SUDHA,GORAKHPUR vs. INCOME TAX OFFICER, WARD 2(2), GORAKHPUR

IN THE INCOME TAX APPELLATE TRIBUNAL VARANASI BENCH, VARANASI BEFORE SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SH. NIKHIL CHOUDHARY, ACCOUNTANT MEMBER ITA No.130/VNS/2025 A.Y. 2016-17 Sudha, vs. Income Tax Officer Basantpur, Geeta Press, Ward-2(2), Income Tax Office, Gorakhpur-273001 Gorakhpur PAN: AVCPS5016P (Appellant) (Respondent) Assessee by: None Revenue by: Shri. Sudipta Paul, Sr. DR Date of hearing: 06.08.2026 Date of pronouncement: 31.08.2026 O R D E R PER NIKHIL CHOUDHARY, AM: This is an appeal filed by the assessee against the order of the ld. CIT NFAC, wherein the ld. CIT(A) vide his order dated 6.01.2024, has dismissed the appeals of the assessee against the orders of the ld. Assessing Officer passed under section 143(3) for the A.Y. 2016-17 on 17.12.2018. The grounds of appeal are as under: - “1. BECAUSE the appellate order dated 06.01.2024 passed by CIT(A) in Appeal No. CIT(A), Gorakhpur/10296/2018-19, impugned in the present appeal, cannot be said to have been passed in accordance with law relating to hearing and disposal of appeal as contained in section 250 of the Income Tax Act 1961. 2. BECAUSE non-compliance to the notices issued by the id. CIT(A) for hearing of appeal was solely for the reason that the appellant was prevented by "sufficient and reasonable cause" (being un-awareness of the notices issued for hearing as income tax matters was being handled by the accountant of the appellant), therefore the CIT(A) had erred in law and on facts in dismissing the appeal ex-parte without considering the "reasonable cause of the appellant.

ITA No. 130/VNS/2025 Sudha WITHOUT PREJUDICE TO ABOVE 3. BECAUSE the authorities below have erred in law and on facts in adopting the stamp duty valuation of property as deemed sales consideration of the property and thereby making addition of Rs.24,32,000/- by invoking the provisions of section 50C of the Act. 3.1 BECAUSE the appellant having objected to the stamp duty valuation of the property during the course of assessment proceedings itself, the authorities below were under a statutory obligation to refer the matter to the valuation officer for redetermination of full value of consideration and failure to make such a reference renders addition/variation of Rs.24,32,000/- as wholly illegal. 3.2 BECAUSE the authorities below on their own should have referred the matter to the Valuation Officer (for valuation of the property at the time of sale) when the appellant had disputed the value assessed by the stamp valuation authority for full value of consideration at the time of proceedings before him. 4. BECAUSE the authorities below have erred in law and on facts in disallowing benefit of indexed cost of improvement aggregating to Rs.27,27,177/- as have been expended by the appellant in two different financial years solely on the ground that source of investment and proof of investment in improvement has not been submitted by the appellant. 4.1 BECAUSE indexed cost of improvement aggregating to Rs.27,27,177/- have been incurred by the appellant in two different financial year viz. 1999- 2000 and 2003-04 and the authorities below have erred in law and on facts in disallowing the benefit of indexation on the pretext that the appellant has failed to explain the source of investment made in the financial year 1999- 2000 & 2003-04. 4.2 BECAUSE the appellant has duly explained the source of cost of improvement (Le. out of her accumulated savings and financial support of her relatives) as have been incurred by her in the financial year 1999-2000 & 2003-04, disallowance of benefit of indexed cost of improvement by the authorities below on the allegation that source of Improvement has not been explained is therefore wholly misplaced. 5. Without prejudice to Ground Nos.3, 3.1, 3.2, 4, 4.1 & 4.2 above, the authorities below have erred in law and on facts is denying the benefit of exemption available to her under section 54/54F of the Act as had been claimed by her for the first time during the course of assessment proceedings. 6. BECAUSE arbitrary assessment of total income of the appellant at Rs.56,99,301/- vis-à-vis income of Rs.5,40,130/- declared by the appellant is wholly based on whims, surmises and conjectures and therefore is neither maintainable on law nor on facts of the case. 7. BECAUSE the appellant craves for leave to modify, alter and raise any other ground during the course of appellate proceedings.

