YOGESH MAFATLAL BHANSALI,AHMEDABAD V. THE INCOME TAX OFFICER, WARD-5(3)(1), AHMEDABAD

ITA 740/AHD/2024

AI Insights

The case revolves around the reassessment of income tax for the assessment year 2015-16 concerning Yogesh Mafatlal Bhansali, who was alleged to have not declared an investment in immovable property. The property was purchased in the name of his minor son, Varun Yogesh Bhansali, and the income from this investment was clubbed with the income of Varun's mother, Purvi Y. Bhansali, for tax purposes. The Income Tax Officer (ITO) reopened the assessment and added the difference between the stamp duty valuation and the purchase consideration of the property as income under section 56(vii)(b)(ii) of the Act. Both the Commissioner of Income-Tax (Appeals) and the Tribunal found that the reassessment was improperly conducted as it did not consider the clubbing of the minor's income with that of his mother, leading to the Tribunal's decision to allow the appeal and delete the addition.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312290 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRATEEK SHARMA
• Assessee Lawyers: TUSHAR HEMANI
• Keywords: Opportunity of being heard; Reassessment proceedings; Sale consideration of property below Jantri Value; Fair market value; Principle of natural justice; Valuation report
• Section: 147; 148; 143(3); 271(1)(c); 56(2)(vii)(b); 50C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD ] ] BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER ITA No.740/Ahd/2024 Assessment Year : 2015-16 Yogesh Mafatlal Bhansali 101, Shakuntal Appt Opp: CN Vidhyalaya Ambawadi Ahmedabad 380015. PAN : AARPB 6394 H Vs ITO, Ward-5(3)(1) Ahmedabad. (Appellant) (Responent) Assessee by : Shri Tushar Hemani, Sr.Advocate Revenue by : Shri Prateek Sharma, Sr.DR Date of Hearing : 05/02/2025 Date of Pronouncement: 02/05/2025 O R D E R PER T.R. SENTHIL KUMAR, JUDICIAL MEMBER This appeal is filed by the asssee as against the appellate order dated 13-03-2024 passed by Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “ld.CIT(A)] arising out of the re-assessment order passed under section 147 read with section 144B of the Income Tax Act, 1961 (hereinafter referred to as \"the Act\") relating to the assessment year 2015-16. 2. Brief facts of the case are that eassessee is an individual who has filed his original Return of Income for the Asst. Year 2015-16 on 26.09.2025 declaring total income of Rs.2,71,630/-. The return was 2 ITA No. 740/Ahd/2024 A.Y. 2015-16 Yogesh Mafatlal Bhansali Vs. ITO taken up for limited scrutiny assessment and regular assessment u/s. 143(3) of the Act was completed on 29.9.2017 accepting the returned income. It is thereafter, the assessment was reopened by issuance of notice dated 26.3.2021 issued under section 148 of the Act, recording the reason that the investment in immovable property is not declared in the Return of Income. In response, the assessee submitted that the land was purchased in the name of his minor son Varun Yogesh Bhansali and for the Asst. Year 2015-16, the income of the minor child was clubbed with his mother Purvi Y. Bhansali (PAN: ADEPB8180F), hence, if the case is to be reopened for re-assessment, it should be done in the hands of the mother and not in the case of the father viz. the assessee herein, since the income of the minor is clubbed in the hands of the mother, as per clause (a) of Explanation to section 64 of the Act. The assessee also filed before the AO details of the Return of Income filed by the mother Purvi Y. Bhansali wherein minor son income is offered to tax. The AO considered the above submissions of the assessee and held that in the Sale Agreement the PAN: AARPB6394H of the father [assessee herein] referred as the Natural Guardian representing the minor son, therefore the claim cannot be accepted. However, in the case of the other co-owners of purchase of land viz. Shri Dhaneshbhai Parshottamdas Soni, where the case was referred to the DVO to determine the valuation of the immovable property and the same was being pending, Therefore the difference of Rs.1,34,00,000/= between the rate as per stamp duty valuation of Rs.2.55 Crs and purchase consideration of Rs.1.21 crs and minor son’s 1/3rd share on the above of Rs.44,66,666/= is added u/s.56 as the income of the assessee and demanded tax thereon. 