JANARDAN R PATEL L/H OF LATE SHRI RAVJIBHAI ISHWARBHAI PATEL,ANAND vs. THE ITO, WARD-4, ANAND

The assessee has filed his return of income u/s. 139 for assessment year 2012-13. On the basis of information, the Assessing Officer observed that the assessee has sold immoveable property aggregating to Rs. 43,75,680/- during financial year 2011-12 registered in the office of sub- registrar, Anand. As a result, the Assessing Officer observed that capital gain must have arisen on sale of property and it needs verification. After recording the reasons for reopening and obtaining prior permission, the case of the assessee was reopened and notice u/s. 148 was issued on 30-03-2019. The assessee has not submitted any details in response to the notices and subsequently show cause notice was issued on 07-11-2019. The assessee filed his return of income on 07-11-2019 u/s. 143(2) issued on 25-11-2019. The assessee submitted a reply on 12-11-2019 and provided a copy of acknowledgement of return of income, sale deed and bank statement. No capital gain was offered by the assessee and the assessee mentioned in reply that he is engaged in farming activity and derives income through agricultural activities. Due to some family problems, the assessee and his three brothers have filed suit for cancellation of sale deed in assessment year 2017-18 and has also produced the order dated 24-07-2017 for cancellation of sale deed. Since the assessee has not paid any capital gain arising on this transaction, as per the submission of the assessee, the assessee and his two brothers has sold immoveable property in assessment year 2012-13 as per the observation of the Assessing Officer and further held that no working of capital gain was given by the assessee at the assessment proceedings. The Assessing Officer in para 5 mentioned that the assessee paid stamp duty of Rs. 2,14,500/-. After taking cognizance of assessee’s reply, the Assessing Officer held that the total income of Rs. 14,58,560/- for 1/3 of the total transaction of Rs. 43,75,680/- should be treated as assessee’s capital gain and is liable to be taxed u/s. 69 of the Act.

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

The ld. A.R. submitted that there is a delay of 382 days in filing present appeal as the assessee did not receive any hearing notice from the CIT(A) and since the assessee when came to know about the order of the CIT(A) on 21-02-2025, the assessee immediately preferred appeal. The assessee has filed the detailed affidavit to that effect and the reason given therein appears to be genuine, hence delay is condoned.

As regards the merits of the case, the ld. A.R. submitted that the addition on account of sale of agricultural land is not justifiable as the fact remains that assessee’s actual sale of land but land transferred through registration in the guise of sale deed as per family statement and therefore no capital gain exigencies on the said transaction has happened. The ld. A.R. further submitted that the assessment order was passed on dead person and therefore the assessment itself is bad in law. The ld. A.R. submitted that it is only exchange that there is no capital gain. The ld. A.R. submitted that the Assessing Officer as well as the CIT(A) has not taken cognizance of the cancellation of deed and the order to that effect which is clearly mentioned in para 4 of the assessment order.

The ld. D.R. relied upon the assessment order and the order of the CIT(A). The ld. D.R. further submitted that the additional grounds filed by the assessee does not sustain as such at this juncture.

We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the additional grounds taken by the assessee is that of legal ground and after going through the notice u/s. 148, it appears that the reopening of the assessment of the assessee is justified as proper procedure has been followed by the Assessing Officer thereby reasons recorded and approval taken properly. Thus, case laws in the present case relied by the assessee do not apply. As regards the merits of the case, it is pertinent to note that the assessee has clearly set out that there is a dispute within the family in which some family members were demanding legal rights over the three land survey nos. The assessee has to cancel the said deal against which counter was also filed by one Anantrai Chandubhai Patel apart from raising ownership claim over land survey no. 182 before land revenue authorities. Thus, no capital gain arise on the said transfer, it was a family arrangement itself and the payment of Rs. 2,14,500/- as stamp duty paid was a loss to the assessee as well his co-owners. The assessee has filed the family details and the disputes along with memorandum dated 26-05-2011 before us which clearly gives picture that there is a genuine case on the part of the assessee that said land deal has not taken place and there is no capital gain owned by the assessee in the present case. Thus, the appeal of the assessee is partly allowed.

In the result, the appeal of the assessee is partly allowed.