SHAKARIBEN MAKWANA,AHMEDABAD vs. INCOME TAX OFFICER, WARD 3(3)(5), AHMEDABAD

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ITA 1048/AHD/2026Status: DisposedITAT Ahmedabad11 August 2026AY 2016-174 pages
AI SummaryAllowed

What did the Tribunal hold?

The tribunal held that the AO's action of treating the cost of acquisition as zero was unjustified and arbitrary, especially since the registered valuer's report remained unrebutted. The additions made by the AO were ordered to be deleted.

What were the facts?

The assessee sold a property and claimed the cost of acquisition based on a registered valuer's report. The Assessing Officer (AO) considered the cost too high, referred the matter to the Departmental Valuation Officer (DVO), but made additions based on zero cost as no DVO report was received before the assessment deadline.

What were the issues?

Whether the AO was justified in treating the cost of acquisition as zero without a DVO report and in the absence of defects in the assessee's valuer's report. Whether the penalty levied under Section 271(1)(c) is sustainable if the primary addition is deleted.

Which sections of the Income-tax Act were involved?

Section 250,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

Before: SHRI SANJAY GARG & SHRI R. GOVINDARAJAN

For Appellant: Shri Maulik Kansara, AR, Ms. Madhulika Satpute, Sr. D.R
For Respondent: Ms. Madhulika Satpute, Sr. D.R
Hearing: 03/08/2026Pronounced: 11/08/2026

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI R. GOVINDARAJAN, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. Nos. 1048 & 1060/Ahd/2026 (िनधा�रण वष� / Assessment Year : 2016-17) बनाम Shakariben Makwana Income Tax Officer / 160, Kumbhar Vas, Ward 3(3)(5), Ahmedabad Vs. Makarba, Ahmedabad, Gujarat-380051 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : BENPM0452C (Appellant) .. (Respondent) अपीलाथ� ओर से /Appellant by : Shri Maulik Kansara, AR ��यथ� क� ओर से/Respondent by : Ms. Madhulika Satpute, Sr. D.R. Date of Hearing 03/08/2026 Date of Pronouncement 11/08/2026 (आदेश)/ORDER Per Sanjay Garg, Judicial Member:

Both the captioned appeals relate to the same assessee are against order passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi (hereinafter referred to as “CIT(A)”), dated 13.02.2026 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2016-17.

ITA Nos.1048 & 1060/Ahd/2026 [Shakariben Makwana vs. ITO] A.Y. 2016-17 - 2 – 2. In ITA No.1048/Ahd/2026, the issue is relating to the quantum additions made by the Assessing Officer (in short ‘the AO’), whereas, in ITA No.1060/Ahd/2026 the issue is relating to the subsequent/consequential penalty levied by the AO u/s.271(1)(c) of the Act.

ITA No.1048/Ahd/2026

3.

The brief facts of the case are that assessee as a co-sharer sold a property for a consideration of Rs.6,05,00,000/-, out of which, assessee received Rs.11,09,256/- as per her share in the property. The assessee claimed cost of acquisition at fair market value as on 01.04.1981 as Rs.515/- per sq.mtr., however, the AO was of the view that the same was on a higher side. He, therefore, referred the matter to the Departmental Valuation Officer (‘DVO’) for assessing the fair market value of the property as on 01.04.1981. Since, no report from the DVO was received and the assessment was going time barred, the AO took the cost of acquisition at zero and assessed the entire consideration of Rs.11,09,256/- as capital gain.

4.

After hearing the learned representatives of the parties, we are of the view that this act of the AO is highly unjustified and arbitrary. The assessee, during assessment proceedings, furnished the report of the registered Valuer, who had estimated the fair market value of the property as on 01.04.1981 as Rs.515 per sq.mtr. Though, the AO did not point out any defect or infirmity

ITA Nos.1048 & 1060/Ahd/2026 [Shakariben Makwana vs. ITO] A.Y. 2016-17 - 3 – in the same, however, observed that the same was on higher side without assigning any reasons. He referred the matter to the DVO, however, no report from the DVO was received as on the date of passing of the assessment order. Under the circumstances, as on the date of completion of assessment proceedings, the report of the registered valuer, remain unrebutted and, hence, there was no justification on the part of the AO to treat the cost of acquisition at nil, merely, because he has not received the DVO’s report at the time of completion of assessment proceedings. Therefore, the impugned addition made by the AO is not justified at all and the same is ordered to be deleted.

5.

In the result, appeal of the assessee stands allowed.

ITA No.1060/Ahd/2026

6.

Since, we have deleted the quantum addition, the penalty levied u/s. 271(1)(c) of the Act has no legs to stand upon and the same is accordingly ordered to be deleted.

7.

In the combined result, both appeals of the assessee stand allowed.

This Order is pronounced on 11/08/2026 Sd/- Sd/- (R. GOVINDARAJAN) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 11/08/2026 S. K. SINHA True Copy आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant

ITA Nos.1048 & 1060/Ahd/2026 [Shakariben Makwana vs. ITO] A.Y. 2016-17 - 4 – ��यथ� / The Respondent. 2. 3. संबंिधत आयकर आयु� / Concerned CIT आयकर आयु�(अपील) / The CIT(A)- 4. 5. �वभागीय �ितिनिध, 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

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