2024 Date of Pronouncement 06/12/2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 23.01.2024 by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’] for the assessment year (AY) 2012-13. 2. The grounds of appeal raised by the assessee are as under: “1. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in reopening the assessment u/s. 147 of the Income Tax Act. 1961 and issuing notice u/s.148 of the Income tax Act, 1961. 2. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in not admitted additional evidences filed under rule 46A(1) of the Rules, 1962. 2 ITA No.308/SRT/2024/AY.2012-13 Sudhirbhai Sukhabhai Patal 3. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of Rs.2,88,600/ on account of not allowing of deduction u/s 54B of the Income Tax At, 1961. 4. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of Rs.7,74,489/ on account of not allowing claim of improvement expenses 5. It is therefore prayed that the above addition may please be deleted as learned members of the tribunal may deem it proper 6. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal.” 3. Brief facts of the case are that assessee had not filed returned on income u/s 139 for AY.2012-13. The case was reopened u/s 147 after recording the reasons which is at para 3 of the assessment order. In response to the notice u/s 148, assessee filed returned of income on 23.06.2016, declaring total income of Rs.52,430/-. The Assessing Officer (in short, ‘AO’) provided reasons for reopening to the assessee on 27.07.2016. During the year, assessee had sold an immovable property for total sale consideration of Rs.1,11,00,000/- whose jantri value was Rs.2,49,40,000/-. The share of the assessee in the total sale consideration was 8.82%, which comes to Rs.21,99,708/-. The assessee had claimed indexation of property @ Rs.345/- per sq. mtr. as on 01.04.1981, as per valuation report of the Registered Valuer (RV) of assessee. The AO referred matter to the DVO to verify land rate as on 01.04.1981 which was yet to be received when the order u/s 147 was passed. The AO adopted the rate of Rs.5/- per sq. mtr. as against Rs.345/- per sq. mtr. claimed by the AO. Thus, the net taxable long-term capital gain (LTCG) on sale of property was determined at 3 ITA No.308/SRT/2024/AY.2012-13 Sudhirbhai Sukhabhai Patal Rs.21,97,754/- by the AO. Against order of AO, assessee filed before the CIT(A) who has deleted the addition of Rs.21,97,754/-. However, the claim of improvement expenses of Rs.7,74,489/- and deduction u/s 54B of Rs.2,88,600/- was not accepted by not admitting the additional evidences filed by the assessee in this regard. The decision of CIT(A) is at para 6.3 of the appellate order. 4. Aggrieved, the assessee filed appeal before the Tribunal. The assessee has taken up 4 grounds of which ground Nos.2, 3 and 4 pertain to admission of additional evidence regarding cost of improvement and claim of deduction u/s 54B of the Act. Ground No.1 is regarding validity of reopening which was not contested before CIT(A). 5. The learned Authorized Representative (ld. AR) submitted that the additional evidence was incorrectly not admitted by the CIT(A). He has submitted paper book and argued that the return of income and computation of income for AY.2012-13 was given to the AO where working of capital gain is at page 3 of paper book. The AO made addition by adopting rate of Rs.5/- per sq. mtr. as on 01.04.1981 as against Rs.345/- per sq. mtr. claimed by assessee. The additional evidence is regarding cost of improvement and deduction u/s 54B of the Act. This should have been allowed by the CIT(A). 6. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) of the Revenue supported the order of lower authorities. He submitted that the CIT(A) has allowed relief to the assessee and this appeal is not justified. 4 ITA No.308/SRT/2024/AY.2012-13 Sudhirbhai Sukhabhai Patal 7. We have heard both the parties and perused the materials available on record. It is seen from the material on record that assessee had taken up only two ground before the CIT(A) which is at column 13 of Form 35 and para 3 of the appellate order. The first ground is regarding addition of Rs.21,97,754/- on account of LTCG. The second ground is general in nature. The CIT(A) has allowed ground No.1 and directed AO to adopt the value as on 01.04.1981 as per valuation report of the Government Valuer. Therefore, the appeal of the assessee was allowed. However, the appellant had also made submission regarding claim of improvement expenses of Rs.7,74,489/- and deduction u/s 54B of Rs.2,88,600/- before CIT(A). The appellant had filed bills in support of improvement expenses and copy of purchase deed of agricultural land. This was not admitted by CIT(A) on the ground that assessee failed to file return u/s 139(1) of the Act. The assessee filed the return only in response to notice u/s 148 of the Act. The case of the appellant is not covered under the circumstances enumerated in Rule 46A. Hence, the additional evidence was not admitted. We have again gone through the details on record. The assessee filed return of income u/s 148 on 21.06.2016 declaring total income of Rs.52,430/-. She had also filed computation of total income which is at page 3 and 4 of paper book. In the said computation of total income, assessee has given the working of capital gain where the deduction / expenses are shown at Rs.7,74,489/-. The ld. AR submitted that the bills pertaining to the improvement expenses was in relation to the above expenses of Rs.7,74,489/-. Since the AO had not called for the said details and evidences, the assessee had not 5 ITA No.308/SRT/2024/AY.2012-13 Sudhirbhai Sukhabhai Patal produced these evidences before AO. The ld. AR further submitted that claim of deduction u/s 54B of the Act is in respect of a permissible statutory deduction cannot be denied to the assessee. 7.1 We have again examined the details on record. Since the additional evidence is related to the claim made by the AO in the return of income and computation of total income and since such details were not called for by the AO, the CIT(A) should have admitted the additional evidence after allowing AO reasonable opportunity to examine the evidence or documents or to cross- examination the witness produced by the appellant or to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant. This is in accordance with rule of natural justice and the said provision is a mandatory provision and non-compliance of the same would vitiate the order itself. We further find that assessee had claimed deduction u/s 54B of the Act which is relevant for computation of capital gain on transfer of land used for agricultural purposes. Since this is a deduction allowed by the Act which confers non-levy of capital gain in certain cases, the CIT(A) should have entertained the ground and decided it on merit in accordance with law. The Hon’ble Supreme Court in case of Jute Corporation of India Ltd. vs. CIT, 187 ITR 688 (SC) held that the power of CIT(A) is co-terminus with that of the AO and there is no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if it was not raised before the AO. The Act does not place any restriction or limitation on the exercise of appellate power. The appellate authority is vested with all the plenary power 6 ITA No.308/SRT/2024/AY.2012-13 Sudhirbhai Sukhabhai Patal which the sub-ordinate authority may have in the matter. Hence, the additional ground raised by the assessee seeking relief u/s 54B of the Act should have been considered by the CIT(A). In view of the above discussion on the statutory provision and the precedent cited supra, we direct the CIT(A) to admit the additional evidence as well as the additional ground and decide the matter after giving reasonable opportunity of hearing to the assessee and the AO. The ground is allowed for statistical purpose. 8. Since we have set aside the matter, we are not deciding the other grounds raised in this appeal. The assessee is given the liberty to raise any other ground before the CIT(A) who should consider the same in accordance with law. 9. In the result, appeal of the assessee is allowed for statistical purpose. Order is pronounced in the open court on 06/12/2024. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 06/12/2024 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat "