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Facts
The assessee filed an appeal against the order of the CIT(A) which dismissed the appeal on the grounds of non-response. The assessee claimed to have submitted a response on time through the Income Tax Portal. The appeal involved issues related to the set off of gains on sale of immovable properties against the purchase of properties, and depreciation claims.
Held
The Tribunal held that the CIT(A) failed to consider the timely submission of the appellant, leading to a violation of natural justice. Consequently, the appellate order was set aside, and the matter was remanded back to the CIT(A) for a fresh adjudication.
Key Issues
Whether the CIT(A) erred in dismissing the appeal without considering the assessee's timely submission, thus violating principles of natural justice, and whether certain properties could be included in the block for depreciation purposes under Section 50 of the Act.
Sections Cited
143(3), 254, 50, 234A, 234B, 220(2)
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Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI PRABHASH SHANKARDr.
Date of Hearing 03.11.2025 Date of Pronouncement 23.12.2025 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal arising from the appellate order dated 03.01.2025 is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 143(3) r.w.s. 254 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 30.03.2022 for the Assessment Year [A.Y.] 2010-11. P a g e | 2 A.Y. 2010-11 Jayem Properties Pvt. Ltd.
The grounds of appeal
are as under:
1. The Hon’ble CIT(A) has dismissed the appeal on the grounds that no response was received from the appellant. However, the appellant duly submitted its response on 26th November, 2024, through the Income Tax Portal, well within the time frame specified in the notice dated 21st November, 2024 (with a due date of 28th November, 2024). The appellant’s submission was made in good faith and in compliance with the notice. The Hon’ble CIT(A) has failed to consider this timely submission, which amounts to a clear oversight, and has instead wrongly concluded that the appellant did not respond to the notices. Your appellant submits that on the facts and in the circumstances of the case and in law, the failure to consider the submissions before dismissing the appeal is a violation of principles of natural justice and liable to be quashed.
2. The Hon’ble CIT(A) passed an order in favour of the learned Assessing Officer which was passed u/s. 143(3) r.w.s. 254 on the issues which were already decided by the Hon’ble ITAT. Your appellant submits that on the facts and in the circumstances of the case and in law, since the Hon’ble CIT(A) had no new jurisdiction over the issues as the same was already decided by the higher authorities in favour of your appellant, the Hon’ble CIT(A) has exceeded its powers and therefore, such an assessment in itself is bad in law and is liable to be quashed.
2. The Hon’ble CIT(A) erred in not considering the 5 flats purchased during the year (Ashok Garden: F-1901, E-2001, F-2001 and Ashok Tower: C- 1803 and C-1804) as part of the block u/s. 50 on the ground that no depreciation was claimed. The said interpretation is not in line with the provisions of section 50 as the said section does not draw any reference as to whether depreciation has been claimed or not by the assessee. If the asset is eligible for depreciation, then the same may form part of the block as per provisions of section 50. P a g e | 3 A.Y. 2010-11 Jayem Properties Pvt. Ltd.
4. The Hon’ble CIT(A) erred in not allowing the set off of capital loss against the purchase of property at Goa on the grounds that the same was not put to use during the year under consideration. The said interpretation is not in line with the provisions of section 50 as the said section does not draw any reference to when the asset was put to use. If the asset is eligible for depreciation, then the same may form part of the block as per provisions of section 50.
5. The Hon’ble CIT(A) erred in not allowing the depreciation on the property at Goa purchased during the year under consideration.
6. The Hon’ble CIT(A) erred in giving tax credit to the extent of Rs. 79,15,594/- as against credit of Rs. 1,39,03,530/- as appearing in form 26AS.
