DHIREN RAMBHAI BHARWAD,AHMEDABAD vs. ACIT, CENTRAL CIRCLE 2(3), AHMEDABAD, AHMEDABAD

ITSSA 98/AHD/2025Status: DisposedITAT Ahmedabad30 April 2026AY 2015-169 pages
AI SummaryPartly Allowed

What were the facts?

The appeals by Dhiren Rambhai Bharwad and Dharnidhar Developers for Assessment Year 2015-16 challenge orders of the CIT(A)-12, Ahmedabad. These appeals stem from a search and seizure action on October 15, 2019. During the search, a Memorandum of Understanding (MOU) dated January 31, 2014, for the sale of land Survey No. 415/4 was found. Advances totaling Rs. 13.77 crore were received, with a forfeiture clause for failure to complete the transaction. The buyer defaulted, leading to forfeiture on May 31, 2014. The Assessing Officer (AO) treated Rs. 3 crore (in Dhiren Bharwad's case) and Rs. 10.77 crore (in Dharnidhar Developers' case) of the forfeited amount as income under Section 56(2)(ix) of the Income Tax Act, 1961, while framing assessments under Section 153A. The CIT(A) confirmed these additions.

What did the Tribunal hold?

The Tribunal held that the grounds challenging the validity of the approval under Section 153D and the consequential assessment under Section 153A are dismissed. Relying on the decisions in Neelu Sanjay Gupta Vs. DCIT and Subhash Stone Products Vs. ACIT, the Tribunal found no infirmity in the approval granted. Regarding the addition under Section 56(2)(ix), the Tribunal found merit in the assessee's contention. It noted that Section 56(2)(ix) was introduced by the Finance (No. 2) Act, 2014, which received presidential assent on August 6, 2014, and was effective from April 1, 2015. Since the forfeiture occurred on May 31, 2014, the new charging section could not be applied retrospectively. The Tribunal also observed that Section 51 of the Act, which was in force at the time, dealt with deducting forfeited advances from the cost of acquisition. The Tribunal further agreed with the assessee that Section 56(2)(ix) applies to the owner of the capital asset, and since the assessee was not the owner of the land in question, the provision was not applicable. Consequently, the additions made under Section 56(2)(ix) were deleted.

What were the issues?

1. Whether the assessment order passed under Section 153A of the Income-tax Act, 1961, is bad in law and void due to an invalid approval granted under Section 153D, which allegedly lacked application of mind and DIN. - Assessee's contention: The approval under Section 153D was mechanical, without examining seized material or assessment records, rendering it invalid. - Revenue's contention: Relied on the CIT(A)'s order. 2. Whether the addition of forfeited advance money under Section 56(2)(ix) of the Income-tax Act, 1961, is legally sustainable, given that the forfeiture occurred before the insertion of this provision. - Assessee's contention: Section 56(2)(ix) was inserted by the Finance (No. 2) Act, 2014, and received presidential assent on August 6, 2014. The forfeiture occurred on May 31, 2014. Applying the provision retrospectively is impermissible. Prior to this, Section 51 governed such transactions, allowing deduction from the cost of acquisition. Furthermore, the assessee was not the owner of the land, so the forfeiture provision under Section 56(2)(ix) does not apply. - Revenue's contention: Relied on the CIT(A)'s order.

Which sections of the Income-tax Act were involved?

Section 153A,Section 153D,Section 56(2)(ix),Section 51,Section 40(a)(ia),Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD

Before: DR. B.R.R. KUMAR, VICE-MS. SUCHITRA R. KAMBLE

For Appellant: Shri Tushar Hemani, Sr. Advocate, Shri Kushal Fofaria, AR
For Respondent: Shri R.P. Rastogi, CIT (DR)
Hearing: 19.02.2026Pronounced: 30.04.2026

PER DR. B.R.R. KUMAR, VICE-PRESIDENT:

-

These two appeals have been filed by different assessees against separate orders of even date 05.08.2025 passed by the Ld. Commissioner of Income Tax (Appeals)-12, Ahmedabad (hereinafter referred to as ‘Ld. CIT (A)’ in short), under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’ in short) for Assessment Year 2015-16. 2

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 153A

All 18,560 judgments and leading authorities on Section 153A →

Recent GST High Court judgments

Search GST case law →