SHER SINGH,KOTA vs. THE INCOME TAX OFFICER, KOTA

PDF · subscribers
ITA 1098/JPR/2025Status: DisposedITAT Jaipur25 June 2026AY 2018-1911 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the CIT(A) erred in setting aside the assessment as the AO had already examined the documents and acknowledged the assessee's claims in the remand report. The Tribunal found no reason to restore the issue back to the AO.

What were the facts?

The assessee claimed Nil Long Term Capital Gain (LTCG) after deductions for sale of property. The Assessing Officer (AO) made an ex-parte addition of LTCG as the assessee failed to participate. The CIT(A) set aside the assessment to the AO for fresh assessment but partly allowed a claim of Rs. 7,00,000/-.

What were the issues?

Whether the CIT(A) had the jurisdiction to set aside the assessment when the AO had already examined the evidences in remand proceedings and acknowledged the assessee's claims. Whether the CIT(A) erred in partly allowing a claim while setting aside the entire assessment.

Which sections of the Income-tax Act were involved?

Section 144,Section 251(1)(a),Section 54

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES, “SMC” BENCH, JAIPUR

Before: SMT. ANNAPURNA GUPTA

Hearing: 01.06.2026Pronounced: 25.06.2026

P a g e | 1 ITA No.1098/JPR/2025 Sher Singh IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “SMC” BENCH, JAIPUR BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No.1098/JPR/2025 (Assessment Year:2018-19)

Sher Singh Vs. ITO D 11, Gokul Colony, Ward2(1) Borkhera, Kota 324001 Kota �थायीलेखासं./जीआइआरसं./PAN/GIR No: FNEPS 8661 F Appellant .. Respondent

Appellant by : Sh. Tarun Mittal, CA& Sh. Harshit Agarwal, CA Respondent by : Sh. Gaurav Awasthi, JCIT

Date of Hearing 01.06.2026 Date of Pronouncement 25.06.2026

O R D E R The present appeal has been filed by the assessee against the order passed by the National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “Ld. CIT(A)”), dated 23.06.2025 under Section 250 of the Income Tax Act, 1961, (hereinafter referred to as “the Act”). 2. The assessee in this appeal has taken following grounds of appeal:- 1. On the facts and in the circumstances of the case ld. CIT(A) has erred in misinterpreting the provisions of section 251(1)(a) of the Act and thereby exercising

P a g e | 2 ITA No.1098/JPR/2025 Sher Singh power of set aside in respect of one of the grounds of appeal and simultaneously adjudicating remaining grounds of appeal, which is absolutely contrary to the spirit of the legislation.

1.1. That, the ld. CIT(A) has erred in not appreciating the first proviso to section 251(1)(a) of the Act in its true sense, according to which assessment completed u/s 144 could be set aside to the file of AO only for making fresh assessment, whereas Id.CIT(A) has adjudicated the appeal partly and has set aside a part of assessment. Appellant prays that order so passed by ld.CIT(A) is beyond jurisdiction, being passed in contradiction to the specific provisions of the Act and thus deserves to be quashed.

2.

On the facts and in the circumstances of the case and in law, ld. CIT(A) grossly erred in setting aside the case to the file of Id. AO to re-determine Long Term Capital Gain arbitrarily.

2.1. That, Id. CIT(A) has further erred in not allowing indexed cost of construction of Rs.12,92,340/- claimed by assessee, even though assessee has furnished the valuation report from the registered Valuer, which was neither challenged by ld. CIT(A) nor by ld. AO in remand report. Appellant prays that ld.CIT(A) not only admitted additional evidences furnished by assessee and sought remand report on same from AO (though there is no reference of remand report in the appellate order), but also allowed the exemption to the tune of Rs. 7,00,000/- u/s 54 of the Act after considering such evidences, thus there is no reason to set aside the issue of determination of Long Term Capital Gain to the file of AO.

3.

