YOGESH HIMATLAL THAKKER,NAVRANGPURA,AHMEDABAD V. INCOME TAX OFFICERWARD 4(1)(1), AHMEDABAD, AMBAWADI, AHMEDABAD,

ITA 1362/AHD/2024

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The case involves Yogesh Himatlal Thakker, the appellant, who contested the addition of Rs. 28,03,587 to his income under the head 'income from business' as confirmed by the CIT(A). The addition was initially made by the CPC due to a discrepancy between the long-term capital gain reported in the Profit and Loss account and the gain calculated after considering the indexed cost of acquisition. The CIT(A) upheld this addition, but the Tribunal found that the CIT(A) failed to consider the CPC's rectification, which adjusted the capital gains correctly. The Tribunal's decision to allow the appeal was based on the CIT(A)'s oversight and the rectification by the CPC, which was not brought to the CIT(A)'s attention by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 25149 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2020-2021
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YOGESH M ISHRA
• Assessee Lawyers: MEHUL THAKKER
• Keywords: Business income; Cost of acquisition; Capital Gains; Principle of natural justice; Rectification of order
• Section: 250; 143(1); 48; 20

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No. 1362/Ahd/2024 (Assessment Year: 2020-21) Yogesh Himatlal Thakker, 70, Stadium House, Stadium Six Roads, Navrangpura, Ahmedabad-380009 [PAN : AAVPT 0060 C] Vs. The Income-Tax Officer, Ward-4(1)(1), Ahmedabad (Appellant) .. (Respondent) Appellant by : Shri Mehul Thakker, CA Respondent by: Shri Yogesh Mishra, Sr DR Date of Hearing 07.01.2025 Date of Pronouncement 11.02.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT : This appeal has been filed by the Assessee against the order passed by the Ld. ADDL/JCIT (A), Aurangabad (hereinafter referred to as \"CIT(A)\" for short) dated 15.05.2024 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as \"the Act\" for short], for Assessment Year (AY) 2020-21 2. The grounds of appeal raised by the Assessee are as follows:- 1 The learned CIT (A) has erred both in law and on facts of the case in confirming the addition of Rs. 28,03,587/- as income under the head income from business by making a wrong adjustment. 2. The lower authorities have passed the orders without properly appreciating the facts. This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. \" 3. The brief facts of the case are that the assessee had filed return of income on 25.01.2021 declaring total income of Rs. 1,03,87,440/ -. During ITA No. 1362/Ahd/2024 Yogesh Himatlal Thakker Vs. ITO Asst. Year : 2020-21 - 2– the year under consideration, the assessee had earned Long Term Capital Gain on sale of property. As per the Profit and Loss account, the long-term gain was of Rs 53,01,700/. As the gain is to be included under the head Capital Gain, the assessee had reduced Rs 53,01,700/- from business income and added it under the head ‘Capital Gain’. As this is long term gain, the assessee worked out long term capital gain at Rs.24,98,113/- after considering indexed cost of acquisition as provided in Section 48 of the Act. The CPC has correctly computed long term capital gain in the intimation sent u/s 143(1) of the Act, but has added the difference of Rs 28,03,587/- which is the difference between long term gain as per Profit & Loss account of Rs 53,01,700 and long-term gain as per working after indexation Rs.24,98,113, as income from business. The CPC, therefore, has allowed deduction of long-term capital gain which is included under the head Capital gain from Business income instead of the long term capital gain as per profit and loss account. The CPC has also made adjustment by adding Rs.2,46,925/- twice. The assessee had debited Rs 2,46,925/- to its profit and loss account due to share of loss from partnership firm. This amount was added to the total income. The CPC has also made an addition of Rs.3,350/- on account of addition u/s 36 of the Act. However, as per tax audit report, there was no delay in depositing ESI contribution for the month of March 2020 since due to lockdown in April 2020, the EPFO had extended due date of payment of PF and ESI contribution for the month of March 20 from 15th April 2020 to 15th May 2020. 4. The CPC processed the return u/s 131(1) determining refund of Rs.25,89,060/- as against the refund claimed by the assessee of Rs.35,88,770/-. ITA No. 1362/Ahd/2024 Yogesh Himatlal Thakker Vs. ITO Asst. Year : 2020-21 - 3– 5. Aggrieved, the assessee filed application for rectification before the CPC. The CPC has rectified the intimation issued u/s 131(1) of the Act dated 16.12.2021 and passed rectification order on 21.06.2022, determining the total refund at Rs.37,12,170/- and the matter came to rest. 6. Meanwhile, the assessee filed appeal before the Ld. CIT(A) on 27.01.2022 who has passed the order on 15.05.2024. The sequence of events are as under:- • Date of filing of return - 25.01.2021 • Date of intimation of 143(1) by CPC - 16.12.2021 • Date of filing of appeal before Ld. CIT(A)- 27.01.2022 • Date of rectification of 143(1) by CPC - 21.06.2022 • Date of Webex meeting - 08.05.2024 • Date of order of Ld. CIT(A) - 15.05.2024 Now comes the fascinating part of the issue. The CPC has rectified the order on account of the capital gains which the Ld. CIT(A) has confirmed. The Ld. CIT(A), while confirming the adjustments made by the CPC, held that “the appellant has claimed that he has offered the same amount as Capital Gain as he has debited from Income from Business & Profession in the computation of income. However, the same is not found to be true. During the VC, the appellant has failed to produce/substantiate the claim that income of Rs. 28,03,587/- has been disclosed. Hence, the addition made by the CPC is found to be justified and is confirmed.” ITA No. 1362/Ahd/2024 Yogesh Himatlal Thakker Vs. ITO Asst. Year : 2020-21 - 4– 7. Thus, we find two defaults. Why the assessee has not brought the factum of rectification already carried out by the CPC before the Ld. CIT(A) and why the Ld. CIT(A) could not examine the facts apparent on the record? 8. Since the matter has already had a breather as mentioned at paragraph No. 5 of this order, we are not inclined to dissect the questions raised at paragraph No. 7 of this order. 9. In the result, the order of the Ld. CIT(A) is treated as infructuous on this issue. 10. The appeal of the Assessee is hereby allowed. The order is pronounced in the open Court on 11.02.2025 Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 11/02/2025 btk आदेश की \u0007ितिलिप अ\rेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b\tथ\u0007 / The Respondent. 3. संबंिधत आयकर आयु\u0015 / Concerned CIT 4. आयकर आयु\u0015(अपील) / The CIT(A)- 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड\u001f फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad "