DINESHBHAI MAGANBHAI BUTANI,SURAT vs. INCOME TAX OFFICER,WARD 3(3)(1), SURAT

आदेश / O R D E R Per B.M. Biyani, A.M.:

Feeling aggrieved by the order of first-appeal dated 19.08.2025 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“Ld. CIT(A)”], which in turn arises out of the assessment-order dated 26.05.2023 passed by learned Assessment Unit of Income-tax Department [“Ld. AO”] u/s 147 r.w.s. 144B of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2017-18, the assessee has filed this appeal on the grounds mentioned in Appeal Memo (Form No. 36).

(i) The assessee-individual was a partner of firm “M/s Dharamjivan Developers”. For AY 2017-18 under consideration, the assessee filed original return u/s. 139 declaring a total income of Rs. 38,79,420/- which was duly assessed. Subsequently, on the basis of certain material seized in search proceeding u/s 132 conducted upon one “SSS” group [According to AO, “SSS” stands for three separate but internally connected groups viz. Sangini, Satyam and Shaligram], the Income-tax Authorities came to know that the aforesaid firm of which the assessee is a partner, developed a project and sold plots therein. Taking into account this information, the Ld. AO formed a belief that the income earned from sale consideration of plots amounting to Rs. 33,38,49,880/- was chargeable to tax in the hands of assessee, which had escaped assessment. On this basis, the AO re-opened assessee’s case through a notice u/s 148. In response, the assessee re-filed return declaring the original income of Rs. 38,79,420/-. Thereafter, the AO issued notices u/s 143(2)/142(1). Ultimately, the AO completed assessment assessing a taxable short-term capital gain of Rs. 28,02,08,880/- from the aforesaid sale consideration of Rs. 33,38,49,880/- in assessee’s hands by passing following order:

“(e) …. Vide notices u/s 142(1), sufficient opportunities have been provided to the assessee to provide the required documents. But every time assessee has requested for adjournment but not provided any documentary evidences which were asked vide above notices in view of the same, it is clear that assessee has failed to provide any details w.r.t sale of land amounting to Rs 33,38,49,880/ by partners of M/s Dharamvan Developers. Further, assessee has also tailed to submit details of year wise sale of plots in impugned land. As assessee has failed to provide the justified documentary evidences/explanation sale of land amounting to Rs. 33,38,49,880/- therefore, the capital gain on the above stated property is proposed to be added to the income of the assessee u/s 45 of the Income Tax Act, 1961 as per following computation:”

(ii) Aggrieved, the assessee carried matter in first-appeal. The Ld. CIT(A), however, dismissed assessee’s appeal by passing following order:

“6.6 On merit of the case from the details available and assessment order, it is seen that the case was reopened under section 148 based on information received during a search action u/s 132 conducted on the "SSS Group" on 06.03.2018. Incriminating documents (Annexure A/5, Page 108-109) were seized from the premises of Shri Ashwin B. Dudhat, revealing unaccounted sales of Rs. 33,38,49,880/- relating to a real estate project developed by M/s Dharamjivan Developers, in which the assessee is a partner. The AO issued multiple statutory notices u/s 142(1) and show-cause notices, but the appellant failed to fully comply. As per statements and seized records, total sales from the project were Rs. 33,38,49,880/- with a profit of Rs. 13.95 crore. The applicant did not submit any conclusive documentary evidence to explain the transaction or provide year-wise breakup to the assessing officer during the course of assessment proceedings. Accordingly, income of Rs. 28,02,08,880/- was added to the income of the assessee as capital gain u/s 45 of the Act. 6.7 Furthermore, during the appellate proceedings, the appellant has continued to be non-compliant in several respects. Despite being given adequate opportunity, the appellant failed to submit any supporting documents in respect of land sold such as copy of ITR, computation sheet, audited books of accounts, submissions made before the AO, computation of income, details and documents of property sold, cost of acquisition of the land, cost of improvement (if any) and also ratio of sharing of profit among the partners. This continued non-compliance further weakens the appellant's case and justifies the addition made. From the assessment order it is seen that the AO has accorded reasonable and sufficient opportunity to the appellant and followed the due procedure as prescribed in the Act. In these circumstances, the addition of Rs. 28,02,08,880/-made by the AO is upheld as the appellant has not submitted any documentary evidence to rebut the findings of the AO in the assessment order. Accordingly, the addition made by the AO is hereby upheld.”

(iii) Still aggrieved, the assessee has come in next appeal before us.

(i) Pages 1-32 of Paper-Book where the order of appeal passed by CIT(A) in assessee’s own case for AY 2014-15, is placed. Ld. AR referred Para 6.5.1 & 6.5.2 of same to demonstrate that the CIT(A) has dealt the issue of very same addition of Rs. 33,38,49,880/- and held that the AO had already taxed the same in earlier year i.e. A.Y. 2013-14. Therefore, the CIT(A) has deleted addition made by AO in AY 2014-15 in assessee’s hands.

(ii) Pages 33-58 of Paper-Book where the assessment-order dated 12.03.2026 passed u/s 147 r.w.s. 250 in the case of “Jaysukh Bhai Gobarbhai Savalia” (another partner of partnership-firm) for AY 2016- 17, is placed. Ld. AR referred Para No. 6, 7 and 8 of same and demonstrated that the AO himself had accepted that the seized material was related to the activities of partnership-firm and not to the partner in individual capacity. The AO has further observed that the concerned assessee-cum-partner was one of the co-owners in the project developed by partnership-firm but the partner’s income was exempted u/s 10(2A). The AO has further observed that no material had been found during the course of verification to indicate that any income accrued or arose to partner in individual capacity from the project developed by partnership-firm. Ultimately, the AO closed the assessment of partner without making any addition.

(iii) Pages 59-72 of Paper-Book where the assessment-order dated 28.08.2025 passed u/s 147 r.w.s. 250 in the case of above partner “Jaysukh Bhai Gobarbhai Savalia” for AY 2015-16, is placed. Ld. AR referred Pages 12-13 of the order wherein the AO has re-produced the assessment-order of AY 2016-17 and made the same finding and conclusion as noted in foregoing sub-para (ii) and ultimately the AO has closed the assessment of partner without making any addition.

(iv) Pages 73-75 of Paper-Book where the assessment-order of AY 2016-17 dated 26.03.2025 passed u/s 147 in the case of one more partner of firm named “Jayesh Bhai Laxmanbhai Bhutani” is placed. Ld. AR referred Paras 2 to 5 of the order wherein the AO has dealt the issue of sale of plots of Rs. 33,38,49,880/- and finally closed partner’s assessment without making any addition.

(i) That, in present case of assessee, the assessment-order as well as the first appellate order passed by Ld. AO and CIT(A) are ex-parte due to lack of representation by assessee.

(ii) That, as regards the first appellate order for AY 2014-15 passed in assessee’s own case being relied upon by Ld. AR, the concerned CIT(A) has deleted addition on limited/technical basis that the same addition was already made in earlier AY 2013-14 in the hands of assessee and hence the addition again made in AY 2014-15 has resulted in double taxation which cannot survive. However, Ld. DR submitted, the crucial fact is that the year-wise break-up of the impugned amount of Rs. 33,38,49,880/- was not available to the lower authorities and therefore the AO had resorted to taxing the same amount in all years.

Therefore, mere deletion by CIT(A) in AY 2014-15 on technical/limited basis cannot lead to the conclusion that the impugned addition is not taxable in AY 2017-18 under consideration.

(iii) That, the appeal of partnership-firm is presently pending before CIT(A) and the factual and legal position in the case of the partnership-firm is not presently available on record, the matter being sub judice before the appellate authority. Therefore, it would be necessary to ascertain whether or not the income arising from the sale of plots has been or is liable to be taxed in the hands of the partnership firm. Otherwise, there is a possibility of the impugned income escaping taxation altogether, both in the hands of the firm and its partners.

Order pronounced in open court on 07/09/2026

Sd/- Sd/- (SUCHITRA KAMBLE) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat दिन ांक /Dated : 07/09/2026 Giridhar/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT – concerned (4) Departmental Representative (6) Guard File By order

UE Assistant Registrar/Sr.PS Income Tax Appellate Tribunal Surat Bench, Surat

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