JAGDISHKUMAR CHHOTUBHAI GANDHI,MUMBAI vs. ITO(INT.TAX), SURAT

ITA 245/SRT/2024Status: DisposedITAT Surat29 September 2026AY 2017-1824 pages
AI SummaryPartly Allowed

What were the facts?

The assessee, an NRI, filed his return for AY 2017-18 declaring Rs. 14,26,950. The initial assessment u/s 143(3) accepted the returned income. Subsequently, the CIT (IT&TP) initiated revisionary proceedings u/s 263, setting aside the assessment order and directing a fresh assessment. The AO issued a draft assessment order proposing additions. The assessee objected to the Dispute Resolution Panel (DRP), which rejected the objections and approved the draft order. The AO then passed the final assessment order u/s 143(3) r.w.s. 263, re-assessing the total income at Rs. 1,28,18,087. This included an addition of Rs. 68,12,137 on account of short-term capital gain due to disallowance of deduction u/s 54, and an addition of Rs. 45,79,000 u/s 56(2)(vii)(b). The assessee appealed this order.

What did the Tribunal hold?

The Tribunal noted that grounds 1 to 3 were not pressed by the assessee and were dismissed. Regarding grounds 4 and 5, concerning the disallowance of deduction u/s 54 and the re-characterization of capital gain as short-term, the Tribunal observed that the assessee purchased an under-construction property in 2011, received an allotment letter on 08.01.2011, and made substantial payments by 01.07.2013. The conveyance deed was registered on 30.09.2016, and the property was sold on 10.10.2016. The assessee treated the gain as long-term based on the allotment date. The AO treated it as short-term, considering the holding period from the registration date. The Tribunal referred to CBDT Circulars No. 471 and 672, which clarify that for Self-Financing Schemes and similar schemes by co-operative societies, the allotment date can be considered for determining the holding period, and such cases are treated as construction. The Tribunal found that the assessee had acquired a right/interest in the property from the allotment date. The Tribunal held that the capital gain should be treated as long-term, allowing indexation and deduction u/s 54. The addition of Rs. 68,12,137 was deleted. The issue concerning Section 56(2)(vii)(b) was not decided as the appeal was disposed of on the capital gains issue.

What were the issues?

1. Whether the order passed by the AO u/s 143(3) r.w.s. 263 is bad and invalid in law? (Assessee's contention: The order is bad and invalid. Revenue's contention: Not recorded. 2. Whether the order passed by the AO u/s 143(3) r.w.s. 263 on 12.01.2024 is time-barred and void ab initio? (Assessee's contention: The order is time-barred and void. Revenue's contention: Not recorded. 3. Whether the DRP erred in issuing directions u/s 144C(5) vide order dated 20.12.2023? (Assessee's contention: The DRP erred. Revenue's contention: Not recorded. 4. Whether the DRP and AO erred in disallowing the deduction claimed u/s 54 amounting to Rs. 57,28,883? (Assessee's contention: The deduction was wrongly disallowed. Revenue's contention: Not recorded. 5. Whether the DRP and AO erred in making addition of Rs. 68,12,137 as alleged short-term capital gains on sale of property? (Assessee's contention: The gain was wrongly treated as short-term. Revenue's contention: Not recorded. 6. Whether the DRP and AO erred in making addition of Rs. 45,79,000 u/s 56(2)(vii)(b) on account of alleged difference in purchase consideration and market value? (Assessee's contention: The addition is erroneous. Revenue's contention: Not recorded.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 263,Section 144C(1),Section 144C(5),Section 54,Section 56(2)(vii)(b)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

Before: SHRI B.M. BIYANI & SHRI PARESH M. JOSHI

For Appellant: Shri Dharmesh Shah, Advocate
For Respondent: Shri Om Prakash Jha, Sr.DR
Hearing: 23.07.2026Pronounced: 29.09.2026

Per B.M. Biyani, A.M.:

Feeling aggrieved by the order of assessment bearing DIN: ITBA/AST/S/ 143(3)/2023-24/1059656534(1) dated 12.01.2024 passed by learned ITO (Int. Tax.), Surat [“AO”] u/s 143(3) r.w.s. 263 of the Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2017-18, the assessee has filed this appeal.

Jagdishkumar Chhotubhai Gandhi ITA No. 245/SRT/2024 – AY 2017-18

2.

The background facts leading to present appeal are as under:

(i) The assessee-individual was

The order continues below.

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