Reshma Dilip Ramrakhyani Vs ITO (ITAT Rajkot)
Same Property, Similar Treatment: ITAT Deletes ₹5.83 Lakh Addition
Relief Based on Co-Owner Parity
The Rajkot ITAT deleted a ₹5,82,956 addition under Section 56(2)(vii)(b) arising from the difference between the consideration paid for a property and its valuation. The Tribunal relied on the principle of similar treatment of co-owners in relation to the same property.
However, the Bench expressly restricted its decision to the peculiar facts of the case and the smallness of the amount involved. It cautioned that the ruling should not be construed as laying down propositions of law of general application.
The Tribunal also condoned a 387-day delay in filing the appeal, accepting the documented medical emergency involving the assessee’s husband.
Husband’s Cancer Treatment Explained the Delay
The assessee explained that her husband ordinarily handled her tax compliance and administrative affairs. He suffered from diabetes and hypertension and, in April 2025, was diagnosed with squamous cell carcinoma of the tongue.
He underwent a right glossectomy and neck dissection on 25 April 2025, followed by continuing medical treatment. The assessee was his primary caregiver and accompanied him for consultations, diagnostic tests, hospitalisation and follow-up care.
Medical reports, operation notes, discharge records and other supporting documents were furnished before the Tribunal.
The Department opposed condonation, alleging negligence. The Tribunal nevertheless accepted that the delay arose from the family’s medical emergency. Relying on Collector, Land Acquisition v. Mst. Katiji, 167 ITR 471 (SC), it emphasised that the explanation constituting sufficient cause, rather than the length of delay alone, required examination.
Joint Property Purchase Led to Multiple Additions
The assessee purchased a property at Gandhidham jointly with her husband on 23 October 2013 for ₹40 lakh. Stamp duty of ₹2,86,000 and registration charges of ₹40,220 were paid.
Her recorded 50% share of the investment, including incidental costs, was ₹21,65,610.
The Assessing Officer questioned both the source of the investment and the difference between the purchase consideration and the Jantri value. By reverse-working the stamp duty, he arrived at a property value of approximately ₹58.37 lakh.
The assessment included substantive additions under Sections 69 and 56(2)(vii)(b) for the assessee’s share, together with protective additions relating to the other 50% share. The aggregate additions recorded in the order amounted to ₹56,67,996.
CIT(A) Granted Substantial Relief
During the first appeal, the assessee furnished documentary evidence explaining the source and mode of payment. The CIT(A) accepted that her investment was duly explained and deleted the ₹16,65,610 substantive addition under Section 69.
The protective additions were also deleted after consideration of the joint ownership and the Assessing Officer’s remand report.
The dispute concerning valuation, however, remained partly unresolved. A Departmental Valuation Officer’s report valued the assessee’s 50% share at ₹23,35,432, against her share of the stated purchase consideration of ₹20 lakh.
The CIT(A) ultimately sustained ₹5,82,956 under Section 56(2)(vii)(b). This was the substantive addition challenged before the Tribunal.
The order’s narration contains a computational inconsistency: the difference between ₹23,35,432 and ₹20 lakh is ₹3,35,432, whereas the sustained addition was stated as ₹5,82,956. The Tribunal deleted the sustained amount without separately resolving that calculation.
Assessee Raised Three Arguments
The assessee argued that the difference between the DVO valuation and the stated consideration was ₹3,35,432, amounting to approximately 14.36% of the DVO value. She relied on C. B. Gautam v. Union of India, 199 ITR 530 (SC) to support a tolerance-based argument.
She further contended that no corresponding addition had been made and no reassessment initiated in her co-owner’s case, and that she should receive similar treatment.
A third argument concerned the property’s leasehold character and the alleged inapplicability of Section 50C to leasehold land.
These were arguments advanced by the assessee. The Tribunal’s operative reasoning centred on co-owner parity, rather than an independent ruling accepting either the tolerance argument or the leasehold contention.
Co-Owner Precedent Supported Deletion
The Tribunal relied on Late Shri Mohanlal Ambelal Desai, ITA No. 1870/AHD/2015, decided by the Surat Bench.
That decision discussed similar treatment where the Revenue had accepted the relevant capital-gains treatment in other co-owners’ assessments. It referred to CIT v. Kumararani Meenakshi Achi, 292 ITR 624 (Mad) and Chetanbhai Prahladbhai Gami v. ITO, ITA No. 2082/Ahd/2013.
