VIKRAM SINGH,GAUTAM BUDH NAGAR vs. ITO WARD - 2(5), NOIDA

The appeal has been preferred by the Assessee against the order dated 31.12.2018 of Ld. Commissioner of Income Tax (Appeals)-I, Noida (hereinafter referred as Ld. First Appellate Authority or in short Ld. „FAA‟) in appeal No. 425/2017-18/Noida arising out of an appeal before it against the assessment order dated 15.12.2017 passed u/s 144/147 of the Income Tax Act, 1961 (hereinafter referred as „the Act‟) by the ld Assessing officer ITO, Ward-2(5), Noida (hereinafter referred as the Ld. AO).

To verify the transaction an information was called u/s 133(6) of the Act. However, Assessee did not respond. The ld AO observed on the basis of sale deed that the plot bearing Khata No. 267, Village-Duryai, Pargana & Tehysil- Dadri, Noida, Distt. Gautam Budh Nagar was sold. Therefore, proceedings u/s 147 of the Act was initiated and notice u/s 148 of the Act was issued after prior approval of ld Pr. CIT, Noida. The Assessee did not furnish return of income u/s 148 of the Act. The Assessee had also not furnished PAN. Notice u/s 142(1) along with questionnaire was issued. The Assessee submitted that the land sold was agricultural land and was of ancestral nature. The Assessee claimed that it was situated at a distance of 12 kms from the local limits of Dadri Municipality and the land sold by him does not fall in the definition of capital asset as defined in section 2(14) of the Act. However, no return of income for Assessment Year 2010-11 or PAN was submitted therefore, show cause notice u/s 144 of the Act was issued and no reply was received. The assessment was completed u/s 147/144 of the Act holding that land sold was capital asset and that the Assessee had failed to submit ITR for Assessment Year 2010-11 and thus long term capital gain of Rs. 1,31,17,537/- was added to the income of the Assessee. As it was challenged in appeal before the ld CIT(A), the ld First Appellate Authority did not decide the appeal on merits but passed the impugned order by dismissing the appeal for non compliance of mandatory provision of section 249(4) of the Act. The Assessee is now in appeal before the tribunal with the following grounds:- “

Heard and perused the record.

On behalf of the Assessee the ld AR submitted that the Assessee is a Senior citizen and copy of PAN card showing date of birth on 05.03.1924 and the copy of Addhar Card showing the same date of birth, has been placed on record. The ld AR relied on the provisions of section 207 of the Act and submitted that as the there was no liability for payment of advance tax the Assessee was not required to file the return of income, therefore, provision of section 249(4) of the Act were not applicable. 5. The ld DR however, relied on the order of the ld AO to submit that AO has passed a reasoned order holding that the Assessee was liable to file income tax return for Assessment Year 2010-11 and therefore as per section 249(4)(b) the Assessee was required to pay the amount equal to amount of advance tax, which was payable by him. 6. The Bench has given thoughtful consideration to the matter on record and the submissions. As for convenience section 249(4) and section 207 are reproduced below:- “Section 249(4) in The Income- Tax Act, 1995 (4) 1 No appeal under this Chapter shall be admitted unless at the time of filing of the appeal,- (a) where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him; or (b) where no return has been filed by the assessee, the assessee has paid an amount equal to the amount of advance tax which was payable by him:

Perusal of the aforesaid provisions of section 207 of the Act show that it talks about payment of advance tax in regard to total income which would be chargeable to tax. However, an individual resident of 60 years or more who, any time during the previous year, was not having any income chargeable under the head “profit and gains” of business or profession, is not required to pay the advance tax. When read in context of section 249(4)(b) it has to be observed that where no return has been filed by the assessee, then in that case at time of appeal before the CIT(A), the assessee has to pay an amount equal to the amount of advance tax which was „payable by him‟. However, here no advance tax was payable as the assessee was over 60 years of age and not having any income from P&G. Further, the proviso to the Section 249(4) of the Act provides that if sufficient reason are brought on record in writing the CIT(A) may exempt the Assessee from the operation of provision of clause 249(4)(b) of the Act.

The record does not show if the Assessee has claimed before the ld CIT(A) that it was entitled to any exemption by virtue of section 207. The impugned Page | 4 order was passed in the absence of Assessee and the impugned order dated 31.12.2018 in paragraph Nos. 2 to 12 mention that inspite of notice being issued the same could not be served on the Assessee and therefore, there was no representation of the Assessee before the ld CIT(A) and who proceeded to dismiss the appeal by invoking provision of section 249(4)(b) of the Act without giving taking into consideration the facts which assessee claims made him not liable to pay the advance tax.

In the light of the aforesaid circumstances, the Bench is of considered opinion that the Assessee should be given an opportunity to put across its claim of exemption from the application of section 249(4) of the Act before the ld CIT(A). The bench can rely on the Hyderabad bench‟s order in in case of Late Smt Raful Ghani Vs. Asstt. CIT, wherein, the Bench was confronted with similar situation. It observed the facts in para No. 3 and 4 as under:- “3. Since this information was received by the Assessing Officer and it was found that the assessee has not filed any return of income for the relevant A.Y declaring capital gains on the consideration received towards her share (50%) as per the joint development agreement, the Assessing Officer reopened the assessment and after examining the assessee’s contention about the exemption u/s 54F of the Act, the Assessing Officer held that since the assessee has not filed her return of income for the relevant A.Y and has not claimed the exemption u/s 54F of the Act, the same is not allowable to the assessee. He accordingly computed the long term capital gain of Rs.56,62,800/- and brought it to tax.

The learned Commissioner of Income-Tax (Appeals) ought to have considered that the Assessing officer wrongly worked out the capital gain; did not allow the amount of deduction claimed u/s 54 of the IT Act and if the Assessing officer had correctly worked out the income there would not have been any tax payable.

Any other ground that may be urged at the time of hearing”.