SUNITA NAGPAL,KALYAN vs. ITO WARD (3)(2), KALYAN

The Assessee has raised the following grounds of appeal:

Ld. Counsel for the assessee, at the outset, submitted that the assessee is an individual lady and widow of Late Shri Kishan Nagpal. The assessee was residing at Bareilly, Uttar Pradesh, and subsequently shifted her residence to Dombivli, District-Thane, Maharashtra. The assessee had throughout been a housewife and had no independent source of income. Accordingly, as the income chargeable to tax for the assessment year 2018-19 was below the maximum amount not chargeable to tax, no return of income was originally filed u/s 139(1) of the Act.

Ld. Counsel submitted that the assessee's husband, Late Shri Kishan Nagpal, had purchased a plot of land in the year 2000 and had constructed a residential house thereon during the financial year 2000- 01. Upon the demise of her husband in the year 2009, the said residential property devolved upon the assessee by inheritance and the assessee became the absolute owner thereof. Ld. Counsel submitted that, as a consequence, for the purpose of computation of capital gains, the assessee became entitled to the benefit of the cost and period of holding of the previous owner in accordance with the provisions of the Act.

Ld. Counsel submitted that during the financial year 2017-18 relevant to the assessment year 2018-19, the assessee sold the said residential property situated at Bareilly, Uttar Pradesh, vide sale deed dated 05.12.2017 for a total sale consideration of Rs.1,53,55,000/-. The entire sale consideration was received through normal banking channels and was credited to the assessee's bank account. The purchaser deducted TDS u/s 194-IA of the Act and the same stood reflected in Form No. 26AS of the assessee. Thus, the source, nature and character of the receipt were fully identifiable and evidenced through registered conveyance documents, banking records and TDS records.

Ld. Counsel submitted that after the sale of the said property, the assessee purchased another residential flat situated at Dombivli (East), Thane, Maharashtra, by a registered agreement dated 24.05.2018. The total investment in the new residential property, including the purchase consideration, stamp duty, registration charges and other incidental expenses, amounted to Rs.72,64,025/-. The consideration for acquisition of the new residential property was paid through banking channels from the very same bank account, into which the sale proceeds of the earlier property had been credited, namely, State Bank of India. The transaction was duly evidenced by the registered purchase agreement, bank statements and TDS compliance u/s 194-IA of the Act.

Ld. Counsel submitted that on the basis of the sale transaction and after considering the indexed cost of acquisition of the inherited property and the deduction available u/s 54 of the Act on account of investment in the new residential property, the assessee computed her taxable income for the assessment year 2018-19 at Rs.54,643/-, comprising taxable long term capital gain of Rs.2,595/- and bank interest income of Rs.52,048/-. Ld. Counsel submitted that according to the assessee, no tax liability arose as the income remained below the basic exemption limit.

Ld. Counsel for the assessee submitted that subsequently the assessment was reopened u/s 147 of the Act and in response to the notice issued u/s 148 of the Act, the assessee filed return of income on 02.12.2022 declaring total income of Rs.7,52,350/-. Ld. Counsel further submitted that the said income was computed by the tax consultant engaged by the assessee and during the proceedings it was specifically explained that the said computation suffered from inadvertent mistake and that the correct taxable income was only Rs.54,679/-.

Ld. Counsel submitted that during the course of the assessment proceedings, the assessee entrusted all notices, documents and explanations to the then tax consultant at Bareilly with the bona fide belief that the necessary compliance would be made before the Assessing Officer. However, owing to the negligence and failure on the part of the said consultant, the relevant evidence and explanations were not furnished before the Assessing Officer. Consequently, the assessment proceedings culminated in an ex-parte assessment u/s 147 r.w.s. 144B of the Act vide order dated 28.02.2023.

Ld. Counsel further submitted that in the assessment order, although the Assessing Officer himself recorded that the assessee had sold an immovable property for Rs.1,53,55,000/- and purchased an 5 immovable property for Rs.68,39,647/-, he treated the entire sale consideration of Rs.1,53,55,000/- as unexplained money u/s 69A of the Act and the entire investment of Rs.68,39,647/- as unexplained investment u/s 69A of the Act, which is not at all justified. Ld. Counsel for the assessee, therefore, submitted that in the interest of justice, the matter may be restored to the file of the Assessing Officer for fresh assessment after providing adequate opportunity of hearing to the assessee.

Considering the rival contentions and after perusing the material available on record, we deem it appropriate to restore the issues in appeal to the file of the Assessing Officer to examine the contentions of the assessee and decide the issues afresh after providing adequate opportunity of hearing to the assessee. Accordingly, we restore the issues in appeal to the file of the Assessing Officer to decide the same in accordance with law.

In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 29/07/2026