Following that reasoning, the Rajkot Bench deleted the ₹5,82,956 addition and allowed the appeal, subject to its express limitation concerning the facts of the case.
Author’s Comments
The decision provides relief on consistency in the treatment of co-owners, but its express factual limitation deserves equal prominence.
For a parity argument, the strongest supporting material would establish that the co-owners’ transactions, interests and relevant assessment facts are comparable. Acceptance in a completed assessment and the mere absence of proceedings are different factual situations requiring careful presentation.
The ruling should not be cited as establishing a general 15% tolerance under Section 56(2)(vii)(b) or a blanket exclusion for leasehold property. Those arguments were recorded but were not independently decided.
Its practical value lies in the Tribunal’s fact-specific application of co-owner consistency and its acceptance of documented family medical circumstances as sufficient cause for delay.
Cases Discussed
- Collector, Land Acquisition, Anantnag v. Mst. Katiji & Ors., [1987] 167 ITR 471 (SC), Supreme Court, Civil Appeal No. 460 of 1987, decided on 19/02/1987 — relied upon while considering “sufficient cause” and condoning the 387-day delay.
- Mrs. Kamala Lakshmi Narayan v. ITO, [1990] 36 TTJ (Mad.) 121 — relied upon on condonation where delay in filing an appeal arose from circumstances beyond the assessee’s control.
- C. B. Gautam v. Union of India, 199 ITR 530 (SC), Supreme Court — cited by the assessee in support of the contention concerning a 15% tolerance; the Tribunal did not independently decide the appeal on this ground.
- Late Shri Mohanlal Ambelal Desai, ITA No. 1870/AHD/2015, ITAT Surat, Assessment Year 2009-10 — followed for the principle of similar treatment of co-owners; applying this precedent, the Tribunal deleted the ₹5,82,956 addition.
- CIT v. Kumararani Meenakshi Achi, 292 ITR 624 (Mad), Madras High Court — discussed in the precedent followed by the Tribunal for the proposition against differential tax treatment of similarly situated co-sharers.
- Chetanbhai Prahladbhai Gami v. ITO, ITA No. 2082/Ahd/2013, ITAT Ahmedabad, dated 19/07/2019 — discussed in the precedent followed by the Tribunal for similar treatment while assessing the same property.
FULL TEXT OF THE ORDER OF ITAT RAJKOT
Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2014-15, is directed against the order under section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by the National Faceless Appeal Centre (NAC) Delhi/Commissioner of Income-tax (Appeals) [in short ‘NFAC/Ld.CIT(A)’], dated 26.09.2024, which in turn arises out of an assessment order passed by the Assessing Officer u/s 143(3) of the Act, dated 21.12.2016.
2. The appeal filed by the assessee for Assessment Year 2014-15, is barred by limitation by 387 days. The assessee has moved a petition requesting the Bench to condone the delay. Learned Counsel for the assessee, explained the sufficient cause for the delay stating that husband of the assessee, namely, Shri Dilip Jethanand Ramrakhyani ordinarily handles all the compliance related and administrative matters on behalf of the assessee. However, husband of the assessee, has been suffering from severe illness and was on medication as advised by the doctor. The husband of the assessee, is suffering from Diabetes Mellitus and Hypertension. In the Month of April, 2025, the husband of the assessee, has been diagnosed with moderately differentiated squamous cell carcinoma of the tongue (tongue cancer) and underwent a right glossectomy and neck dissection on 25/04/2025. The husband of the assessee, therefore, was hospitalized from 25/04/2025 to 29/04/2025.The assessee, being the spouse of the patient, was the primary care giver and responsible, for accompanying for all the consultations, diagnostic tests, hospitalisation, surgery, pre and post-operative wound care and follow-up visits, and for coordinating his ongoing, medical treatment. The medical crisis of her husband being a case of oral cancer requiring major surgery and radiotherapy, the assessee remained preoccupied with his care and treatment and was consequently unable to attend to her routine affairs, including timely compliance with income-tax proceedings and the filing of the present appeal. The copy of documentary evidences in terms of medical reports, operation notes, discharge summary, MRI reports, subsequent follow up OPD records are submitted by the assessee before the Bench. Therefore, ld. Counsel for the assessee, contended that aforesaid facts and circumstances, being a medical emergency of a family member involving a diagnosis of cancer, major surgery and continuing oncological treatment, constitute sufficient and reasonable cause for the delay in filing the present appeal, and the delay is neither intentional nor attributable to any negligence on the part of the assessee, therefore, delay may be condoned.
