PRAKASHBHAI MOTILAL SHAH,AHMEDABAD vs. THE ITO, WARD-2(1)(2), 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 11.11.2025 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”).

ITA No.2464/Ahd/2025 Prakashbhai Motilal Shah - 2 –

ITA No.2464/Ahd/2025 Prakashbhai Motilal Shah - 3 – 5. The assessee has further raised additional grounds before us, vide letter dated 22.12.2025 which are reproduced hereunder:- Without prejudice to the main ground of appeal filed in the Appeal Memo we also request to admit the following ground of appeal arising from the evidence already available on record. Additional Ground No.1:- Whether, on facts and in circumstances of the case and in law, Ld. AO erred in issuing the notice u/s. 148 of the act? Additional Ground No.2:-

Whether, on facts and in circumstances of the case and in law, Ld. AO erred in making addition for other issues in light of binding judicial pronouncement of territorial high court in case of CIT-II vs. Mohmed Juned Dadani [2013] 30 taxmann.com 1 (Gujarat)?

We crave to admit the above additional ground of appeal and allow us to be heard on the same. In this regards, we would like to mention that relevant documents in this regards is already available on record and no additional evidence is required to be admitted. Further, Additional Ground is purely question of law and the material for the same is already available on record. In this regards, on the background of the many judicial pronouncements, we understand that Hon'ble Income tax appellate tribunal has vide power to entertain the additional ground though not raised earlier. For our above contention that additional ground can be entertained by Hon'ble ITAT though not raised earlier, we rely on the following judgments:- i) Jute Corporation of India v. CIT [1991] 187 ITR 688 (SC) ii) CIT v. Nirbheram Daluram [1997] 91 Taxman 181 (SC) iii) CIT v. Gokuldas & Co. [2002] 122 Taxman 849 With this background, we humbly request your Honor to entertain the Additional Ground for the sake of the justice to the assessee. 6. Ld. counsel for the assessee, contended that the additional grounds raised are legal grounds, challenging the validity of the assessment framed u/s 147 of the Act and since all facts for adjudication of the same are available on record the same need to be entertained, though not raised earlier. Reference were made to the decisions of the Hon’ble Apex Court, in the case of Jute

ITA No.2464/Ahd/2025 Prakashbhai Motilal Shah - 4 – Corporation of India Vs. CIT [1991] 187 ITR 688 (SC) and CIT Vs. Nirbheram Daluram [1997] 91 taxmann 181 (SC). 7. We have noted the additional grounds raised by the assessee, to be legal grounds challenging the validity of the assessment framed, therefore, following the settled proposition of law, in this regard by the Hon’ble Apex Court in the case of Jute Corporation of India (Supra), the same are entertained and admitted for adjudication. 8. Taking up the additional grounds, ld. Counsel for the assessee challenged the validity of the assessment framed u/s 147 of the Act to be without jurisdiction on 2 grounds:- 1) Non-application of mind by the AO, while recording the reasons for escapement of income of the assessee, 2) no addition being made on the reasons for which the AO reopened the case of the assessee believing income to have escaped assessment and addition having been made on a completely different issue. Reliance was placed on various decisions both of the Jurisdictional High Court and the Bombay High Court in this regard as well as the decision of ITAT Ahmedabad Benches and Mumbai Benches which shall be referred to subsequently in our order. 9. The ld. Counsel for the assessee, drew our attention, to the facts of the case, pointing out, from the assessment order, that reopening was resorted to, on the basis of information in the possession of the AO, which was flagged on Insight Portal under the category e-verification module, reflecting the assessee to have sold immovable property during the year amounting to Rs.19,80,00,000/-. Basis this information, the AO formed belief of escapement of income of the assessee and issue notice u/s 148 of the Act to

