SAMTA S. JAIN,AHMEDABAD vs. THE ACIT, CIRCLE-2(2)(1), AHMEDABAD

PDF · subscribers
ITA 865/AHD/2025Status: DisposedITAT Ahmedabad20 May 2026AY 2012-137 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that while the assessee provided some evidence, details related to transportation bills and some purchase/sales bills were missing. Therefore, the matter was remanded back to the Assessing Officer for verification.

What were the facts?

The assessee claimed cost of improvement for land development, which the Assessing Officer disallowed. The CIT(A) partly allowed the appeal. The assessee argued that payments were made via account payee cheques and VAT numbers were active at the time of purchase, even if later cancelled.

What were the issues?

Whether the disallowance of cost of improvement is justified when VAT numbers of suppliers were cancelled retrospectively, and whether the reopening under Section 147 was valid.

Which sections of the Income-tax Act were involved?

Section 147,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD

Before: MS. SUCHITRA KAMBLE & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri S N Divetia & Shri Samir Vora, ARs
For Respondent: Shri Rameshwar P. Meena, Sr. D.R
Pronounced: 20.05.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER I.T.A. No. 865/Ahd/2025 (Assessment Year: 2012-13) Samta S. Jain, Vs. Assistant Commissioner of 7, Madhupuri Flat, Income Tax, Kabhirchowk, Sabarmati, Circle-2(2)(1), Ahmedabad-380005 Ahmedabad [PAN No.AFSPJ2908R] (Appellant) .. (Respondent) Appellant by : Shri S N Divetia & Shri Samir Vora, ARs Respondent by : Shri Rameshwar P. Meena, Sr. D.R. 22.04.2026 Date of Hearing Date of Pronouncement 20.05.2026 O R D E R PER: SUCHITRA KAMBLE, JUDICIAL MEMBER: The appeal filed by the assessee is against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi on 15.03.2025 for A.Y. 20127-13.

2.

The grounds of appeal raised by the assessee are as under:

“1.1 The order passed by U/s.250 passed on 15.03.2025 for A.Y. 2012-13 by NFAC, [CIT(A)], Delhi (for short CIT(A)” upholding the cost of improvement to the extent of Rs. 79,67,111/- and Rs. 13,07,920/- aggregating to Rs. 92,75,031/- made by A.O. is wholly illegal, unlawful and against the principles of natural justice. 1.2 The ld. CIT(A), has grievously erred in law and or on facts in not considering fully and properly the explanation furnished with documents/evidence with regard to the claim of cost of improvement. 2.1 The ld. CIT(A), has grievously erred in law and or on facts in confirming the disallowance of cost of improvement aggregating to Rs. 92,75,031/- (Rs. 79,67,111/- and Rs.13,07,920/-) though the complete details/evidence were furnished.

ITA No. 865/Ahd/2025 Samta S. Jain vs. ACIT Asst.Year–2012-13 - 2 - 2.2 That in the facts and circumstances of the case the ld. CIT(A), ought to have upheld the disallowance of cost of improvement aggregating to Rs. 92,75,031/- (Rs. 79,67,111/- and Rs. 13,07,920/-) though the complete details/evidence were furnished.” 3. The assessee filed return of income declaring Rs. 2,62,97,400/- for A.Y. 2012-13 on 31.12.2012. The assessment under Section 143(3) of the Income Tax act was completed on 04.02.2015 thereby assessing the income at Rs. 2,62,97,400/-. The assessee is an individually earning income from partnership share and short term capital gain. Subsequently, on verification of computation of income profit and loss and submissions of the assessee in respect of sale and purchase of land, the Assessing Officer observed that assessee has shown short term capital gain of Rs. 2,62,71,712/- from the sale of land at Kheda for Rs. 5,45,80,652/- after reducing cost of acquisition of Rs. 2,83,08,940/-, after issuing statutory notices the assessee filed the detailed submissions. The assessees submitted a recomputation of the short term capital gain and explanation of expenditure of Rs. 38,96,092/- was also given therein. The assessee has given the cost of improvement valued at Rs. 1,29,87,990/- which was reproduced at Page 2 of the assessment order. After taking cognizance of all the details, the Assessing Officer made addition of improvement being disallowed and added the same at Rs. 98,63,223/-.

4.

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

5.

The Ld. AR filed an Additional Grounds thereby stating the initiation of reassessment proceedings under Section 147 thereby stating that it is without any jurisdiction and has not followed the conditions laid down under the proviso to Sectin148. The Ld. AR further submitted that on merit the Ld.

ITA No. 865/Ahd/2025 Samta S. Jain vs. ACIT Asst.Year–2012-13 - 3 - Assessing Officer passed an order by making an addition of Rs. 98,63,223/- being the cost of Improvement Charges disallowed. Out of this Rs. 79,67,111/- were disallowed on the ground that the VAT numbers of four parties were cancelled. The Ld. AR submitted that the VAT numbers of all parties were active at the time of purchase. The mere fact that the VAT numbers were cancelled on a later date from retrospective date does not mean that the purchases made are not genuine. The details of the parties are as follows:

Sr. Name of the Co Cancellatio Cancelled Remarks No. n Effective on (As Per Date Vat Certificate) 1 Shree Ganesh 26-08-2008 15-04-2013 The entire Enterprise purchase of Rs. (PAN:ACHPM8339B 24,65,585 is made between April to December 2010, and payment was done before the Cancellation Date on 10/04/2011 2 Navrang Enterprise 10-04-2008 13-07-2011 The entire (PAN:AONPP8135L) purchase of Rs. 15,00,026 are made between April-2010 to February 2011, and payment was done before the Cancellation

