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2026 Supreme(Online)(ITAT) 10109
INCOME TAX APPELLATE TRIBUNAL (RAJKOT BENCH)
Arjun Lal Saini, Accountant Member, Dinesh Mohan Sinha, Judicial Member
Giants Gandhidham Owners Association – Appellant
Versus
Income Tax Officer – Respondent
ITA No.670/RJT/2025
For the Appellants/Petitioners: Vimal Desai
For the Respondents: Abhimanyu Singh Yadav
The applicability of Section 50C to long-term leasehold interests and the verification of an assessee's legal identity in specific development zones require thorough factual de-novo examination by the Assessing Officer when proceedings are initially conducted without adequate disclosure or cooperation.
Headnote:(A) Income Tax Act, 1961 - Section 50C - Section 2(14) - Section 45 - Assessment proceedings - Reassessment under Section 147 - Appeal against order confirming addition on account of Short Term Capital Gain - Whether provisions of Section 50C applicable to long-term leasehold land - Identity of Association of Persons - Assessee failed to cooperate during original assessment - Matter restored for fresh examination regarding the Gandhidham (Development and Control on Erection of Buildings) Act, 1957. (Paras 14, 15, 16)
Facts of the case:
The assessee, an association of persons, sold five duplexes in Gandhidham during the assessment year 2014-15. The Assessing Officer initiated reassessment proceedings under Section 147 and invoked Section 50C to compute short-term capital gains based on the stamp valuation authority's rates. The assessee challenged the reopening and the applicability of Section 50C, contending the land was leasehold and not a property. The CIT(A) confirmed the addition. Before the Tribunal, the nature of the assessee's identity and the applicability of Section 50C to long-term leasehold rights in Gandhidham were contested.
Findings of Court:
The Tribunal noted that the assessee was not fully registered and had not cooperated during initial proceedings. It further observed that Gandhidham land transactions often involve 99-year leasehold rights, which, in substance, align with ownership. Emphasizing the need to verify the nature of leasehold rights under specific local statues, the Court determined the matter required fresh examination by the Assessing Officer.
Issues: Whether the reopening of assessment was valid and whether the provisions of Section 50C are applicable to the transfer of 99-year leasehold interests in Gandhidham, given the uncertainty regarding the legal status and identity of the assessee.
Ratio Decidendi: Where the identity of the assessee is not clearly established and the underlying asset involves unique long-term leasehold arrangements under specific development acts, it is appropriate to set aside the orders of lower authorities and restore the matter to the Assessing Officer for a denovo examination while ensuring the principles of natural justice are observed.
Result: Appeal allowed for statistical purposes.
| Table of Content |
|---|
| 1. procedural history and factual background of reassessment and section 50c addition. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9) |
| 2. contentions regarding applicability of section 50c to leasehold land. (Para 10 , 11 , 12 , 13) |
| 3. court's decision to restore matter for examination of leasehold status and assessee identity. (Para 14 , 15 , 16 , 17) |
ORDER
Per, Dr. Arjun Lal Saini, AM:
The present appeal has been filed by the assessee, against the order passed by the Learned Commissioner of Income Tax, Appeal, ADDL/JCIT (A)-10, Mumbai [hereinafter referred to as “CIT(A)”] dated 28.08.2025, arising in the matter of assessment order passed u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short ‘the Act’), dated 31.12.2018, relevant to the Assessment Year 2014-15.
2. The Grounds of appeal raised by the assessee are as follows:
1. The reassessment order u/s. 143(3) r.w.s. 147 of the Act is bad in law.
2. The reopening of the assessment u/s. 147 of the Act is bad law.
3. The learned Assessing Officer has erred in law as well as on facts in making addition of Rs. 79,65,900/- on account of short-term capital gain by invoking provisions of Section 50C of the Act. The ld. CIT( A) has erred in law as well as on facts in confirming the same.
3. Succinctly, the factual panorama of the case is that assessee before us is an Individual. Notice under section 148 of the Act, was issued on 19.05.2017, after recording of reasons. The assessee had not filed his return of income in response to notice under section 148 of the Act. Due to change of incumbent, a fresh opportunity have been granted by issue of notice u/s 142(1) of the Act on 01/08/2018. Thereafter, many of the statutory notices u/s 142(1) of the Act had been issued to the assessee. The details of the statutory notice issued, which read as under:
| Sr. No. | Notice u/s | Date of issue | Date of hearing |
|---|---|---|---|
| 01 | 148 | 19/05/2017 | Within 30 days |
| 02 | 142(1) | 01/08/2018 | 16/08/2018 |
| 03 | 142(1) | 27/08/2018 | 04/09/2018 |
| 04 | 142(1) | 04/10/2018 | 12/10/2018 |
| 05 | 144 of the Act | 17/12/2018 | 21/12/2018 |
In response to the said notices, the assessee submitted reply dated 20/08/2018, which bank statement copy only. Then notice u/s 142(1) of the Act dated 27/08/2018 was issued and served upon the assessee, fixing hearing on 04/09/2018. But in response to this notice assessee vide letter dated 06/09/2018 asked adjournment for 2nd week of October, 2018. But it was allowed for 10 days with fixing hearing on 17/09/2018. As per the ITD system, it was observed that the assessee having taxable income but failed to file his return of income. The assessing officer had sent various statutory notices which have been duly received by the assessee. In order to finalize the assessment, the assessing officer had issued various statutory notices, however the assessee failed to establish the details properly. Therefore, a final show cause notice was issued to the assessee on 17/12/2018 to file reply on or before 21/12/2018. In this case, assessing officer had granted sufficient time to explain the reason not showing capital gain on account of sale of property purchased. As the assessee did not cooperate in the assessment proceedings, therefore, assessing officer did not have any other alternative, but to finalize the assessment as per materials available on records.
4. In the assessee’s case, information gathered from Sub-Registrar, Gandhidham, that the assessee, M/s Giants (Gandhidham) Owners Association- Gandhidham through its President, Shri Tejabhai Sadabhai Kangad, they have sold duplex situated at Plot No.265, Ward No.3/B, Adipur-Kutch, during the year. The assessing officer noted that the said properties were sold to different entities and capital gain arises on this transaction, however, no return of income was filed by the assessee. In order to finalize the assessment, the assessing officer had issued a show cause notice on 15/12/2018, as to why the capital gain on sale value of the said property should not con
