DEBJANI GUPTA,MUMBAI vs. ITO 26(1)(1), MUMBAI SUBURBAN

The assessee is an individual. The assessment in the present case was completed by the Assessing Officer under section 147 r.w.s. 144 read with section 144B of the Act vide order dated 30.01.2024 determining total income at Rs.62,50,000/-. The case of the assessee was reopened on the basis of information available with the department that the assessee had sold an immovable property for a consideration of Rs.62,50,000/- during F.Y. 2017–18 relevant to A.Y. 2018–19, however, no return of income was filed. Accordingly, notice under section 148 dated 31.01.2023 was issued. During the course of assessment proceedings, the Assessing Officer issued various notices under sections 148 and 142(1), however, as recorded in the assessment order, no compliance was made by the assessee. The Assessing Officer, therefore, proceeded to complete the assessment ex-parte under section 144 of the Act. On merits, the Assessing Officer observed that the assessee failed to furnish any details regarding the nature of property sold, cost of acquisition, cost of improvement or computation of capital gains. In absence of any explanation, the Assessing Officer treated the entire sale consideration of Rs.62,50,000/- as income of the assessee and assessed the same as short-term capital gain.

Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). CIT(A) noted that though several notices were issued during appellate proceedings, the assessee did not make effective compliance. The CIT(A) recorded that the assessee failed to furnish any submissions or evidences in support of the grounds raised and, therefore, proceeded to decide the appeal on the basis of material available on record. The CIT(A) confirmed the action of the Assessing Officer by observing that the assessee had not filed return of income, the assessee had sold immovable property for Rs.62,50,000/-, the assessee failed to disclose capital gains arising therefrom, and no evidence or explanation was furnished despite opportunities. Accordingly, the addition of Rs.62,50,000/- made by the Assessing Officer was upheld and the appeal of the assessee was dismissed. Aggrieved by the order of CIT(A), the assessee has raised the following grounds of appeal:

During the course of hearing before us, the learned Authorised Representative (AR) submitted that the assessee was merely a name-lender/co-owner in the property in question and that, in substance, the entire investment in the said property was made by her husband. It was further contended that the sale transaction was also carried out by the husband and that the name of the assessee was included in the property documents only for the sake of convenience. The learned AR further submitted that the entire capital gains arising from the sale of the said property has already been duly offered to tax in the return of income filed by the husband, and in support thereof, a copy of the return of income evidencing such disclosure was placed on record.

On the other hand, the learned Departmental Representative submitted that both the assessment order as well as the appellate order are ex-parte and the factual claim now

We have heard the rival submissions and perused the material available on record.

1 It is an undisputed position emerging from the record that the assessment has been framed ex-parte under section 144, and the CIT(A) has also decided the appeal ex-parte without any effective representation from the assessee. Further the addition has been made by treating the entire sale consideration of Rs.62,50,000/- as income in absence of any details.

2 Before us, the assessee has raised a specific contention that she was merely a co-owner in name and had neither made any investment in the property nor derived any real income therefrom. It has been submitted that the entire investment in the property was made by her husband out of his own funds, duly evidenced by bank statements and loan disbursement records, and that the sale transaction was also undertaken by him. It has further been contended that the resultant capital gains arising from the said transaction have already been duly offered to tax by the husband in his return of income.

3 In support of the aforesaid contention, the assessee has placed reliance on documentary evidences available on record, including the purchase agreement, sale agreement, bank statements reflecting the flow of funds, loan disbursement

4 In our considered view, the aforesaid contention goes to the root of the matter, as it directly impacts the taxability of income in the hands of the assessee. However, this factual aspect has neither been examined by the Assessing Officer nor by the CIT(A), as both the authorities proceeded ex-parte.

5 In such circumstances, and in the interest of substantial justice, we are of the considered view that the matter requires fresh examination at the level of the Assessing Officer. The Assessing Officer shall verify the ownership of the property, the extent of share of the assessee, if any, and whether the capital gains have already been offered to tax by the co-owner.

6 The assessee is directed to furnish necessary evidences and cooperate in the proceedings. The Assessing Officer shall provide reasonable opportunity of being heard and decide the issue afresh in accordance with law.

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