ITA No.2464/Ahd/2025 Prakashbhai Motilal Shah - 5 – the assessee. These facts, are noted at para 1 of the assessment order under the heading “Reason for selection of the case” as under:- 1. Reasons for selection of the case: Information has been flagged on Insight Portal under category e- Verification module in the case of PRAKASHBHAI MOTILAL SHAH (PAN: AINPS6451L) for A.Y.2020-21. The e Verification Scheme, 2021 was notified vide CBDT's Notification No.137/2021/F.No.370142/57/2021-TPL(Part-1) dated 13.12.2021 in accordance with the provisions of Section 135A of the Income-tax Act, 1961. The following information/report has been uploaded in the form of Preliminary Verification Report (PVR) by Prescribed Authorities under scheme after making e-verification in the instant case.

In accordance with the risk management strategy formulated by CBDT, information is available with the Department that assessee PRAKASHBHAI MOTILAL SHAH (PAN: AINPS6451L), has undertaken the following financial transactions in the previous year relevant to A.Y. 2020-21:

In view of the above discussion, following key parameters for issue of notice u/s 148 of the Act can be said to have fulfilled

ITA No.2464/Ahd/2025 Prakashbhai Motilal Shah - 6 – Verification procedure have been made available to the Assessing Officer under e- Verification module in Insight Portal. 2. The provisions of section 148A shall not apply since information is received through Insight Portal under the scheme (e- verification Scheme, 2021) as notified under section 135A of the Income-tax Act, 1961 and information received in the case of the assessee that there is income chargeable to tax escaping assessment of Rs. 19,80,00,000/- for A.Y.2020- 21. 3. From the above discussion and information available on record which suggests that the income chargeable to tax which has escaped assessment amounts to Rs. 19,80,00,000/- for the AY 2020-21which is within the period referred to in clause (a) of sub section (1) of section 149 of the Income-tax Act. Hence, the time limit and conditions as per section 149 of the Act are fulfilled in the present case. 4. The Pr. Commissioner of Income-tax is specified authority as per clause (i) of section 151 of the Act to grant approval for issue of notice under section 148 of the Act. Accordingly, the proceedings were assigned to this Assessment Unit (hereinafter referred as 'AU') for further assessment proceedings under the Faceless Assessment Regime.

ITA No.2464/Ahd/2025 Prakashbhai Motilal Shah - 7 – pointed out at point No.10(B) wherein details of long term capital gain was required to be furnished by the assessee, the assessee had disclosed the full value of consideration received as Rs.13.85 crores and given all details in column f of the name of buyers of the property, PAN of the buyers, the share of the buyers, the amount received, the address of the property and the PIN code, a screenshot of the relevant page is as under:-

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ITA No.2464/Ahd/2025 Prakashbhai Motilal Shah - 9 – accordingly, had received information from the Sub-Registrar’s Office regarding sale of property by the assessee during the impugned year. He contended that, the AO very well, could have applied his mind, and obtained the sale deeds for the impugned property from Sub-Registrar’s Office, that he could very well have correlated the details mentioned in the sale deed with information furnished by the assessee in his return of income, and thereafter, arrived at finding of escapement of income, which would have revealed that, there was no escapement of income of the assessee at all in relation to the sale consideration received by the assessee on the sale of immovable property. He contended that, it was only subsequently during assessment proceedings, that the AO found the assessee to have disclosed all particulars relating to the impugned transaction in his return of income, and made no addition on account of the sale consideration received by the assessee from the sale of the immovable property. He contended therefore, that the AO had not applied his mind at all to the information of record with him, and therefore, had reopened the case on the wrong belief of income of the assessee escaping assessment, on account of sale of the property received by the assessee of immovable property not being disclosed by the assessee. 14. Ld. Counsel for the assessee, further pointed out, that the AO did not make any addition on account of the reason for which the reopening was done in the case of the assessee, but however, made addition of the cost of acquisition and improvement claimed by the assessee ,disallowing the same while computing the capital gains liable to tax on account of the said transaction. He contended that, the Jurisdictional High Court in the case of CIT-2 Vs. Mohmed Juned Dadani [2013] 30 taxmann.com 1 (Guj.) has categorically held that when on the ground of which reopening of assessment

