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Income Tax Appellate Tribunal, AGRA (SMC
Before: SHRI S. RIFAUR RAHMAN
The assessee has filed this appeal against the order of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Mumbai dated 20.06.2025 for the Assessment Year 2012-13.
Brief facts of the case are that the Assessing Officer received information that the assessee has deposited cash of Rs.15,62,500/- in his saving bank account during the year under consideration. Accordingly, notice u/s. 148 of the Income-tax Act, 1961 (“the Act” for short) was issued and served on the assessee. In response, assessee submitted a written submissions and return of income for the assessment year 2012-13, declaring the same income already disclosed in the original return of income. Accordingly, notice u/s. 143(2) and 142(1) of the Act were issued and served on the assessee.
During the assessment proceedings, the Assessing Officer observed that the assessee has declared income from salary of Rs.1,74,000/- and income from business of Rs.1,38,500/- against gross receipts of Rs.4,50,000/-. Besides above, the assessee has declared nil income from capital gains on sale of property of Rs.10,00,000/- after claiming cost of acquisition of Rs.1,01,000/-, cost of improvement of Rs.8,95,000/- and expenditure on transfer of Rs.4,000/-. A separate notice was issued to the assessee to explain through documentary evidence in respect of calculation of capital gains and deposit of cash of Rs.15,62,500/- in his saving bank account and after adjusting Rs.14,50,000/- towards gross receipts from business and capital asset transferred, the assessee was show caused as to why difference of Rs.1,12,500/- should not be added to the income of the assessee. In compliance to the above notice, assessee filed a written submission dated 13.12.2019 through email. After considering the submission of the assessee, the Assessing Officer observed that the assessee has deposited total cash of Rs.15,57,500/- and as per the sale deed of land, assessee has received amount of Rs.8,00,000/- and there is a difference of Rs.7,57,500/-. Further, the 2 | P a g e Assessing Officer observed that the assessee has declared Rs.4,50,000/- as gross business receipts. Accordingly, he added the difference of Rs.3,07,400/- to the total income of the assessee. Further, he determined the short term capital gains of Rs.2,32,800/- and observed that the capital gain declared by the assessee in his ITR is not substantiated by any evidence and there is contradiction to the stamp duty value of the sold property. Accordingly, he treated the same as short term capital gains by determining the same as under :
Full Value of consideration (as per section 50C) Rs.8,40,000/- Cost of acquisition Rs.1,07,200/- Cost of improvement Rs.5,00,000/- Short term capital gains Rs.2,32,800/-
4. Aggrieved with the above order, assessee preferred an appeal before learned CIT(Appeals) and filed the detailed submission before him. After considering the detailed submissions, learned CIT(Appeals) sustained the additions made by the Assessing Officer relating to cash deposits from undisclosed sources and with regard to short term capital gains, he observed that the assessee has filed a valuation report of the property at Rs.11,14,000/-. Same was reproduced in the appellate order from page 12 to page 15 of the order. Based on the above valuation, after giving notice to the assessee and after considering submissions of the assessee, learned CIT(Appeals) enhanced the additions made by the Assessing Officer based 3 | P a g e on the valuation report submitted by the assessee by replacing the sale consideration as per the stamp duty of Rs.8,40,000/- with the valuation report submitted by the assessee.
5. Aggrieved with the above order, assessee is in appeal before ITAT, raising following grounds :
“1. Because having regard to the facts and circumstances of the case and in law, the impugned order passed under section 143(3) read with section 147 and sustained/enhanced by the Learned JCIT(Appeals) is bad in law and void ab initio; all additions and enhancement so made/confirmed are liable to be deleted.
2. Because having regard to the facts and circumstances to the case the reopening under section 147 is illegal and without jurisdiction as there was no tangible material to form a valid 'reason to believe that income had escaped assessment; the Assessing Officer failed to make any independent enquiry or application of mind and acted on mere borrowed satisfaction/suspicion.
3. Because having regard to the facts and circumstances to the case the Assessing Officer erred in law in not supplying the copy of reasons recorded for reopening despite specific requests; the failure to furnish reasons and to dispose of objections, if any, vitiates the entire reassessment proceedings in terms of settled law.
Because having regard to the facts and circumstances to the case the reassessment is further vitiated as the mandatory previous sanction under section 151 was not supplied to the appellant despite request, and in any case appears to have been obtained mechanically without due application of mind; absence of a valid sanction renders the notice and consequent assessment void.
Because having regard to the facts and circumstances to the case there is gross violation of principles of natural justice in as much as the material, if any, relied upon for reopening/assessment was neither confronted nor opportunity of effective rebuttal/cross- examination was afforded.
Without prejudice, the addition of ₹3,07,400/- out of cash deposits of ₹15,62,500/- in the bank account is arbitrary and unsustainable. The Appellant had duly explained the source of cash 4 | P a g e deposits with supporting cash flow/records; the Assessing Officer rejected the explanation on erroneous presumptions without bringing any cogent material on record.
