Income Tax Appellate Tribunal - Rajkot
Giants (Gandhidham) Owners ... vs Income Tax Officer, Ward-1, Gandhidham on 21 April, 2026
आयकर अपीलीय अिधकरण, राजकोट ायपीठ, राजकोट।
IN THE INCOME TAX APPELLATE TRIBUNAL,
RAJKOT BENCH, RAJKOT
BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER
AND
SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER
आयकर अपील सं/.ITA No.670/RJT/2025
िनधारणवष /Assessment Year: 2014-15
Giants (Gandhidham) Owners Income Tax Officer
Association बनाम Ward-1, Gandhidham
Gandhidham Kutch, Kutch, Vs. Income Tax office, Plot No. 32,
Gujarat - 370201 Sector No. 3, Near IFFCO
C/o. Sarda & Sarda, Sakar, 1st Floor, Colony, Gandhidham.,
Dr. Radha-Krishnan Road, Gandhidham Gujarat 370201
Opp. Rajkumar College, Rajkot,
Gujarat - 360001
PAN: AAEAG8503F
(अपीलाथ /Assessee) : ( थ /Respondent)
िनधा रती की ओर से /Assessee by : Shri Vimal Desai, Ld.AR
राज की ओर से/Revenue by : Shri Abhimanyu Singh Yadav, Ld. Sr. DR
सुनवाई की तारीख/Date of Hearing : 23/02/2026
घोषणा की तारीख/Date of Pronouncement : 21/04/2026
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:
Giants (Gandhidham) Owners Association vs. ITO - ITA No.670 /RJT/2025 (AY : 2014-15) 2 "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 Giants (Gandhidham) Owners Association vs. ITO - ITA No.670 /RJT/2025 (AY : 2014-15) 3 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 considered as Rs.76,90,900/-, in terms of section 50C of the Act, with request to furnish the reply on or before 18/12/2018. The assessing officer also noticed that during the initial proceedings, the assessee has not obtained PAN, the said PAN was allotted on 08/12/2018, even though assessee has not field any return of income. Foregoing facts and circumstances, from the records it is clear that the assessee was afforded sufficient opportunities of being heard and to file his return of income in response to notice u/s 148 of the Act.
5.During the year under consideration, information was gathered from Sub- Registrar- Gandhidham, that the assessee, M/s Giants (Gandhidham) Owners Giants (Gandhidham) Owners Association vs. ITO - ITA No.670 /RJT/2025 (AY : 2014-15) 4 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 said properties are sold to different entities and capital gains arise on this transaction and no return of income was filed in this gain. In order to finalize the assessment, the assessing officer, has issued a show cause notice on 15/12/2018, as to why the capital gain on sale value of the said property should not considered as Rs.76,90,900/- in terms of section 50C of the Act, with request to furnish the reply on or before 18/12/2018. The contention of the show cause notice read as under:
"Whereas the re-assessment proceedings are under process in your case for A.Y. 2014-15, on perusal of case record, it is seen that you have not filed Return of Income for A.Y. 2014-15 in compliance to notice u/s 148 of I.T.Act. Further, on perusal of your submission and details available with this office, it is seen that you had sold 5 duplex situated at Plot No. 265, Ward No. 3-B, Adipur-Kachchh, during the year. The details of aforesaid transaction in immovable properties are as under: -
Giants (Gandhidham) Owners Association vs. ITO - ITA No.670 /RJT/2025 (AY : 2014-15) 5 On perusal of above table, it is seen that you have sold 5 duplex for Rs.39,80,000/- during F.Y. 2013-14 and paid total stamp duty of Rs.5,68,670/- for these transactions. The Stamp Valuation Authority had valued the sale consideration/jantri value of aforesaid properties at Rs. 1,15,89,900/-. The aforesaid property was purchased for Rs. 36,24,000/- vide purchase deed No. 7066/2011 dated. 16.11.2011. Since, the immovable property was purchased on 16.11.2011 and sold on 29.08.2013 & 02.09.2013, the assessee had hold the property less than 36 months. Therefore, the profit/gain of Rs. 3,56,000/- (Rs. 39,80,000 Rs. 36,24,000) on sale of aforesaid properties were liable to pay tax as Short Term Capital Gain. Further, you have also shown less sale value in sale deed compare to value adopted by Stamp Valuation Authority in contrast to the provisions of sec. 50C of Income Tax act 1961, hence, you have also liable to pay Short Term Capital Gain on total difference amount of Rs. 76,09,900/- (as per above table). Hence, in your case total taxable short term capital gain comes to Rs. 79,65,900/-.
