JITENDRA VIRENDRA BAGRECHA,NAVI MUMBAI vs. INCOME TAX OFFICER, NAVI MUMBAI
Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SMT. BEENA PILLAI () & SMT. RENU JAUHRI ()
Per: Smt. Beena Pillai, J.M.:
The present appeal filed by the assessee arises out of order dated 20/12/2023 passed by NFAC, Delhi, for assessment year
2017-18 on following grounds of appeal :
“
The appellant prefers an appeal against an order passed by Ld.
CIT(A). National Faceless Appeal Centre, Delhi dated 20/12/2023
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Jitendra Virendra Bagrecha on following amongst other grounds each of which are without prejudice to any other :-
1. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in passing ex-parte order in hurried manner as only three notices were given.
2. In order to give proper opportunity to the appellant to present its case and to defend the grounds of appeal taken by the appellant, the case was posted for hearing on various dates, the details of which are as under:
Date of Notice
Date of Compliance
Status
19.01.2021
26.01.2021
No compliance
03.11.2023
10.11.2023
No compliance
29.11.2023
07.12.2023
No compliance
Which clearly shows that within a month two notices were served to complete the formality. The Ld. CIT has not adhered to the spirit of section 250(2) which states
"Section 250 (2)
The following shall have the right to be heard at the hearing of the appeal:- a. The appellant, either in person or by an authorised representative;"
It is evident from the provision that the hearing to be given is not a formality but an effective hearing is sine qua non for the purpose of upholding the principal of natural justice.
3. On facts and circumstances of the case and in law, Ld. CIT(A) erred in not deciding the Grounds of appeal on merits and erred in ignoring the submissions and exhaustive documents filed on set- aside assessment record;
4. The JAO has exceeded the limited scrutiny proceeding and without obtaining prior approval from higher authority, hence, the Assessment order u/s 143(3) is bad in law.
a. On the facts and circumstances of the case and in law, the Ld.
CIT(A) erred in confirming Rs. 47,90,500/- as unexplained money under section 69A, as he did not dispute the sales and the accounts were audited under section 44AB of the Income Tax Act,
1961. As per judicial pronouncement, once the sales are accepted, no addition for cash deposits can be made. The Ld. AO did not 3
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Jitendra Virendra Bagrecha point out any defects in the details or documentary evidence filed on record and failed to conduct any inquiries to verify the admissibility of the claimed expenses. Mere non-furnishing of details in the format sought by the AO does not disentitle the allowance of the claimed expenses.
5. The Ld. CIT(A), before confirming the capital gain of Rs 10,00,000/- and Rs 24,37,500/- u/s 45, erred in not considering the understated vital facts, being; a. Pushpa Bagrecha, Jitendra Bagrecha and Deepak Vagrecha have received
Rs.
3,00,000/-,
3,00,000/- and 4,00,000/- respectively in Oct 2016. The details were submitted, but learned
JAO did not appreciate the documents and made addition of Rs
10,00,000/-.
b. The Flat was purchased in 2002 in the name of Jitendra
Virendra Bagrecha, Deepak Vagrecha and their mother Smt.
Pushpa Bagrecha. They contributed initial payment of Rs
1,59,640/- and balance payment was made through home loan of Rs 6,39,760/-.
c. They sold the flat at Mudit Pearl for Rs 48,75,000/-. Pushpa
Bagrecha, Jitendra Bagrecha and Deepak Vagrecha have received
Rs. 3,00,000/-, 3,00,000/- and 4,00,000/- respectively in Oct
2016. Balance of Rs 38,75,000/- were received by Deepak
Vagrecha only.
d. Pushpa Bagrecha and Jitendra Bagrecha transferred Rs.
3,00,000/- each, received from the buyer, to Deepak Vagrecha's account. It was a family decision to buy a bigger flat in the name of a single person i.e. Deepak Vagrecha, and for this purpose, the entire proceeds were transferred to Deepak Vagrecha.
e. Co-owner Deepak Vagrecha has already shown 50% of Sales consideration and cost in his return, therefore, it is but obvious the balance 50% must be assessed in the hands of the co-owners.
f. The then Tax Consultant claimed LTCG of Rs. 14,84,899/-
(24,37,500-9,52,601 indexed cost), assuming the amount of Rs.
