Loading judgment…
Facts
The assessee's appeal was filed after a significant delay due to company liquidation and issues with their tax practitioner. The Assessing Officer (AO) made an addition of Rs. 2,60,00,000/- under Section 68, treating it as income from the sale of immovable property, based on AIR information.
Held
The Tribunal condoned the delay in filing the appeal. On merits, it was held that the transaction was an assignment of a loan and not a sale of immovable property, and the information was available with the AO earlier. Therefore, the addition made by the AO was deleted.
Key Issues
Whether the addition made under Section 68 was justified when the transaction was an assignment of a loan and not a sale of property, and if the delay in filing the appeal should be condoned.
Sections Cited
147, 144, 68, 148
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘D’ BENCH
आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 28/03/2024 passed by NFAC, Delhi for the quantum of assessment passed u/s.147 r.w.s. 144. 2. Before us assessee has challenged the validity of reopening u/s.147 and on merits, challenged the addition of Rs.2,60,00,000/- added u/s.68.
At the outset, appeal of the assessee is time barred by 192 days. In the petition of condonation of delay it has been stated that assessee’s company was in liquidation and has stopped its business since 1988 and office of the assessee was closed and there was no employee. Assessee had appointed one tax practitioner Mr. Bhavin Kanakiya to look after its tax related matters and the concerned person looking after the company matter himself was a very aged person having no knowledge or expertise in the tax appeal matters. The assessee could not file the appeal in time due to lack of any information or knowledge about the service of the first appellate order which has been passed exparte and the same was posted in the income tax portal. It was when assessee was served with the show-cause notice dated 28/11/2024 for the demand, then only assessee came to know that the order has been passed and SMS or mail for communication must have been sent to Mr. Bhavin kanakiya who had given his mobile number and e-mail ID. Assessee was not informed by Mr. Bhavin Kanakiya. When he was approached then he stated that he is unable to handle the matters of the assessee. Accordingly, assessee took steps to file appeal against first appellate order before this Tribunal. An affidavit has also been filed in support of the averments made in taking the steps leading to delay in filing of appeal. Looking to the aforesaid facts that the work of the company has been stopped and does not have any employee and also the earlier tax practitioner looking after the matter did not intimate the order to the assessee, therefore, the delay in filing the appeal is condoned.
On merits, it is seen that the ld. AO on the basis of some AIR information and TDS statement noted that assessee had sold some immovable property at Rs.2,60,00,000/-. Based on this information a notice u/s.148 was issued. However, in response to the notice, no return of income has been filed and according to the ld.AO, none of the notices were complied by the assessee. Accordingly, he treated the amount of Rs.2,60,00,000/- as income from other sources which as per the information was on account of sale of some immovable property and made the addition u/s.68 of Rs.2,60,00,000/-. Ld. CIT (A) too has dismissed the appeal exparte as assessee could not appear.
After hearing both the parties and on perusal of the material furnished before us, it is seen that the company had earlier taken a loan of Rs.2,60,00,000/- from SICOM Ltd., a Government undertaking. Due to enormous losses, Assessee Company was declared sick and was refer to BIFR. Since the company could not pay the secured loan amount to SICOM, then in the scheme of rehabilitation, SICOM Ltd., assigned the financial asset, that is, the loan availed by the assessee company for Rs.2,60,00,000/- in favour of Radhe Rhea Financial Advisors Ltd. on 02/09/2013 and Assignment Deed was signed with the Registrar office at Andheri and stamp duty of Rs.31,840 was paid. The Assignment Agreement has been filed before us, the copy of which is appearing at pages 16 to 29 of the paper book. It had been further stated that this Assignment of Agreement alongwith the letter was filed before the ld. AO on 29/08/2016 Mikado Textile Industries Ltd. and also were uploaded on the portal of the Income Tax department. The screen shot for uploading the reply and Assignment Deed has also been filed before us. From the perusal of the same it is seen that assessee has uploaded the submissions on 25/03/2022 in response to the notice issued on 21/03/2022. There is also a letter dated 21/06/2022 wherein SICOM Ltd., has assigned the loan to Radhe Riya Financial Advisors Pvt. Ltd. Once the registration was for Assignment of Agreement of the loan from SYCOM Ltd. to Radhe Riya Financial Advisors Pvt. Ltd., then we fail to understand how as per the information ld. AO can assume that this information pertain to sale of immovable property. This shows completely lack of mind on the information. Apart from that, this information was also furnished before the ld. AO which was uploaded on the Income Tax portal on 25/03/2022, wherein assessee had submitted the letter as well as the assignment agreement. Further, assessee has also filed physical letter on 25/08/2016 before the ld. AO which is duly stamped and acknowledged by the office of Additional Commissioner of Income Tax and Office of the Income Tax Officer 12(3)(4). Thus, this information was there before the ld. AO. Once it is clear that agreement was for assignment of loan, then the same cannot be held to be sale of any old property which can be added u/s.68, accordingly, the addition made by the ld. AO is deleted.
Before parting we are compel to express our dismay at the injudicious manner in which the impugned addition has been foisted upon the assessee by the AO. Had the AO demonstrated Mikado Textile Industries Ltd. the requisite circumspection and exercised his quasi-judicial authority with discernment it demands, it would have been palpable that neither the initiation of reassessment proceedings nor the consequent addition was warranted. Such sagacity would have obviated the needless vexation of assessee in incurring the litigation cost and time and resources and undue toll thrust upon the assessee. Such kind of mindless assessment betrays the dereliction of duty and cast a shadow on the credibility and fairness of the tax administration in the eyes of citizenry. It should be avoided.
In the result, appeal of the assessee is allowed.
Order pronounced on 29th April, 2025.