HITESHKUMAR MOHANLAL DESAI,DAMAN vs. THE ASSESSMENT UNIT, ITO, DAMAN WARD, DAMAN

ITA 962/SRT/2025Status: DisposedITAT Surat29 September 2026AY 2018-1915 pages
AI SummaryAllowed

What were the facts?

The assessee, Hiteshkumar Mohanlal Desai, is in appeal before the Income Tax Appellate Tribunal (ITAT) against the order of the Commissioner of Income-Tax (Appeals)-NFAC, Delhi, which upheld the assessment order passed by the Assessment Unit of the Income-tax Department. The assessment year in question is 2018-19. The Assessment Officer (AO) reopened the assessment under Section 147 read with Section 144B of the Income-tax Act, 1961. The assessee had not filed a return for AY 2018-19. Upon notice, the assessee filed a return declaring total income of Rs. 23,93,740, including long-term capital gain of Rs. 23,47,626 from a non-agricultural land. The land was jointly owned by the assessee and his three brothers, and a Development Agreement was entered into with M/s Param Corporation for Rs. 24 crores. During AY 2018-19, the assessee claims to have received Rs. 25,00,000, while the developer deducted TDS on Rs. 2,86,25,000. The AO made an addition of Rs. 2,45,32,692.

What did the Tribunal hold?

The Tribunal found that the assessee had actually received Rs. 25,00,000 during AY 2018-19 and offered capital gains relatable to this receipt, claiming TDS credit only for Rs. 25,000. The balance TDS was carried forward. The assessee also furnished particulars of further receipts in subsequent AYs (2019-20 to 2022-23) and correspondingly offered relatable capital gains, which were accepted by the Department and not disturbed. The Tribunal noted that the property was jointly owned and other co-owners followed the same method of offering capital gains in respective years of receipt, which was also accepted by tax authorities in their Section 147 assessments. Therefore, the assessee's case was at parity with the co-owners. Consequently, the Tribunal held that the impugned addition of Rs. 2,45,32,692 made by the AO was not sustainable and was deleted. All grounds raised by the assessee were allowed. The issue of reopening validity, transfer under Section 2(47), applicability of Section 45(1) vs 45(5A), real income theory, TDS credit determinacy, and double taxation were implicitly decided in favour of the assessee by deleting the addition based on the factual findings regarding the year of accrual and acceptance by the department in subsequent years and co-owners' cases.

What were the issues?

1. Whether the reopening of assessment under Section 147 was valid, considering the assessee's contention that there was no tangible material for the AO's belief of escaped income and that it was based on a change of opinion, contrary to the ruling in CIT v. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC)? 2. Whether the CIT(A) erred in confirming the addition of Rs. 2,45,32,692 as capital gains by erroneously holding that a transfer under Section 2(47)(v)/(vi) had occurred, ignoring that juridical possession remained with the assessee until full payment and no ownership rights were transferred, as per CIT v. Balbir Singh Maini (2017) 398 ITR 531 (SC)? 3. Whether Section 45(1) was erroneously invoked when the transaction was covered by Section 45(5A), which defers capital gains taxation to the year of the completion certificate? 4. Whether the authorities erred in taxing hypothetical income in violation of Sections 4 and 5 and the 'real income theory' as propounded in E.D. Sassoon & Co. Ltd. v. CIT (1954) 26 ITR 27 (SC), CIT v. Shoorji Vallabhdas & Co. (1962) 46 ITR 144 (SC), and CIT v. Excel Industries Ltd. (2013) 358 ITR 295 (SC)? 5. Whether the TDS credit mismatch in Form 26AS is determinative of the accrual of income, disregarding Section 199 and Rule 37BA? 6. Whether the addition results in double taxation as the receipts were already offered to tax in subsequent years (AYs 2019-20 to 2025-26)? 7. Whether the order violates principles of natural justice by not properly considering the assessee's submissions and precedents? Assessee's Contentions: The assessee argued that only Rs. 25,00,000 was received in AY 2018-19, and capital gains were offered accordingly, with TDS credit claimed only for Rs. 25,000. The balance TDS was carried forward. Further sums received in subsequent years were offered to tax in those respective AYs (2019-20 to 2022-23) and accepted by the department. The same method was followed by co-owners and accepted in their Section 147 assessments. The reopening was based on change of opinion. The transaction was covered by Section 45(5A). The income was not real income. TDS credit does not determine accrual. The addition leads to double taxation. Principles of natural justice were violated. Revenue's Contentions: The Revenue relied on the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 2(47),Section 45(1),Section 45(5A),Section 4,Section 5,Section 199,Section 37BA

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 Sankar Sharma, CA
For Respondent: Shri Om Prakash Jha, Sr.DR
Hearing: 22.07.2026Pronounced: 29.09.2026

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

Feeling aggrieved by the order of first appeal dated 18.07.2025 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“Ld. CIT(A)”], which in turn arises out of the assessment-order dated 27.03.2023 passed by learned Assessment Unit of Income-tax Department [“Ld. AO”] u/s 147 r.w.s. 144B of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2018-19, the assessee has filed this appeal on following grounds:

Shri Hiteshkumar Mohanlal Desai ITA No. 962/Ind/2025 – AY 2018-19 “1. Reopening of Assessment The Ld. CIT(A) erred in law and on facts in upholding the reopening of assessme

The order continues below.

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