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Facts
The assessee sold agricultural land in FY 2011-12 and filed their Income Tax Return for AY 2012-13 on 30.03.2014. The Assessing Officer reopened the assessment under Section 147 on 19.12.2014, claiming the assessee had not filed a return. The AO computed Long Term Capital Gain (LTCG) and disallowed a deduction under Section 54B, which the CIT(A) confirmed ex-parte.
Held
The Tribunal found that the assessee had indeed filed the return of income on 30.03.2014, prior to the issuance of the Section 148 notice. Since the foundational jurisdictional fact for reopening (that no return was filed) was factually incorrect, the reopening of assessment under Section 147 was held to be invalid and without jurisdiction. Consequently, the entire assessment was quashed, rendering the other grounds challenging the additions academic.
Key Issues
Whether the reopening of assessment under Section 147 was valid when the assessee had already filed the return of income prior to the issuance of the Section 148 notice; and the correctness of additions related to LTCG computation and disallowance of Section 54B deduction.
Sections Cited
250, 139(4), 148, 143(3), 147, 54B, 10(37)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, THE INCOME TAX APPELLATE
Before: DR. B DR. B.R.R. KUMAR VICE-DR. B DR. BSHRI SIDDHARTHA NAUTIYAL SHRI SIDDHARTHA NAUTIYALSHRI SIDDHARTHA NAUTIYAL SHRI SIDDHARTHA NAUTIYAL
(Appellant Appellant Appellant) Appellant .. (Respondent Respondent Respondent) Respondent Appellant by : Appellant by : Shri Parimalsinh B. Parmar, AR Appellant by : Appellant by : Respondent by: Respondent by Shri B.P. Srivastava, Sr DR Respondent by Respondent by Date of Hearing Date of Hearing Date of Hearing Date of Hearing 29.09.2025 Date of Pronouncement Date of Pronouncement Date of Pronouncement Date of Pronouncement 30.09.2025 O R D E R O R D E R O R D E R O R D E R
PER PER DR. B.R.R. KUMAR, VICE PER PER DR. B.R.R. KUMAR, VICE DR. B.R.R. KUMAR, VICE-PRESIDENT DR. B.R.R. KUMAR, VICE PRESIDENT PRESIDENT:- PRESIDENT
This appeal has been filed by the assessee against the order dated 05.09.2017 passed by the Ld. Commissioner of Income-Tax (Appeals), Gandhinagar, Ahmedabad (‘Ld. CIT(A)’ in short), under Section 250 of the Income- tax Act, 1961 (‘the Act’ in short), for Assessment Year 2012-13.
The assessee has raised following grounds in this appeal :- “(1) That on facts, and in law, the learned CIT(A) has grievously erred in not giving sufficient and reasonable opportunity of hearing to the appellant and in deciding the appeal ex-parte. (2) That on facts, and in law, the learned CIT(A) has grievously erred in confirming the addition of Rs.6,32,995/- made towards computation of LTCG by adopting a different FMV as on 01/04/1981. (2) That on facts, and in law, the learned CIT(A) has grievously erred in confirming the addition of Rs. 28,94,410/- made by disallowing the claim of deduction u/s 54B of the Act.
(3) That on facts, in law, and on evidence on record, the entire addition ought to have been deleted, as prayed for.”
In this case, the assessee, Late Shri Chhatrasinh J. Vaghela, was a co-owner of agricultural land situated at Saragasan, Gandhinagar, which was sold on 14.10./2011 for a total consideration of Rs. 11,25,62,000/- along with other co- owners. The return of income was filed on 30.03.2014 under section 139(4) of the Act, within the permissible time limit under the law then applicable. The Assessing Officer issued notice under section 148 of the Act dated 19.12.2014 for AY 2012-13 on the grounds that the assessee had not filed the return of income and that verification of capital gain and other income was required. Pursuant to this, the Assessing Officer completed the assessment under section 143(3) r.w.s. 147 of the Act by computing Long Term Capital Gain (LTCG) and denying deduction u/s 54B of the Act. The CIT(A) confirmed the additions made by the Assessing Officer ex-parte, without granting sufficient opportunity to the legal heir of the deceased assessee.
Heard the arguments of both the parties and perused the material available on record.
4.1 We find that the notice issued under section 148 of the Act reads as under:-
“Date : 19/12/2014 …….. Whereas I have reason to believe that your income/the income of Α.Υ. 2012- 13 in respect of which you are assessable chargeable to tax for the assessment year 2012-13 has escaped assessment within the meaning of Section 147 of the Income Tax Act, 1961 I, therefore, propose to assess/reassess the income/re-compute loss/depreciation allowance for the said assessment year and I hereby require to deliver to me within 30 days from the date of service of this notice, a return in the prescribed form of your income/the income of AY 2012-13 in respect of which you are assessable chargeable to tax for the said assessment year.
Sd/- (G.G.THAKER) INCOME TAX OFFICER, WARD-1 GANDHINAGAR Encl.: Reason Recorded.”
4.2 Reasons recorded before issue of notice u/s 148 of the IT Act, 1961 is as under:-
1 Name : Shri Chhatrasinh J. Vaghela Address : At & Post Saragasan, Tal & Dist Gandhinagar 2. Permanent Number Account: : 3. AY : 2012-13 As per data available with this office, the assessee. Shri Chhatrasinh J. Vaghela has sold the immovable property (Non Agriculture Land) situated at Block/Survey No 394's 17503 Sr. Mtr., TP Scheme No. 7's Final Plot No.97s 11363 Sr. Mtr. Village Saragasan, Dist. Gandhinagar along with other 6 co owners for Rs 11,25,62,000/- and the same is registered with SR- Gandhinagar GDR12155/1/26/2011 (page 1 to 26) on 14/10/2011. The assessee has not filed the return of income, therefore with a view to verifying calculation of capital gain and other income. Therefore, I have reason to believe that the income chargeable to tax had escaped assessment to that extent, for A.Y 2012-13, within the meaning of Section 147 of the Act. Hence, in my opinion, this is a fit case for re-opening of assessment u/s.147 of the I.T. Act, 1961.
Date: 19/12/2014 Sd/-
(G.G.THAKER) INCOME TAX OFFICER, WARD-1 GANDHINAGAR”
4.3 We find that the primary reason recorded by the Assessing Officer for reopening the case was that the assessee had not filed a return of income despite having sold immovable property. However, it is an undisputed fact on record that the assessee had already filed his return of income on 30.03.2014 under section 139(4), prior to the issuance of notice under section 148 dated 19.12.2014. The capital gains have been duly computed as per the return filed. Therefore, the foundational jurisdictional fact stated by the Assessing Officer that no return was filed is factually incorrect. It is a settled position of law that if the very basis of reopening is factually incorrect, such reopening is bad in law. Therefore, the reopening of assessment u/s 147 in the present case is invalid and without jurisdiction, and hence, the assessment liable to be quashed.
4.4 Since we have already held that the reopening is bad in law and the entire assessment is quashed, grounds challenging the additions on merit become academic in nature and require no adjudication at this stage.
In the result, the appeal of the assessee is allowed.
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