7. The Hon’ble CIT(A) erred in charging excess interest u/s. 234A, 234B and 220(2).
3. The instant appeal is the second round of litigation. Brief facts of the case are that the return for the relevant year declaring loss of Rs. 21,90,313/-was filed and order u/s. 143(3) of the Act was passed determining the total income at Rs. 4,78,82,330/-. The only issue involved relates to the claim of set off of gains on sale of certain immovable properties against the purchase of properties in terms of section 50 of the Act. Against the said assessment order, the assessee filed an appeal with the CIT(A) who partially allowed the appeal in favor of the assessee. Subsequently, the Department and the assessee filed cross appeal with the ITAT. Most of the issues were decided in favor of the assessee and one of the issues was referred back to the AO for P a g e | 4 A.Y. 2010-11 Jayem Properties Pvt. Ltd. examination which pertained to set off of gains on sale of units of Ashok Towers /Ashok Garden against the purchase of property at Goa as per provisions of section 50 of the Act .was only required to be examined by the AO.
3.1 In the fresh assessment proceeding, the AO issued show cause as to why the as to why the set off of the Short-Term Capital Gain arising out of the transfer of the 5 Flats (Ashok Garden: F- 1901, E-2001, F-2001 and Ashok Tower: C-1803 & C-1804) against the new Goa property should not be denied. Though submission in response was duly made as stated by the assessee, order u/s. 143(3) r.w.s. 254 of the Act was passed making an addition under the head "Income from Capital Gains amounting to Rs. 4,30,15,715/-without allowing the set off of property purchased at Goa.
Against the order, appellant filed the instant appeal. However, the ld.CIT(A) dismissed the appeal on account of non-prosecution as despite several notices issued the assessee failed to respond in support of the grounds of appeal
. The ld.CIT(A) observed that the view adopted by AO was fair and in accordance with law as stipulated in section 50 of the Act, which envisages two conditions necessary for set off gains against the purchase of new property i.e. one was assets should be block P a g e |
5. A.Y. 2010-11 Jayem Properties Pvt. Ltd. of assets and second depreciation was to be allowed. From the facts of the case discussed in the order passed by the AO, it was clear that assessee had taken possession of the flats only on 29.04.2009 and sold the same on 30.12.2009. Thus, it was clear that on the above assets, no depreciation was claimed and neither allowed by the AO. As these flats entered the block on 29.04.2009, the same exited by selling the flats on 30.12.2009. These flats were not existing in the block at the end of the assessment year as depreciation would be computed based on the WDV at the end of the year. As these assets were not part of the block at the end of this year, so no depreciation was claimed by the assessee and was neither allowed by the AO.
4.1 He further observed that during the appeal proceedings, the assessee failed to make any submission and bring out any new facts for consideration. Therefore, action of the AO did not require any interference and the appeal filed by the assessee was dismissed.
The ld.AR has submitted before us that the assessee did make necessary compliance during the appellate proceedings. However, the ld.CIT(A) did not take cognizance of the same. It is contended that the ld. CIT(A) dismissed the appeal on the grounds that no response was received from the appellant. However, the assessee duly submitted its P a g e | 6 A.Y. 2010-11 Jayem Properties Pvt. Ltd. response on 26th November, 2024, through the Income Tax Portal, well within the time frame specified in the notice dated 21st November, 2024 (with a due date of 28th November, 2024). Its submission was made in good faith and in compliance with the notice. The ld. CIT(A) has failed to consider this timely submission, which amounts to a clear oversight, and had instead wrongly concluded that the appellant did not respond to the notices. The ld.DR relied on the orders of authorities below.
We have carefully considered all the relevant facts of the case. On perusal of the appellate order, it appears that the ld.CIT(A) could not evaluate the points of consideration in the absence of any reply from the assessee, mainly on account of certain lack of communication due to e- filing of the reply claimed to have been submitted by the assessee well in time on e-portal. Consequently, appellate order passed by him amounts to violation of the principles of natural justice and fair play .Accordingly, in the substantial interest of justice, we set aside the appellate order and restore the entire matter back to the ld.CIT(A) for passing the appellate order de novo after allowing adequate opportunity of hearing to the assessee.
P a g e | 7 A.Y. 2010-11 Jayem Properties Pvt. Ltd. 7. In the result, the appeal is allowed for statistical purposes.
Order pronounced in the open court on 23/12/2025. NARENDER KUMAR CHOUDHRY PRABHASH SHANKAR (न्याययक सदस्य /JUDICIAL MEMBER) (लेखाकार सदस्य/ACCOUNTANT MEMBER)