3. On the other hand, learned DR for the revenue submitted that in this case no “sufficient cause” was shown by the appellant to explain the unreasonable delay in filing of appeal. Rather, this is a clear case of deliberate inaction or negligence on the part of the appellant. Period of delay is a factor to be considered while considering a delay condonation application, since the law assists those that are vigilant with their rights, and not those that sleep thereupon. Therefore, delay should not be condoned.
4. We have heard both the parties on this preliminary issue.It is a settled position of law that the expression “sufficient cause” in matters of condonation of delay ought to be construed liberally to advance substantial justice, particularly when there is no mala fide intention behind it. We find that delay has resulted because of medical emergency in the family of the assessee, which is narrated above. The Hon’ble Supreme Court in the case of Land Acquisition vs. MST Katiji (1987) (167 ITR 471)(SC), held that the expression ‘sufficient cause’ employed by the legislature in section 5 of the Indian Limitation Act, 1963 is adequately elastic to enable the Courts to do substantial justice to parties by disposing of matters on merits. The Hon’ble Madras High Court in the case of Mrs. Kamala Lakshmi Narayan v.ITO [1990] 36 TTJ (Mad.) 121 held that where the assessee filed appeal with certain delay and explained that she being a non-resident had entrusted the matter to her representatives who had failed to file the appeal and it was noted that the present appeal was filed after changing her representative, it was held that keeping in mind the principles enunciated in the case of Collector, Land Acquisition v. Mst. Katiji [1987] 167ITR471 (SC), the appeal had to be decided on merits in the interest of justice and delay was to be condoned since the delay in filing of appeals was due to reasons beyond the control of the assessee. We note that it is not the length of delay that would be required to be considered while examining the plea for condonation of delay, it is the cause for delay which has been propounded will have to be examined. If the cause for delay would fall within the four corners of “sufficient cause”, irrespective of the length of delay same deserves to be condoned. We find that assessee has explained the sufficient cause and reason for delay therefore we condone the delay in filing the appeal before this Tribunal.
5. Grounds of appeal raised by the assessee are as follows:
1. That, the Ld. CIT(A) has wrongly confirmed the addition of Rs. 5,82,956/-on account of difference in jantri rates u/s 56(2) (vii) (b) of the I.T. Act, 1961, as 50% of share of the assesse.
2. That, the Ld. CIT(A) has wrongly worked out the jantri value without having any evidences and proof and therefore method of computation of jantri value is not based on any evidences.
3. That, the Ld. CIT(A has wrongly considered the jantri value as fair market value without considering valuation report u/s 55A of the I.T. Act, 1961.
4. That, the Ld. CIT(A has wrongly initiated penalty proceedings u/s 274 r.w.s. 271(1) (c) of the I.T. Act, 1961.
5. That, the Ld. CIT(A) has wrongly charged interest u/s 234A, and 234B of the I.T. Act, 1961.
6. That, the findings of the Ld. CIT(A) are not justified and are bad-in-law.
7. The assessee craves to add, amend, alter or delete any of the above grounds of appeals.
8. The facts necessary for disposal of the appeal are stated in brief. The assessee filed her return of income on 28.03.2015, declaring income of Rs.2,70,110/-. The return was processed under section 143(1) of the Income tax Act, 1961 on 03.06.2015. The case was taken up for limited scrutiny assessment and a notice under section 143(2) of the Income tax Act was issued on 02.09.2015 and was duly served upon the assessee. Subsequently, a notice u/s 142(1) along with questionnaire was issued. In response to the notices issued, Authorised Representatives of the assessee attended from time to time before assessing officer and filed the detail details and documents. During the year, the assessee has derived income from house property, brokerage and commission. The detail of brokerage and commission earned during the year was called for with reference to the source for the investment in property, but the same was not produced. It was observed that during the year, the assessee had purchased a property bearing plot no. 94, Block-B NU-3, Gandhidham on 23.10.2013 jointly with Shri Dilip Jethanand Ramrakhyani for Rs. 40,00,000/-. The stamp duty paid for registering the purchase deed was Rs.2,86,000/- and Rs. 40,220/- was paid towards registration charges. Time and again, the assessee was requested to produce the source and evidence for meeting the purchase cost of the said property. It was also observed from the payment of stamp duty that the value of the property (Jantri value) exceeded the amount as shown in the registered purchased deed. In terms of payments of stamp duty, the actual value of the property worked out to Rs. 58,36,735/-. The assessee had shown 50% of the value of the property in her return of income. The detail of holding of the other 50% is not provided. Considering these aspects, a detailed showcause notice was issued on 08.12.2016, the relevant portion of which is reproduced in the assessment order page no.2. In response to the said notice, the assessee submitted its reply before the assessing officer.
