Gujarat High Court
Principal Commissioner Of Income Tax, ... vs Bhavanbhai R. Bharwad on 1 April, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
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C/SCA/4482/2022 JUDGMENT DATED: 01/04/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 4482 of 2022
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
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Approved for Reporting Yes No
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PRINCIPAL COMMISSIONER OF INCOME TAX, VADODARA-1
Versus
BHAVANBHAI R. BHARWAD
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Appearance:
MR. NIKUNT K.RAVAL, SR.STANDING COUNSEL(5558) for the
Petitioner(s) No. 1
NOTICE SERVED BY DS for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 01/04/2025
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE D.N.RAY)
1. Heard learned Senior Standing Counsel Mr.Nikunt K.Raval
appearing on behalf of the Petitioner. None appears for the
Respondent despite service of notice.
2. Having regard to the controversy arising in the petition, which
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is in narrow compass, the matter is taken up for final disposal.
3. The brief facts of the case are as follows:
3.1 It is the case of the Petitioner-Revenue that, in the present
matter, the assessment under Section 143(3) read with Section 153A
of the Income Tax Act, 1961 ("the Act") was completed on
24.03.2014, wherein, the returned income of Rs.3,07,59,620/- and
agricultural income of Rs. 1,82,920/- as declared by the Assessee
were accepted.
3.2 Subsequently, reassessment order under Section 143(3) read
with Section 147 r.w.s 144 of the Act was finalized on 23.12.2015,
determining total income at Rs.4,33,11,670/- after disallowing claim
of deduction under Section 54B of Rs. 1,25,52,048/-.
3.3 During the reassessment process, it was found that the
Assessee had incorrectly claimed a deduction under Section 54B for
two pieces of land located in Atladara; one with Survey No. 254/55
valued at Rs. 84,88,812/- and the other with Survey No. 223 valued
at Rs. 40,63,236/-. It was observed that no agricultural activities had
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been carried out on these lands, and they were also situated within 8
kilometers of the Vadodara Municipal Corporation limits. Since
these conditions did not meet the requirements of Section 54B, the
total claimed exemption of Rs. 1,25,52,048/- was disallowed and
added back to the Assessee's total income.
3.4 Aggrieved by the said reassessment order, the Assessee
preferred an appeal before the Commissioner of Income Tax
(Appeals) [CIT(A)]. Vide order dated 18.12.2017 bearing No.
CIT(A)-12/936/CC-1/15-16, the CIT(A) allowed the appeal of the
Assessee and deleted the addition of Rs. 1,25,52,048/-. The CIT(A)
observed that under Section 54B, the newly acquired capital asset
must be intended to be used for agricultural purposes within the
prescribed time, and further held that there exists a qualitative
distinction between "agricultural land" and "land used for
agricultural purposes."
3.5 Thereafter, the Petitioner-Revenue challenged the aforesaid
appellate order by preferring an appeal before the Income Tax
Appellate Tribunal (ITAT), registered as ITA No.475/Ahd/2018.
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The learned ITAT, vide common order dated 14.08.2019, dismissed
approximately 628 appeals and cross-objections, including the said
appeal, as withdrawn on the ground that the tax effect in each of the
cases was below the monetary threshold prescribed by the Central
Board of Direct Taxes (CBDT) under Circular No. 17 of 2019 dated
08.08.2019.
3.6 The Petitioner-Revenue subsequently filed Miscellaneous
Application No. 24/Ahd/2020 seeking recall of the order dated
14.08.2019 passed in ITA No. 475/Ahd/2018. It was contended that
the said case falls within the exceptions enumerated under paragraph
10(c) of CBDT Circular No. 3 of 2018 dated 11.07.2018, as
amended by letter bearing F.No.279/MISC.142/2007-ITJ(PT) dated
20.08.2018, inasmuch as it involves a Revenue Audit Objection
which has been accepted by the Department. Hence, the said appeal
is erroneously dismissed as withdrawn applying the said CBDT's
Circular No.17. of 2019 instead of deciding the same on merits.
3.7 However, the learned ITAT, vide impugned order dated
09.09.2020, rejected the Miscellaneous Application No.
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24/Ahd/2020, thereby declining to recall the earlier order dated
14.08.2019 passed in ITA No.475/Ahd/2018. The plea of the
Petitioner-Revenue for reconsideration was not entertained, leading
to the present proceedings.
3.8 Being aggrieved by the Order dated 09.09.2020, passed by the
Income Tax Appellate Tribunal, Ahmedabad, dismissing the Misc.
Application No. 24/Ahd/2020 in ITA No. 475/A/2018 filed by the
Petitioner-Department against the order dated 14.08.2019 passed by
the Ld. ITAT in the ITA No. 475/A/2018, the Petitioner has
preferred the present petition under Article 226 of the Constitution
of India, with the following prayers:
"A. Be pleased to issue writ of certiorari and/or any other
appropriate writ, direction in the like nature quashing and
setting aside the order dated 09.09.2020 passed in Misc.
Application 24/Ahd/2020 in ITA no.475/A/2018 and be
further pleased to allow the said Misc. Application no.
24/Ahd/2020 by restoring the appeal of the department
being no.475/A/2018 for deciding the same on merits;
B. Any other appropriate and just relief/s be granted;"
4. By a detailed judgment and order dated 8.07.2022 in the case
of Principal Commission of Income Tax, Vadodara, Vs. M/s.
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Emtici Engineering Ltd. in Special Civil Application No.9995 of
2021 on identical facts, a Co-ordinate Bench of this Court has
quashed and set aside the order of dismissal of the Appeal by the
Tribunal on low tax effect and remanded the matter back to the
Tribunal so as to enable the Revenue to point out the issue regarding
audit objections that were accepted by the Revenue, before the
Tribunal. The aforesaid judgment was followed by another judgment
of another Co-ordinate Bench of this Court in the Principal
Commissioner of Income-tax (Central) Vs. Hunubhai R.Sangani
reported in 2024:GUJHC:40264-DB.
5. Having heard learned Senior Standing Counsel Mr.Nikunt
K.Raval for the Department and on perusal of the records before us,
we find that the facts of the instant petition and issues arising for
determination of this Court are identical to Emtici and Hanubhai
(Supra). In view of the same, the impugned order dated 09.09.2020
passed in Misc. Application No.24/Ahd/2020 in ITA no.475/A/2018
is hereby quashed and set aside. The said Appeal being 475/A/2018
is restored to the file of the Tribunal and remanded back to the
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Tribunal so as to enable the Revenue to point out the audit
objections which were accepted by the Revenue. Thereafter, the
Department's Appeal being No. 475/A/2018 may be decided on
merits. Considering that the Appeal is of the year 2018, the Tribunal
may accord such priority in hearing the same as it would have
otherwise accorded to the Appeals of the same year. Therefore, the
petition succeeds and is accordingly allowed. Rule is made absolute
to the aforesaid extent. No order as to costs.
(BHARGAV D. KARIA, J)
(D.N.RAY,J)
BINA SHAH