22,50,000/-made by the appellant was actually made by the co- owner Deepak Vagrecha, as he received the total consideration.
Section 54 does not stipulate that the house must be purchased in the name of the appellant. In this case, the flat was purchased in the name of the appellant's younger brother, which should be 4
ITA No.1140/Mum/2025; A.Y. 2017-18
Jitendra Virendra Bagrecha allowed as a deduction under Section 54, being a beneficial provision, in line with the law, its spirit, and judicial pronouncements. Therefore, no capital gain will be chargeable to tax.
6.0 As per the principles of permutation and combination, there will be five possibilities in this case.
i.
As the entire sale proceeds were received by the co-owner,
Mr. Deepak Vagrecha, his younger brother, he should claim 100%
of the sale consideration and the investment of the same in his own hands.
ii.
As the investment in sold property was done by appellant and his brother in equal ratio, hence, his share should be calculated at 50%.
iii.
As the appellant has received only Rs. 3,00,000 out of Rs.
48,75,000/- his share should be calculated based on the amount received by him.
iv.
As there were three co-owners, if the calculation is to be made according to the number of co-owners, then his share should be calculated at 33%.
v.
Since his younger brother has already claimed 50% in his
ITR, the appellant's share should be calculated at 25%, as there were three co-owners.
7.0 On facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming Rs 22,50,000/- as unexplained money u/s 69A erred in not considering the understated vital facts, being a) Appellant had made investment of Rs 22,50,000/- through his brother as the whole proceed was transferred to Deepak Vagrecha, which JAO did not accept. Hence, he had not allowed deduction u/s 54 from long term capital gain.
b) The purchase agreement is related to his co-owner, Deepak
Vagrecha, who had purchased the flat for Rs. 90,00,000/- along with his wife, Prerana Bagrecha. He rightfully claimed Rs.
22,50,000/- and the appellant also claimed Rs. 22,50,000/-, which is allowable under section 54 as the investment was made in the name of a relative. Various judicial pronouncements support the appellant's claim.
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Jitendra Virendra Bagrecha
0 The assessing officer has initiated penalty proceedings and imposed penalty u/s 274 r.w.s. 270A, is bad in law. 9.0 The appellant craves leave to add, amend, alter, and/ or withdraw any of the grounds of appeal at the time of hearing.” Brief facts of the case are as under: 2. The assessee filed its return of income on 31/10/2017, disclosing total income of Rs.9,52,540. The case was selected for scrutiny and notice u/s. 143(2) and 142(1) was issued to the assessee calling upon to furnish various details. The Ld.AO observed that assessee deposited cash of Rs. 47,90,500/- in its the current account. The Ld.AO thus called upon the assessee to furnish the details to explain the deposits and why the same should not be held unexplained u/s.69A of the Act. 2.1 In response, the assessee submitted sales register along with other requisite details before the Ld.AO. It was also submitted that, assessee also received Rs.10 lakhs from his younger brother and his mother against the sale agreement. He submitted that, sum of Rs. 24,37,500/- was received by the assessee towards the sale consideration of jointly owned property and sum of Rs.22,50,000/- was investment claimed by the assessee u/s.54 of the Act. The Ld.AO rejected the submissions of the assessee in respect of the cash deposits and made addition u/s.69A of the Act amounting to 47,90,500/-. Aggrieved by the order of the Ld.AO assessee preferred appeal before the Ld. CIT(A). 3. Before the Ld.CIT(A) assessee was not able to represent its case and an ex-parte order was passed on 20/12/2023. 6 ITA No.1140/Mum/2025; A.Y. 2017-18 Jitendra Virendra Bagrecha
1 Aggrieved by the order of the Ld. CIT(A) assessee preferred appeal before this Tribunal belatedly the delay of 367 days. It was submitted that, assessee was not aware of the order having passed by first appellate authority. Assessee has filed petition seeking condonation of delay along with Affidavit by submitting as under:
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Jitendra Virendra Bagrecha