On the facts and in the circumstances of the case and in law, ld. CIT(A) grossly erred in restricting exemption u/s 54 to Rs. 7,00,000/- as against Rs. 25,80,000/- as claimed byassessee, by brushing aside the fact that the same relates to Construction and ancillary expenses for the acquisition of new residential property and are thus eligible for deduction.

4.

That, the ld. CIT(A) has further erred in not considering the submission made and transaction undertaken by assessee in totality. Appellant prays that in the year under consideration, appellant has sold a constructed house and thereafter out of proceeds received purchased a plot for Rs. 7,00,000/- and incurred Rs. 18,80,000/- on construction and ancillary expenses for residential house. Hence the order so passed by ld. AO deserves to be quashed.

5.

That the appellant craves the right to add, delete, amend or abandon any of the grounds of appeal either before or at the time of hearing of appeal.

3.

At the outset itself, ld. Counsel for the assessee stated that the primary and sole grievance of the assessee in the present case was with respect

P a g e | 3 ITA No.1098/JPR/2025 Sher Singh to the addition made to his income on account of Long Term Capital Gain earned amounting to Rs.32,71,440/-, as opposed to NIL return by the assessee.

4.

The assessee had sold property for a consideration of Rs.33,00,000/- and reduced the cost of site of Rs.28,560/-, cost of construction (Indexed) of Rs.12,92,000/- and the net gain of Rs.19,79,440/-, was claimed as exempt u/s 54 of the Act on account of investment made in a new property of Rs.25,80,000/-. However, since the assessee failed to participate in the assessment proceedings, the AO in an ex parte order passed u/s 144 of the Act ,allowed the assessee only the claim of indexed cost of acquisition of property amounting to Rs.28,560/- against the sale consideration of Rs.33,00,000/- and compute Long Term Capital Gain at Rs.32,71,440/-, adding the same to the income of the assessee. The AO denied the assessee claim of indexed cost of construction of Rs.12,92,000/- and exemption u/s 54 of the Act on account of an investment made in new property of Rs.25,80,000/-,In the absence of any evidence corroborating the above two claims of the assessee.

5.

Ld. Counsel for the assessee pointed out from the order of Ld. CIT(A) that during appellate proceedings, the assessee submitted additional evidences corroborating the claims denied to it which were forwarded to the AO for his report thereto; that the report of the AO was received, but however, the Ld. CIT(A) exercising his powers u/s

P a g e | 4 ITA No.1098/JPR/2025 Sher Singh 251(1)(a) of the Act set aside the assessment and restored the issue back to the file of AO for making a fresh assessment.

6.

He pointed out that at the same time, the Ld. CIT(A) perusing the documents filed by the assessee held that the assessee had submitted sufficient evidences demonstrating purchase of a property for Rs.7,00,000/- from one Smt. Renu Gupta through banking channels, and had also furnished electricity bill of the new property, and accordingly allowed assessee’s claim of deduction/exemption of the capital gains to the extent of Rs.7,00,000/-.

7.

The contentions of the Ld. Counsel for the assessee before me was that, the Ld. CIT(A) after having sought a remand report from the AO on the additional evidences filed by the assessee, and the AO having given no adverse view with respect to the additional evidences filed could not have exercised his powers u/s 251(1)(a) of the Act to set aside the assessment to the file of the AO, directing him to frame an assessment afresh.

8.

He also pointed out that, the Ld. CIT(A) exercise of power of setting aside the assessment order for fresh assessment to the file of the AO was incorrect also for the reason, that he had partly allowed assessee’s claim of exemption u/s 54 of the Act to the extent of Rs.7,00,000/-, when in exercise of his powers, he was required to set

P a g e | 5 ITA No.1098/JPR/2025 Sher Singh aside the complete assessment and direct the AO to assess income of the assessee afresh.

9.

The Ld. DR, however, supported the order of Ld. CIT(A).

10.