ITA No. 865/Ahd/2025 Samta S. Jain vs. ACIT Asst.Year–2012-13 - 4 - Date on 03/06/2011 3 Arasuri Enterprise 07-08-2009 24-12-2013 The entire (PAN:AAZPP4676N) purchase of Rs. 16,05,900 is made between June 2010 to October 2011, and payment was done before the Cancellation Date on 05/04/2011 4 C R Marketing 17-01-2008 06-08-011 The entire (PAN:bbgpp9620r) purchases of Rs. 23,95,000 were made between June 2010 to February 2011, and payment was done before the Cancellation Date on 03/05/2011 The Ld. AR submitted that the assessee has submitted the ledger copies along with invoices of purchases made from the above parties. Also, the copy from the commercial department showing that the VAT numbers were cancelled on later date was submitted before the Assessing Officer. The assessee provided the purchase bills at the time of assessment proceedings. The Ld. AR submitted that the payment of all the goods purchased was done via account payee cheque only and are reflected in the ledger copies and bank

ITA No. 865/Ahd/2025 Samta S. Jain vs. ACIT Asst.Year–2012-13 - 5 - statement of the assessee. Copy of bank statement were also submitted. Therefore, the Ld. AR submitted that the said purchase cannot be said to be fraudulent and not genuine. The assessee could not finish the civil work of land if the purchases were not received by the party. Thus, the Ld. AR submitted that the purchases done by the assessee are genuine, and the assessee has shown sales because of the purchase done from this party along with other purchases. Furthermore, the purchase cost of improvement was not considered by the Assessing Officer solely on the grounds that VAT number were cancelled, but that neither implies that the purchase was not done nor did the Assessing Officer rejected the purchase. Additionally, it was clearly mentioned in the Sale Deed on Page 6 as well that the land being sold is non-agricultural land, hence cost was incurred to make the border walls of the property and potholes were filled along with levelling and developing the land. This all work would have not been possible without buying the goods/services from the above purchase parties. The Ld. AR also pointed out Sale Deed for both the lands. The Ld. AR gave clarifications for the remaining amount of Rs. 18,96,112/- as under:

Particulars Amount (Rs.) Labour Expenditure (Amit R Prajapati 8,13,011/- Brokerage Expense (Jograna Kiritbhai Surabhai) 1,95,400/- Brokerage Expense (Balbhadra Himatlal Vyas) 1,83,700/- Conversion from Agricultural to Non-Agricultural 4,07,838/- Charges (Government Receipt) Conversion from Agricultural to Non-Agricultural 1,80,354/- Charges (Government Receipt) Miscellaneous expenses 1,15,809/- Total Expenditure 18,96,112/-

ITA No. 865/Ahd/2025 Samta S. Jain vs. ACIT Asst.Year–2012-13 - 6 - The ledger copies of above expenditures were already given at the time of assessment proceedings. The payment for all the above expenses were done via account payee cheque only. The Ld. AR submitted that this can be verified from the bank statement. Thus, the entire amount of Rs. 98,63,223/- claimed by the assessee as cost of improvement is genuine and cannot be disallowed solely on the grounds that the VAT numbers was cancelled.

6.

The Ld. DR relied upon the assessment order and the order of the CIT(A).

7.

We have heard both the parties and perused all the relevant materials available on record. As regards the additional ground, from the perusal of records of notice under Section 148 issued to the assessee, the assessment year is of 2012-13 and the notice was issued within the stipulated time prior to four years period and the assessee has filed the letter dated 09.06.2017 thereby stating that the assessee’s return of income filed for A.Y. 2012-13 dated 31.12.2012 be treated as the return of income in response to notice under Section 148 of the Act. Thus, the objection / additional ground raised by the assessee does not sustain related to the procedural aspect of reopening and issuance of notice under Section 148 of the Act. Thus, the additional ground is dismissed.

8.

As regards the merits of the case, the assessee is submitting that the vendors registration under GST has been cancelled, but the assessee has made full payment for his purchase and the assessee has submitted the evidence of purchase bills (sample bills) of the assessee but related to transportation bill except few the assessee could not file all the details. Therefore, it will be

ITA No. 865/Ahd/2025 Samta S. Jain vs. ACIT Asst.Year–2012-13 - 7 - appropriate to remand back this matter to the file of the Assessing Officer for verifying the details related to transportation bills and also to that extent of purchase bills and sales bills and thereafter adjudicate the same as per Income Tax Act. Needless to say the assessee be given opportunity of hearing by following principles of natural justice.

9.

In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 20/05/2026

Sd/- Sd/- (NARENDRA P. SINHA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 20/05/2026 TANMAY, Sr. PS TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant ��थ� / The Respondent. 2. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)- 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 1. Date of dictation 18.05.2026 2. Date on which the type draft is placed before the Dictating Member 19.05.2026 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 19.05.2026 5. Date on which the fair order is placed before the Dictating Member for pronouncement .05.2026 6. Date on which the fair order comes back to the Sr.P.S./P.S 20.05.2026 7. Date on which the file goes to the Bench Clerk 20.05.2026 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Dispatch of the Order……………………………………

More judgments on Section 147

All 49,210 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →