ZABUBEN MEPABHAI BHARVAD,AHMEDABAD vs. THE PCIT - 1, AHMEDABAD, AHMEDABAD

ITA 1233/AHD/2026Status: DisposedITAT Ahmedabad08 October 2026AY 2018-1910 pages
AI SummaryDismissed

What were the facts?

The assessee, Zabuben Mepabhai Bharvad, is in appeal against an order passed by the Principal Commissioner of Income Tax (PCIT) – 1, Ahmedabad, dated 18.03.2026, under section 263 of the Income Tax Act, 1961, for Assessment Year 2018-19. The assessee had not filed a return of income, and the case was reopened based on information about a high-value sale of immovable property. The Assessing Officer (AO) issued a notice under section 148, and the assessee filed a return on 30.04.2022, disclosing an income of Rs. 3,03,940. The assessee received Rs. 42,50,000 as 1/8th share of sale consideration for a property, claiming a cost of acquisition of Rs. 43,21,060 based on a registered valuer's report. The AO referred the matter to the Departmental Valuation Officer (DVO) under section 142A but completed the assessment under section 147 read with section 144B on 18.09.2023 at Rs. 3,03,940 without awaiting the DVO's report. The PCIT found the AO's order erroneous and prejudicial to the revenue as the DVO determined the fair market value as on 01.04.2001 at Rs. 8,21,500, significantly lower than the assessee's claim.

What did the Tribunal hold?

The Tribunal held that the AO, by referring the matter to the DVO under section 142A, had himself considered the fair market value of the property as on 01.04.2001 to be material and requiring verification. The assessment was completed without awaiting the DVO's report, which constituted relevant material for computing capital gains. The Tribunal noted that the limitation period for assessment could be extended by excluding the period of the DVO reference as per Explanation-1 to section 153. Therefore, the AO ought to have awaited the DVO's report. The fact that the DVO's report was received after the assessment order did not preclude its consideration by the PCIT, especially in light of Explanation-1(b) to section 263. The Tribunal found that the assessment order was erroneous and prejudicial to the interest of revenue. The PCIT was justified in exercising jurisdiction under section 263 and setting aside the assessment order to allow the AO to examine the DVO's report and pass a fresh order. The contention regarding other co-owners was not adjudicated as it did not require adjudication in the present appeal arising from a section 263 order.

What were the issues?

1. Whether the order passed by the PCIT under section 263 of the Income Tax Act, 1961, dated 18.03.2026, is erroneous and requires to be quashed, considering the AO applied his mind and made a reference to the DVO under section 142A. (Mixed law and fact, turns on Section 263). Assessee's contentions: The AO conducted proper inquiry, applied his mind, and took a plausible view. The DVO's report was received beyond the statutory period of six months and thus had no value, citing the decision in Bashir Ahmed Abdurrahman Matte (supra). The revisionary proceedings based on a DVO report received after assessment completion are illegal. The AO applied his mind and accepted the valuation based on available material, making the order not amenable to revision under section 263. The valuation was accepted in the cases of other co-owners, violating the principle of consistency. Revenue's contentions: The AO referred the matter to the DVO but completed the assessment without awaiting the report. The PCIT examined the record, including the DVO's report which was available, showing the AO's order was erroneous and prejudicial to revenue. As per Explanation (1)(b) to section 263, the record includes material available at the time of PCIT's examination. The DVO's report received subsequent to the assessment order was part of the record.

Which sections of the Income-tax Act were involved?

Section 263,Section 148,Section 147,Section 144B,Section 142A,Section 153

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

Before: SHRI NARENDRA PRASAD SINHA & SHRI SANJAY KUMAR

For Appellant: Shri Harish Gamara, CA
For Respondent: Shri Kiran Unavekar, CIT-DR
Hearing: 10.09.2026Pronounced: 08.10.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal filed by the Assessee is directed against the order of Principal Commissioner of Income Tax (PCIT), Ahmedabad – 1, [hereinafter referred to as “PCIT”] dated 18.03.2026 for the Assessment Year (A.Y.) 2018-19, passed in his revisional juri iction u/s. 263 of the Income Tax Act [hereinafter referred as “the Act”].

2.

The brief facts of the case are that the assessee did not file his return of income for A.Y. 2018-19. The case of the assessee was reopened on the basis of information received by the AO that the Zabuben Mepabhai Bharvad Vs PCIT, AY- 2018-19 2 assessee had carried out high value transaction of

The order continues below.

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