LATE SHRI KHEMRAJ PATIDAR (THROUGH WIFE AND LEGAL HEIR SMT. BHAGWATI PATIDAR),BHOPAL vs. INCOME-TAX OFFICER, 2(4), BHOPAL, BHOPAL

आदेश/ O R D E R

Per B.M. Biyani, A.M.:

“1. That, on the facts and in the circumstances of the case, the action of the learned CIT(A) in confirming the additions to the extent of Rs 43,01,000/-made by the Id. AO in the appellant's income for the Page 1 of 10

Late Shri Khemraj Patidar AY 2012-13 relevant assessment year, is quite unjustified, unwarranted and bad- in-law 2. That, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the Id. AO for making an addition of Rs.43,01,000/- in the appellant's income on the allegation of undisclosed capital gain without properly considering and appreciating the facts and circumstances of the case of the appellant and as also, without properly considering the submissions of the appellant made before both the authorities below along with relevant documentary evidences.

4. That, without prejudice to the above, both the learned authorities below further grossly erred in computing the capital gains by disregarding the deductions allowable under Section 48 of the Income Tax Act, 1961, which mandates the deduction of (i) expenditure incurred wholly and exclusively in connection with the transfer, and (ii) the cost of acquisition of the asset. In the present case, the AO failed to consider the expenses on transfer and the cost of acquisition, leading to an erroneous computation of capital gains. The Id. CIT(A) should have quashed this erroneous computation, but instead, upheld the AO's flawed assessment.

5. That, without prejudice to the above, the learned Assessing Officer unjustly issued notices and pursued the appellant, Late Shri Khemraj Patidar, despite the fact that the transaction in question was between Shri Lakhanlal Patidar and Shri Rajesh. The appellant had long relinquished any interest in the land, transferring all rights to Shri Lakhanlal Patidar well before the transaction. The appellant received no consideration from the deal, as evident from his bank records. The ld. CIT(A) overlooked this crucial fact and passed an arbitrary order, causing grave injustice to the appellant.

6. That, without prejudice to the above, both the learned authorities below further erred by treating the sum credited to the appellant's bank account as taxable income, despite the appellant's clear

Late Shri Khemraj Patidar AY 2012-13 submission that his only source of income is agriculture, which is exempt from tax. The Id. CIT(A) failed to completely rectify this wrongful addition of Rs. 10,00,000/- and confirmed an addition to the extent of Rs.5,00,000/- in the hands of the appellant on account of unexplained cash deposits in bank account.

7. That the Id. CIT(A) failed to appreciate the appellant's advanced age, illiteracy, and lack of awareness of the intricacies of the Income Tax Act. The ld. CIT(A) should have adjudicated the appeal on humanitarian and legal grounds by rectifying the multiple errors committed by the AO, including: (i) adding the income of third parties to the appellant's income: (ii) treating exempt agricultural income as taxable; (iii) failing to allow statutory deductions such as basic exemptions applicable to super senior citizens, and the cost of acquisition in the calculation of capital gains, and (iv) assuming a higher sale consideration without obtaining a proper valuation report. It is evident that the assessment was conducted with the sole intent of inflating the revenue figures, disregarding the principles of fairness and justice.

8. That, the appellant further craves leave to add, alter or amend the foregoing ground of appeal as and when considered necessary.”

2. The background facts leading to present appeal are such that the assessee did not file any return of AY 2012-13 under consideration. The AO, on the basis of information in his possession revealing that the assessee sold a land on 21.03.2012 for Rs. 30,00,000/- [Stamps Authority Valuation – Rs. 37,01,000/- u/s 50C] and also made a cash deposit of Rs. 11,00,000/- in bank A/c, initiated proceeding of section 147 through notice dated 26.03.2018 u/s 148 calling the assessee to file return. However, the notice issued by AO remained uncompiled by assessee. Thereafter, the AO issued notices u/s 142(1) which were partly complied by assessee. As per notings made by AO in Para 2 of assessment-order, the assessee replied that no ITR was filed since there was only agricultural income. Further, the assessee

Page 3 of 10 not available with him. Hence, the assessee requested AO for giving more time. Thereafter, the AO collected direct information from bank u/s 133(6) and again issued notice giving last opportunity to assessee but this notice also remained uncompiled. Ultimately, the AO completed best judgement assessment u/s 144 wherein he made two additions, namely (i) an addition of Rs. 37,01,000/- equivalent to the Stamps Authority Valuation of sold property, (ii) unexplained cash deposit of Rs. 11,00,000/- in Bank a/c.

