ACIT CIRCLE-1(1), RAJKOT, RAJKOT vs. KHODABHAI POLABHAI SAKARIYA, RAJKOT

PDF · subscribers
ITA 680/RJT/2025Status: DisposedITAT Rajkot21 April 2026AY 2015-165 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the CIT(A)'s order was correct and that the fresh assessment order passed pursuant to the Section 263 order became infructuous once the Section 263 order was quashed by the ITAT.

What were the facts?

The assessee sold agricultural land and offered long-term capital gains after claiming deductions. The original assessment was quashed under Section 263, leading to a fresh assessment order. The CIT(A) allowed the assessee's appeal, holding the fresh assessment order infructuous because the Section 263 order was quashed by the ITAT.

What were the issues?

Whether a fresh assessment order passed under Section 143(3) read with Section 263 becomes infructuous if the Section 263 order is subsequently quashed by the ITAT.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 263,Section 54B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT

Before: Dr. Arjun Lal Saini & Dr. Dinesh Mohan Sinha

For Appellant: Shri Sanjay Punglia, Ld
For Respondent: Shri Mehul Ranpura, Ld.AR
Hearing: 24.02.2026Pronounced: 21.04.2026

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT Before: Dr. Arjun Lal Saini, Accountant Member And Dr. Dinesh Mohan Sinha, Judicial Member

ITA No. 680/RJT/2025 Assessment Year 2015-16

The Assistant Khodabhai Polabhai Commissioner of Sakariya, Income Tax,Circle-1(1), Vs Meghdhara, Vejagam Road, Raiya Village, Rajkot - 360005 PAN: EEDPS9686R (Appellant) (Respondent) Appellant by : Shri Sanjay Punglia, Ld. CIT(DR) Respondent by : Shri Mehul Ranpura, Ld.AR Date of hearing : 24.02.2026 Date of pronouncement : 21.04.2026 आदेश/ORDER PER : Dr. DINESH MOHAN SINHA, J.M.:-

This appeal is filed by the Department against the order dated 28.08.2025 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2015-16.

2.

Four grounds are taken by the Department. The grounds of appeal raised by the Department, are as mentioned below. “1.The CIT(A) erred in law and on facts, in allowing the assessee’s appeal and holding that the fresh assessment order passed by the A.O. u/s. 143(3) read with

I.T.A No. 781/RJT/2025 A.Y. 2015-16 2 Menand Sughabhai Odedara VS. The ITO, Ward-2(4), Porbandar section 263 dated 26.03.2022 was rendered infructuous merely because the Hon’ble ITAT had quashed the revisionary order u/s. 263 dtd. 08.02.2021. 2. The CIT(A) failed to appreciate that the challenge to the validity of the underlying section 263 order is a separate proceeding, and the merits of the addition of Rs 3,13,00,008/- made in the fresh assessment order dtd. 26.03.2022 still need to be adjudicated, especially since the department is contesting the ITAT’ s order before the Hon’ble High Court vide C/TAXAP/514/2023. 3. The Ld. CIT(A) erred in not appreciating that, until the ITAT’s order dated 15.02.2023 quashing section 263 order attains finality, or is upheld by the higher appellate forums, the fresh assessment order passed by the AO on 26.03.2022 remained valid and effective, and its merits should have been examined. 4. It is therefore, prayed that the order of the Ld. CIT(A) be vacated / reversed and the fresh assessment order passed by the AO u/s. 143(3) rws 263 (and rws 144B) dtd. 26.03.2022 be restored. 3. The brief facts of the case are that the assessee has sold agriculture land at Survey No. 11/1/p3, Raiya Village, Dist. Rajkot for sale consideration of Rs. 3,73,32,000/-. The assessee has after claiming index cost of acquisition of Rs. 3,14,31,680/- and exemption u/s. 54B of Act of Rs. 509497/- offered long term capital gain of Rs. 53,90,893/-. The AO has finalized the assessment u/s. 143(3) vide order dtd. 18.09.2017 but the same has been quashed by the order of the PCIT u/s. 263 dtd. 08.02.2021. The AO has finalized the Assessment u/s. 143(3) rws 263 in pursuance to directions contained in the PCIT order u/s. 263 and order has been passed on 26.03.2022 by enhancing the capital gain, the income has been finalized at Rs. 3,67,15,218/- . Against which Assessee has filed the appeal before CIT(A) and the same has been allowed by CIT(A) vide order dtd. 28.08.2025. Aggrieved by the order of CIT(A), Revenue preferred appeal before us.

4.

The appeal is squarely covered by our own order in case of the ACIT, Circle-1(1), Rajkot Vs. Khodidas Ganeshbhai Sakariya, Rajkot, ITA No. 23/RJT/2024 pronounced on 03.02.2025. The facts and of this appeal is

I.T.A No. 781/RJT/2025 A.Y. 2015-16 3 Menand Sughabhai Odedara VS. The ITO, Ward-2(4), Porbandar totally similar to present appeal. The operative paras of the Tribunal Order passed in ITA No. 23/RJT/2024 are reproduced as under.

2.

