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

ITA 962/SRT/2025Status: DisposedITAT Rajkot29 September 2026AY 2018-1915 pages
AI SummaryAllowed

What were the facts?

The assessee, Hiteshkumar Mohanlal Desai, is in appeal against the order of the CIT(A) upholding the assessment order passed by the Assessment Unit (AO) for Assessment Year (AY) 2018-19. The 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. This 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. In AY 2018-19, the assessee claims to have received Rs. 25,00,000 from the developer, with a TDS of Rs. 2,86,250 deducted on Rs. 2,86,25,000, reflected in Form 26AS. The AO made an addition of Rs. 2,45,32,692, adopting Rs. 2,86,25,000 as the consideration for the year.

What did the Tribunal hold?

The Tribunal found that the assessee had actually received Rs. 25,00,000 in AY 2018-19 and offered capital gains relatable to this receipt. While the developer deducted TDS on a higher amount (Rs. 2,86,25,000), the assessee claimed TDS credit only for Rs. 25,000 in the current year and carried forward the balance. The Tribunal noted that the assessee had furnished particulars of further receipts in subsequent AYs (2019-20 to 2022-23) and correspondingly offered relatable capital gains in those years, which were not disturbed by the Department. The Tribunal also found merit in the argument that other co-owners followed the same method of offering capital gains in respective years of receipt, and this treatment was 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 addition of Rs. 2,45,32,692 made by the AO was not sustainable and was deleted. The grounds raised by the assessee were allowed. The Tribunal did not expressly leave any issue undecided.

What were the issues?

1. Whether the reopening of assessment under Section 147 was valid, given 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, citing CIT v. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC)? 2. Whether the CIT(A) erred in confirming the addition 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 wrongly invoked, when the transaction should have been covered by Section 45(5A), deferring 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' from 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 income accrual, disregarding Section 199 and Rule 37BA? 6. Whether the addition leads to double taxation as receipts were already offered in subsequent years (AYs 2019-20 to 2025-26)? 7. Whether the order violated principles of natural justice by not properly considering 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. Further sums received in subsequent years were offered in those respective AYs and accepted by the Department. Similar treatment was accepted for co-owners in their Section 147 assessments. The reopening was based on change of opinion. The transaction should be covered by Section 45(5A). The real income theory and 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

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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