BHARATI MUZUMDAR,BENGALURU vs. INCOME TAX OFFICER, WARD INTL. TAXATION 1(2), BLR, BENGALURU

PDF · subscribers
ITA 2234/BANG/2026Status: DisposedITAT Bangalore07 October 2026AY 2020-216 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the CIT(A) erred in dismissing the appeal without adjudicating the issues on merits, solely on the ground of alleged non-response to hearing notices. The Tribunal noted that the assessee had provided an updated email ID during assessment proceedings, but notices were sent to the old one. The Tribunal identified three core issues that the AO had decided on merits: (a) whether the land transferred was a capital asset or rural agricultural land, (b) the year of transfer for taxation, and (c) the value of consideration for capital gain computation, including the applicability of Section 50C. The Tribunal found that the CIT(A) had not performed the statutory appellate function of examining the AO's findings. Restoring the matter to the AO was deemed inappropriate as adjudication had already occurred. Therefore, the Tribunal set aside the CIT(A)'s order and restored the matter to the CIT(A)'s file for fresh adjudication on merits. The CIT(A) was directed to decide the issues in a logical sequence: first, whether the land is a capital asset; second, the correct year of transfer and taxability; and third, if capital gain computation survives, the issue relating to Section 50C, including a reference to the DVO if conditions are met. The assessee was directed to cooperate. The grounds raised by the assessee were allowed for statistical purposes.

What were the facts?

The assessee, Bharati Muzumdar, is an individual. The appeal is against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2020-21. The assessee's appeal was dismissed in limine by the CIT(A) for alleged non-compliance with notices during appellate proceedings. The assessee had been issued a notice under section 148 for alleged non-disclosure of immovable property transfer. The Assessing Officer made an addition of Rs. 9,76,11,370/- as short-term capital gain. The assessee contended that notices were sent to an old email ID, despite providing an updated one during assessment proceedings, leading to non-compliance. The CIT(A) did not adjudicate the grounds on merits. The assessee is in appeal before the ITAT against the CIT(A)'s order.

What were the issues?

1. Whether the CIT(A) erred in dismissing the appeal on account of alleged non-compliance of notices without properly considering the submissions and adjudicating all grounds raised, thereby violating principles of natural justice? (Question of law and fact, turning on principles of natural justice and procedural fairness). Assessee's contentions: - The CIT(A) failed to provide a proper and effective opportunity of hearing. - Notices were sent to an old email ID, despite an updated one being provided to the AO during assessment proceedings. - The CIT(A) did not properly consider facts, submissions, and details furnished with Form No. 35. - The CIT(A) failed to pass a reasoned and speaking order on merits. - The impugned order was passed in violation of the principles of natural justice. Revenue's contentions: - The Ld. DR supported the order of the Ld. CIT(A) but did not raise serious objections if the matter was set aside for fresh adjudication on merits after granting a proper opportunity of hearing.

Which sections of the Income-tax Act were involved?

Section 148,Section 147,Section 144,Section 144B,Section 250,Section 2(14),Section 50C,Section 50C(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES, BANGALORE

Before: WASEEM AHMED & SHRI SOUNDARARAJAN K.

For Respondent: Shri Somnath S Ukkali

PER WASEEM AHMED, ACCOUNTANT MEMBER: The present appeal filed by the assessee is directed against the order under section 250 of the Income Tax Act, 1961 (hereafter the Act) passed by the learned Commissioner of Income Tax (Appeals) under the National Faceless Appeal Centre, Delhi (hereafter the Ld. CIT(A)) for A.Y. 2020-21 bearing DIN & Order No.: ITBA/NFAC/S/250/2025-26/1087086515(1).

2.

The assessee, in the memo of appeal, has raised several grounds of appeal. However, the effective issue raised by the assessee through Ground No. 2 of the appeal is that the Ld.

CIT(A) erred in dismissing the appeal on account of alleged non-compliance of notices without properly considering the submissions & adjudicating all the grounds raised.

3.

The necessary facts are that the assessee is an individual against whom a notice under section 148 of the Act was issued for A.Y. 2020-21 on account of alleged non-disclosure of the transfer of immovable property. In response to the notice under section 148 of the Act, the assessee filed a return of income. During the assessment proceedings, the Assessing Officer issued various notices, including a show cause notice. The assessee also made several submissions and explanations during the assessment proceedings. Finally, the assessment order was passed under section 147 r.w.s. 144 r.w.s. 144B of the Act, vide order dated 25-03-2025, wherein an addition of short-term capital gain of Rs. 9,76,11,370/- was made.

4.

The aggrieved assessee preferred an appeal before the Ld. CIT(A) and filed a detailed statement of facts and raised detailed grounds of appeal, which are on pages 5 to 14 of the order passed under section 250 of the Act. However, the Ld. CIT(A) dismissed the appeal of the assessee in limine without adjudicating the issue on its merits, on the ground that the assessee had not responded to the notices issued during the appellate proceedings.

5.

Being aggrieved by the order of the learned CIT(A) the assessee is in appeal before us.

5.1 The Ld. AR for the assessee before us submitted that the Ld. CIT(A) had disposed of the appeal without granting a proper and effective opportunity of hearing to the assessee. The appeal was dismissed mainly on the ground of non-response to the hearing notices, whereas the notices were continuously being sent to the old e-mail ID of the assessee. The assessee had limited access to the said e-mail ID and this difficulty had already been brought to the notice of the AO during the assessment proceedings.

5.2 The Ld. AR further submitted that the assessee had specifically provided an updated and active e-mail ID, namely, mmuzumdar@gmail.com, through written submission dated 17.12.2024 during the assessment proceedings. However, the subsequent hearing notices and communications by the Ld. CIT(A) were not sent to the updated e-mail ID. Because of this, the assessee could not respond to the notices in time.

5.3 The Ld. AR also submitted that the Ld. CIT(A) did not properly consider the facts, submissions and details already furnished along with Form No. 35 and failed to adjudicate all the grounds raised by the assessee by passing a reasoned and speaking order.

5.4 Accordingly, the Ld. AR submitted that the impugned order was passed in violation of the principles of natural justice and prayed that the same be set aside and the matter be restored to the file of the AO for fresh adjudication after granting proper opportunity of hearing to the assessee.

6.

The Ld. DR supported the order of the Ld. CIT(A). However, the Ld. DR did not raise any serious objection if the impugned order is set aside and the matter is restored to the file of the AO for fresh adjudication on merits after granting proper opportunity of hearing to the assessee.

7.

We have heard the rival contentions of both the parties and perused the materials available on record. The grievance of the assessee is that the Ld. CIT(A) dismissed the appeal without adjudicating the issues on merits. The record shows that the assessee had filed detailed grounds of appeal and statement of facts before the Ld. CIT(A). However, the appeal was dismissed in limine mainly on the ground of alleged non-response to the hearing notices.

7.1 At the time of hearing before us, the Ld. AR submitted that the matter may be set aside to the file of the AO for fresh adjudication. The Ld. DR also did not raise any serious objection to such restoration. Initially, considering the submissions of both the parties, we were also inclined to restore the matter to the file of the AO. However, while examining the record and the issues involved, we find that such a course would not be appropriate in the facts of the present case.

7.2 We note that the AO had already examined the dispute on merits during the assessment proceedings. The assessee had participated in the assessment proceedings and had filed various submissions and explanations. Thereafter, the AO passed the assessment order u/s 147 r.w.s. 144 r.w.s. 144B of the Act and made the addition towards capital gain.

7.3 On going through the record, we find that broadly three issues arise from the assessment order.

a. The first and most important issue is whether the land transferred by the assessee is a "capital asset" within the meaning of section 2(14) of the Act or whether it is rural agricultural land falling outside the scope of a capital asset.

b. The second issue is the year in which the transfer took place for the purpose of taxation. The assessee claims that the transfer was completed in the subsequent year and that the amount arising from the transfer was disclosed as exempt income on the ground that the property was rural agricultural land.

c. The third issue relates to the value of consideration to be adopted for computation of capital gain, particularly the applicability of section 50C of the Act as against the actual sale consideration received by the assessee.

7.4 We find that the AO considered these issues and decided them on merits after considering the assessee's submissions. Therefore, once the AO had already adjudicated these issues, the statutory appeal against such findings lay before the Ld. CIT(A) who was required to examine the AO's findings, consider the grounds and evidence placed by the assessee, and pass a reasoned and speaking order on merits.

