PARESHBHAI LALJIBHAI PATEL,AHMEDABAD vs. THE DY.CIT, CIRCLE-4(1)(1), AHMEDABAD

PER ANNAPURNA GUPTA, AM:

The present appeal has been filed by the Assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “CIT(A)”) dated 17.11.2025 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”).

ITA No.238/Ahd/2026 Pareshbhai Laljibhai Patel - 2 – 2. Brief facts of the case are that the assessee is an individual and had filed return of income for the impugned year declaring income from business, salary, property and capital gain of Rs.1,58,41,120/-. The AO was in possession of information that the assessee had sold immovable property for a total consideration of Rs.14,99,80,000/- during the impugned year, and accordingly, he reopened the case of the assessee by issuing notice u/s 148 of the Act. Thereafter, assessment was framed making the addition on account of Long Term Capital Gain earned by the assessee on the sale of property amounting to Rs.67,47,880/- and on account of unsecured loans, the genuineness of which was not approved to the satisfaction of the AO amounting to Rs.13,51,032/-. 3. The matter was carried in appeal before the Ld. CIT(A), where the assessee raised legal grounds challenging the validity of the assessment framed u/s 147 of the Act, and also grounds on merits challenging the addition made. The Ld. CIT(A), dismissed all the grounds raised by the assessee. 4. Aggrieved by the order of Ld. CIT(A), the assessee has come up in appeal before us. In ground No.1 to 4, the assessee has raised legal grounds, challenging the validity of the assessment framed u/s 147 of the Act. The said grounds are reproduced hereunder:- 1. The Ld. AO erred in law in assuming jurisdiction u/s 147 by issuing notice u/s 148 without valid and tangible "information" and without compliance with mandatory pre-conditions, rendering the reassessment void ab initio.

ITA No.238/Ahd/2026 Pareshbhai Laljibhai Patel - 3 – 2. The reassessment proceedings are bad in law on non-existent enquiry and incorrect factual recording amounts to total non-application of mind and renders the assumption of jurisdiction invalid. 3. The learned AO has erred in law by initiating reassessment proceedings in breach of the mandatory "e-Verification Scheme, 2021", notified under section 135A of the Act, which mandates that all enquiries and information-gathering exercises prior to reassessment must be system- driven, digitally issued and verifiable through the ITBA framework. Any alleged enquiry conducted dehors the Scheme is illegal, unenforceable and incapable of forming the basis of reopening. 4. The approval u/s 151 is mechanical and based on incorrect facts, recording issuance of three notices u/s 133(6) which were never issued/served and have no ITBA trail; hence the sanction is invalid and the notice u/s 148 is void. 5. The contention of the ld. Counsel for the assessee before us, was that the reopening resorted to by the AO was without any application of mind to facts on record before him. His contention was that the reopening was resorted to on account of information in possession of the AO that the assessee had sold immovable properties for Rs.14.99 crores and on account of the non-response of the assessee to notice issued to him u/s 133(6) of the Act by the AO seeking information of the property transaction undertaken, the AO formed belief of escapement of income to the tune of Rs.14.99 crores. The contention of the ld. Counsel for the assessee was that all information with regard to the sale of property was in the possession of the AO, who could have easily verified that the assessee had disclosed the transaction in his return of income filed, and there was no escapement of income at all, to the tune of Rs.14.99 crores.

ITA No.238/Ahd/2026 Pareshbhai Laljibhai Patel - 4 – In this regard, he first drew our attention to the reasons recorded by the AO placed before us at paper book page Nos. 3 to 8. Referring to the same, he pointed out that the AO had information received from the Sub-Registrar Ahmedabad of the sale of two immovable properties by the assessee of value of Rs.4.99 crores and Rs.10 crores respectively. He pointed out that the AO had the ITR of the assessee also in his possession, which he has noted at page 4 of his reasons, and he had noted the assessee to have sold two immovable properties. He pointed out that the AO noted that, since no reply was given by the assessee, the share of the assessee in immovable property and the applicability of Section 50C could not be ascertained, and therefore, he noted that the consideration of Rs.14.99 crores is treated as mismatched for further scrutiny. He pointed out that the AO had not recorded any belief of escapement of income with regard to the consideration received on the sale of immovable property but had flagged it for further scrutiny. 6. He thereafter pointed out that the AO in the reasons recorded believed the entire amount of consideration of Rs.14.99 crores to have escaped assessment. Ld. Counsel for the assessee thereafter pointed out, that admittedly, the assessee had filed return of income for the impugned year, which the AO had noted in his reasons also, and the return of income contained the statement of Long Term Capital Gain. He drew our attention to the computation of income for the impugned year placed before us at paper book page Nos. 11 to 14, and drew our attention to the statement of

ITA No.238/Ahd/2026 Pareshbhai Laljibhai Patel - 5 – Long Term Capital Gain included therein at page No.14, the contents of which are as under:-