Because having regard to the facts and circumstances to the case the addition of ₹2,32,800/- towards short-term capital gains by estimating/substituting the cost of acquisition is bad in law and on facts. The Assessing Officer could not have adopted an estimated cost in place of the Appellant's evidenced cost without any reference to the Departmental Valuation Officer (DVO) under section 55A; mere estimation is impermissible.
Because having regard to the facts and circumstances to the ₹3,00,000/- case the enhancement of by the Learned JCIT(Appeals) by taking the difference between 28,40,000/- (as adopted by the AO) and the value as estimated by the Appellant's private engineer/valuer is erroneous, contrary to law and facts, and beyond jurisdiction. The enhancement is founded on a private estimate which cannot substitute statutory valuation; further, no reference under section 55A was made and no DVO report was obtained/relied upon.
Because having regard to the facts and circumstances to the case for computing capital gains, only the actual sale consideration disclosed in the registered sale deed or, where applicable, the value adopted/assessed for stamp duty purposes under section 50C can be considered as the full value of consideration'. The Learned JCIT(Appeals) erred in law in effectively importing a notional figure derived from a private engineer's estimate for enhancement. Section 50C does not authorize substitution of the cost of acquisition; and in any case, without a reference to the DVO as per section 55A/section 50C(2), no such substitution/estimation is permissible.
10. Because having regard to the facts and circumstances to the case the Learned JCIT(Appeals) failed to provide proper and effective opportunity of being heard prior to enhancement as mandated under section 251(2); no cogent reasons have been recorded as required under section 250(6). The enhancement, therefore, deserves to be struck down on this ground alone.
11. Because having regard to the facts and circumstances to the case the consequential levy of interest under sections 234A/234B/234C is wrong and without prejudice; the initiation of penalty proceedings, if any, is unwarranted.
That the Appellant craves leave to add, alter, amend, vary or withdraw any ground of appeal and to urge additional grounds at the time of hearing.” 5 | P a g e
6. At the time of hearing, assessee has brought to my notice relevant facts available on record and submitted that the assessee has made the deposit of Rs.15,62,500/- in his bank account, which is out of his salary income and gross business receipts and also the proceed of sale consideration and prayed that the addition proposed by the Assessing Officer is excessive, even though he was supplied the reasons for reopening the assessment for the different value of Rs.1,12,500/- only.
However, while completing the assessment he has enhanced the same without considering the facts available on record. With regard to the enhancement of capital gain by ld. CIT(Appeals) for the land sold, he submitted that the learned CIT(Appeals) cannot enhance the value of property on the basis of the valuation report. He should have considered the actual sale consideration or the stamp duty valuation, which is the fair market value. He prayed that the additions made by the tax authorities are excessive.
7. On the other hand, Learned DR supported the findings of the lower authorities.
8. Considered the rival submissions and the material placed on record. I observe that the assessee has made cash deposit of Rs.15,62,500/- and the relevant sources are, the assessee has received salary as well as there
6 | P a g e is gross receipts from business of Rs.4,50,000/-. Further I observe that the assessee has received sale consideration against the sale of land during the year, even though, the stamp duty value is mentioned in the agreement of Rs.8,40,000/-. However, the assessee has actually received Rs.8,00,000/- as sale consideration. By considering the above three sources of income, the total comes to Rs.14,24,000/- (Rs.1,74,000 + 4,50,000 + 8,00,000 from sale of land). Besides this, the assessee also received money from sale of other house hold assets. Therefore, the source of cash deposits of Rs.15,62,000/- stands explained and no addition is required to be made on this account u/s. 69A of the Act.
9. With regard to the addition made by the Assessing Officer and enhancement made by learned CIT(Appeals), I observe that the assessee has filed his return of income by declaring the long term capital gains with the sale proceeds of Rs.10,00,000/- and claimed the cost of acquisition and cost of improvement and declared the income as nil. The Assessing Officer made the addition for the reason that the assessee has not submitted any document to claim the above transaction. On the other hand, learned CIT(Appeals) enhanced the addition by relying on the valuation report submitted by the assessee. I observe that the assessee has sold land and also other household items totaling to Rs.10,00,000/-. Learned
7 | P a g e CIT(Appeals) has enhanced the addition merely relying on the valuation report, which cannot be considered as fair market value when the stamp duty valuation is also available on record. Therefore, the enhancement made by the ld. CIT(Appeals) is accordingly deleted.
With regard to the addition proposed by the Assessing Officer to the extent of Rs.2,32,800/- as short term capital, we observe that the Assessing Officer has only considered the sale of land and not considered the other household items, which were declared by the assessee. Since the value involved is very small, we do not see any reason to remit the issue back to the file of Assessing Officer. Therefore, we are inclined to give benefit of doubt to the assessee. Accordingly, the grounds raised are allowed.
In the result, the appeal preferred by assessee is allowed.
Order pronounced in the open court on 19.12.2025