SHALIN JAYANTBHAI DESAI,VADODARA vs. ACIT, CIRCLE-4(2), VADODARA PRESENT JURIDICTION DCIT CIRCLE 1(1)(1), VADODRA, VADODARA

ITA 2569/AHD/2026Status: DisposedITAT Ahmedabad19 October 2026AY 2010-119 pages
AI SummaryAllowed

What were the facts?

The assessee, Shalin Jayantibhai Desai, filed an appeal against the order dated 29.05.2026 passed by the Addl/JCIT Commissioner of Income Tax (Appeals) Aurangabad for Assessment Year 2010-11. The original return filed on 31.07.2010 was processed under Section 143(1). The Assessing Officer (AO) reopened the assessment under Section 147 on 16.05.2016, based on information regarding undisclosed long-term capital gains (LTCG) of Rs. 1,17,49,792. During reassessment, the AO disallowed a deduction of Rs. 7,35,327 claimed under Section 54F, stating the assessee owned more than one residential house property on the transfer date. An addition of Rs. 1,065 was also made under 'Income from Other Sources'. The assessment order under Section 143(3) read with Section 147 was passed on 14.08.2017, determining total income at Rs. 1,16,58,712. The CIT(A) dismissed the assessee's appeal.

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings initiated under Section 147 of the Income-tax Act, 1961, are unsustainable in law. The primary reason for this decision is that the Assessing Officer did not make any addition or reassessment concerning the specific long-term capital gains of Rs. 1,17,49,792, which was the stated basis for reopening the assessment. The additions made by the AO, namely the disallowance of deduction under Section 54F (Rs. 7,35,327) and the addition under 'Income from Other Sources' (Rs. 1,065), related to different issues. The Tribunal relied on the decisions of the Hon'ble Bombay High Court in CIT v. Jet Airways (I) Ltd. and the Hon'ble Gujarat High Court in CIT v. Mohmed Juned Dadani. These judgments established that where the AO does not assess or reassess the income forming the basis of reopening, the reassessment cannot be sustained merely on the basis of additions made in respect of other issues. Consequently, the reassessment order was quashed, and the additions made therein, including the disallowance under Section 54F and the addition under 'Income from Other Sources', were rendered invalid and could not survive. The remaining grounds of appeal were rendered academic.

What were the issues?

1. Whether the reassessment proceedings initiated under Section 147 of the Income-tax Act, 1961, are valid when no addition was made in respect of the specific long-term capital gains (Rs. 1,17,49,792) that formed the basis of reopening, and the additions made (disallowance of Rs. 7,35,327 under Section 54F and Rs. 1,065 under 'Income from Other Sources') pertain to different issues? (Question of law) Assessee's contentions: - The reassessment proceedings are void as the addition for which proceedings were initiated under Section 147 were not made in the assessment order. - The CIT(A) erred in not following the ratio laid down in jurisdictional High Court cases like Mohammad Junaid Dadani and Jet Airways Ltd. - The reassessment proceedings are void ab initio as the assessee had disclosed all facts pertaining to exempt LTCG in the original return, and reopening beyond four years is bad in law. - The addition of Rs. 7,36,392 (sic, Rs. 7,35,327) is bad in law and needs to be deleted. Revenue's contentions: - Not explicitly recorded in the provided text, but implied by the CIT(A)'s order upholding the AO's actions.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 143(3),Section 147,Section 148,Section 10(38),Section 54F,Section 250,Section 234B,Section 234C,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

For Appellant: Shri Biren Shah, AR
For Respondent: Shri Amit Pratap Singh, Sr. DR
Hearing: 15.10.2026Pronounced: 19.10.2026

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

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This appeal has been filed by the assessee against the order dated 29.05.2026 passed by the Addl/JCIT Commissioner of Income Tax (Appeals) Aurangabad [hereinafter referred to as the ‘Ld. CIT(A)’], under section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) for Assessment Year 2010-11. 2. The assessee has raised the following grounds of appeal: 1) In law and in facts and circumstances of the case the order passed u/s 143(3) r.w.s. 147 of the Act is void since the addition for which proceedings were initiated u/s 147 have not been made in the impugned assessment order.

ITA No.2569/AHD/20

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