KAMLESH BHIKHABHAI PATEL,VADODARA vs. THE DY. CIT, CIRCLE-1(1)(1), VADODARA

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ITA 182/AHD/2026Status: DisposedITAT Chandigarh12 June 2026AY 2017-185 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the reopening of the assessment was valid. However, it found that the CIT(A) erred in dismissing the appeal solely on delay without considering merits. The Tribunal set aside the matter to the AO for fresh consideration.

What were the facts?

The assessee did not file a return of income for AY 2017-18. The AO reopened the case based on information of property sale and completed assessment treating the entire sale consideration of Rs. 1.24 crores as short-term capital gain due to non-compliance by the assessee.

What were the issues?

Whether the reopening of assessment under Section 147 was valid, and whether the CIT(A) correctly dismissed the appeal on grounds of delay without examining the merits.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 148A,Section 149,Section 151,Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD

Before: SHRI TR SENTHIL KUMAR & SHRI NARENDRA PRASAD SINHA

For Appellant: Ms. Kinjal Shah, CA
For Respondent: Shri Rameshwar P Meena, SR-DR
Hearing: 10.06.2026Pronounced: 12.06.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal is filed by the assessee against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] dated 17.12.2025 for the Assessment Year (A.Y.) 2017-18 in the proceeding u/s 147 r.w.s. 144 of the Income Tax Act [hereinafter referred as “The Act”].

2.

The brief facts of the case are that the assessee did not file any return of income for the A.Y. 2017-18. The AO had received an information that the assessee had sold a property for a consideration of Rs. 31,00,000/- and the capital gain arising thereon was not offered to tax. Therefore, the case of the assessee was reopened by issue of notice u/s.

ITA No.182/Ahd/2026 Kamlesh Bhikhabhai Patel Vs DCIT, AY- 2017-18 2

148 of the Act on 27.07.2022, after passing an order u/s. 148A(d) of the Act. In the course of assessment proceeding no compliance was made by the assessee. The AO had found that the total sale consideration of the property was Rs. 1.24 crores. In the absence of any compliance, the AO had treated the entire sale consideration of Rs. 1.24 crores as short-term capital gain and added to income. The assessment was completed u/s. 147 r.w.s. 144 of the Act on 26.05.2023 at total income of Rs. 1.24 crores.

3.

Aggrieved with the order of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the learned CIT(A) vide the impugned order and the appeal of the assessee was dismissed. Th

4.

Now the assessee is in second appeal before us. The following grounds have been taken in this appeal:

1.

On Legality 1. The Comm. Of Income-tax (Appeals) has erred both in Law and in Fact in upholding the Order of Assessing Officer u/s. 147 of the Act which does not apply to the facts of the case and as per provisions of Law. 2. (a) The AO had issued notice u/s. 148 of the Act dated 27-7-2022 for A.Y.17- 18 which is Time Barred and beyond limitation and not maintainable as per Sec. 149 of the 1.T. Act. (b) Without prejudice to above, your Appellant further submits that the Reopening was done for alleged escapement of Rs.31,00,000/- and the amount being less Rs.50,00,000/- as per provisions of Law reopening was bad in Law and Void. 3. Further it is submitted that the AO has not supplied Reasons Recorded for Reopening u/s.148 and he has not adheard to the provisions of Sec. 151 of the 1.T. Act which was also makes the proceedings bad in Law and Void. On Merits: 1. Without prejudice to above and on merits, the AO has erred in taking Sale Proceed for Rs.1,24,00,000/- as Capital Gains which is contrary to the facts of

ITA No.182/Ahd/2026 Kamlesh Bhikhabhai Patel Vs DCIT, AY- 2017-18 3 the case more particularly because the Land was joined holding of land out of total sale price of 124000 shares of the Appellant was only Rs.31,00,000/-and therefore he Reopening is also bad since the amount deferred in the Show Cause Notice and correct amount of Sale Price are different. 2 On Quantum, your Appellant also submits that the land is ancestral land held for many years and the surplus if at all is a Short Term Capital Gains making the vary assessment and the addition bad in Law and quantum also. It is therefore submitted that relief claimed above be allowed and the order of the Assessing Officer be modified accordingly. Your Appellant reserves right to add, alter, amend to withdraw any or all Grounds of Appeal.

5.