The Ld.AR submitted that, only 2 notices were issued on secondary e-mail Id registered with department, which was not regularly checked by the authorised representative due to oversight. He submitted that, the representative of the assessee could not appear and attend the proceedings. The Ld.AR submitted that, there is no gross negligence or any deliberate attempt to avoid proceedings before the Ld.CIT(A), and was on bonafide reason, beyond the control of the assessee, due to which 8 ITA No.1140/Mum/2025; A.Y. 2017-18 Jitendra Virendra Bagrecha representation could not be made before first appellate authority and an ex-parte order, was passed. The Ld.AR submitted that, the appeal may be remanded to the Ld.CIT(A) in the interest of justice as assessee has a good case on merit and can substantiate the cash deposits and the disallowance made by the Ld.AO. 4.1 On the contrary, the Ld.DR relied on the orders passed by the authorities below. We have perused the submissions advance by both sides in the light of record placed before us. 5. From the affidavit filed by the assessee, it is noted that, the assessee was under a bonafide belief that appeal is pending before the first appellate authority. Further, it is noted that only two notices were issued to the secondary mail ID of the representative that went unnoticed inadvertently. The passing of impugned order was also not in the notice of the assessee thereby causing delay to file present appeal before this Tribunal. We are of the opinion that substantial justice should be pitted against technicalities and the delay deserves to be condoned. 5.1 Hon’ble Supreme Court in case of Collector, land acquisition vs. MST. Katiji & Ors held that, no hard and fast rule can be laid down in the matter of condonation of delay and the Court should adopt a pragmatic approach and the Court should exercise their discretion on the facts of each case keeping in mind that in construing the expression "sufficient cause" the principle of advancing substantial justice is of prime importance and the expression "sufficient cause" should receive a liberal construction. Therefore, this Judgment of the Hon’ble Madras
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Jitendra Virendra Bagrecha
High Court (supra) clearly says that in order to advance substantial justice which is of prime importance, the expression
"sufficient cause" should receive a liberal construction.
Therefore, for the purpose of advancing substantial justice which is of prime importance in the administration of justice, the expression "sufficient cause" should receive a liberal construction. In opinion of this Tribunal, this decision of Hon’ble
Madras High Court is applicable to the present facts of the case.
A similar view was taken by Hon’ble Madras High Court in the case of Venkatadri Traders Ltd. v. CIT (2001) 168 CTR (Mad) 81 :
(2001) 118 Taxman 622 (Mad).
6. We are of the opinion that if the delay is not condoned, it would amount to legalising an order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorised by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalise an illegal and unconstitutional order passed by the lower authority.
Therefore, in our opinion, by preferring the substantial justice, the delay of in filing the appeal before this Tribunal has to be condoned.
Accordingly the application seeking condonation of delay filed by the assessee stands allowed.
7. On merits of the case, it is noted that, the Ld. CIT(A) did not get an opportunity to verify the documents in support of the claim of assessee. In the interest of justice, we deem it appropriate to remit this issue back to the Ld.CIT(A) to carry out
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Jitendra Virendra Bagrecha necessary verification and to consider the claim of the assessee in accordance with law. Needless to say that proper opportunity of being heard must be granted to the assessee.
Accordingly the grounds raised by the assessee stands partly allowed for statistical purpose.
In the result the appeal filed by the assessee stands partly allowed for statistical purpose.
Order pronounced in the open court on 24/04/2025 (RENU JAUHRI)
Judicial Member
Mumbai:
Dated: 24/04/2025
Poonam Mirashi,
Stenographer
Copy of the order forwarded to:
(1)The Appellant
(2) The Respondent
(3) The CIT
(4) The CIT (Appeals)
(5) The DR, I.T.A.T.By order
(Asstt.