3. Aggrieved against the reassessment order, the assessee filed an appeal before the ld.CIT(A) who has confirmed the addition made by 3 ITA No. 740/Ahd/2024 A.Y. 2015-16 Yogesh Mafatlal Bhansali Vs. ITO the AO. Aggrieved with the appellate order, the assessee is in appeal before us raising the following Grounds of Appeal: “1. The Ld. AO has erred in law and on facts of the case in reopening the assessment u/s. 147 of the Act. Under the facts and circumstances of the case, the action of reopening is without jurisdiction and is not permissible either in law or on facts. 2. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in making addition of Rs.39,50,333/- u/s. 56(2)(vii)(b)(ii) of the Act. 3. Both the lower authorities failed to appreciate that there is no \"receipt\" of immovable property by the appellant as contemplated u/s. Section 56(2)(vii)(b) of the Act. 4. Both the lower authorities failed to appreciate that no addition u/s. 56(2)(vii)(b) of the Act in respect of receipt of immovable property by the minor can be made in the hands of his father (the appellant) when the minor's income has been clubbed in the hands of his mother. 5. The Ld. CIT(A) has erred in law and on facts of the case in blindly accepting the value computed by DVO without any independent verification and without dealing with the objections raised by the appellant. 6. Alternatively and without prejudice, the addition shall be restricted to Rs.5,16,333 [l/3rd of Rs. 15,49,000/-] being the difference between fair market value of Rs. 1,36,49,000/- computed by DVO and sale consideration of Rs. 1,21,00,000/- as per first proviso to Section 56(2)(vii) r.w.s. 50C r.w.s. 155(15) of the Act. 7. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. The action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 8. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in levying interest u/s. 234A/B/C/D of the Act. 9. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in initiating penalty proceedings u/s. 271(1)(c) of the Act. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. 4. The ld. Senior Counsel Sri Tushar Hemani appearing for the assessee submitted before us that the original assessment was 4 ITA No. 740/Ahd/2024 A.Y. 2015-16 Yogesh Mafatlal Bhansali Vs. ITO completed in the above case, after calling for investment details in purchase of property by the AO dated 29.09.2017. It is, thereafter, the assessment was reopened after a period of four years, that too on a wrong assessee. Thus, there is no failure on the part of the assessee in not disclosing the income to the department, since the income of the Minor son Varun Yogesh Bhansali has been clubbed with the income of his mother, which was duly accepted by the Department. Therefore, the AO was not justified in making the impugned addition in the hands of the assessee viz. Varun’s father and the entire reassessment proceedings are liable to quashed. Both the lower authorities are not correct in observing the details of the Return of Income of the mother Smt. Purvi Y Bhansali, wherein minor son’s income is also offered to taxation, which are placed at page nos. 192 to 195 of the Paper Book. As per clause [a] of explanation to section 64 of the Act, namely clubbing of income, reassessment ought have be made in the hands of the mother and not on the father. This impugned addition made in the hands of the assessee is not taxable in the eyes of the law, and the same deserves to be deleted. Alternative submission of the Ld Counsel was even on merits of the case, the addition be restricted to Rs.5,16,333/= based on DVO’s valuation report. 5. Per contra, the ld.DR appearing for the Revenue supported the orders passed by the lower authorities and requested to confirm the addition. 