ITA No.2464/Ahd/2025 Prakashbhai Motilal Shah - 10 – was based no addition was made by the AO, he could not make additions on some other grounds which did not form part of reasons recorded by him. Our attention was drawn to the copy of the order of the Hon’ble Jurisdictional High Court placed before us, more particularly to para 4 where the substantial question of law framed was as under:- "Whether the Income-tax Appellate Tribunal was right in law in coming to the conclusion that when on the ground on which the reopening of assessment is based, no additions are made by the Assessing Officer in the order of assessment, he cannot make additions on some other grounds which did not form part of the reasons recorded by him."

which was answered at para 33, in the affirmative in favour of the assessee, and against the Revenue. 15. Reference in this regard was also made to the decision of the Hon’ble Bombay High Court in the case of CIT-5 Mumbai Vs. Jet Airway (I) Ltd. [2010] 195 taxmann 117 (Bombay), and to the decision of ITAT Ahmedabad in the case of DCIT Vs. Mrunal Santramdas Verma ITA No.231/Ahd/2017 and ITAT Mumbai in the case of Chintan Harshad Kanakia Vs. ITO ITA No.2822/Mum/2025. 16. The Ld. DR before us, though opposed the contention of the ld. Counsel for the assessee, however, was unable to controvert both the factual contention made by the ld. counsel for the assessee and also the proposition of law laid down, both by Jurisdictional High Court and the other Hon’ble High Courts referred to by the ld. Counsel for the assessee, before us. 17. In the light of the above, noting the fact that, the AO had reopened the case of the assessee believing income pertaining to the sale consideration of immovable property sold during the year amounting to Rs.19.80 crores, having escaped assessment, without making any enquiry in relation to the same, despite the facts on record revealing the assessee to have disclosed sale

ITA No.2464/Ahd/2025 Prakashbhai Motilal Shah - 11 – consideration to the tune of Rs.13.85 crores, in his return of income, and the AO being capable of verifying and tallying the transaction disclosed by the assessee and that revealed by the information extracted from the Sub- Registrar’s Office, as demonstrated by the ld. counsel for the assessee as above , the reopening resorted to by the AO in the facts of the present case, we hold, was without any application of mind at all. 18. Undoubtedly, the information relating to the assessee having sold immovable property during the year was made available from the e- verification carried out with the Sub-Registrar’s Office in terms of Section 135 A of the Act. Further, the assessee had undoubtedly, returned transaction of sale of immovable property to the tune of Rs.13.85 crores, to tax in the return of income filed and had furnished all details relating to the buyer of the property in the return of income filed. With the above two informations, in his possession one from the Sub-Registrar’s Office and other furnished by the assessee in his return of income, the AO could very well have undertaken the verification exercise and it would have been revealed to the AO that the assessee firstly had not undertaken any sale transaction to the tune of Rs.19.80 crores but only to the tune of Rs.13.85 cores and which stood duly disclosed for taxation purposes. This fact was ultimately accepted by the AO but we have noted that before reopening of the case and issuing notice to the assessee u/s 148 of the Act, the AO also could have arrived at the same conclusion, that there was no escapement of income of the assessee vis-à-vis the sale of immovable property. 19. This preliminary exercise having not been carried out by the AO, we agree that the AO had reopened the case of the assessee believing the assessee to have escaped assessment without any application of mind in an arbitrary

ITA No.2464/Ahd/2025 Prakashbhai Motilal Shah - 12 – manner. The reopening therefore we hold is liable to be quashed for this reason along.

ITA No.2464/Ahd/2025 Prakashbhai Motilal Shah - 13 –

Sd/- sd/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 14/07/2026 Mittali आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant ��यथ� / The Respondent. 2. संबं�धत आयकर आयु�त / Concerned CIT 3. आयकर आयु�त(अपील) / The CIT(A)- 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,

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