DHANJIBHAI DAYALBHAI CHAVDA,VADODARA vs. INCOME TAX OFFICER, WARD 1(3)(1), VADODARA

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ITA 357/AHD/2026Status: DisposedITAT Ahmedabad23 April 2026AY 2020-217 pages
AI SummaryRemanded

What did the Tribunal hold?

The ITAT condoned the delay in filing the appeal before it, citing a liberal approach to advance substantial justice. The Tribunal held that the CIT(A) erred in dismissing the appeal on technical grounds without adjudicating the substantive issues, which involved complex calculations under Section 50C and capital gains treatment.

What were the facts?

The assessee's appeal before the CIT(A) was dismissed due to a delay of over 4 months, with the CIT(A) rejecting the condonation application. The assessee, an auto driver with limited education and financial constraints, cited lack of professional guidance and awareness of legal remedies as reasons for the delay.

What were the issues?

Whether the CIT(A) was justified in rejecting the condonation of delay without considering the substantive issues on merits. Whether the Assessing Officer correctly applied Section 50C and treated capital gains without considering cost of acquisition and period of holding.

Which sections of the Income-tax Act were involved?

Section 50C,Section 147,Section 234A,Section 234B,Section 234C,Section 234F,Section 270A,Section 272A(1)(d)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

Before: SMT. ANNAPURNA GUPTA & SHRI SIDDHARTHA NAUTIYAL

For Appellant: Shri Virat Bhavsar, AR
For Respondent: Shri Girish Parihar, Sr. DR
Hearing: 25.03.2026Pronounced: 23.04.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.357/Ahd/2026 (Assessment Year: 2020-21) Dhanjibhai Dayalbhai Chavda, Vs. Income Tax Officer, Room No. 4, Jay Raneswar Ward-1(3)(1), Society, Opp. En Vaikunth Flats, Vadodara Nr. Saurabh Park Samta Road, Vadodara-390023 [PAN No.AGYPC0569N] (Appellant) .. (Respondent) Appellant by : Shri Virat Bhavsar, AR Respondent by: Shri Girish Parihar, Sr. DR Date of Hearing 25.03.2026 Date of Pronouncement 23.04.2026 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee 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 vide order dated 22.09.2025 passed for A.Y. 2020-21.

2.

The assessee has raised the following grounds of appeal:

“Prayer for remand-Assessing Officer 1) That the Appellant most humbly submits that the delay in filing the present appeal was caused due to reasonable and sufficient cause and was not intentional or deliberate. The Appellant therefore prays that, in the interest of substantial justice, the delay may kindly be condoned, and the appeal admitted for hearing on merits. Prayer for remand-Assessing Officer 2) The Ld. CIT(A)/NFAC erred in passing the impugned order without granting the condonation of delay in filing the appeal despite the fact the Appellant has sufficient cause for such delay.

ITA No. 357/Ahd/2026 Dhanjibhai Dayalbhai Chavda vs. ITO Asst.Year –2020-21 - 2–

2) The Ld. CIT(A)/NFAC erred in rejecting the condonation application by adopting an excessively technical and rigid approach, ignoring settled judicial principles that procedural delays should not defeat substantive justice. 3) The Learned CIT(A)/NFAC erred in dismissing the appeal without adjudicating the substantial issues involved, thereby denying the Appellant his statutory right of first appeal, which is a vital facet of natural justice. 5) That on the facts and in the circumstances of the case and in law, the Ld. CIT(A)/NFAC erred in passing the impugned order without granting adequate and effective opportunity of being heard to the Appellant. 6) The Appellant respectfully prays the matter may be set aside and restored to the file of the Assessing officer for fresh adjudication after granting reasonable and sufficient opportunity of hearing to the Appellant for considering the following issues: (i) That, the AO having passed the order u/s 147 dated 18.02.2025 by invoking provisions of section 50C of ITA. (ii) That, the AO has determined the stamp duty value based on reversal calculation of stamp duty paid by the Appellant. The actual stamp duty value of the property is much lower than the amount determined by the AO/CIT(A). (iii) That, the AO has treated entire amount as capital gain of the Appellant without giving benefit of cost of acquisition. (iv) That, the AO has treated entire gain as short-term capital gain without verifying period of holding of such land. (v) That, the AO has treated entire credits (after allowing deduction of credits related to land) in bank accounts as Income of the Assessee without verifying the source and nature of such receipts. The Hon'ble ITAT is humbly prayed to set aside the matter and issue appropriate direction to the Assessing officer to verify the claim as per law. Other Grounds 7) The learned AO and consequently the learned CIT(A) has erred in facts and in law by charging interest u/s 234A of ITA. 8) The learned AO and consequently the learned CIT(A) has erred in facts and in law by charging interest u/s 234B of ITA. 9) The learned AO and consequently the learned CIT(A) has erred in facts and in law by charging interest u/s 234C of ITA. 10) The learned AO and consequently the learned CIT(A) has erred in facts and in law by charging interest u/s 234F of ITA.