7.5 However, this exercise has not been carried out by the Ld. CIT(A). Instead, the Ld. CIT(A) dismissed the appeal without deciding the substantive grounds merely on account of alleged non-response to the hearing notices. The assessee has also explained that the notices were being sent to the old e-mail ID, despite an updated e-mail ID having been communicated during the assessment proceedings. The Ld. CIT(A), therefore, did not examine the merits of the additions challenged before him.

7.6 In these circumstances, we are of the considered view that restoring the entire matter once again to the file of the AO would amount to reopening an adjudication which has already been completed by the AO. It would also deprive the assessee of proper adjudication by the first appellate authority. Therefore, notwithstanding the request made by the Ld. AR at the time of hearing and the absence of serious objection from the Ld. DR, we consider it appropriate to restore the matter to the file of the Ld. CIT(A), and not to the file of the AO, for fresh adjudication on merits and as per law.

7.7 There is one further aspect which requires consideration. The assessee has also disputed the adoption of the value contemplated u/s 50C of the Act. We note that where the assessee disputes the stamp duty value and the conditions prescribed u/s 50C(2) of the Act are satisfied, the question of valuation has to be examined through the mechanism provided under the said provision, including reference to the DVO. A question therefore arises whether this issue should be restored separately to the AO for obtaining the valuation report.

7.8 In our considered view, splitting the proceedings at this stage would unnecessarily complicate the matter and may result in parallel or repetitive proceedings before the AO and the Ld. CIT(A). More importantly, the question of valuation u/s 50C of the Act would arise only if it is first held that the land transferred by the assessee is a capital asset chargeable to capital gains tax.

7.9 Therefore, the proper course would be to decide the issues in a logical sequence. The Ld. CIT(A) shall first examine and decide whether the land in question is a capital asset under the Act or rural agricultural land falling outside the definition of capital asset. This issue goes to the root of the entire addition. If the Ld. CIT(A) concludes that the land is a capital asset, he shall then decide the correct year of transfer and taxability after examining the agreement to sell, registered sale deed, transfer of possession, and other relevant material. If required, he shall also decide whether the asset gives rise to short-term or long-term capital gain.

7.10 Thereafter, only if the computation of capital gain survives, the issue relating to section 50C of the Act shall be examined. If the assessee disputes the stamp duty valuation and the requirements of section 50C(2) of the Act are fulfilled, the Ld. CIT(A) shall make the necessary reference to the DVO and thereafter compute the capital gain in accordance with law.

7.11 Accordingly, we set aside the impugned order of the Ld. CIT(A) and restore the entire matter to his file for fresh adjudication on merits in the manner indicated above and as per law. The Ld. CIT(A) shall consider all the grounds, submissions and supporting evidence filed by the assessee and pass a speaking order in accordance with law after granting adequate opportunity of hearing to the assessee. The assessee is also directed to cooperate in the appellate proceedings and furnish the necessary details as and when called for. Thus, the grounds raised by the assessee are allowed for statistical purposes.

8.

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

Order pronounced in the open court on 7th October, 2026. Sd/- Sd/-

SOUNDARARAJAN K. WASEEM AHMED JUDICIAL MEMBER ACCOUNTANT MEMBER Bangalore Dated: 7th October, 2026 Vms

Copy to: BHARATI MUZUMDAR, C 403 EPSILON APARTMENTS, YEMLUR 1 MAIN ROAD,, BENGALURU-560037, KARNATAKA INCOME TAX OFFICER, WARD INTL. TAXATION 1(2), BLR, INCOME TAX OFFICER, WARD INTL. 2 TAXATION 1(2), BLR, BMTC BUILDING, KORAMANGALA, BENGALURU-560095, KARNATAKA 3 THE PCIT / CIT, 4 THE D.R., ITAT, BANGALORE BENCH 5 GUARD FILE

By Order

ASSISTANT REGISTRAR / I.T.A.T., BANGALORE

Digitally signed P G by P G RAJANI Date: RAJANI 2026.10.22 15:41:47 +05'30'

More judgments on Section 148

All 35,022 judgments and leading authorities on Section 148 →

Recent GST High Court judgments

Search GST case law →