I have heard the rival contentions. In the facts of the present case, undoubtedly, assessment has been framed u/s 144 of the Act. As per Section 251(1)(a) of the Act, the Ld. CIT(A) is empowered to set aside the assessment framed u/s 144 of the Act and direct the AO to frame assessment afresh. Relevant provision of Section 251(1)(a) is reproduced hereunder:- Powers of the Joint Commissioner (Appeals) or the Commissioner (Appeals). 251. (1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers— (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment : 98 [Provided that where such appeal is against an order of assessment made under section 144, he may set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment;]……………………

11.

There is no dispute with above power of Ld. CIT(A). However, what is to be determined, is whether, the Ld. CIT(A) has exercised the power lawfully and validly in the peculiar facts of the present case, being that the Ld. CIT(A) had already sought the comments of the AO on the additional evidences filed before him by the assessee with respect to the issue which the AO was unable to investigate and adjudicate upon during assessment proceedings. As is evident, the issue during assessment was with respect to the capital gain earned by the

P a g e | 6 ITA No.1098/JPR/2025 Sher Singh assessee, which the assessee had claimed to be Nil after claiming deduction from the consideration received on sale of immovable property of 1) The indexed cost of acquisition. 2) The indexed cost of improvement and 3) Exemption/ deduction u/s 54 of the Act on account of acquisition of new residential property. 12. In the absence of any cooperation by the assessee during the assessment proceedings, the AO had allowed the assessee only benefit of indexed cost of acquisition against the sale consideration in his order passed u/s 144 of the Act. Before the Ld. CIT(A), the assessee had admittedly filed all additional evidences corroborating his claim of both the indexed cost of improvement of the property sold as also the investment made by him in the new property. 13. In this regard, my attention was drawn to the copy of the application under Rule 46A of Income Tax Rules 1962 along with affidavit of the assessee placed at paper book page No.74 to 79, more particularly my attention was drawn to page No.76 pointing out that the assessee had furnished additional evidences in the form of documents which include:- 1) Valuation report of property sold as well as property purchased. 2) Electricity bill pertaining to property purchase. 14. Thereafter, my attention was drawn to the remand report of the AO placed at paper book Page No.90 to 92, more particularly page

P a g e | 7 ITA No.1098/JPR/2025 Sher Singh No.91 regarding the comments of the AO noting that the assessee had furnished documentary evidences in the form of :- 1) purchase agreement reflecting cost of acquisition 2) sale deed of property sold wherein it is clearly stated that constructed properties being is sold. 3) Purchase deed of residential plot against which exemption is claimed u/s 54 of the Act along with bank statement reflecting withdrawals for construction of such plot all of which were furnished during assessment proceedings itself. 4) My attention wasthereafter, drawn to page No.92. Ld. Counsel for the assessee pointed out that with respect to the property sold by the assessee, the AO categorically commented on the documents submitted stating that the assessee had purchased plot vide agreement dated 13.02.2001 and later on got a house constructed on the above plot which was evident from the copy of the sale deed of the said property dated 07.03.2018 in which a house of two floors is mentioned. The AO, he pointed out, admitted to the fact that two floor house was constructed on the above plot and the assessee had claimed cost of construction of Rs.12,92,000/- supporting the claim with the valuation report from an approved valuer. My attention was drawn to the comments of the AO in this regard as under:- Comment on the plot no. D-11/B, Gokul Colony, Village Ramchandrapura, Borkhera, Tehsil Ladpura, Kota: On perusal of agreement dated 13.02.2001 of plot no. D-11/B, Gokul Colony, Village Ramchandrapura, Borkhera, Tehsil Ladpura, Kota, it is noticed that the assessee purchased the plot. Later on the assessee get the house constructed on the above plot and the same can be verified from the copy of sale deed dated 07.03.2018 in which a house of two floor is mentioned. Thus two floor