ITA No. 357/Ahd/2026 Dhanjibhai Dayalbhai Chavda vs. ITO Asst.Year –2020-21 - 3– 11) The learned AO and consequently the learned CIT(A) has erred in facts and in law by initiating penalty proceedings u/s 270A of ITA. 12) The learned AO and consequently the learned CIT(A) has erred in facts and in law by initiating penalty proceedings u/s 272A(1)(d) of ITA. 13) The appellant craves leave to add to, amend, alter, vary, or withdraw any of the above grounds at or before the time of hearing of the appeal.” 3. The brief facts of the case are that the assessee is an individual engaged in small-scale livelihood activities and his case for Assessment Year 2020-21 was subjected to reassessment proceedings under section 147 of the Income-tax Act, 1961 ("the Act"). During the course of assessment proceedings, the Assessing Officer observed that the assessee was one of the co-owners of a parcel of land which was sold for a total consideration of Rs.2,25,00,000/-, wherein the assessee’s share was Rs.6,25,000/-. However, the Assessing Officer invoked the provisions of section 50C of the Act on the basis of stamp duty valuation, which was adopted at Rs.3,85,71,429/-, and accordingly re-determined the assessee’s share of sale consideration at a higher figure of Rs.10,71,428/-. While doing so, the Assessing Officer computed the capital gains by adopting the enhanced value without granting the benefit of cost of acquisition or indexed cost of acquisition, and the Assessing Officer further treated the entire gain as short-term capital gain, without appreciating the claim of the assessee that the property was ancestral in nature and held prior to 01.04.2001.

4.

Aggrieved by the said assessment order, the assessee preferred an appeal before the Ld. CIT(Appeals). However, Ld. CIT(A) observed that the appeal was filed with a delay of 4 months and 9 days. The assessee filed an application for condonation of delay explaining that being a person of limited means and education, he was not aware of the legal

ITA No. 357/Ahd/2026 Dhanjibhai Dayalbhai Chavda vs. ITO Asst.Year –2020-21 - 4– remedies and due to lack of professional guidance and financial constraints, there was an inadvertent delay in filing the appeal. The Ld. CIT(A) issued notice seeking explanation for delay and the assessee furnished reply reiterating the above reasons.

5.

The Ld. CIT(A), however rejected the condonation application by holding that the reasons furnished by the assessee did not constitute “sufficient cause” within the meaning of the Act. The Ld. CIT(A) adopted a strict interpretation of the term “sufficient cause” and held that ignorance of law, lack of professional advice, and financial hardship cannot absolve the assessee of his responsibility to act diligently. The CIT(Appeals) held that the burden to prove sufficient cause lies upon the assessee and that condonation of delay is not a matter of right. The Ld. CIT(A) relied upon various judicial precedents including R.B. Ramlingam vs. R.B. Bhavaneshwari (2009), CIT vs. Ram Mohan Kabra (2002) 257 ITR 773 (P&H), and Surinder Kumar Boveja vs. CWT (2006) 287 ITR 52 (Del), to hold that limitation provisions must be applied strictly and that negligence or lack of diligence cannot be condoned merely on sympathetic grounds.

6.

The Ld. CIT(A) also placed reliance on recent Tribunal decisions holding that condonation requires a convincing explanation for each day of delay and that liberal approach cannot be stretched to cover cases involving negligence or inaction. The CIT(Appeals) therefore held that the assessee had adopted a casual approach in pursuing his legal remedy and had failed to demonstrate due diligence. Consequently, the delay was not condoned and the appeal was dismissed as non-maintainable without adjudicating the issues on merits. Thus, the Ld. CIT(A) effectively foreclosed the assessee’s right to challenge the additions made by the Assessing Officer, solely on technical grounds of limitation.

