BIHARILAL,HOSHANGABAD vs. COMISSIONER OF INCOME TAX (APPEALS), NFAC-DELHI

आदेश/ O R D E R

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

Feeling aggrieved by order of first-appeal dated 15.01.2025 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 23.03.2023 passed by learned Assessment Unit of Income-tax Department [“AO”] u/s 147 r.w.s. 144 & 144B of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2018-19, the assessee has filed this appeal on following grounds:

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“Ground1. Because the very initiation of proceeding us 147 and issuance of notice u/s 148 are bad in law, invalid and therefore, the assessment is liable to be annulled. Ground2. Because the initiation of proceeding u/s 147, 148, and completion of assessment order u/s 144 are bad in law as well as on facts and are liable to be annulled. Ground3. The Learned A.O. has erred in computation of Long-term capital gain on fact that he has not considered the basic exemption limit of Rs. 2,50,000/- Ground4. The Learned A.O. has erred in taking the consideration for sale of land as Rs. 1,29,73,500/- to arrive at capital gain of Rs. 1,29,73,500/- ignoring the consideration shown in documents of transfer of land and in the ITR filed by the appellant in response to notice issued u/s 148. Ground5. The Learned Assessing Officer has erred in passing the assessment order without applying the provisions of Section 50C(2) of the Income Tax Act, 1961, regarding the valuation of the property. The Ld. AO has failed to consider the provisions allowing the taxpayer to dispute the stamp duty value by obtaining a report from a registered valuer under Section 50C(2), which was duly requested by the Appellant verbally during the course of assessment. Ground6. The learned A.O. has erred in treating Cost of Acquisition of land to be Rs. NIL ignoring the Fair Market Value as on 01.04.2001 for the purpose of computation of long-term Capital gains. Ground7. The learned A.O. has erred in treating Cost of improvement of land to be Rs. NIL ignoring the necessary Expenditure incurred on the plots sold. Ground8. That the appellant craves leave to add to amend alter modify substitute withdrawal delete or rescind all or any of the above grounds of appeal on or before the final hearing if necessary, so arises. Ground9. The appellant prays that the order passed shall be quashed, and the additions made therein be deleted, as the same are unjustified, erroneous and contrary to the applicable provisions of law.” 2. The background facts leading to present appeal are such that the AO,

on the basis of information available in INSIGHT Portal of Income-tax

Department revealing certain sale transactions of immovable properties

done by assessee during the previous year 2017-18 relevant to AY 2018-19,

issued notice u/s 148A(b) which remained uncompiled by assessee.

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Thereafter, the AO issued notice u/s 148 for making assessment u/s 147,

followed by notices u/s 142(1) and show-cause notices. However, all notices

remained uncompiled by assessee except that the assessee made limited

compliance by way of filing return of income on 07.02.2022 in response to

notice u/s 148 and filing a part-reply on 12.03.2023/14.03.2023 [Para 2 of

assessment-order]. In the return of income so filed, the assessee declared

aggregate sale proceed of Rs. 4,50,000/- of three (3) properties, cost of

acquisition/ improvement of Rs. 26,49,806/- and taxable long-term capital

gain of Rs. (-) 21,99,806/-. Further in his reply filed to AO, the assessee

submitted that the properties sold by him were disputed and having

litigation. The reply of assessee is extracted by AO in Para 6 of assessment-

order and the same is also re-produced by us in subsequent Para No. 5 of

this order. As against assessee’s submission, the AO assessed aggregate sale

consideration of five (5) properties amounting to Rs. 1,29,73,500/- as

taxable long-term capital gain without giving any deduction of cost and

completed assessment. Aggrieved, the assessee carried matter in first-appeal

but the CIT(A) did not grant relief for lack of evidences/documents. Now, the

assessee has come in next appeal before us.

case record including the orders of lower authorities and the documents

filed in Paper-Book.

assessee to AO during assessment-proceeding; Copy of same available at

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Pages 11-12 of Paper-Book is scanned and re-produced below for an

immediate reference:

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demonstrated that the AO has considered following five (5) transactions of

immovable properties for making impugned addition of Rs. 1,29,73,500/-:

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Sl. Date of Name of Market value Sale Taxed in Amount transaction purchaser (Stamps duty consideration assessee’s value) received hands (% of Market Value)

1 11.10.2017 Manoj Kumar 1,08,18,000/- 12,00,000/- 50% 54,09,000 Gupta

2 11.10.2017 Mo Soab 6,84,000/- 1,00,000/- 50% 3,42,000

3 11.10.2017 Manoj Kumar 56,07,000/- 8,00,000/- 50% 28,03,500 Gupta

4 28.12.2017 Shakeel Ali 19,85,000/- 1,70,000/- 100% 19,85,000 Hasmi

5 28.12.2017 Saeed 24,34,000/- 2,30,000/- 100% 24,34,000 Ajimuddin

Total 1,29,73,500

grievances and prayers of assessee, as under:

(i) Transactions at S.No. 2, 4 & 5:

The assessee has accepted and disclosed these three (3) transactions

in the return of income filed to AO on 07.02.2022 in response to

notice u/s 148. Copy of the return filed by assessee is placed at Pages

13-35 in Paper-Book. Referring to Page 9 of Return [Page 21 of Paper-

Book], it is demonstrated that the assessee disclosed aggregate sale-

proceed of Rs. 4,50,000/-, which consists of Rs. 50,000 (50% share in

Rs. 1,00,000/-) for transaction no. 2 (+) Rs. 1,70,000/- for transaction

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no. 4 (+) Rs. 2,30,000/- for transaction no. 5. Thus, the assessee has

accepted the sale transactions at S.No. 2, 4 & 5 and declared the

capital gain arising therefrom in return of income. However, the

assessee’s limited grievance qua these transactions is such that the

sold properties were disputed and the assessee had to sell them at

much lower prices due to litigation. The assessee’s submission is that

the “actual” sale considerations as received by him were recorded in

the registered sale-deeds and also reported in the return of income;

the assessee did not receive a single penny over and above from the

purchasers. These facts were clearly informed by assessee to AO in

the reply-letter filed (re-produced above). However, the AO has taxed

the Stamps Authority Valuations in assessee’s hands without making

any reference to the Departmental Valuation Officer (DVO) and

without giving benefit of section 50C(2)/(3). Therefore, the assessee

prays for remanding this issue to the file of AO with a direction that

the AO shall make a reference to the Departmental Valuation Officer

(DVO) and finalise taxable amount of these transactions in accordance

with the provisions of section 50C(2)/(3). Ld. AR relied upon (i)

Ramesh Mangal Vs. ACIT, ITA No. 461/Ind/2018, order dated

20.11.2019 (ITAT, Indore), (ii) The Commissioner of Income-tax Vs.

Chandni Bhuchar, ITA No. 653 of 2009, order dated 07.01.2020

(P&H High), and (iii) Kiran Ashok Desai Vs. The PCIT, ITA No.

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1794/Mum/2024, order dated 21.08.2024 (ITAT, Mumbai),

wherein the courts have given such a direction to AO in similar cases.

(ii) Transactions at S.No. 1 & 3:

These two (2) transactions of sale were made with the purchaser

“Manoj Kumar Gupta” but a serious litigation cropped between

assessee and purchaser due to which the deals had to be cancelled.

According to Ld. AR, the assessee has already executed cancellation-

documents of transactions, therefore the transactions stand cancelled

and no capital gain is taxable. Ld. AR further narrated that the

assessee has also developed a dispute with the counsel involved in

execution of cancellation-documents, therefore the counsel has not

provided copies of cancellation-documents to assessee. The assessee

is, however, making all efforts to obtain cancellation-documents and

will file the same to AO. Accordingly, in the situation, the assessee

prays that this issue must also be remitted to the file of AO for a fresh

adjudication after examining the evidences of cancellation to be filed

by assessee. Ld. AR makes a further request that in the event the

assessee is unable to file the evidences of cancellation or the AO is not

satisfied with the assessee’s claim of cancellation for any reason, a

further direction should be given to the AO for making a reference to

the DVO and finalise the taxability of these transactions in accordance

with the provisions of section 50C(2)/(3).

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(iii) Deduction of cost – in all five (5) transactions:

Ld. AR submitted that the AO has taxed the entire sale-consideration

of properties as ‘capital gain’ without giving any deduction for cost of

acquisition/improvement allowable to assessee, therefore the income

assessed by AO is against the provisions of section 45(1) r.w.s. section

48 and 55(1)/(2) of the Act. Therefore, the AO must be directed to give

deduction of cost to assessee. Ld. AR acknowledges that the assessee

shall file required details/documents to AO in this regard.

orders of lower authorities yet was fair enough in accepting that the prayers

made by assessee may be accepted. However, Ld. DR submitted that the

bench must give stricter directions to the assessee for co-operation and

filing of details/documents as and when called by AO without seeking

unnecessary adjournments.

narrated above. Considering the totality of facts of case and the submissions

of both sides, we find merit in the prayers made by the assessee/Ld. AR as

narrated above. Accordingly, we remit following issues to the file of AO for a

fresh adjudication:

(i) The issues relating to the transactions at S.No. 2, 4 & 5 are restored

to the file of the AO with a direction to make a reference to the DVO

and re-compute taxable capital gains in accordance with provisions of

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section 50C(2)/(3) after affording reasonable opportunity of being

heard to the assessee.

(ii) The issues relating to the transactions at S.No. 1 & 3 are restored to

the file of the AO for fresh adjudication after examining the evidences

relating to cancellation of transactions to be filed by the assessee. In

case the AO is not satisfied with the claim of cancellation or in the

event of non-furnishing of such evidences, the AO shall make a

reference to DVO and re-compute the capital gains in accordance with

provisions of section 50C(2)/(3) after affording reasonable opportunity

of being heard to the assessee.

(iii) We further direct the AO to allow the cost of acquisition/improvement,

as admissible u/s 48 r.w.s. 55(1)/(2) of the Act after carrying out

necessary exercise and after verification of details and documents to

be furnished by the assessee.

proceedings and to file all requisite details and evidences as and when called

for by the AO, without seeking unnecessary adjournments.

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Order pronounced in open court on 19/02/2026

Sd/- Sd/-

(PARESH M. JOSHI) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER

Indore

िदनांक/Dated : 19/02/2026

Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Senior Private Secretry Income Tax Appellate Tribunal Indore Bench, Indore

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