6. We have given our thoughtful consideration and perused the material available on record, including the Paper Book and submissions filed before the lower authorities. It is undisputed fact that the land situated in Survey No.1, Khata No.137, Mouje-Makarba Village was purchased by three persons jointly, one among them is 5 ITA No. 740/Ahd/2024 A.Y. 2015-16 Yogesh Mafatlal Bhansali Vs. ITO assessee’s minor son Varun Yogesh Bhansali. As per the Sale Deed, the land was purchased for Rs.1,21,00,000/- whereas stamp duty valuation of the land was Rs.2.55 crores. Thus, there is a difference of Rs.1.34 crores and 1/3rd shares of minor son is Rs.44,66,666/- which has escaped the assessment, thereby the assessment was reopened in the case of the assessee and made addition of Rs.44,66,666/- under section 56(vii)(b)(ii) of the Act. During the course of reassessment proceedings, the assessee categorically explained that the minor son’s income was clubbed with the return of income filed as per clause (a) of Explanation to section 64 of the Act, in the hands of the mother, therefore, reopening of minor son’s income in the hands of the father [assessee herein] is not proper in law. In this connection, the reply filed by the assessee vide letter dated 23.3.2022 is reproduced as below: “….2. Screen shot of Stamp duty value as per stamp duty authority website as on March 23, 2022 and stamp duty value as per Superintendent of Stamps, Gandhinagar which mentions value of Rs.2500 for the applicable survey number of the land. Value of land accordingly will be Rs. (2500 * 8499 Sq Mtr.) = Rs 21247500. Hence calculation made by ITO determining value as Rs 25500000 is erroneous hence addition should not be made. 3. Income Tax Return and Computation statement of Purvi Yogesh Bhansali are attached herewith. Since Minor Varun Bhansali's income (who has purchased land) is clubbed with his mother in relevant assessment year, addition should not be made in income of his father Yogesh Mafatlal Bhansali. 4. It has come to our notice that in the case of Co-Purchaser of our land Shri Dhanesh P Soni (PAN No-ADIPS1555M) is referred to the departmental valuer for valuation, that be the similar case, addition in our case should not be made since it would result into different treatment of same case. Notice received by Shri Dhanesh P Soni is attached herewith for your ready reference. We request to kindly consider above-mentioned and earlier submitted detailed replies and grounds which are self-explanatory for not making any addition in this regard. Kindly provide an opportunity of being heard in case you wish to make any additions in this regard.” 6 ITA No. 740/Ahd/2024 A.Y. 2015-16 Yogesh Mafatlal Bhansali Vs. ITO 6.1 Further, the income-tax return filed by the mother Smt.Purvi Y. Bhansali on 08.08.2015, wherein the minor son Varun’s income is also shown by her, which is available at page no.198 of the paper book. The assessee also explained in his reply letter dated 27-01-2022 to the show cause notice, produced copy of the Purchase Agreement dated 19-01-2015; Axis Bank statement of minor Varun Y Bhansali from 01-01-2015 to 31-03-2015 wherein claimed the acquisition of property was loan taken from his uncle Piyush M Bhansali who is the Proprietor of Bhansali Associates. Without verification of the above details and records furnished by the assessee, the ld.AO proceeded with re-assessment proceedings on the wrong assessee viz. the father [assessee herein] which is against the provision of law. Further the clubbing of income in the hands of the mother, was also informed by the assessee before the lower authorities, the AO had not taken cognizance of the same and proceeded with re-assessment proceedings, which is clearly against the provisions of law. Therefore, the entire re-assessment proceedings itself is bad in law and the same is liable to be quashed. Consequently, the addition made by the AO is hereby deleted. 7. In the result, the appeal of the assessee is hereby allowed. Order pronounced in the Court on 2nd May, 2025 at Ahmedabad. Sd/- Sd/- (ANNAPURNA GUPTA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad, dated 02/05/2025 आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy of the Order forwarded to : 7 ITA No. 740/Ahd/2024 A.Y. 2015-16 Yogesh Mafatlal Bhansali Vs. ITO 1. अपीलाथᱮ / The Appellant 2. ᮧ᭜यथᱮ / The Respondent. 3. संबंिधत आयकर आयुᲦ / Concerned CIT 4. आयकर आयुᲦ(अपील) / The CIT(A) 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाडᭅ फाईल / Guard file. आदेशानुसार/BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad "