THE ITO, WARD-3(3)(12),, AHMEDABAD vs. SHRI CAWAS DARASHA KARAKA, AHMEDABAD

ITA 499/AHD/2018Status: DisposedITAT Ahmedabad08 April 2025AY 2013-14Bench: DR. B.R.R. KUMAR, VICE-PRESIDENT\nMS. SUCHITRA KAMBLE, JUDICIAL MEMBER\nI.T.A. No. 499/Ahd/2018\n(Assessment Year: 2013-14)\nIncome-Tax Officer,\nWard-3(3)(12),\nAhmedabad\n(Appellant)\nVs.\nLate Shri Cawas Darasha\nKaraka, Legal Heir M/s.\nCawas Karaka Trust,\n22, Teen Murti Bungalows,\nNr. Devang Bungalows,\nThaltej, Ahmedabad-380054\n[PAN : AGSPK 9616 L]\n(Respondent)\nAppellant by :\nShri Tushar Hemani, Sr. Advocate &\nShri Parimalsinh H. Parmar, ARs\nRespondent by:\nAdjournment applica18 pages
AI SummaryDismissed

What did the Tribunal hold?

On Issue No. 1, the Tribunal held that the Assessing Officer's action of referring the matter to the DVO was not supported by the provisions of Section 55A of the Act. The Tribunal noted that the assessee had transferred leasehold rights for Rs.4,40,00,000/-, adopted a cost of acquisition of Rs.52,00,000/- based on land rate as on 01.04.1981, and calculated indexed cost of acquisition at Rs.4,43,04,000/-. The Assessing Officer considered the cost of acquisition as NIL and the DVO determined the cost at Rs.285/- per sq. mtr. against the assessee's claim of Rs.1320 per sq. mtr. The Tribunal found that the provisions of Section 55A did not support the AO's action and declined to interfere with the CIT(A)'s order. On Issue No. 2, the Tribunal found that the CIT(A) had correctly deleted the addition as the source of the deposits aggregating to Rs.61,32,400/- had been adequately explained by the assessee through documentary evidence, including receipts for sale of shares and repayment of a loan. The Tribunal upheld the CIT(A)'s order.

What were the facts?

The Revenue appealed against the order of the CIT(A) dated 26.12.2017 for Assessment Year 2013-14. The assessee had filed a return of income at Rs.49,13,080/-. The assessment under Section 143(3) was completed on 29.02.2016, with additions including Rs.4,40,00,000/- for Long Term Capital Gain (LTCG) and Rs.61,32,400/- under Section 69A for unexplained deposits. The CIT(A) deleted both these additions. The Revenue's appeal before the ITAT challenges these deletions. The assessee is represented by the Legal Heir of Late Shri Cawas Darasha Karaka, also functioning as Cawas Karaka Trust.

What were the issues?

1. Whether the CIT(A) erred in deleting the addition of Rs.4,40,00,000/- on account of LTCG, without appreciating the provisions of Section 55(2)(a)(ii) of the Income-tax Act, 1961? The Revenue argued that the cost of acquisition in the hands of the assessee should be that of the forefathers under Section 49(1)(iii)(a), as the tenancy right was acquired without cost. It contended that an affidavit claiming Rs.3000/- paid in 1944 was not supported by the lease deed and was submitted after 72 years. The Revenue also argued that the fair market value of leasehold rights should be determined by capitalizing net annual income, referencing the case of M/s Natraj vs DCIT. The assessee's contentions are not explicitly recorded, but the CIT(A) had held the assessee's claim to be as per the Act. 2. Whether the CIT(A) erred in deleting the addition of Rs.61,32,000/- made by the Assessing Officer under Section 69A, on the grounds that the assessee had not furnished any evidence? The Revenue argued that the assessee failed to provide satisfactory evidence for the deposits. The assessee, however, provided documentary evidence including receipts and balance sheets to explain the source of funds, which included consideration received on sale of shares and repayment of a loan.

Which sections of the Income-tax Act were involved?

Section 55(2)(a)(ii),Section 69A,Section 143(3),Section 49(1)(iii)(a),Section 48,Section 55A,Section 105,Section 250

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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

Before: DR. B.R.R. KUMAR, VICE-MS. SUCHITRA KAMBLE

For Appellant: Shri Tushar Hemani, Sr. Advocate &, Shri Parimalsinh H. Parmar, ARs
Hearing: 12.03.2025Pronounced: 08.04.2025

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

- This appeal has been filed by the Revenue against the order of the learned Commissioner of Income-tax (Appeals)-3, Ahmedabad (in short 'the CIT(A)') dated 26.12.2017 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as "the Act" for short], for Assessment Year (AY) 2013-14. 2. The Revenue has taken following grounds of appeal:- “1. The Ld.CIT(A) has erred in law and on facts in deleting the addition of Rs.4,40,00,000/- without appreciating the provisions of section 55(2)(a)(ii) of the Act. I

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