ITA No. 130/VNS/2025 Sudha 8. BECAUSE the order appealed against is contrary to facts, law and principles of natural justice.” 2. It is observed that from a perusal of the records that the appeal is delayed by 443 days. A condonation petition has been filed in which it has been submitted that the petitioner, who is a female engaged in the business of trading of foodgrains is not readily aware about the intricacies of income tax law and procedure. She was therefore, wholly dependent upon her Accountant Sh. Shivam Srivastav for all income tax compliances including preparation and filing of returns and subsequent compliance of notices. The return of income of the assessee was taken up for scrutiny and concluded with an assessment order dated 17.12.2018, wherein the income of the assessee was assessed at Rs. 56,99,301/- against the returned income of Rs. 5,40,130/-. Upon receipt of such order, the assessee had contacted her Accountant Sh. Shivam Srivastav, who had assured the assessee of taking appropriate action in the matter and filed the appeal on 17.01.2019. However, this appeal was adjudicated ex parte against the assessee vide order dated 6.01.2024 and the addition made by the ld. Assessing Officer was confirmed by the ld. CIT(A), solely on account of non-compliance to notices issued for hearing. Since Sh. Shivam Srivastav was fearful of losing his job, he did not communicate the fact of this order to the assessee as otherwise the fact of non-compliance would have also been brought out. It was only in the month of May, 2025 that the assessee received a communication from the Income Tax Department for payment of earlier demand and then upon enquiries came to know about the fate of the appeal order. However, the assessee was not aware regarding the procedure or formalities of how could proceed thereafter and therefore, she had to contact a C.A. Sh. Prateek Agarwal, and with his aid and assistance, she was able to find another C.A. based at Prayagraj who handled matters before the Income Tax Appellate

ITA No. 130/VNS/2025 Sudha Tribunal and she was only able to file the appeal thereafter. It was prayed that since the assessee was prevented by reasonable cause as stated above from filing the appeal on time, the delay in filing the same may kindly be condoned. Alongwith the condonation petition, the assessee filed an affidavit that was signed by Sh. Shivam Srivastav in which these facts were corroborated. 3. We have duly considered the facts and circumstances of the case. We find that the appeal filed by the assessee before the ld. CIT(A) was dismissed ex parte as the assessee did not make compliance. It is therefore, entirely possible that the assessee was unaware of the conclusion of these proceedings as has been contended by her in her condonation petition on account of the circumstances enumerated therein. After considering the issue had at hand, which also involves legal questions, we deem it appropriate in the interest of justice to condone the delay as in our opinion, the assessee does not gain or benefit in any way from the said delay. Accordingly, the appeal is admitted for a decision on merits. 4. The facts of the case are that the ld. Assessing Officer discovered that the assessee had sold three properties for Rs. 17,00,000/-, Rs. 7,00,000/- and Rs. 9,00,000/- on 9.07.2015, 20.02.2016 and 28.01.2016. Upon calculating of the cost of purchase and the indexed value, the assessee submitted that the total cost to the assessee was Rs. 42,235.02/-, and the indexed value was Rs. 1,17,367.75/-. Furthermore, the assessee submitted that the indexed cost of improvement of these properties was Rs. 8,33,676.09/- and Rs. 18,93,501.08/-. Thus, the capital gain was only Rs. 4,55,462/-. The assessee submitted that the property was situated less than 1 Kilometer from the river bank and it was therefore, well below the circle rate. The land had to be improved by making of boundary and filling of land by soil to elevate it, as it being low land, water logging was very common in 4