6. In response to the show cause notice, the assessee has filed written submission, before assessing officer, which are as follows:
"Please note that proposed addition under 50C is not acceptable to us. At the time of actual transfer deed execution, the same was done at actual market value only. Some expenditure related to plot development amounting to Rs.4,32,231/- were also incurred which were part of the cost for Glants (Gandhidham) Owners Association considering the same there will be no profit on sale of plot / capital gain as proposed to be added in issued show cause notice of Rs.3,56,000/-. Details related to expenditure will be submitted in due course.
Difference of stamp duty was paid due to compulsion of Jantri Value consideration. Hence, proposed addition of Rs. 76,09,900/- is not acceptable to us. Hence, we request your sir to refer the matter to DVO as per the provision of section 50C.
Hence, we request your sir to do the needful to refer the matter to DVO as per provisions and oblige.
7. However, the assessing officer rejected the above contention of the assessee and observed that assessee had denied to adopt 50C of the Act based on the sale value determined by the stamp value authority. However, the assessee has not filed any corroborating evidences how he denied the value adopted by the Sub- registrar, Gandhidham. In the situation, the assessing officer adopted the sale value determined by the Sub-Registrar, Gandhidham, until outcome of decision of the DVO/AVO-Rajkot on the valuation of said property referred by assessing officer. The assessing officer observed that as per the sale deed, said property had registered, accordingly, assessee has made the transactions of Rs.1,15,89,900/-, Giants (Gandhidham) Owners Association vs. ITO - ITA No.670 /RJT/2025 (AY : 2014-15) 6 as per Stamp Valuation Authority, less sales consideration as per sale deed comes to Rs.39,80,000/-, difference of capital gain in terms of section 50C of the Act come to Rs.76,09,900/- ( Rs.1,15,89,900- Rs.39,80,000). The short term capital gain on sale of the immovable property was therefore proposed to be adopted at Rs.76,09,900/-. Since, the assessee has not disclosed the sale transaction of the aforesaid immovable property, the amount of Rs.76,09,900/- was treated as short- term capital gain.
8. Hence, there is a short-term capital gain as mentioned in above paras amounting to Rs.3,56,000/- and Rs.76,09,900/- to the assessee. The total amount of the STCG comes to Rs.79,65,900/- (Rs.3,56,000 + Rs.76,09,900) received on the sale of immovable property was assessed as total income of the assessee considering it income under the head 'short term capital gain'.
9. Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the learned CIT(A), who has confirmed the action of the assessing officer. The assessee has contested the reopening proceedings, before learned CIT(A), as bad in law without submitting the reasons for the same. It was noted by the learned CIT(A) that the assessee was a non-filer and the case was reopened on the basis of information received from the Sub-Registrar Gandhidham, on account of registration of properties, whose jantri rate was determined at Rs.76,09,900/-. The notice u/s 148 of the Act was issued on 19.05.2017 and assessment completed u/s 147 of the Act, vide order dated 31.12.2018. These grounds of appeal were dismissed by ld.CIT(A) on grounds that the assessee has not pointed out any discrepancy in the reopening proceedings. On merit, the ld.CIT(A) noticed that the assessee sold properties at value lesser than the jantri rate. The assessee contested the jantri rate and the case was referred to the DVO Rajkot, by the assessing officer, vide letter dated Giants (Gandhidham) Owners Association vs. ITO - ITA No.670 /RJT/2025 (AY : 2014-15) 7 26.12.2018 to value the said properties. As the DVO's report was not available at the time of the finalization of the assessment order, therefore, the assessing officer calculated the short term capital gain on sale of the said properties by taking the jantri value as per section 50C with a note that the S.T.C.G. will be rectified on receipt of the DVO's report. The assessee has challenged the A.O.'s action in invoking the provisions of section 50C of the Act for computing the S.T.C.G. on sale of land and building. The ld. CIT(A) noted that section 50C covers capital assets being land or building, hence the A.O. has rightly initiated the provisions of 50C of the Act.
10.Aggrieved by the order of the Ld. CIT(A), the assessee is in further appeal before us.
11. Learned Counsel for the assessee, argued that the assessee under consideration is an association of persons, which works on mutuality concept and lease land was transferred, in the assessment year under consideration, therefore, provisions of Section 50C of the Act is not applicable, as lease land, is not a property. Therefore, addition made by the assessing officer may be deleted.
