SHRADHA SIPANI,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 4(3)(1), BANGALORE

At the outset, it is noticed that assessee has filed appeal with a delay of 114 days. The assessee has submitted a petition for condonation of delay along with affidavit. On perusal of the same, we find that assessee has sufficient cause for filing the appeal belatedly before the Tribunal and hence we are inclined to condone the delay of 114 days and proceed to adjudicate the appeal on merits.

Briefly stated the facts of the case are that the assessee has filed the return of income on 30th July 2022. The return was summarily processed under section 143 (1) of the Act on 7th August 2022. Subsequently the case for selected for scrutiny and statutory notices u/s 143(2) and 142(1) of the Act was issued and served on the assessee. It was observed by the Learned Assessing Officer (Ld. AO) that the assessee has made huge time deposits and also claimed deduction under section 54 of the Act. By way of notice under section 142(1) of the Act the assessee was required to submit the details. In response the assessee made various submissions and furnished documentary evidences. Thereafter show cause notice was issued on 6th March 2024. The Ld. AO observed that assessee has not filed the copies of the purchase and sale deeds and has also not produced sources for the fixed deposits. Therefore the Ld. AO treated the entire sale consideration as short term capital gain amounting to Rs.24,08,00,000/- and added it to the total income of the assessee. The Ld. AO also made additions of Rs.62,84,557/- as unexplained income under section 69 of the Act.

On being aggrieved by the order of the Ld. AO the assessee carried the matter in appeal before the Ld CIT(A). Before the learned CIT(A), the assessee, in the statement of facts has claimed that the assessee has submitted documentary evidences with respect to sale of land for an amount of ₹24,08,00,000. The assessee also submitted that capital gain arising out of the sale transaction ought to have been reported during the assessment year 2021-22, but has failed to do so. The assessee also submitted that the time limit for filing the revised return also expired and therefore filed a condonation petition under section 119(2)(b) of the Act. After the delay is condoned by PCIT, the assessee filed the revised return of income including the capital gain, for the assessment year 2021-22, and also revised the return of income for the assessment year 2022-23. The assessee also explained that it has made deposits into the bank account under Capital Gains Accounts Scheme and claimed deduction under section 54F of the Act, which was subsequently used for purchasing residential house. Except submitting the above in the statement of facts, the assessee has not complied with any the notices issued by the Ld CIT(A). Since the assessee has not responded to the notices issued by the Ld CIT(A) the Ld CIT(A) dismissed the appeal of the assessee.

On being aggrieved by the order of the learned CIT(A) filed an appeal before the Tribunal by raising the following grounds.

The issues emanating from the above grounds are with respect to the addition under the short term capital gains and addition made on account of investment in Time deposits.

The learned AR submitted that the assessee has made written submissions before the learned CIT(A) which was not considered. He also submitted that the assessee has furnished relevant documentary evidences for the sale of property and for the deposits made under the capital gain account scheme for claiming deduction u/s 54F of the Act. He also submitted that the documents made available before the revenue authorities are available in the paper book before the Tribunal. He therefore prayed for one more opportunity before the learned AO to submit these documents supporting the claim made in the return of income.

Per Contra learned DR heavily relying on the orders of the Revenue authorities submitted that the learned CIT(A) has provided multiple opportunities to the assessee but the assessee has not responded to any of the notices. He therefore strongly objected to the remanding back of the issue to the learned AO. He therefore prayed that the order of the learned CIT(A) be upheld.

We have heard the rival contentions and perused the material available on record. It is an admitted and undisputed fact that the assessee erroneously claimed the capital gains while filing the return of income for the impugned assessment year. It was submitted that the assessee sold the land on 24th August 2020 and the capital gain rising out of same ought to have been admitted during the assessment year 2021-22. However the assessee has declared capital gains and claimed the deduction u/s 54F during the assessment year 2022-23. The assessee also submitted before us the order of the Principal Commissioner of Income Tax condoning the delay for filing revised return of income for the assessment year 2021-22. A copy is reproduced below:

Further to the grant of condonation as above the assessee filed the revised returns for the assessment year 2021-22 and 2022-23. In the light of the facts and circumstances as discussed above we are of the view that since the assessee has rectified the returns filed erroneously, the AO ought to have considered the same. However the lower authorities ignoring the same, framed the assessment. We therefore direct the Ld. AO to examine the documents furnished by the assessee, in support of income as declared in the revised return of income and thereafter frame the assessment in accordance with law. We also direct the Ld. AO to provide an opportunity of being heard to the assessee. At the same time we also direct the assessee to produce the documents before the Ld. AO, failing which the Ld. AO is at liberty to pass assessment order in accordance with the material available on record. The grounds raised by the assessee on this issue is statistically allowed. Since the issue is remanded at bank to the file of Ld. AO, other grounds raised by the assessee becomes infructuous and hence dismissed.

In the result appeal of the assessee is partly allowed for statistical purposes