SHEWAK JASHAN MAKHIJA,NAVI MUMBAI vs. DCIT CIRCLE 27(3), NAVI MUMBAI

At the outset, we note that there is a delay of 69 days in filing the present appeal before the Tribunal. The assessee has filed an application seeking condonation of the delay explaining that he is a businessman not conversant with the procedural requirements of the Income-tax Act and had bona fide entrusted the filing of the appeal to his Chartered Accountant, who is about 76 years of age and was facing age-related health difficulties. It is also stated that the assessee was under a bona fide belief that the appeal had been filed within time and, on becoming aware of the delay pursuant to the Registry’s defect notice, immediately took steps to explain the same. Considering the explanation furnished, the period of delay and the absence of any deliberate inaction or mala fide intention, we are satisfied that sufficient cause has been shown. The Hon’ble Supreme Court in Collector, Land Acquisition, Anantnag v. Mst. Katiji & Ors. (1987) 2 SCC 107 has held that the expression “sufficient cause” should receive a liberal construction so as to advance substantial justice and that a meritorious matter should ordinarily not be rejected at the threshold on account of a non-deliberate delay. Similar principles were reiterated in N. Balakrishnan v. M. Krishnamurthy (1998) 7 SCC 123, where the Hon’ble Supreme Court held that the acceptability of the explanation is more material than the length of delay. In the interest of justice, we therefore condone the delay of 69 days and admit the appeal for adjudication on merits.

On merits, the brief facts of the case are that the assessee, an individual, filed his return of income for A.Y. 2017-18 on 25.10.2017 declaring total income of ₹18,11,630/-. The case was selected for scrutiny and the Assessing Officer completed the original assessment under section 143(3) of the Income- tax Act, 1961 (“the Act”) in which the Assessing Officer made an addition of ₹42,67,000/- by computing short-term capital gain from sale of an immovable property. According to the assessee, the Assessing Officer did not properly consider the submissions filed during the assessment proceedings. The assessee also claimed that the property was jointly owned by two persons and his share was only 50%, whereas the Assessing Officer computed the capital gain by considering the entire property in his hands. The assessee further stated that the Assessing Officer had not correctly computed the cost of acquisition, particularly the reduction of notional depreciation while computing the short- term capital gain under sections 48 and 50 of the Act.

The assessee carried the matter in appeal before the learned CIT(Appeals). During the appellate proceedings, the learned CIT(Appeals) issued notices under section 250 on 08.01.2021, 04.04.2025, 05.06.2025 and 13.08.2025. The assessee sought an adjournment on 16.04.2025 but did not thereafter file written submissions or documentary evidence in support of the grounds raised in the appeal. Even in response to the final notice dated 13.08.2025 requiring compliance by 20.08.2025, the assessee did not furnish the required details. The learned CIT(Appeals), therefore, proceeded on the basis of the material available on record. The CIT(Appeals) observed that the assessee had failed to produce any documentary evidence to show that the findings of the Assessing Officer were incorrect and, upheld the assessment and dismissed the appeal.

The assessee is in appeal before us against the order passed by the learned CIT(Appeals) dismissing the appeal of the assessee. The assessee has, inter alia, challenged the addition of ₹42,67,000/- towards short-term capital gain and has contended that the Assessing Officer failed to consider the submissions made during the assessment proceedings, has incorrectly reduced notional depreciation from the cost of acquisition and computed the capital gain by treating the assessee as the 100% owner of the property even though, according to him, he held only a 50% share therein.

We have heard the rival submissions and perused the material available on record. We find that the addition is with respect to computation of capital gain on sale of immovable property and the assessee has raised specific factual objections regarding the extent of his ownership, the cost of acquisition and the adjustment of depreciation. These issues need to be verified from the purchase and sale documents, records of ownership of property, earlier return of income, depreciation schedule and computation of capital gain. At the same time, we cannot ignore the fact that the assessee did not properly pursue the proceedings before the learned CIT(Appeals) despite several opportunities and, therefore, the relevant evidence could not be examined at the first appellate stage. The learned CIT(Appeals) consequently decided the appeal on the basis of the material then available.

Considering the nature and quantum of the addition and the factual issues involved, we are of the view that one final opportunity should be granted to the assessee so that the matter is decided after examining the relevant evidence on merits. However, such opportunity cannot be unconditional in view of the repeated non-compliance before the learned CIT(Appeals). We therefore set aside the impugned order and restore the issues raised in the appeal to the file of the Assessing Officer for de novo consideration, subject to the assessee depositing a cost of ₹25,000/- with the Prime Minister's National Relief Fund and producing evidence of such payment before the Assessing Officer.

The Assessing Officer shall examine the assessee's claim that the property was jointly owned and that only 50% of the capital gain was attributable to him. He shall also verify the original cost of acquisition, the assessee's claim regarding depreciation, the computation under sections 48 and 50 of the Act and the submissions and supporting documents produced by the assessee. The Assessing Officer shall thereafter compute the capital gain in accordance with law after giving the assessee a reasonable opportunity of being heard.

The assessee shall fully cooperate with the proceedings and shall not seek unnecessary adjournments. If the assessee again fails to comply without reasonable cause, the Assessing Officer shall be at liberty to decide the matter in accordance with law on the basis of the material available on record.

Accordingly, the grounds raised by the assessee are allowed for statistical purposes.