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Facts
The assessee, a co-operative housing society, failed to file a return of income. The AO made additions for sale and purchase of immovable property based on information suggesting a redevelopment agreement. The assessee claims the agreement was terminated, no actual redevelopment occurred, and notices were not properly served.
Held
The Tribunal held that the appeal was filed against an ex-parte order. Considering the circumstances, including the claim of non-receipt of notices and the termination of the redevelopment agreement, the matter was restored back to the AO.
Key Issues
Whether the additions made by the AO were justified without proper service of notice to the assessee, and whether the redevelopment agreement's termination affects the capital gains/investment additions.
Sections Cited
144, 69
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Income Tax Appellate Tribunal, ‘D‘ BENCH
आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 25/06/2025 passed by NFAC, Delhi.
In various grounds of appeal the assessee has challenged exparte order passed by AO and ld. CIT(A).
1. 1. 3. The brief facts are that the assessee is a co-operative housing society which only collects contribution from its members towards housing society maintenance charges, property bills etc., No return of income was filed for the year under consideration. The AO based on certain information that assessee had entered into re-development agreement made addition of Rs.41,85,10,250/- for sale and purchase of immovable property, it has been informed that the notice was sent on a wrong e-mail invoked and therefore, assessee was not aware of any such notices. Apart from that ld. CIT(A) within a period of 27 days has given three dates of hearing and has decided the appeal exparte without the merits. Before us assessee has filed following submissions:-
“Appellant is a Co-operative Housing Society, not carrying any business activity. It collects contribution from its members towards housing society maintenance charges, property bills, etc. No return of Income was filed for the year under consideration. The AO made addition of Rs 41,85,10,250 for sale and purchase of immovable property by passing best judgement order u/s 144 of I tax act. The Appellant society had entered into a redevelopment agreement with a Developer in 2014. It was terminated after 9 years in 2023 as nothing was done by the Developer and also the money received was returned back. There was no redevelopment, no sale, no purchase, no demolition nor any construction. Only agreement was signed. Possession of flats was not given to Developer and even today members are still staying in their flats. The AO made addition of Long Term Capital Gains of Rs 35.51 crore for sale of property and Rs 6.33 crore as unexplained investment u/s 69 of the act for purchase of property on basis of Insight portal eventhough there was no redevelopment, no sale nor any purchase of any property. 1) Ground no 1 to 10: Non attendance a) The Ld CIT(A) dismissed the appeal for non-attendance. b) 3 notices of appeal hearing were Issued within a period of 27 days (23/05/2025 to 20/06/2025) and the appeal was dismissed c) The Appellant did not receive any notice of Appeal hearing from Ld. CIT(A). d) The Correct pan number of Appellant society is AAAAM6011G whereas the notices and Assmt order have wrong pan number AADAM4423H mentioned. The Appellant was not aware of the wrong pan number AADAM4423H. e) The assessment and appeal notices were sent to email ID of "abravani66@gmail.com" and "abravani872@yahoo.in" which do not belong to appellant. f) The appellant tried to reset the user ID and password and finally on 7th August 2024, the password was reset and appellant coule downioad the Assessment order for the relevant year. g) Proper opportunity of being heard was not granted to Appellant. h) The Hon Secretary of the Appellant Society, Mr TD Shinde expired on 25-12-2020. h) An Administrator was appointed and looking after the Societ affairs in 2022 after the old committee was dissolved. i) The non compliance to the notices was for bonafadie reason beyond Appellants control. k) In the interest of justice and equity, the appellant requests for one more opportunity wherein there will be no non- compliance. Ground no 11 to 16: Addition of Long Term Capital gains of Rs 35.51 crores for sale of Immovable Property and Rs 6.33 crore as unexplained investment for purchase of Immovable Property a) There is neither sale nor purchase of any immovable property b) The appellant society entered into a redevelopment agreement with a Developer, Lakhani Builders Pvt Ltd for redevelopment of the existing buildings on 11th July, 2014 c) The individual members are owners of their respective flats and Appellant Society merely entered Into redevelopment agreement on behalf of its members d) The appellant Society received Rs 4 crore from the Developer for redevelopment which included Rs 1 crore Security deposit and Rs 3 crore part amount of Hardship Compensation to be paid to the members e) The said agreement was terminated on 29-11-2023 as no redevelopment took place f) The appellant also refunded the amount of Rs 4 crore back to the Developer vide cheq dt 23-11-2023 g) Only the agreement was signed, possession was never given to the developer. There is no sale, no purchase and no redevelopment. The buildings are as it is and not demolished. h) The entire process of redevelopment is terminated and no construction activity has been carried out till date 1) The said buildings are still occupled by the members of the society. The members have not vacated the flats nor given any possession to the Developer J) Enclosed recent photographs of the society taken on 20-11- 2025, which shows there is no redevelopment. k) Hon. Mumbai High court vide order dt 29-4-2024 has appointed Arbitrator for the said dispute. Arbitration proceedings are still going on as on date.
1) The AO made addition of Long Term Capital Gains R 35.51 crore only on the basis on the registered redevelopment agreement which is now terminated m) The AO made addition u/s 69 of I tax Act of Rs 6.33 crore as purchase of property only on the basis on Insight portal which is totally wrong. The Appellant did not purchase anything. This was only a Deemed conveyance deed which was registered by Developer for the property already owned since 1982 but was not registered by the land owners in 1982. The said conveyance deed was mandatory for redevelopment. n) We pray that: 1) The flats are owned by individual members and not by Society 2) The Society only acted as a mere representative 3) There is no transfer as Possession was never given to the Developer 4) The Entire process of redevelopment is terminated 5) The transaction itself is aborted before any transfer 6) For 9 years, the developer did nothing and hence the transaction Itself is aborted and no gain is realized 7) We rely on CBDT circular no 9 F.no 8/2/29-IT(A-1) dt 25-2- 1969 which states that Ownership of flats vested in individual members and not in hands of the society.
In view of the aforesaid circumstances that assessee has not received any notice and order has been passed exparte and therefore, in the interest of justice, matter is restored back to the file of AO be decided afresh and in accordance with law after considering the entire facts and material on record and considering the assessee’s explanation.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced on 28th November, 2025.