12. On the other hand, Ld. DR for the Revenue submitted that original documents of the lease land should be produced before the Bench and division of lease hold land should be identified with the original documents. The assessee never argued before the lower authorities that provisions of section 50C of the Act is not applicable on lease land. Therefore, assessee is required to take a certified copies of this lease land from the Registrar and from there, the assessee should submit the sequence of the events, before the Bench, showing to whom this lease land was transferred in the previous years. Since, the certified copy of original deed which is made in 1954 and the same has not been submitted before the Bench. Giants (Gandhidham) Owners Association vs. ITO - ITA No.670 /RJT/2025 (AY : 2014-15) 8 Besides, it is 99 years lease, which is in substance is nothing but ownership. That is, if the lead period is 99 years than in substance, the assessee is going to be the true owner of the land. Hence, provisions of section 50 C is applicable to the assessee under consideration. There may be mistake in quoting the section 50 C of the Act in the assessment order, however, leasehold rights are capital assets under Section 2(14) of the Act, and transfer of such rights triggers Section 45 of the Act. Besides, the assessee under consideration ( Giants Gandhidham, owners, association) is not a registered organisation, even it does not have PAN number during the assessment year 2014-15. Therefore, it is not a unit for assessment under the Income tax Act and it is mentioned that president of this Giants Gandhidham owners association, in his individual capacity, filed this appeal. It is also not certain whether this assessee is a charitable institution or an association of person. Hence, there is no identity of Giants Gandhidham Owners Association. Therefore, ld.DR submitted that to examine all these issues, the matter may be restored back to the file of the assessing officer for fresh examination.
13. The Ld. Counsel for the assessee, in rejoinder submitted that there is a complete sequence of events and the assessee's case was registered with Sub- Registrar, hence, the transaction is not a fake transaction.
14. 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. We find merit in the submissions of learned DR for the revenue and noted that land on lease for 99 years, in substance is an ownership. We also noticed that Leasehold rights are capital assets under Section 2(14) of the Act and transfer of such rights triggers Section 45 of the Act.We note that Gandhidham is a special case due to its Giants (Gandhidham) Owners Association vs. ITO - ITA No.670 /RJT/2025 (AY : 2014-15) 9 historical development model, which materially affects land transactions. There is predominance of leasehold tenure and Land in Gandhidham was originally allotted by the Government of India (through Kandla/Deendayal Port Trust) on long-term lease (often 99 years) to entities like Sindhu Resettlement Corporation. Subsequent occupants generally hold sub-lease rights for long-term say 99 years. Transfer is not a simple sale of ownership, but often assignment of leasehold rights.Such transfers require permission of the lessor authority (e.g., Port Trust) and payment of transfer fees. All these information, have not submitted by the assessee before the Bench. Therefore, this matter should be restored back to the file of the assessing officer with the direction to examine the Gandhidham (Development and Control on Erection of Buildings) Act, 1957 and adjudicate the issue in accordance with Law.
15. We also find merit in the submissions of learned DR for the revenue to the effect that the assessee under consideration ( Giants Gandhidham, owners, association) is not a registered organisation, even it does not have PAN number during the assessment year 2014-15. Therefore, it is not a unit for assessment under the Income tax Act and it is mentioned that president of this Giants Gandhidham owners association, in his individual capacity, filed this appeal. It is also not certain whether this assessee is a charitable institution or an association of person. Hence, there is no identity of Giants Gandhidham Owners Association. Therefore, to examine all these issues, the matter should be restored back to the file of the assessing officer for fresh examination.
16. We also find that during the assessment proceedings, the assessee did not cooperate with the assessing officer and did not submit the required documents and details before the assessing officer, as noted by us in above paras of this order. The Ld. Counsel for the assessee cited various judgments pertaining to section Giants (Gandhidham) Owners Association vs. ITO - ITA No.670 /RJT/2025 (AY : 2014-15) 10 50C of the Act, however, as we have noted that identity of assessee is in dark and purchase and sale of land is governed by special provisions in Gandhidham, therefore, these case laws cited by the Ld. Counsel are not applicable to the assessee's fact. For the reasons given above, we are of the view that the order of the CIT(A) on this issue requires to be set aside and the issue needs to be looked into afresh by the assessing officer in the light of the observations as set out above. We hold and direct accordingly. The assessing officer will afford opportunity of being heard to the assessee before deciding the issue. The assessee will also be at liberty to let in further evidence to substantiate it's case. For statistical purpose, the appeal of the assessee is treated as allowed.
17. In the result, appeal filed by the assessee is allowed for statistical purposes.
Order is pronounced in the open court on 21/04/2026.
Sd/- Sd/-
(Dr. Dinesh Mohan Sinha) (Dr. Arjun Lal Saini)
ाियक सद / Judicial Member लेखा सद /Accountant Member
Rajkot
Date:21/04/2026.
आदे श की ितिलिप अ ेिषत/ Copy of the order forwarded to :
अपीलाथ / The Assessee
थ / The Respondent
आयकर आयु / CIT
आयकर आयु (अपील)/ The CIT(A)
िवभागीय ितिनिध, आयकर अपीलीय आिधकरण, सूरत/ DR, ITAT, Rajkot
गाड फाईल/ Guard File
By order,
(Truce// Copy)
Assistant Registrar/Sr.PS/PS
ITAT, Rajkot