ITAT Ahmedabad Upholds Rs. 1.5 Crore Capital Gains Tax on Land Sale, Rejects Assessee’s Appeal
The present appeal has been filed by an individual named Gajiben Mahotji Thakor (Appellant) against the Income Tax Officer, Ward 3(3)(8), Ahmedabad (Respondent) in the Income Tax Appellate Tribunal (ITAT) “B” Bench, Ahmedabad, before Smt Annapurna Gupta (Accountant Member) and Shri Siddhartha Nautiya (Judicial Member). The case was heard before the tribunal on October 13, 2025, and the final ruling was announced on October 30, 2025.
The appeal has been registered, challenging an order dated March 28, 2023, issued by the CIT(A), NFAC Delhi, under Section 250 of the Income Tax Act, 1961, related to the assessment year 2011-12. The case revolved around the addition of Rs. 1.5 crore as capital gains, made by the Income Tax Officer (ITO) after reopening her assessment.
Key Arguments of Assessee:
- AO did not provide full reasons for reopening, only an abstract.
- Notice issued under Section 148/143(2) to inspect the ITR (Income Tax Return) filed by the assessee in response to notice under Section 148 of the Act, it was issued by the ITO, Ward-3(3)(2); on the other hand the order issued under Section 147 was issued by the ITO, Ward 3(3)(8), in the absence of any fresh notice under Section 143(2) of the Act. Therefore, it was an invalid jurisdiction.
- No capital gains should apply because co-owners were not taxed similarly.
- Sought the benefit of the indexed cost of acquisition (not claimed previously).
Findings of Tribunal:
1. Reopening of Assessment Valid:
- Previously, the assessee claimed that the reopening of assessment under Section 147 was valid; however, the tribunal has rejected this claim of the assessee. It was discovered that the reasons recorded by the Assessing Officer were properly dated and approved, and the assessee failed to produce any evidence that a full copy of the reasons was not shared.
2. Jurisdictional Objection Rejected:
- According to the assessee, the assessment was performed by a completely different assessing officer than the one who issued the initial notices. Therefore, it was an invalid jurisdiction. However, the tribunal highlighted that under Section 127, such transfers between officers in the same city are valid and do not require the issuance of fresh notices or separate hearings. Thus, the procedure was held valid.
3. Capital Gains Taxable:
- In the present case, the assessee jointly owned land, with his share being Rs. 1.5 crore. The Tribunal endorsed the point of the Assessing Officer (AO) that capital gains had arisen from the sale, especially since the land was converted from agricultural to non-agricultural use before sale.
4. Claims of Equal Treatment Dismissed:
- The assessee contended that in similar cases of other co-owners, no additions were made. However, the Tribunal stated that such non-action did not amount to acceptance by the department. In fact, in one co-owner’s case, similar capital gains were assessed.
5. No Proof of Indexed Cost of Acquisition:
- The assessee demanded the same benefit of indexed acquisition cost given to a co-owner. The Tribunal rejected this plea since no proof of cost was provided, and the claim was raised too late in the proceedings.
Final Ruling of ITAT Ahmedabad:
- The tribunal endorsed the addition of Rs. 1.5 Crore as capital gains and dismissed the appeal filed by the assessee, i.e., Gajiben Mahotji Thakor.