Case Law Details
Rameshbhai Rayjibhai Parmar Vs ITO (ITAT Ahmedabad)
In a case concerning reassessment proceedings for A.Y. 2015-16, the Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) considered appeals relating to both quantum addition and penalty proceedings under Section 271(1)(c) of the Income-tax Act. The Assessing Officer (AO) had reopened the assessment after receiving information that the assessee had sold immovable properties worth Rs.2,23,18,000 during the relevant year. The assessee had neither filed a return under Section 139 nor responded during proceedings under Section 148A.
During reassessment proceedings, the assessee stated that he was an agriculturist earning only exempt agricultural income. He contended that he had executed a power of attorney in favour of another person for conversion of agricultural land into non-agricultural land, but the attorney holder allegedly misused the authority and sold the properties without consent. The assessee claimed that sale consideration mentioned in the deeds was never received by him. He further submitted that legal proceedings had been initiated for cancellation of the sale deeds and that possession of the disputed properties continued with him.
The AO accepted the assessee’s explanation regarding two immovable properties sold for Rs.1.12 crore after noting that those transactions had already been annulled by the Revenue Department. However, with respect to three immovable properties allegedly sold for Rs.1,11,51,800, the AO observed that the assessee had failed to provide documentary evidence proving annulment of sale deeds, retention of possession, institution of legal proceedings, or non-receipt of sale consideration. Consequently, the AO treated the amount as taxable and made an addition of Rs.1,11,51,800.
The Commissioner of Income Tax (Appeals), NFAC, dismissed the assessee’s appeal ex parte due to non-participation and upheld the assessment order. Before the ITAT, the assessee produced documents including an order of lis pendens passed by the Additional Civil Judge, Vadodara, copies of civil suit proceedings, and a panchnama relating to inspection of the disputed properties. The assessee argued that these documents established that the sales were under dispute before the civil court.
The ITAT held that the assessee should be granted another opportunity of hearing since relevant documents had now been produced indicating that the sale transactions were disputed. The Tribunal restored both the quantum and penalty matters to the file of the CIT(A) for fresh adjudication. However, noting that no valid reason had been given for earlier non-appearance, the ITAT directed the assessee to deposit Rs.5,000 in the Prime Minister’s Relief Fund before the appeal is taken up again. Both appeals were allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
Both the appeals relate to the same assessee and pertain to the same Assessment Year (A.Y.) 2015-16; while one is against the order passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred to as “NFAC”) (in short “CIT(A)”), Delhi dated 08.10.2025 in quantum proceedings in appeal against assessment order passed under Section 147 r.w.s. 144 r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred to as the “Act”), the other appeal lies against order of the Ld. CIT(A) confirming the levy of penalty under Section 271(1)(c) of the Act.
2.The brief facts relating to the case are that in this case information was received by the AO that the assessee had sold immovable property during the year amounting to Rs. 2,23,18,000/-. The assessee failed to file any reply during proceedings u/s.148A of the Act to justify these transactions and had also not filed any return u/s.139 of the Act. Accordingly, order u/s.148A(d) of the Act was passed and notice u/s.148 of the Act issued to the assessee. In response to the same, the assessee contended that he was an agriculturist having no taxable income other than agricultural income, which was exempted from tax. That he was having agricultural land and had given his power of attorney to one Mr. Dineshbhai Natubhai Patel to convert this agricultural land into non-agricultural land, but, the power of attorney holder had misused the same and sold the land to a third party without his consent. He contended that no amount had been transferred by the buyer as notified in the sale deed. The assessee stated that three immovable properties were allegedly so sold to Smt. Silaben Kalpeshbhai Patel, Pannaben Thakorbhai Patel and Arunaben Ashokbhai Patel for Rs.1,11,51,800/-. The assessee contended that even the physical possession of the property was still with him and he had filed suit for cancellation of the above sale deeds against both the power of attorney holders and the buyers. He further contended that two immovable properties had been sold for Rs.1,12,00,000/- to Rameshbhai Chunibhai Patel and Amrutbhai Manibhai Patel which again was fraudulently sold by the power of attorney holder. He pointed out that this sale transaction had been cancelled by the Revenue Department. The AO noted that the sale deeds for the sale of two immovable properties for Rs.1.12 Crores have been annulled and, accordingly, drew no adverse inference. With regard to the sale of three immovable properties for Rs.1,11,51,800/-, he found that the assessee had failed to file any evidence to prove the final possession of the property was still with them / the sale deed had been annulled nor any evidence said to have been filed by him against the power of attorney holder and the buyers or any evidence to prove that he did not receive the said sale consideration. Accordingly, the assessee’s explanation for the said sale was not accepted by him and addition made to his income of the sale consideration so received on the sale of the three immovable properties amounting to Rs. 1,11,51,800/-.
3. The matter was carried in appeal before the Ld. CIT(A) where assessee did not participate. The Ld.CIT(A), therefore, in the absence of any evidence filed by the assessee to contradict the findings of the AO, found no cause to interfere with the assessment order and, accordingly, dismissed the assessee’s appeal.
4. Before us, Ld. Counsel for the assessee contended that he was in possession of necessary documents evidencing the fact that he had disputed the sale of the 3 immoveable properties. He pointed out the Court order of lis pendens by the Additional Civil Judge, Vadodara, with respect to the said properties wherein the Hon’ble Court, he pointed out, had allowed the assessee’s application for lis pendens. Copy of the same was placed before us at paper book page nos. 4 to 7. He also filed before us copy of the original Panchnama with respect to the Suit proceedings in Special Civil Suit No.98/2023 filed by the assessee, Rameshbhai Rayjibhai Parmar, against the buyers of the property Pannaben Thakorbhai Patel, Arunaben Ashokbhai Patel & Mr. Dineshbhai Natubhai Patel, wherein inspection of the disputed suit property was carried out. Copy of the Civil Suit filed by the assesse against the illegal sale of his property by the power of attorney holder was also filed before us. Ld. Counsel for the assessee contended that in all fairness, the assessee should be granted an opportunity of hearing, since, he was now in possession of all documents to prove that no sale had been taken place of three immovable properties noted by the AO to have been sold by the assessee of Rs.1.11 Crores.
5. Considering the above contention of the assessee, we are of the view that the assessee should be granted another opportunity of hearing, since, the Ld. CIT(A) has dismissed the appeal ex parte and the assessee has fairly demonstrated before us that he has in his possession documents to prove that he had disputed the sale of the impugned properties before court and hence no addition on account of capital gain earned on the said transaction was warranted. Further noting that no valid reasons have been given by the assesee for not appearing before the Ld. CIT(A), we direct the assessee to pay a cost of Rs.5000/- to the Prime Minister’s Relief Fund and the Ld.CIT(A) is directed to take up the matter only after confirming the payment of the aforestated amount to the designated fund. The penalty appeal is also restored back accordingly to the file of the Ld. CIT(A) to be decided alongwith quantum appeal.
6. In the combined result, both the appeals of the assessee are allowed for statistical purposes.
This Order pronounced on 20/05/2026
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