9. However, the assessing officer rejected the contention of the assessee and observed that during the course of assessment proceedings, the assessee had at one stage furnished a confirmation in respect of loan taken from one Shri Pawan Khatri. Therefore, the assessing officer, had issued summons to the said person and he had confirmed giving Rs.5,00,000/- to the assessee. Hence, the source for purchase of property to this extent i.e. Rs.5,00,000/- stands explained out of the addition proposed for Rs.30,81,498/-. The assessee had shown 50% ownership of the purchase price of the property at Rs.40 lakhs and the total cost of the property was shown at Rs.21,65,610/- in the assessee’s books inclusive of stamp duty and registration charges. Explanation is received for source to the extent of Rs.5,00,000/- and the balance is unexplained amounting to Rs. 16,65,610/- (Rs.21,65,610- Rs.5,00,000). This amount is treated as met out of undisclosed and unexplained sources and as added to the total income of the assessee under the provision of section 69 of the Act.
10. The assessing officer noticed that jantri value or market value of the property was much higher than that was shown by the assessee in her books. The total difference as per the jantri rates vis-à-vis the value disclosed by the assessee in the purchase deed worked out to Rs.18,36,776/-, and 50% share of the assessee, being Rs.9,18,388/- (Rs.18,36,776/2) was also added to the total income of the assessee under the provision of section 56(2(vii)(b) of the Act.
11. The assessing officer further noticed that the assessee has not been able to provide the details of the other 50% of the joint ownership as claimed. To that extent, Rs.30,81,498/- stands unexplained in the hands of the assessee. Since, the purchase deed is recorded at a price lower than the jantri rates, the portion for which the deed is recorded was treated as having met out of unexplained and undisclosed sources by the assessee, that is, Rs.21,65,610/-. This amount was also treated as met out of undisclosed and unexplained sources and was added to the total income of the assessee under the provision of section 69 of the Act on protective basis.
12. The assessing officer also noticed that jantri value or market value of the property was much higher than that was shown by the assessee in her books. The total difference as per the jantri rates vis-à-vis the value disclosed by the assessee in the purchase deed worked out to Rs.18,36,776/- and 50% share of the assessee, being Rs.9,18,388/- (1836776/2) was already added to the income of the assessee. For the balance 50% for which no explanation is given, a further amount of Rs.9,18,388/- was added to her income under the provision of section 56(2(vii)(b) of the Act on protective basis.
Total protective addition was at Rs.30,83,998/- (Rs.9,18,388+ Rs.21,65,610).
Total substantive addition was at Rs.25,83,998/-(Rs. 16,65,610+ Rs.9,18,388)
This way, assessing officer made total addition in the hands of the assessee to the tune of Rs.56,67,996/- (Rs.30,83,998+ Rs.25,83,998).
