HASSAN NARASIMHA MURTHY NARASIMHAN ,BANGALORE vs. INCOME TAX OFFICER, WARD-2(2)(1), BANGALORE

The only issue raised by the assessee is that the learned CIT(A) erred in confirming the addition made by the AO on account of capital gains by invoking the provisions of section 50C of the Act.

The assessee carried the matter before the learned CIT(A) and submitted that the property in dispute does not belong to him, as he only represented the property as a benamidar. However, the learned CIT(A) disagreed with the contention of the assessee, observing that the assessee did not place any document on record suggesting that he is a benamidar. As such, the learned CIT(A) confirmed the order of the AO.

The learned AR before us filed additional pieces of evidence/documents, including Civil Suit bearing No. 1306/2005 before the Civil Judge, demonstrating that the assessee was not the real owner but a benamidar of the property. The learned AR fairly requested to restore the issue to the file of the AO for fresh adjudication in light of the said civil suit, as it was not filed before the lower authorities.

On the other hand, the learned DR submitted that the assessee was already afforded various opportunities before the lower authorities and, therefore, no new documents should be accepted at this stage. However, the learned DR left the matter to the discretion of the Bench.

The learned AR, however, also submitted that the assessment framed under Section 147 is invalid as the statutory conditions specified

We have considered the rival submissions of both the parties and perused the materials available on record. We find that the assessee has filed certain additional evidences before us, including copies of Civil Suit No. 1306/2005 pending before the Civil Judge, to substantiate the contention that he was merely a benamidar and not the real owner of the property in question. It is an admitted position that these documents were not produced before either the Assessing Officer or the learned CIT(A). The additional evidences now placed on record, if found to be genuine and relevant, have a direct bearing on the determination of the issue involved in the present appeal, namely, whether the assessee was the owner of the property liable to capital gains tax and consequently whether the provisions of section 50C of the Act were rightly invoked. In the interest of substantial justice and considering that these documents go to the root of the matter, we deem it appropriate to admit the additional evidences and restore the issue to the file of the Assessing Officer for fresh adjudication after examining the same in accordance with law.

We also note the contention of the learned Authorised Representative that the reassessment proceedings initiated under section 147 of the Act are invalid for non-compliance with the statutory conditions prescribed under the Act. Since the matter is being restored to the file of the Assessing Officer for fresh adjudication, we deem it appropriate to grant liberty to the assessee to raise all legal as well as factual grounds, including the challenge to the validity of the reassessment proceedings

Needless to say, the Assessing Officer shall provide reasonable opportunity of hearing to the assessee and shall decide the issue afresh by way of a speaking order after considering the evidences and submissions that may be placed on record. The assessee is also directed to extend full cooperation and furnish all necessary documents required for the purpose of adjudication.

In the result, the appeal of the assessee is allowed for statistical purposes.