Facts of the case enumerated by appellant in Column 11 of Form 35 are reproduced as under:- 1. The appellant, an individual, in assessed to tax by the Assistant Commissioner of Income-tax, Circle-1(1), Rajkot (hereinafter referred to as the "AO"). During the year under consideration, he has derived capital gain sale of property and income from agriculture activities. Apart from that he has also derived income from other source i.e. interest income etc. The Return of income for the assessment year under consideration was filed on24.09.2015 declaring the total income at Rs. 45,43,200/- 2. During the year under consideration, the appellant has sold an agriculture land situated at Survey No.11/1/p3, Raiya Village. Dist. Rajkot for sale consideration of Rs. 10.92.69.000/ The appellant has after claiming index cost of acquisition of Rs. 9,19,99,641/- and exemption u/s.54 B of Act of Rs. 1,28,57,670/- offered long term capital gain of Rs. 44,11,688/- 3. The assessment in case of appellant was originally finalized vide order passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as "Act") dated 18.09.2017 accepting the returned income as such. During the course of assessment proceeding u/s.143(3) of the Act the appellant has furnished necessary documents in support of the claim of index cost of acquisition and exemption claimed u/s.54B of the Act which Interalia Includes copy of sale deed, purchase deed, valuation report and purchase of investment made in now agriculture land etc. The AO after verification of all the details/evidence furnished before him finalized the assessment. 4. However, subsequently, the Pr. Commissioner of Income-tax-1, Rajkot has vide order u/s.263 of the Act dated 20.01.2021 alleged that order passed u/s. 143(3) of the Act dated 18.09.2017 is erroneous and prejudicial to the interest of revenue as the AO has not inquired/verified appellant's claim of index cost of acquisition Rs. 9,19,99,641/- and exemption claimed u/s. 54B of the Act of Rs. 1,28,57,670/- and thereby set aside the assessment order passed u/s.143(3) of the Act dated 23.11.2017 and directed the AO conduct independent inquiries for determination of market value of land as on 01.04.1981 by way of referring

I.T.A No. 781/RJT/2025 A.Y. 2015-16 4 Menand Sughabhai Odedara VS. The ITO, Ward-2(4), Porbandar the matter to the Valuation Cell as also by way of inquiries from the Revenue Authorities of the Jurisdictional area. 6. Being aggrieved by the order of Ld. PCIT-1, Rajkot dated 20.01.2021, the appellant has filed an appeal before the Hon'ble Income-tax Appellate Tribunal; Rajkot Berich, Rajkot on 23.06.2021 which is pending till date. 7. During the course of do-novo assessment proceeding appellant has in order to verify the claim of index cost of acquisition and exemption claimed u/s. 54B of the Act furnished the required details. However, the AO in total disregards to the submissions replies furnished with documentary evidence finalized the assessment 1 vide order u/s. 143(3) r.w.s. 263 of the Act dated 30.03.2022 assessing the total income of the appellant at Rs. 10,90,15,110/- by estimating cost of acquisition of property at Rs.37,637/- as per valuation report of Assistant Valuation Officer. Thus, the AO recalculated long term capital gain at Rs.9,60,25,927/- as against the same calculated in return of income at Rs.44,11,688/- and thereby added difference LTCG of Rs. 9,16,14,239/- to the appellant's total income. The AO also disallowance exemption claimed u/s.54B of the Act of RS.1,28,57,670/- on the alleged ground of non-furnishing documentary evidences.

3.

That the assessee filed an appeal before the Ld. CIT(A) against the order dated 30.03.2022. The appeal was disposed with following observation:

“During the appeal has submitted as under: The Hon'ble ITAT, Rajkot Bench, Rajkot has vide order dated 15.02.2023 in ITA No. 95/Rjt/2021 quashed the order passed u/s. 263 of the Act, copy of which is herewith. attached

As the order passed u/s. 263 of the Act has been quashed, all subsequent proceedings become infructuous and non est as such the order under appeal does not survive and requires to be quashed therefore the same may kindly be quashed." Since the order u/s 263 has been quashed by ITAT the order u/s 143(3) r.w.s 263 does not survive and this order is quashed accordingly. Appeal is allowed.

In the result, the appeal is allowed.

4.

That the revenue has filed an appeal against the order dated 10.11.2023 of Ld. CIT(A). The department of Revenue is in appeal before us.

I.T.A No. 781/RJT/2025 A.Y. 2015-16 5 Menand Sughabhai Odedara VS. The ITO, Ward-2(4), Porbandar 5. During the course of hearing, the Ld. CIT(DR) has submitted that the Revenue Department has challenged the legality and validity of order of this Tribunal dated 15.02.2023 (ITA No. 95/Rjt/2021) by moving of an appeal before the Hon’ble High Court of Gujarat, and the same is pending for disposal. 6. Ld. AR of the assessee relied on the judgment of Ld. CIT(A). 7. We have heard both the parties and perused the material available on record. There is no infirmity in the order of the Ld. CIT(A). We are agree with the decision of the Ld. CIT(A) dated 10.11.2023 and the appeal filed by the department is hereby dismissed. In the result, the appeal of the Revenue is dismissed.

5.

Thus the appeal is covered by the order of same bench, dtd. 03.02.2025 in case of the ACIT, Circle-1(1), Rajkot Vs. Khodidas Ganeshbhai Sakariya, Rajkot on same set of facts. Therefore, there is no separate finding is required.

6.

In the result, the appeal of the revenue is dismissed. Order is pronounced in open court on __21.04.2026_ .

Sd/- Sd/- (Dr. ARJUN LAL SAINI) (Dr. DINESH MOHAN SINHA) ACCOUNTANT MEMBER JUDICIAL MEMBER Rajkot : Dated 21.04.2026 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Rajkot 6. Guard file. By order/आदेश से, Assistant Registrar/Senior PS / PS

More judgments on Section 263

All 13,616 judgments and leading authorities on Section 263 →

Recent GST High Court judgments

Search GST case law →