13. Against the above, protective and substantive additions, the assessee carried the matter in appeal before the learned CIT(A), who has partly deleted the addition made by the assessing officer. During the appellate proceedings, the assessee has strongly opposed the findings of the assessing officer with regard to addition of Rs. 9,18,388/- made u/s 56(2)(vii)(b) in her written submission filed during the appellate proceedings. The assessee has submitted that assessee has paid the stamp duty amounting to Rs. 2,86,000/- on the purchase of immovable property. However, assessing officer has calculated the fair market value (FMV) i.e., jantri value of the property based on reverse working of the stamp duty paid and has wrongly worked out the purchase value of the immovable property of Rs. 58,36,735/-. The assessee has asserted that action of the assessing officer is merely on presumption and without verifying the jantri value as per the records of the government. It has been submitted that stamp duty is paid at circle rates which are fixed by the state authority, however, the circle rates does not mention the details and description of the property but it uniformly applies to all the properties which are covered in the vicinity of the circle rates. There are several factors which determine the valuation of property such as locational factors and particular condition of that property. However, circle rate disregarded all such fact and adopt a uniform rate for all property in particular area. Further, assessee has submitted that reference to the DVO was made in this case for valuation of the property and DVO has given its valuation report on 26.09.2019. As per the valuation report the estimated value of the 50% share of assessee amounts to Rs. 23,35,432/-. However, the valuation has been conducted by way of considering the date of exclusion of sale deed on 23.10.2013. Whereas the assessee had already paid the Rs. 17,15,000/- till 18.06.2012. Further, valuation report by the DVO has been arrived by taking the date of execution i.e., 23.10.2013 instead of the date on which agreement to say has been entered and the payments were made to the vendor by the assessee. The assessee has also relied on the fact that the valuation as per DVO is Rs. 23,35,432/- whereas value as per sale agreement is Rs. 20,00,000/- and there is minor difference of Rs. 3,35,432/- which should be ignored. From the proper evaluation and appreciation of the findings of the assessing officer and submission/reply and Remand Report, it was seen that assessing officer has invoked Section 56(2)(vii)(b) on the basis of difference between jantri value of the property and actual purchase price of the property and has added back the difference amount Rs. 9,18,388/- in the total income of the assessee. The assessee has submitted that the action of the assessing officer is not in accordance with the provision of the law and has argued that DVO report in this matter may be taken as reference point for arriving the fair market value of the property. In this regard, it is pertinent to note that assessing officer has given his Remand Report and has requested that as per DVO report the fair market value of the property should be taken. Here, it is noted that DVO has arrived the value of 50% share of assessee property at Rs. 23,35,432/-. Considering the valuation arrived at by the DVO in the present case, it was held that fair market value of the property in the hand of the assessee (50% share of the total property) is at Rs. 23,35,432/-. Therefore, assessing officer was directed by ld.CIT(A), to restrict the addition on this account to Rs. 5,82,956/- (9,18,388-3,35,432). Therefore, ld.CIT(A) allowed these grounds of appeal partly.
14. The assessee has also challenged the addition of Rs. 9,18,388/- on account of difference in jantri rates u/s 56(2)(vii)(b) as 50% of the unexplained share. The Ld. CIT(A) noticed that assessing officer has made addition u/s 56(2)(vii)(b) of the Act, in the hand of assessee because the assessee has not furnished any explanation with regard to balance 50% value of the purchase property. The assessee has strongly opposed this finding on the ground that this addition amounts to double addition in the hand of assessee because she had purchased the property in the joint ownership with Dilip ramrakyani. Considering the facts and circumstances of the present case it was seen by ld.CIT(A) that assessee along with Shri Dilip Ramrakhyani has purchased the property and the onus of the 50% value of property only lies on the assessee. If any addition is to be made for the balance 50% it should be made in the hands of Shri Dilip Ramrakhyani. Therefore, it was held that assessing officer has wrongly made the addition of Rs. 9,18,388/- because assessee has not provided the explanation for the same. Therefore, assessing officer was directed by ld.CIT(A) to delete the addition of Rs. 9,18,388/- made u/s 56(2)(vii)(b) on protective basis. Therefore, ld.CIT(A) allowed this ground of the assessee.
15. The assessee has also challenged the addition of Rs. 16,65,610/- made u/s 69 on account of unexplained sources as the 50% share of the assessee.The ld.CIT(A) noted that assessing officer has sought explanation from the assessee during assessment proceedings with regard to balance 50% share of the property amounting to Rs. 30,81,498/-. It has been asked that since this amount is not explained it is proposed to be treated as invested out of undisclosed sources and may be taxed as income under provision of Section 69 of the I.T Act. The assessing officer has noted that assessee has neither attended nor sought any adjournment or furnished any written submission in this regard. It is therefore clear that assessee does not wish to state anything in the matter. Further, assessing officer has noted that during assessment proceedings the assessee had furnished confirmation of loan from Shri Pavan Khatri amounting to Rs. 5,00,000/-. In view of the above confirmation, the assessing officer has held that the source of purchase of property to the extent of Rs. 5,00,000/- stood explained out of the total at Rs. 30,81,498/-. Since, the assessee had shown 50% ownership of the purchase price of the property at Rs. 40,00,000/- and the total cost of property was shown at Rs. 21,65,610/- in the assessee’s books of account. Therefore, assessing officer has held that addition to the extent of Rs. 16,65,610/- ( Rs. 21,65,610- Rs. 5,00,000) is made in the hand of assessee u/s 69 of the I.T Act. The assessing officer has held that this amount should be treated as undisclosed and unexplained sources. However, ld.CIT(A) noticed that assessing officer has invoked Section 69 for making addition of Rs. 16,65,610/-. However, the assessee has submitted that the deeming provision u/s 69 has been wrongly invoked by the assessing officer in the given facts and circumstances of the present case. The assessee has submitted that there is clear documentary evidence with regard to source of investment which has been duly recorded in the books of account maintained by the assessee. The assessee has submitted date wise proof of the payment in her submission filed during appellate proceedings. Considering the explanation and relevant documentary evidence with regard to source of investment in the purchase of property it was seen that assessee has duly explained the source of payment which has been recorded in the books maintained by the assessee. From the reply, it was crystal clear that assessee has fully explained the source of investment and mode of payment through valid documentary evidence. Hence, ld.CIT(A) held that the action of the assessing officer in invoking Section 69 and making addition of Rs. 16,65,610/- was wrong on the part of assessing officer. Accordingly, assessing officer was directed by ld.CIT(A) to delete the addition of Rs. 16,65,610/-, therefore, this ground of appeal was allowed by ld.CIT(A).
16. The assessee has also challenged the addition of Rs. 21,65,610/- on account of unexplained sources u/s 69 of the I.T Act as 50% of unexplained share. The ld.CIT(A) considered the facts of the case, grounds of appeal raised by the assessee, findings of the assessing officer and reply/submission, and Remand report submitted by the assessing officer and case law and judicial pronouncement cited by the assessee during appellate proceedings. The ld.CIT(A) noticed that assessing officer has noted that assessee has not been able to provide the details of other 50% of the joint ownership as claimed. Further, assessing officer has held that since the purchase deed is recorded at a price lower than the jantri rates the portion for which deed is recorded is treated as having made out of unexplained and undisclosed sources by the assessee i.e., Rs. 21,65,610/-. The assessing officer has held that this amount is treated as undisclosed and unexplained sources and therefore added to the total income of the assessee under the provision 69 on the protective basis. The assessee has opposed the addition in her hand because the property was purchased along with Dilip Ramrakhyani on the joint ownership basis. So, the assessee is not responsible for providing the source of investment in the property made on the part of Shri Dilip Ramrakhyani. In this regard, the Remand Report was sought from the assessing officer during the appellate proceedings. The assessing officer in his Remand Report has admitted that contention of the assessee in this regard may be considered. Further, the assessing officer has submitted that the 50% share of Shri Dilip Ramrakhyani, proprietor M/s Royal Dresses i.e., Rs. 61,65,610/- may be assessed separately in the case of Shri Dilip Ramrakhyani for the year under consideration. Further, the assessing officer has reported that the jurisdiction over the case of Shri Dilip Ramrakhyani pertains to ITO Ward 1 Gandhidham. The information regarding transaction may be passed for necessary action. Considering the reply of the assessee and Remand Report of the assessing officer it was seen by ld.CIT(A) that the addition of Rs. 21,65,610/- made u/s 69 does not pertain to the present assessee. The assessing officer has reported that the balance share of the property pertains to Shri Dilip Ramrakhyani. In view of the above, the addition made u/s 69 in the hand of present assessee is patently wrong. Accordingly, assessing officer was directed by ld.CIT(A) to delete the addition of Rs. 21,65,610/- made u/s 69 on the protective basis. Therefore, this ground of appeal was allowed by ld.CIT(A).
17. This way, ld.CIT(A) deleted all the protective additions, and also deleted substantive additions, partly. The ld.CIT(A) sustained the substantive addition to the tune of Rs. 5,82,956/-, being, difference in jantri rates u/s 56(2) (vii) (b) of the I.T. Act, 1961, as 50% of share of the assessee.
18. Therefore, assessee is in appeal before this Tribunal only for substantive addition to the tune of Rs. 5,82,956/-, being, difference in jantri rates u/s 56(2) (vii) (b) of the I.T. Act, 1961, as 50% of share of the assessee.
19. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. Learned Counsel for the assessee submitted that as per Departmental valuation report, the valuation of the property comes to Rs.23,35,432/-, whereas value as per assessee is Rs.20,00,000/-, hence there is difference of Rs.3,35,432/- and in terms of percentage it comes to 14.36%. The Ld. Counsel for the assessee submitted that the assessee’s appeal pertains to the assessment year 2014-15, wherein the tolerance limit of (plus and minus) 15% was taken by the Hon’ble Supreme Court in the case of C. B. Gautam v. Union of India 199 ITR 530 (SC) and wherein the tolerance limit of 15% was waived, therefore, remaining addition to the tune of Rs. 5,82,956/- may be deleted.
20. The Ld. Counsel for the assessee further submitted that assessee is owner of 50% property, however in case of co-owner, no addition was made and no reassessment proceedings was initiated, therefore, the assessee should not be treated differently and assessee should be treated at par with his co-owner and since there is no addition in the hands of the co-owner, therefore, no addition should be made in the assessee’s case under consideration.
21. The Ld. Counsel also submitted that provisions of Section 50C of the Act is not applicable to lease of land and the land under consideration is a lease hold land, therefore provisions of Section 50C is not applicable and for that Ld. Counsel for the assessee took us through paper book page No.43, wherein lease hold land agreement is placed and stated that this land is purely taken on lease basis, therefore provisions of Section 50C is not applicable in the case of assessee under consideration and hence addition sustained by ld.CIT(A) may be deleted.
22. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.
23. We have considered submissions of both the parties and noted that assessee is in appeal before us, only for substantive addition to the tune of Rs. 5,82,956/-, being, difference in jantri rates u/s 56(2) (vii) (b) of the I.T. Act, 1961, as 50% of share of the assessee. We note that assessee should not be treated differently, if the addition is deleted in the hands of the co-owner, for that reliance is placed on the decision of the Co-ordinate Bench of ITAT -Surat in the case of Late Shri Mohanlal Ambelal Desai, vide I.T.A No.1870/AHD/2015, for Assessment Year 2009-10, wherein addition was deleted based on the same facts and circumstances, observing as follows:
“In other alternative submission the AR for the assessee submits that in assessee co-owner’s case the Department has accepted similar Long Term Capital Gain in the assessment order passed under section 143(3) of the Act. The AR of the assessee furnished the copy of assessment order in case of Smt. Prabhodhchandra Ambelal Desai dated 27.09.2013 and in case of Smt. Prabhaben H.Desai in the assessment order dated 27.09.2013 passed under section 147 r.w.s 143(3) of the Act. The AR for the assessee submits that being co-owner the assessee is also entitled for similar treatment. The Revenue cannot treat the assessee indifferently. In support of his submission the AR relied upon the decision of Madras High Court in CIT Vs. Kumar Rani Meenakshi Achi (207) 292 ITR 624 (Mad), decision of Ahmedabad Bench in Chetanbhai Prahaldbhai Gami Vs. ITO (ITA No. 2082/Ahd/2013) dated 19.07.2019 and CBDT Circular No.014(XL-35) dated 11.04.1955
1. On the other hand, the ld. DR for the Revenue supported the order of Lower Authorities.
2. We have considered the submission of both the parties and gone through the orders of Lower Authorities carefully. We have also deliberated on various case laws relied by the AR of the assessee. Before us, the AR of the assessee vehemently submitted that in assessee’s co-owner case, the revenue has accepted similar Long Term Capital Gain in the scrutiny assessment. Copy of the assessment order in respect of two co-owners is placed on record. We have noted that no counter to the submission of the assessee, was made by DR that similar Long Term Capital Gain was accepted in case of co-owner.
3. The Hon’ble Madras High Court in ICT vs. Kumararani Meenakshi Achi (supra) held that during the same assessment year same quantity of wealth in possession of co-sharer is subjected to a lower rate of taxation, it would be highly improper to burden a similarly situated co-sharer with a higher rate of tax. If such an action on the part of the assessing authorities is sanctioned it would militate against the principle of equality of laws enshrined in Article 14 of the Constitution. By following the same principle, the Co-ordinate Bench of this Tribunal in Chetanbhai Prahladbhai Gami vs. ITO in ITA No.2082/AHD/2013 dated 19.07.2019, the Tribunal granted relief to the assessee holding that while making the assessment of the same property the similar treatment should be granted.
4. We have noted that in assessee’s co-owner’s case with respect to the property against the sale of which the assessee claimed Long Term Capital Gain, the AO in assessee’s co-owner case in Prabhodhchandra Ambelal Desai allowed the similar Long Term Capital Gain by passing the following order :
“3. On perusal of records and details submitted by the assessee it was found that the assessee was co-owner having share of 6.25% in the property sold for Rs.2,00,00,001/- on 19.01.2009 situated at Survey No.86, Lunsikui, Navsari. Value of property as per stamp duty valuation was determined at Rs.4,09,01,000/-. The assessee has not declared capital gain as he has not filed Return of Income for AY 2009-10 . The said property was inherited by the assessee. The assessee has submitted valuation report of the property from Govt. Approved Valuer who has arrived value of property at Rs.66,61,020 as on 01.04.1981. The value of the assessee’s share comes to Rs. 4,16,314. Indexed cost as per section 48 of the Act is worked out at Rs.24,22,947/-. As per stamp duty authority the assessee’s share being 6.25% of sale value in the property comes to Rs.25,56,310/-. Thus capital gain comes to Rs. 1,33,363/-, which was taxable in the hands of the assessee. The capital gain of Rs.1,33,363 has now been shown by the assessee in the Return of Income filed in response to notice u/s 148 of the Act. However, the assessee has not declared suo moto Long Term Capital Gain as he has not filed return of Income. The assessee has consciously not filed return of income to avoid payment of tax. Therefore, Penalty proceedings u/s. 271(1)(c) of the Act are initiated on this issue for concealment of income.”
5. We have noted that identical worded assessment order was passed in other co-owner case i.e. Smt. Prabhaben Harshadrai Desai, relevant part of the assessment order is extracted below;:
“3. On perusal of records and details submitted by the assessee it was found that the assessee was co-owner having share of 6.25% in the property sold for Rs.2,00,00,001/- on 19.01.2009 situated at Survey No.86, Lunsikui, Navsari. Value of property as per stamp duty valuation was determined at Rs.4,09,01,000/-. The assessee has not declared capital gain as he has not filed Return of Income for AY 2009-10. The said property was inherited by the assessee. The assessee has submitted valuation report of the property from Govt. Approved Valuer who has arrived value of property at Rs.66,61,020 as on 01.04.1981. The value of the assessee’s share comes to Rs. 4,16,314. Indexed cost as per section 48 of the Act is worked out at Rs.24,22,947/-. As per stamp duty authority the assessee’s share being 6.25% of sale value in the property comes to Rs.25,56,310/-. Thus capital gain comes to Rs. 1,33,363/-, which was taxable in the hands of the assessee. The capital gain of Rs.1,33,363 has now been shown by the assessee in the Return of Income filed in response to notice u/s 148 of the Act. However, the assessee has not declared suo moto Long Term Capital Gain as he has not filed return of Income. The assessee has consciously not filed return of income to avoid payment of tax. Therefore, Penalty proceedings u/s. 271(1)(c) of the Act are initiated on this issue for concealment of income.”
In view of the above aforesaid factual and legal discussion and respectfully following the decision of Madras High Court in Kumararani Meenakshi Achi (supra) and decision of Co-ordinate Bench in Prabhodhchandra Ambelal Desai (supra), the revenue cannot treat the assessee in different way, therefore, the addition to the Long Term Capital Gain added by the AO, confirmed by ld.CIT(A) is deleted. In the result the grounds of appeal raised by the assessee are allowed”.
24. Therefore, respectfully following the binding precedent of the Co-ordinate Bench of ITAT -Surat in the case of Late Shri Mohanlal Ambelal Desai(supra), we delete the addition of Rs. 5,82,956/-. We also emphasise that this decision is rendered on the peculiar facts of this case and having regard to the smallness of the amounts involved, and, therefore, it cannot be construed as laying down propositions of law of general applications.
25. In the result, appeal filed by the assessee, is allowed.
Order is pronounced in the open Court on 28/09/2026.