ITA No.238/Ahd/2026 Pareshbhai Laljibhai Patel - 6 – from Sub-Registrars Office, from where he had initially got information of sale of property by the assessee, he could have easily ascertained the sale consideration attributable to the assessee on account of the sale of the said property and also the fact that the said amount had been duly disclosed in the return of income filed by the assessee, which fact he contended the AO agreed with during assessment proceedings making no addition on account of the sale consideration of the properties sold. He contended therefore, that the AOs belief of escapement of the income to the entire extent of sale consideration of the said two properties amounting to Rs.14.99crores was arrived at without any application of mind at all. 9. Ld. DR on the other hand, relied on the order of Ld. CIT(A). Our attention was drawn to page 14 of the order of Ld. CIT(A), the contents of which are as under:- Ground No. 1 - Validity of Re-assessment Proceedings The appellant contended that the reopening under section 147 was unjustified. However, the records clearly show that the AO received specific information through the Insight portal that the appellant had sold two immovable properties for total consideration exceeding Rs14.99 crores during FY 2019-20, whereas the same had not been properly examined during original processing of return. The AO recorded detailed reasons, obtained approval u/s 151, and issued valid notice u/s 148 on 23.03.2024. The appellant responded by reiterating the same return u/s 148, which clearly established that the original return was not subjected to scrutiny earlier. The Hon'ble Supreme Court in Raymond Woollen Mills Ltd. v. ITO (236 ITR 34) held that at the stage of reopening, only the existence of tangible material is required and sufficiency of reasons cannot be questioned. Further, in Phool Chand Bajrang Lal v. ITO (203 ITR 456, SC), it was

ITA No.238/Ahd/2026 Pareshbhai Laljibhai Patel - 7 – observed that if the AO obtains fresh material showing that income has escaped assessment, reopening is justified. In the present case, the reopening was based on verifiable third-party information of high-value property transactions, and the AO recorded reasons demonstrating nexus between the information and escapement of income. Therefore, the proceedings under section 147 are valid and the ground challenging their legality is devoid of merit and is accordingly dismissed. 10. We have heard the rival contentions and we agree with the ld. Counsel for the assessee that the reopening resorted to in the present case by the AO u/s 147 of the Act, was without any application of mind at all. Admittedly, the AO had recorded reasons for escapement of income amounting to the total sale consideration of two immovable properties sold during the year amounting to Rs.14.99crores. The said information was available with the AO from the Sub-Registrar’s Office. The assessee had filed return of income for the impugned year and had disclosed capital gain earned from the sale of two immovable properties. The fact that the assessee had disclosed capital gain on the sale of immovable property ought to have prompted the AO, to verify the facts disclosed in the return with the registered sale deed of the said property and as rightly pointed out by the ld. Counsel for the assessee, it would have been sufficiently demonstrated to the AO on verification of the sale deeds with the data returned by the assessee in his return of income, that the assessee had disclosed capital gain with respect to his share in the property sold. The registered sale deed of the two properties would have adequately revealed that the properties were not completely owned by the

ITA No.238/Ahd/2026 Pareshbhai Laljibhai Patel - 8 – assessee, but he had only 5% share in the said properties. The AO, it is a fact on record, t during assessment proceedings when he conducted this verification exercise, made no addition of the sale consideration and agreed with the fact that the assessee’s share in the property sold was to the extent of 5% and the assessee had disclosed the sale consideration commensurate with his share in the immovable property while computing capital gains for returning of taxes. 11. It is established therefore, beyond any doubt, we hold that the AO, while reopening the case of the assessee did not do the basic exercise of verifying the fact of the capital gain transaction returned by the assessee in his return of income filed, with the information that came to his possession from the Sub-Registrar’s Office. As rightly contented by the ld. Counsel for the assessee, the AO was required to undertake this basic exercise and not to have jumped to the conclusion of the entire sale consideration on the sale of the immovable property having escaped assessment merely, because no reply was filed by the assessee to the enquiry conducted by the AO by issuing notices u/s 133(6) of the Act. Even if the assessee had not filed any reply to the notices issued to it, the AO was duty bound to have collected the necessary information from the Sub-Registrar’s Office, verifying the same with the information disclosed by the assessee in his return of income in relation to the property sold, before arriving at any belief of escapement of income. We are sufficiently satisfied that, if the AO had undertaken this exercise while reopening the case of

ITA No.238/Ahd/2026 Pareshbhai Laljibhai Patel - 9 – the assessee, there could not have any case at all of the AO forming belief of escapement of income to the tune of Rs.14.99crores. This is corroborated by the fact that when the AO conducted this exercise during assessment proceedings, he found the sale consideration in relation to the said two properties to have been correctly disclosed to the extent of assessee’s share in the property. 12. In the light of the above, we have no hesitation in holding that, the AO has reopened the case of the assessee without any application of mind at all to the facts available with him and which he could have easily procured from the sub registrars office, before reopening the case of the assessee. In the light of the same, the jurisdiction assumed by the AO, we hold, to reopen the case of the assessee, is in violation of law. The assessment framed as a consequence u/s 147 of the Act, we hold is not sustainable in law, and we direct quashing of the assessment order passed. 13. Since we have quashed the assessment order for the above reason, we are not taking up the other legal grounds and also the grounds raised on merits, since they are mere academic in nature. 14. In effect, appeal of the assessee is allowed in above terms. Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 21.07.2026

Sd/ Sd/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 21/07/2026 Mittali

ITA No.238/Ahd/2026 Pareshbhai Laljibhai Patel - 10 – आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)- 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad