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Facts
The assessee's appeal was filed with a delay of 458 days due to personal and pandemic-related adversities faced by the assessee's partner. The Assessing Officer made additions under Section 56(2)(x) and for alleged unoffered capital gains based on a Joint Development Agreement (JDA) and stamp duty valuation.
Held
The Tribunal condoned the delay, finding the reasons genuine and convincing. The Tribunal set aside the orders of the lower authorities and restored the matter to the Assessing Officer for de novo adjudication, noting that the assessment was made without proper appreciation of the JDA and actual accrual of consideration.
Key Issues
Whether the delay in filing the appeal is justifiable and whether the additions made by the Assessing Officer under Section 56(2)(x) and for capital gains are premature and unsustainable.
Sections Cited
143(3), 56(2)(x), 2(47)(v), 53A, 45(5A)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘F’ BENCH
Before: SHRI AMIT SHUKLA & SHRI PRABHASH SHANKAR
आदेश / O R D E R PER AMIT SHUKLA (J.M): This appeal has been preferred by the assessee against the order dated 16.02.2024 passed by NFAC, Delhi, in relation to the assessment framed under section 143(3) of the Income-tax Act, 1961, for the assessment year 2018-19. 2. At the outset, it is noticed that the appeal has been filed with a delay of 458 days. The assessee has filed an affidavit sworn by Smt. Jaishree Ashok Khatri, partner of the assessee-firm and widow of late Shri Ashok Gaurichand Khatri, setting out the circumstances leading to such delay.
Shree Sai Constructions 3. In the affidavit, the deponent explained that her late husband, who was the managing partner and was solely responsible for the conduct of the firm’s affairs, expired on 02.12.2017. She was thereafter compelled to take over the business amidst deep personal bereavement. In that period, the nation was struck by the unprecedented disruption of the COVID-19 pandemic, further impairing the functioning of business and access to professional assistance. To compound matters, she herself was diagnosed with breast cancer and had to undergo medical treatment. The accountant who had been handling the firm’s financial and tax matters also resigned without handing over complete records.
Owing to this combination of adversities personal tragedy, pandemic disruptions, serious illness, and loss of professional support, the appeal could not be pursued in time. The deponent has affirmed that the delay was neither deliberate nor negligent, but entirely beyond her control.
Having considered the explanation in the affidavit, we find the reasons genuine and convincing. In law, “sufficient cause” must receive a liberal construction to advance the cause of justice rather than to defeat it on technical grounds. We are satisfied that the delay was occasioned by circumstances beyond the assessee’s control. Accordingly, the delay of 458 days is condoned, and the appeal is admitted.
Coming to the merits, the brief facts are that the assessee filed its return declaring income of ₹97,98,640/-. The case was selected for limited scrutiny to verify the sale Shree Sai Constructions consideration of immovable property vis-à-vis stamp duty value. The Assessing Officer observed that the assessee purchased land at Shirgaon, Thane, for ₹62,50,000/- whereas the stamp duty valuation was ₹4,76,84,000/-. He invoked section 56(2)(x) and made an addition of ₹45,00,000/-. Further, upon examining the Joint Development Agreement (JDA), he held that though the assessee disclosed only ₹3,00,00,000/- as sale consideration, the stamp valuation was ₹9,04,16,000/-. Treating the difference of ₹6,04,16,000/- as unoffered capital gain, he brought the same to tax.
In appeal, the ld. CIT(A) confirmed the additions by passing an ex parte order without affording adequate opportunity of hearing to the assessee.
Before us, the learned counsel explained that under the JDA, the assessee was to receive (i) monetary consideration of ₹3,00,00,000/-, which was received and duly disclosed, and (ii) non-monetary consideration in the form of specified constructed premises to be delivered only upon completion of construction. Since no construction was completed and no possession handed over during the year, there was no transfer within the meaning of section 2(47)(v) read with section 53A of the Transfer of Property Act. It was thus submitted that the addition of ₹6,04,16,000/- was premature and unsustainable. The learned counsel further explained that due to the medical condition of the deponent and pandemic disruptions, these facts could not be properly brought before the authorities earlier.
Shree Sai Constructions 9. The learned Departmental Representative, with fairness, did not seriously object to the restoration of the matter for fresh consideration.
We have considered the rival submissions. It is evident that the assessment order was framed without a proper appreciation of the nature of the JDA and the actual accrual of consideration. The learned CIT(A) further compounded the prejudice by confirming the additions ex parte. Such an approach not only deprived the assessee of an effective opportunity of hearing but also led to taxation of amounts which had neither accrued nor arisen in the relevant year.
In these facts, we deem it just and proper to set aside the orders of the authorities below and restore the matter to the file of the Assessing Officer for de novo adjudication. The Assessing Officer shall re-examine the terms of the JDA, the consideration actually received, and the applicability of section 56(2)(x) and section 45(5A), in accordance with law, after giving due opportunity of hearing to the assessee.
In the result, the appeal is treated as allowed for statistical purposes.
Order pronounced on 30th September, 2025.