On the issue of reopening, Ms. Kinjal Shah, the Ld. AR of the assessee submitted the notice u/s. 148 of the Act was issued on 27.07.2022 which was beyond the limitation period u/s. 149 of the Act. She further submitted that the reopening was done for alleged escapement of Rs. 31,00,000/-, which was below the prescribed limit of 50,00,000/- for the reopening. Therefore, the reopening made u/s. 147 of the Act, was not valid. On merits the Ld. AR submitted that the Ld. CIT(A) had dismissed the appeal on the ground of delay without examining the grounds taken by the assessee on merits.

6.

Per Contra, Shri Rameshwar P Meena, the Ld. SR-DR submitted that the initial notice u/s. 148 of the Act was issued on 21.06.2021, which was within the time period of 3 years as extended by TOLA. Thereafter, the AO had issued a fresh notice u/s. 148 of the Act on 27.07.2022, after passing the order u/s. 148A(d) of the Act, in pursuance to the direction of the Hon’ble Supreme Court in the case of Ashish Aggarwal. The Ld. SR- DR, therefore, submitted that the case was reopened within 3 years and the notice was also issued within time. On merits, the Ld. SR-DR submitted that the assessee did not make any compliance either before the AO or before the Ld. CIT(A).

ITA No.182/Ahd/2026 Kamlesh Bhikhabhai Patel Vs DCIT, AY- 2017-18 4 7. We have considered the rival submissions. We do not find any merit in the grounds taken by the assessee on the issue of reopening. The original notice u/s. 148 of the Act was issued on 21.06.2021, which was within time period of 3 years as extended by TOLA. Therefore, the monetary limit of 50,00,000/- as contended by the assessee was not applicable. Further, the subsequent notice issued u/s. 148 of the Act on 27.07.2022, after passing order u/s. 148A(d) of the Act, was in pursuance to the direction of Hon’ble Supreme Court in the case of Ashish Agrawal. Therefore, the reopening as done by the AO is found to be valid and the ground taken by the assessee on the reopening is dismissed.

8.

On merits, it is found that the assessee did not make any compliance either before the AO or before the Ld. CIT(A). In form No. 35, the assessee had admitted that there was a delay in filing of the appeal, still no affidavit/condonation application for delay was filed before the Ld. CIT(A). At the same time, the Ld. CIT(A) was also not correct in dismissing the appeal of the assessee on the ground of delay, without allowing any opportunity of being heard to the assessee. It has been held by Hon’ble Gujarat High Court in the case of Vareli Textiles Ltd (284 ITR 238 (Guj), that a meritorious case should not be thrown out on the ground of limitation. In the present case, the AO had treated the entire sale consideration of Rs. 1.24 crores as short-term capital gain, which was apparently not correct. The entire sale consideration could not have been treated as STCG without bringing on record the date of purchase, purchase consideration (being nil) and the date of sale, which was not done in the present case. Further, the assessee was only a co-owner and not the sole proprietor of the property. In the interest of justice, therefore, we deem it proper to set aside the matter to the file of Jurisdictional AO

ITA No.182/Ahd/2026 Kamlesh Bhikhabhai Patel Vs DCIT, AY- 2017-18 5

with a direction to allow another opportunity to the assessee to make compliance, subject to payment of cost of Rs. 10,000/-, which should be paid to the Prime Minister National Relief Fund within a period of two weeks from the date of receipt of this order. The assessee is directed to make compliance before the AO in the course of set aside proceeding and bring on record the evidence for cost of acquisition of the property and the working of capital gain derived on sale thereof. The assessee should also comply to the directions of the JAO and produce the documents and clarifications as required by him. The JAO will have liberty to make enquiry in respect of evidences brought on record, as deemed fit. The ground taken by the assessee is allowed for statistical purpose.

9.

In the result, the appeal of the assessee is partly allowed for statistical purpose.

Order pronounced in the Court on 12/06/2026 at Ahmedabad.

Sd/- Sd/- (TR SENTHIL KUMAR) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Dated – 12th June, 2026 Neelesh, Sr. PS (True Copy) आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : अ�ेिषत 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A) 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाड� फाईल /Guard file. आदेशानुसार/BY ORDER, आदेशानुसार आदेशानुसार आदेशानुसार पंजीकार (Dy./Asstt.Registrar) उप उप/सहायक उप उप सहायक सहायक पंजीकार सहायक पंजीकार पंजीकार आयकर आयकर अपीलीय आयकर आयकर अपीलीय अपीलीय अिधकरण अपीलीय अिधकरण अिधकरण, अहमदाबाद अिधकरण अहमदाबाद अहमदाबाद / ITAT, Ahmedabad अहमदाबाद

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