PALANISAMY RANI,ERODE vs. PCIT, COIMBATORE

The appeal filed by the assessee is delayed by 79 days in filing the appeal before the Tribunal. The assessee has filed a petition for condonation of delay in support of an affidavit as well as medical certificate for the treatment underwent by the assessee. The ld. Counsel for the assessee has submitted that the assessee suffering from spinal cord injury and was under treatment, thereby, the assessee could not file the appeal before the Tribunal in time. It was further submission that the delay was neither wilful nor wanton but due to circumstances beyond the control of the assessee and prayed for condonation of delay in filing the appeal and to admit the appeal for adjudication. Against the above submissions, the ld. DR has not raised any serious objection. Since the assessee was prevented by reasonable cause, we hereby condone the delay in filing the appeal and admit the appeal for adjudication.

Brief facts of the case are that the assessee filed the return of income for the assessment year 2017-18 on 04.02.2019 admitting total income of ₹.40,40,240/-. The case was selected for scrutiny through CASS for limited scrutiny and the assessment was completed under section 143(3) of the Act dated 28.12.2019 arriving a total income of ₹.2,06,39,519/-.

Subsequently, by invoking the provisions of section 263 of the Act, the ld. PCIT, after examining the assessment records, noticed that the assessee had transferred a property (Land & building) by means of six registered sale deeds dated 07.03.2017 for a sale consideration of ₹.5,13,55,000/- and the assessee had admitted ₹.1,84,77,500/- @ 35.98% as assessee’s share. The stamp duty value adopted by the stamp valuing authority had been paid by the purchaser for the value of ₹.7,30,98,200/- without any dispute. The assessee had admitted LTCG of ₹.36,17,794/- after deducting indexed cost of acquisition of ₹.12,96,709/-, which was disallowed by the Assessing Officer. While computing the tax, the Assessing Officer assessed building value [₹.41,27,211/- - 35.98% of ₹.1,14,70,848/-) as LTCG and taxed @ 20% applicable for LTCG. Since the Assessing Officer assessed the building as a depreciable asset, then the gain from sale of the building value has to be considered as short term capital gain and to be taxed under normal rate of 30% applicable to the assessee and the long term capital gain of ₹.1,63,89,626/- has to be charged @ of 20%. Since the above issue was not considered in the assessment order passed under section 143(3) of the Act and the same erroneous in so far as it is prejudicial to the interest of the Revenue, the ld. PCIT show-caused the assessee to file the reply. Since the assessee has not filed any explanation/written submission or sought for adjournment, the ld. PCIT set aside the assessment order passed under section 143(3) of the Act dated 28.12.2019 and directed the Assessing Officer to redo the assessment afresh after verification of the facts by affording an opportunity of being heard to the assessee.

On being aggrieved, the assessee carried the matter in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that the ld. PCIT has issued the show-cause notice dated 10.03.2022 and posted for hearing 15.03.2022 without giving sufficient time for preparation of reply, which is against the Income Tax Act. No further opportunity was accorded by the ld. PCIT and prayed for quashing the revision order passed under section 263 of the Act.

On the other hand, the ld. DR submitted that the ld. PCIT may be directed to afford one more opportunity of being heard to the assessee.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In this case, the ld. PCIT issued show-cause notice under section 263 of the Act dated 10.03.2022 and posted for hearing 15.03.2022. It is clear that the assessee was not given sufficient time to file the written submission. The ld. PCIT issued notice dated 10.03.2022 and hurriedly fixed for hearing 15.03.2022 and passed the revision order under section 263 of the Act dated 23.03.2022. In view of the above facts and to meet the ends of natural justice, the exparte order of the ld. PCIT is set aside and we direct the ld. PCIT to afford reasonable opportunity of being heard to the assessee for filing the explanation/reply and after considering the submissions of the assessee, the revision order may be passed afresh in accordance with law.

In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 10th May, 2023 at Chennai.