BODDUPALLY ISAC CHINNAI,WARANGAL vs. INCOME TAX OFFICER, WARD-3, WARANGAL

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ITA 1277/HYD/2019Status: DisposedITAT Hyderabad22 April 2021AY 2011-123 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal noted that both the assessment order and the CIT(A)'s order were ex-parte. The Tribunal observed that the AO had not allowed the indexed cost of acquisition while computing the long-term capital gain. In the interest of justice and to provide the assessee with another opportunity, the Tribunal decided to condone the 40-day delay in filing the appeal before the CIT(A). The issue was remanded to the file of the Assessing Officer with a direction to allow the indexed cost of acquisition while computing the capital gain. The AO was also directed to re-compute the assessee's income according to his share in the property denovo, in accordance with law. The Tribunal expressly left undecided the issue regarding the proportionate assessment in the hands of other vendors.

What were the facts?

The assessee, Sri Boddupally Isac Chinnai, sold a house property on July 29, 2010, for Rs. 20,00,000. The sub-registrar's data indicated a market value of Rs. 21,19,920. The Assessing Officer (AO) initiated reassessment proceedings under Section 147, deeming Section 50C applicable. The assessment was completed ex-parte under Section 144 read with Section 147, treating the entire Rs. 21,19,920 as long-term capital gain. The assessee appealed to the CIT(A) with a 40-day delay. The CIT(A) dismissed the appeal without condoning the delay or adjudicating on merits. The assessee then filed an appeal before the Income Tax Appellate Tribunal (ITAT) for Assessment Year 2011-12.

What were the issues?

1. Whether the learned CIT(A) erred in holding that the delay in filing the appeal could not be condoned, without adjudicating the issue on merits, as per Section 246A of the Income Tax Act, 1961? 2. Whether the learned CIT(A) erred in confirming the AO's action of assessing the entire sale consideration of Rs. 21,19,920 as Long Term Capital Gain without considering the indexed cost of acquisition of the inherited property, as per Section 48 of the Income Tax Act, 1961? 3. Whether the learned AO erred by assessing the entire sale consideration in the hands of the appellant without assessing proportionately in the hands of other two vendors as per the sale deed dated 29-07-2010? Assessee's Contentions: The assessee argued that the CIT(A) should have adjudicated the appeal on merits after condoning the delay. The assessee contended that the indexed cost of acquisition of the inherited property should be considered while calculating the long-term capital gain. Furthermore, the assessee argued that the sale consideration should be assessed proportionately among all vendors as per the sale deed. Revenue's Contentions: The judgment records no specific contentions from the revenue.

Which sections of the Income-tax Act were involved?

Section 50C,Section 148,Section 144,Section 246A,Section 48

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad SMC Bench, Hyderabad

Before: Smt. P. Madhavi Devi

Hearing: 08/04/2021Pronounced: 22/04/2021

This is assessee’s appeal for the A.Y 2011-12 against the order of the CIT (A)- 3, Hyderabad, dated 9.5.2019.

2.

Brief facts of the case are that the assessee individual, had sold a house property vide sale document No.1515/2010 dated 29.07.2010 for a sale consideration of Rs.20.00 lakhs while the market value of the aforesaid property as per the sub-registrar data was Rs.21,19,920/-. The Assessing Officer received this information and therefore, was of the opinion that the provisions of section 50C of the I.T. Act are applicable and the capital gain therefrom is chargeable to tax. Therefore, he reopened the assessment by issuance of a notice u/s 148 of the Act. However, none appeared for the assessee. The Assessing Officer, therefore, completed the assessment u/s 144 r.w.s. 147 of the Act and brought the total consideration of Rs.21,19,920/-to tax as long term capital gain.

3.

Aggrieved, the assessee preferred an appeal before the CIT (A) but with a delay of 40 days. The CIT(A), observing that the assessee has failed to explain the reasons for the delay, refused to condone the delay and accordingly dismissed the appeal thereafter, without considering the assessee’s contentions on merit. Thus, aggrieved by the order of the CIT (A), the assessee is in second appeal before the Tribunal by raising the following grounds of appeal: “1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in holding the delay in filing the appeal cannot be condoned, without adjudicating the issue on merits.

2. On the fact and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in confirming the action of Assessing Officer in making the entire sale consideration of Rs. 21,19,920/- as "Long Term Capital Gain" without considering the Indexed Cost of Acquisition of inherited property, which is against the principles of natural justice.

3. On the facts and circumstances of the case and under the law, the learned Assessing Officer erred by assessing the entire sale consideration in the hands of the appellant without assessing proportionately in the hands of other two vendors as per the sale deed dated 29-07-2010.

4. The appellant may add or alter or amend or modify or substitute or delete and/ or rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appeal. Prayer of Relief "The Appellant most respectfully prays that this Hon'ble Tribunal may be pleased to pass judgment in favour of appellant: a. Consider the Indexed Cost of acquisition while calculating Long Term Capital Gain. b. To grant such other relief or reliefs that are deem fit and proper in the interest of Justice”.

4. I find that both the assessment order as well as the CIT(A)’s orders are ex-parte the assessee, and the Assessing Page 2 of 3 Officer while computing the LTCG has not allowed the indexed cost of acquisition at all. Therefore, in the interest of justice and to give the assessee another opportunity, I deem it fit and proper to condone the delay of 40 days in filing of the appeal before the CIT (A) and remand the issue to the file of the Assessing Officer with a direction to allow the indexed cost of acquisition while computing the capital gain and re-compute the income of the assessee according to his share in the property denovo in accordance with law.

5.

In the result, assessee’s appeal is treated as allowed for statistical purposes. Order pronounced in the Open Court on 22nd April, 2021.

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