Aggrieved, the assessee carried matter in first appeal. During first-appeal, the assessee made submissions whereupon the CIT(A) called remand-report from AO. The AO filed remand-report. After considering assessee’s submissions and remand-report, the CIT(A) decided first-appeal giving a part-relief of Rs. 5,00,000/- out of addition (ii) of Rs. 11,00,000/-. Still not satisfied with the relief granted by CIT(A), the assessee has come in next appeal before us.

3. Ld. AR at the start of hearing submitted that the original assessee in this case was “Shri Khemraj Patidar, Bhopal” who had already expired and presently “Smt. Bhagwati Patidar” is pursuing this appeal as Legal Representative [“L/R”]. He submitted that “Smt. Bhagwati Patidar - L/R is a widowed lady; she is herself aged 90 years and does not have much details/documents but trying to get the issues resolved in her late husband’s case. Ld. AR submitted that he himself is also helping the widowed and 90 years aged lady to serve the profession and humanity and Page 4 of 10 prayer that this Court should give most judicious relief after hearing the facts and issues involved. Ld. DR is also fair enough in accepting the submissions and prayer of Ld. AR.

Issue of capital gain on sale of land:

(i) Page No. 3 of the registered sale-deed of impugned land, available at Page 12 of Paper-Book, clearly mentions that the land was situated in a ‘Village – Bilkhiriya’ outside the municipal limit of Bhopal Nagar

Nigam. He admitted that although the sale-deed does not reflect the exact distance from municipal limit but, however, he has received information that it was outside the distance prescribed in section Page 5 of 10 definition of ‘capital asset’ in terms of section 2(14)(iii) and accordingly the resultant gain is not taxable.

(ii) The AO has assessed full value of consideration of Rs. 37,01,000/-

(Stamps Authority Valuation) as taxable capital gain without giving deduction of ‘cost’. This approach of AO is very much against the ‘mode of computation’ prescribed in section 48 of the Act. Ld. AR pointed out that the impugned land was an ancestral land and even if the details/documents of ‘cost’ were not available, the fair market value of land as on 01.04.1981 has to be allowed as ‘cost of acquisition’ in terms of section 55(2)(b)(i) of the Act, which has not been done by AO.

(iii) The AO has adopted Stamps Authority Valuation of Rs. 37,01,000/- by picking the endorsement made by office of sub-registrar on registered sale-deed dated 21.03.2012 but the factual position is such that the deceased assessee “Late Shri Khemraj Patidar” sold impugned land to one “Shri Lakhan Lal Patidar/Purchaser” on 12.01.2012 for Rs.

20,00,000/- through a Sale-Agreement [Copy at Page 8-9 of Paper-

Book]; received consideration fully in cash; handed over possession to Purchaser; and also gave power of attorney to Purchaser.

Subsequently, “Shri Lakhan Lal Patidar/Purchaser” re-sold impugned land through aforesaid registered sale-deed 21.03.2012 for Rs.

Paper-Book] and at the time of re-sale the Stamps Authority Valuation was Rs. 37,01,000/-. Therefore, in so far the assessee is concerned, his transaction of sale took place on 12.01.2012 and the assessee was nothing to do with the consideration of Rs. 30,00,000/- or the Stamps

Authority Valuation of Rs. 37,01,000/- which are the figures of transaction of re-sale done by Purchaser.

Ltd. Vs. State of Haryana & Anr, Order dated 11.10.2011, de-recognised the unregistered sale-agreements. Therefore, the sale-agreement dated 12.01.2012 being relied by assessee is not acceptable. Furthermore, the registered sale-deed dated 21.03.2012 has been executed by “Shri Lakhan Lal Patidar” as “Power of Attorney Holder” of deceased assessee. Therefore, the transaction of sale of impugned land by deceased assessee is treated as Page 7 of 10 consideration of Rs. 30,00,000/- mentioned therein as well as the Stamps Authority Valuation of Rs. 37,01,000/- are relevant to deceased assessee and have been rightly considered by AO in assessment-order. Hence, the objection No. (iii) raised by Ld. AR is meritless and rejected.

Issue of deposit in bank a/c:

Ld. AR submitted that the entry of Rs. 5,00,000/- is not a cash deposit, it is a deposit of cheque. Further, the cash deposit of Rs. 1,00,000/- was made from agricultural income earned during the year before sale of land. Ld. AR submitted that for a proper examination, verification and adjudication of these transactions, this issue should also be remanded to the file of AO.

Page 8 of 10 but left the issue for wisdom of bench.

Order pronounced in open court on 11/11/2025