Recent ITAT Ahmedabad Ruling
Relief Granted to Assessee in Section 50C
& Cash Deposit Case
Case 1: Section 50C & Cash Deposits
We are pleased to share a recent matter successfully represented by CA Hemant Suthar before the Hon’ble ITAT Ahmedabad, where the decision was delivered in favour of the assessee. The case has been reported in Taxmann 174 taxmann.com 333 (Ahmedabad Tribunal).
Facts of the Case
The assessee did not file a return of income for the relevant year and had sold an immovable property, in which he was a one-third co-owner.
The Stamp Duty Value (SDV) of the property was nearly double the value declared in the registered sale deed.
Due to the assessee’s non-attendance during assessment proceedings, the Learned Assessing Officer (Ld. AO) passed an ex-parte assessment, invoking Section 50C of the Income Tax Act and making an addition accordingly.
Additionally, there were substantial cash and cheque deposits in the assessee’s bank accounts, which were also added to his total income.
At the first appellate stage, the assessee filed additional evidence to justify the cash/cheque deposits and requested a reference to the District Valuation Officer (DVO) for a fair market valuation.
However, the Learned Commissioner of Income Tax (Appeals) [Ld. CIT(A)] rejected this plea, stating that such requests cannot be raised for the first time at the appellate level. The appeal was dismissed, prompting escalation to the Tribunal.
Tribunal’s Analysis
The Tribunal examined the following key aspects:
Right to Fair Valuation under Section 50C: Judicial precedents have consistently held that an assessee has the right to request a DVO valuation if there is a dispute over SDV, even at the appellate stage.
Admission of Additional Evidence: The Tribunal acknowledged that the CIT(A) should have considered the evidence on cash/cheque deposits, as appellate proceedings are meant to ensure justice.
Principles of Natural Justice: Ex-parte assessments often lack balanced evaluation. By ignoring assessee’s supporting evidence, the lower authorities denied fair opportunity.
ITAT Ahmedabad’s Decision
The Hon’ble ITAT Ahmedabad set aside the order of the CIT(A) and directed:
The matter relating to Section 50C addition to be reconsidered after a DVO valuation report is obtained.
The cash/cheque deposit explanations filed by the assessee to be properly examined at the assessment level.
Thus, the Tribunal restored the matter for fresh adjudication, ensuring a fair opportunity to the assessee.
Key Takeaways for Taxpayers
DVO Reference is a Right: Assessees can seek DVO reference under Section 50C even at appellate stages.
Appellate Authorities Must Consider Evidence: New evidence, if crucial, should not be dismissed mechanically.
Natural Justice Principle: Ex-parte assessments can be challenged if they disregard taxpayer’s rights.
Cash Deposit Justification: Proper documentation and timely submission are critical to defending unexplained income additions.
Case 2: TDS on Property Transactions – Prospective Applicability
Further, another matter argued by CA Hemant Suthar before the Hon’ble ITAT Ahmedabad in the case of Shri Aakash Pursottambhai Vaghela v. Income-tax Officer resulted in a favourable outcome for the assessee. The order dated 26.06.2025 has been reported in Taxmann [2025] 176 taxmann.com 372 (Ahmedabad – Trib.).
Key Highlights
- Prospective Applicability of proviso to Section 194IA(2) (Finance Act, 2024 w.e.f. 01.10.2024):
TDS on purchase of immovable property (with multiple owners/sellers) exceeding Rs. 50 lakhs in aggregate applies only prospectively from 01.10.2024. For earlier transactions, TDS was required only if consideration from a single owner exceeded Rs. 50 lakhs. - Prospective Applicability of amendment to Section 194IA (Finance Act, 2022 w.e.f. 01.04.2022):
The requirement to consider both consideration value and stamp duty value for TDS applicability is valid only from 01.04.2022. For transactions before that date, only the consideration value was relevant.
ITAT Ahmedabad’s Decision
The Tribunal ruled in favour of the assessee by deleting the additions made by the Revenue. It reaffirmed that amendments made through Finance Acts must be interpreted carefully regarding their retrospective or prospective effect.
Key Takeaways for Taxpayers
Check Effective Dates of Amendments: Always verify whether new provisions apply prospectively or retrospectively.
No Retrospective Burden: Taxpayers cannot be penalised based on amendments applicable only to future transactions.
TDS in Co-ownership Cases: Payments to each co-owner must be tested individually for the Rs. 50 lakh threshold before 01.10.2024.
Kreston OPR Insight
This ruling highlights the importance of protecting taxpayer rights during assessments and appeals. It reiterates that substantive justice must prevail over procedural technicalities. Taxpayers facing similar issues under Section 50C or with unexplained bank deposits may find strong precedent in this ITAT Ahmedabad ruling.
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