NAUSHADAHMED ASEER AHMED,CHENNAI vs. ACIT, NON- CORPORATE CIRCLE-13(1), CHENNAI

Brief facts of the case are that the assessee is an individual and filed his return of income for the assessment year 2016-17 on 31.03.2018 declaring taxable income of ₹.70,66,490/-. The assessee has declared only long term capital gains as income. The case was selected for scrutiny through CASS and notice under section 143(2) of the Income Tax Act, 1961 [“Act” in short] was issued on 23.08.2018 under the category ‘Limited Scrutiny’. Notices under section 142(1) of the Act dated 23.08.2018, 11.10.2018 and 04.12.2018 were issued calling for details. After considering the details furnished by the assessee, the Assessing Officer has completed the assessment under section 143(3) of the Act dated 26.12.2018 by disallowing the entire deduction claimed under section 54F of the Act amounting to ₹.1,60,17,386/-. On appeal, the ld. CIT(A) dismissed the appeal for the reason that there was no response from the assessee against various hearing notices issued for furnishing written submissions to controvert the findings of the Assessing Officer.

On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that the ld. CIT(A) has erroneously upheld the assessment order denying the exemption claimed under section 54F of the Act without discussing any merits of the case. It was further submitted that since the assessee was prevented by reasonable cause, he was unable to furnish any details before the ld. CIT(A) and prayed that one more opportunity may be afforded to substantiate his case.

On the other hand, the ld. DR strongly supported the orders of authorities below.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. Against the disallowance of deduction claimed under section 54F of the Act amounting to ₹.1,60,17,386/-, the assessee preferred further appeal before the ld. CIT(A). However, the assessee has not furnished any written submission to controvert the findings of the Assessing Officer despite various opportunities afforded. Considering the prayer of the ld. Counsel and in order to meet the ends of natural justice, we are of the considered opinion that the assessee shall be afforded one more opportunity of being heard to substantiate its case before the ld. CIT(A). Accordingly, we set aside the appellate order and remit the matter back to the file of the ld. CIT(A) to afford one more opportunity of being heard to the assessee to substantiate his case with suitable explanation and evidences and thereafter decide the issue in accordance with law subject to the condition that the assessee should pay ₹.1,000/- to the State Legal Aid Authority, Hon’ble Madras High Court and produce necessary proof of payment of cost before the ld. CIT(A).

In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 17th October, 2023 at Chennai.