P a g e | 8 ITA No.1098/JPR/2025 Sher Singh house was constructed on the above plot for which the assessee has claimed cost of construction of Rs. 12,92,000/- and furnished valuation report from the govt. approved valuer. The assessee sold the above constructed house for sale consideration of Rs.33,00,000/- on 06.03.2018. 15. With respect to the plot purchased by the assessee, he pointed out that the AO noted from the documents furnished that the assessee had purchased plot of Rs.7,00,000/- and had make a cash withdrawal entry of Rs.3,30,000/- in his bank account which could be considered for construction purposes. Comment on the plot no.59-A, Aastha Nagar-II, Thekda, Kota:-On perusal of agreement dated 20.03.2018, it is noticed that the assessee purchased a plot no.59-A, Aastha Nagar-II, Thekda, Kota for Rs.7,00,000/-. Entry of payment made by the assessee of Rs.7,00,000/- is reflected in bank statement of the assessee. Further on verification of bank statement furnished by the assesseeupto F.Y. 2017-18, one cash withdrawal entry of Rs.3,30,000/- is reflecting which may be considered as withdrawal for construction purpose. The assessee has not furnished bank statement for further financial years such as for F.Y. 2018-19 and F.Y. 2019-20 to strengthen his claim for exemption u/s 54 of Rs. 25,80,000/-. 16. It is evident from the above, that, necessary documents were furnished by the assessee to the Ld. CIT(A) during appellate proceedings which were entertained and admitted by him for adjudication of the issue before him as per Rule 46 A of the Income Tax Rules and were confronted to the AO for his comments thereon, who after examining the same found merit in the assessee’s claim of having sold a house on basis of land owned by him. He also acknowledges the fact of a valuation report being submitted by the assessee from a Government approved valuer, certifying the cost of the construction of house to be Rs.12,92,000/-. Similarly, with respect to the, property purchased the AO has acknowledged purchase of land by

P a g e | 9 ITA No.1098/JPR/2025 Sher Singh the assessee and withdrawals of Rs.3,30,000/- made for construction purposes. 17. What is derived from above is that, all documents necessary for corroborating the claim of the assessee of the indexed cost of construction and the claim of deduction/exemption u/s 54 of the Act already stood examined by the AO during assessment proceedings. The AO though initially allowed the assessee only the claim of cost of acquisition of land in his remand report, he acknowledged the fact that the assessee had constructed house thereon. With respect to the valuation of the said house at Rs.12,92,000/- certified by Government approved valuers, the AO has made no adverse comments with respect to the same. 18. Similarly, with respect to the, investment made in a new house, the AO had admitted to the fact of investment made to the extent of Rs.7,00,000/- in a plot of land and Rs.3,30,000/- for construction thereon. With respect to the new property purchase, the assessee had also submitted a valuation report against which the AO had found no adverse comments to make. 19. It is clear therefore, the AO had examined all the documents furnished by the assessee regarding his claim of indexed cost of improvement of the asset and the claim of deduction u/s 54 of the Act and the AO had acknowledged the claim of the assessee and found no infirmity in the document submitted by the assessee. The claim of the assessee to long term capital gain of Nil as per facts of the case before

P a g e | 10 ITA No.1098/JPR/2025 Sher Singh me stood completely examined by the AO in the assessment proceedings and therefore, I find:- 1) No reason for setting aside the assessment order and directing the AO to frame assessment afresh. 2) For any addition to be made to the income of the assessee on account of long term capital gains 20. The AO having examined the issue in remand proceedings itself, the Ld. CIT(A) had no reason to restore the issue back again to the AO by setting aside the assessment order. 21. In the light of the same, I set aside the order of Ld. CIT(A) and hold the assessee’s claim of NIL long term capital gain as correct and no addition being warranted on this issue. 22. In effect, appeal of the assessee stands allowed. Order pronounced in the open court on 25.06.2026

Sd/- (Annapurna Gupta) ACCOUNTANT MEMBER Dated 25.06.2026 Mittali, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT

P a g e | 11 ITA No.1098/JPR/2025 Sher Singh By Order,

Asst. Registrar ITAT, Jaipur

More judgments on Section 251(1)(a)

All 935 judgments and leading authorities on Section 251(1)(a) →

Recent GST High Court judgments

Search GST case law →