ITA No. 357/Ahd/2026 Dhanjibhai Dayalbhai Chavda vs. ITO Asst.Year –2020-21 - 5– 7. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.

8.

We have carefully considered the rival submissions, perused the material available on record and the impugned orders of the lower authorities. At the outset, we note that the present appeal before the Tribunal itself has been filed with a delay of 69 days. The assessee has filed a detailed application for condonation of delay explaining that he is an auto driver by profession, having limited education and no knowledge of tax laws or procedural requirements, and was dependent upon informal advice, which resulted in delay. Considering the peculiar facts and circumstances of the case, and respectfully following the ratio laid down by the Hon’ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. (1987) 167 ITR 471 (SC) and Improvement Trust vs. Ujagar Singh (2010) 6 SCC 786, wherein it has been held that a liberal approach should be adopted in condoning delay so as to advance substantial justice, we are satisfied that the delay in filing the present appeal is supported by sufficient cause. Accordingly, the delay of 69 days in filing the appeal is condoned.

9.

Coming to the merits, we find that the Ld. CIT(A) has dismissed the appeal of the assessee purely on technical grounds of delay without adjudicating the issues on merits. It is a settled principle of law that justice should not be denied on technicalities, particularly when the assessment itself appears to be high-pitched and the additions have been made without proper examination of facts. The Hon’ble Gujarat High Court in the case of Gujarat State Fertilizers & Chemicals Ltd. vs. CIT (2006) 283 ITR 149 (Guj) has held that a liberal approach should be adopted in condonation matters so that substantive rights are not defeated on

ITA No. 357/Ahd/2026 Dhanjibhai Dayalbhai Chavda vs. ITO Asst.Year –2020-21 - 6– technical grounds. Similarly, the Coordinate Bench of the Tribunal in J.K. Chaturvedi vs. ACIT (2004) 3 SOT 456 (Ahd) has held that the expression “sufficient cause” should receive liberal construction to advance substantial justice.

10.

In the present case, we find that the assessee is a small taxpayer with limited means, and the additions made by the Assessing Officer involve application of section 50C of the Act, determination of nature of capital gains, and denial of indexed cost, which require proper verification and adjudication on merits. The assessment appears to be high-pitched inasmuch as the income assessed is disproportionately enhanced by invoking deeming provisions without granting deductions available to the assessee and without examining the factual matrix in entirety. In such circumstances, dismissal of appeal at threshold without adjudication on merits results in grave miscarriage of justice.

11.

The Hon’ble Supreme Court in the case of N. Balakrishnan vs. M. Krishnamurthy (1998) 7 SCC 123 has held that length of delay is not material, and acceptability of explanation is the only criterion, and that rules of limitation are not meant to destroy rights of parties. Further, in Anshul Aggarwal vs. NOIDA (2011) 14 SCC 578, it has been held that while limitation provisions must be applied, they should not result in injustice where sufficient cause is shown.

12.

Considering the totality of facts and circumstances, and the fact that the assessee was prevented by reasonable cause, the smallness of the taxpayer, the nature of additions, and the fact that the assessment is high- pitched, we are of the considered view that the matter deserves to be restored to the file of the Assessing Officer for de novo adjudication.

ITA No. 357/Ahd/2026 Dhanjibhai Dayalbhai Chavda vs. ITO Asst.Year –2020-21 - 7–

13.

Accordingly, in the interest of justice and fair play, we restore the matter to the file of the Assessing Officer for fresh adjudication after affording adequate opportunity of being heard to the assessee. The Assessing Officer shall consider all evidences, viz. valuation aspects, nature of capital asset, applicability of section 50C of the Act, and allow lawful deductions including indexed cost of acquisition, in accordance with law.

14.

In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 23/04/2026

Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 23/04/2026 TANMAY, Sr. PS TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. 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 16.04.2026 (Dictated over dragon software) 2. Date on which the typed draft is placed before the Dictating Member 16.04.2026 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 16.04.2026 5. Date on which the fair order is placed before the Dictating Member for pronouncement 23.04.2026 6. Date on which the fair order comes back to the Sr.P.S./P.S 23.04.2026 7. Date on which the file goes to the Bench Clerk 23.04.2026 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……………………………………

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