ITA No. 130/VNS/2025 Sudha rainy days. Furthermore, in the F.Y. 2003-04, improvement in the form of built-up area was made for residential purposes. All these improvements were made out of accumulated savings and financial savings and financial support of relatives. The property was sold for Rs. 33,00,000/- as it was the only realizable value of that area. However, the ld. Assessing Officer did not accept the submission of the assessee. He noted that the assessee had neither been able to furnish proof of the investment in improvement, nor source of the improvement in F.Ys. 1999-2000 and 2003-04 and therefore, he adopted the stamp duty value of Rs. 57,32,000/- as the deemed value of consideration and re-calculated the capital gain at Rs. 56,14,633/-. 5. Aggrieved with the said assessment order the assessee went before the ld. CIT(A). Before the ld. CIT(A), it was submitted that the ld. Assessing Officer was not justified in rejecting the submissions of the assessee because the property was a low lying property near the Rapti river, which required improvements before the property could be sold and it had to be sold at rates which were below the stamp duty value because of location. It was submitted that neither had the ld. Assessing Officer deputed an Inspector to make spot enquiry of the property, nor had the ld. Assessing Officer referred to the matter to the DVO for consideration. The assessee submitted a report of a Government approved registered valuer to show that the stamp duty value could not be taken to be the deemed value of consideration in the case of the assessee, because the fair market value was less than the stamp duty value. The ld. CIT(A) records the fact that he issued various notices to the assessee to file written submissions but the assessee did not respond to the notices therefore, the ld. CIT(A) did not find any reason to interfere with the order of the ld. Assessing Officer and he accordingly dismissed the appeal. 6. Aggrieved with the order of the ld. CIT(A), the assessee has accordingly come before us. On the appointed date of hearing, nobody 5

ITA No. 130/VNS/2025 Sudha appeared on behalf of the assessee. However, ongoing through the facts of the case, we noticed that one of the grounds taken before us is that the assessee having objected to the stamp duty value of the property during the course of assessment proceedings itself, the authorities below were under a statutory obligation to refer the matter to the Valuation Officer for determination of the full value of consideration and the failure to make such a reference renders the addition / variation of Rs. 24,32,000/- as completely illegal. The assessee had also questioned the decision of the ld. Assessing Officer and the ld. CIT(A) to disallow the benefit of indexed cost of improvement made by the assessee in 1999-2000 and 2003-04 on the grounds that the sources of such cost of improvement had not been submitted by the assessee. It has further been contended that the assessee was entitled for exemption under section 54/54F of the Act which she had claimed during the course of assessment proceedings but the same had been denied to her. Accordingly, these grounds of appeal are taken on record as the submissions of the assessee during the appeal proceedings. 7. On the other hand, Sh. Sudipto Paul, Sr. DR (hereinafter referred to as the ld. DR) arguing on behalf of the Department pointed out that the assessee had submitted no evidence whatsoever before any authority for the cost of improvement claimed by her and therefore, the same should not be allowed. He further submitted that even her plea for condonation of delay was an afterthought and should not be entertained. The ld. DR further submitted that the assessee had not made any claim under section 54/54F in the return filed by her and therefore, the same could not be allowed. He, therefore, submitted that the ld. Assessing Officer was fully justified in applying the provisions of section 50C in the instant case in the absence of evidences to suggest that the market value of the property was lesser than

ITA No. 130/VNS/2025 Sudha what was claimed by the assessee and therefore, the addition made may be confirmed. 8. We have duly considered the facts and circumstances of the case and the submissions of both the parties. We note that the assessee had raised the ground of failure to refer the matter to the Valuation Officer before the ld. CIT(A) but the ld. CIT(A) has not adjudicated upon the same. It is fairly settled law that if the assessee objects to the valuation of a property under the provisions of section 50C, the ld. Assessing Officer is obliged to refer the matter to the Departmental Valuation Officer for his consideration before foisting the stamp duty value upon the assessee as the fair market value. It appears that the same has not been done in this case. Accordingly, it also appears that the ld. Assessing Officer adopted the stamp duty value without even causing a physical inspection of the property to verify the contentions of the assessee of the nature of the land and the improvements done therein. In the circumstances, we feel that it is in the interest of justice to restore the matter back to the file of the ld. Assessing Officer so that the ld. Assessing Officer may consider the objections of the assessee and the report of the registered valuer submitted by him and obtain a report from the Departmental Valuation Officer on the issue before proceeding thereafter in accordance with law. Accordingly, the matter stands restored to the file of the ld. Assessing Officer for a fresh assessment in accordance with law. 9. In the result, the appeal of the assessee is held to be allowed for statistical purpose. Orders pronounced on 31.08.2026 in the open Court. Sd/- Sd/- [SUDHANSHU SRIVASTAVA] [NIKHIL CHOUDHARY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31/08/2026 sh 7

ITA No. 130/VNS/2025 Sudha Copy forwarded to: 1. Appellant – 2. Respondent – 3. CIT DR, ITAT, 4. CIT, 5. The CIT(A) By order Sr. P.S.