INCOME TAX OFFICER, WARD-1(2)(2), VADODARA, VADODARA vs. SHARADCHANDRA RAMANLAL BHATT, VADODARA

ITA 1948/AHD/2025Status: DisposedITAT Ahmedabad12 October 2026AY 2012-134 pages
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What did the Tribunal hold?

The Tribunal held that the Revenue's appeal regarding the deletion of Rs. 3,39,79,750/- was dismissed. The reasoning was that Shri Ashit Shah was treated as the owner of the land, and even if the value of Rs. 3.39 crores was to be considered under Section 50C, it should be in the hands of Shri Ashit Shah. The assessee could not be considered the owner for the purpose of capital gains computation or Section 50C, as the matter rested with Shri Ashit Shah. Regarding the assessee's appeal concerning Rs. 10,00,000/-, the Tribunal directed that Rs. 5,00,000/-, which was the assessee's investment in the property subsequently sold by Shri Ashit Shah, should be considered as capital gain already offered to tax. The balance amount of Rs. 5,00,000/- was directed to be treated as commission income. The legal grounds raised by the assessee were not adjudicated upon as they became infructuous. The ratio is that once a transaction's ownership and tax implications are settled in the hands of one party (Shri Ashit Shah), the same cannot be re-imposed on another party (the assessee) for the same transaction, and income should be classified based on its nature and the assessee's contribution.

What were the facts?

These are cross appeals by the Revenue and the assessee, Sharadchandra Ramanlal Bhatt, against an order dated 01.08.2025 by the NFAC, Delhi, for Assessment Year 2012-13. The Revenue's appeal challenges the deletion of an addition of Rs. 3,39,79,750/-. The facts indicate that Shri Ashit Shah purchased land from the assessee for Rs. 10,00,000/-, sold it for Rs. 2,13,73,500/-, and offered capital gains, claiming exemption under section 54F. The Tribunal had previously held the reopening under section 148 invalid in Shri Ashit Shah's case. The Revenue contended that the land sold by the assessee was valued at Rs. 3.39 crores. The assessee's appeal concerns an addition of Rs. 10,00,000/-. The assessee claimed to have incurred Rs. 5,00,000/- for property purchase, later sold by Shri Ashit Shah, and received Rs. 10,00,000/-. The assessee offered capital gains on Rs. 5,00,000/- investment and sought the balance Rs. 5,00,000/- to be treated as commission income.

What were the issues?

1. Whether the Ld. CIT(A) erred in deleting the addition of Rs. 3,39,79,750/- without appreciating that Shri Ashit Shah was not the owner of the land as possession was not handed over by the assessee? (Revenue's contention: The land sold by the assessee was valued at Rs. 3.39 crores, and this value should be considered for capital gains or Section 50C purposes, but the assessee cannot be tagged as the owner for these computations as the matter rests with Shri Ashit Shah). 2. Whether the Ld. CIT(A) erred in upholding the reopening of assessment without independent application of mind, relying solely on information from the DCIT Investigation? (Assessee's contention: Reopening was based on external information without independent application of mind). 3. Whether the Ld. CIT(A) erred in upholding the reassessment without appropriate satisfaction under section 151 of the Income-tax Act, 1961? (Assessee's contention: Lack of proper satisfaction under section 151). 4. Whether the Ld. CIT(A) erred in upholding the reassessment under section 148 beyond the period of four years without any failure on the part of the assessee to disclose material facts? (Assessee's contention: Reassessment beyond four years without failure to disclose). 5. Whether the Ld. CIT(A) erred in upholding the addition of Rs. 10,00,000/- towards commission income under income from other sources, when this income was already offered for taxation as capital gain? (Assessee's contention: The amount was already offered as capital gain, not commission income).

Which sections of the Income-tax Act were involved?

Section 148,Section 151,Section 250,Section 54F,Section 50C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

For Appellant: Shri Piyush Chhajed, AR
For Respondent: Shri Kiran Unavekar, CIT(DR) &, Shri Amit Pratap Singh, Sr DR
Hearing: 12.10.2026Pronounced: 12.10.2026

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

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These cross appeals, one by the Revenue and the other by the assessee, arise out of the order dated 01.08.2025 passed by the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi ["Ld. CIT(A)" in short] under section 250 of the Income-tax Act, 1961 ["the Act" in short] for Assessment Year 2012-13. 2. Since both the appeals emanate from the same appellate order, involve common facts and interconnected issues, they were heard together and are bein

The order continues below.

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