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Facts
The assessee received a notice u/s. 148 and filed a return. Subsequently, a notice u/s. 142(1) was issued, and details were furnished. The assessee jointly purchased land and constructed a building, which was later sold. The Assessing Officer (AO) computed short-term capital gains without considering the cost of construction. The CIT(A) dismissed the appeal.
Held
The Tribunal condoned the significant delay in filing the appeal, emphasizing substantial justice over technicalities, and referred to Apex Court principles for condoning delay. On merits, the Tribunal found that the AO erred in calculating capital gains by not considering the cost of construction and the assessee's share.
Key Issues
Whether the delay in filing the appeal should be condoned considering substantial justice, and whether the Assessing Officer correctly computed the short-term capital gains without accounting for the cost of construction and the assessee's share.
Sections Cited
148, 142(1), 80IB
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Income Tax Appellate Tribunal, “H(SMC
Before: SMT. BEENA PILLAI & SHRI OMKARESHWAR CHIDARA
Per: Smt. Beena Pillai, J.M.: The present appeal filed by the assessee arises out of order dated 29/12/2023 passed by Ld.CIT(A), Patna, for assessment year 2013-14 on following grounds of appeal:
1. The learned COMMISSIONER OF INCOME TAX, APPEALS ADDL/JCIT(A), PATNA has erred in passing the appeal dismissal order without discussing the case on merits and before dismissing the appeal without undertaking further inquiry by himself or through the assessing officer.
2 ITA 810/Mum/2025; A.Y. 2013-14 Sulochana Suresh Mankumare
The appellant should be given one opportunity to save the appellant from undue burden of exorbitant tax liability to produce the documentary evidence.
The appellant craves that the delay in filing the appeal may please be condoned to do natural justice to the appellant.” Brief facts of the case are as under: 2. The assessee received notice from Income Tax Officer Ward 29(3)(4), Mumbai u/s. 148 of the Act, vide dated 28.03.2018. In response to the notice assessee filed her return of income for A.Y.2013-14 on 16-04-2018 electronically declaring Rs.1,23,870/- as income. 2.1 The assessee received notice u/s.142(1) of Act, in response to which the representative of the assessee furnished details as called for. 2.2 The assessee purchased land at village Bhuinj along with 10 other jointly, for Rs 9,00,000/- on 09-06-2008. This was only land and that there was no construction which can be verified from the purchase deed. Subsequently the assessee and 10 co owners jointly constructed Mangal Karyalaya Building on this land. Necessary permission for construction, books of accounts of construction, sample bills and vouchers were produced before the Ld.AO for verification. However, before completion of construction all of them were sold along with land for a consideration of Rs 1,85,92,500/- on 14-10-2012 as per the sale deed. It was submitted that, the assessee has income from rent of house property situated at Mumbai and that she contributed sum of Rs. 2,50,000/- from her income and made addition of Rs. 16,08,409/- in the hands of the assessee. The Ld.AO did not 3 ITA 810/Mum/2025; A.Y. 2013-14 Sulochana Suresh Mankumare consider the cost of construction contributed by the assessee while calculating short term capital gain. Aggrieved by the order of Ld.AO, the assessee preferred appeal before Ld.CIT(A).
3. It was submitted that the property was developed as Venkatlaxmi Mangal Karyalaya and was sold for Rs. 1,85,92,500/-.It was submitted that cost of construction incurred between 01.04.2008 to 14.10.2012, submitted that the date of sale agreement was Rs. 1,72,29,936/-. It is submitted that the profit on sale of Venkatlaxmi Mangal Karyalaya was Rs. 13,62,564/-. The assessee submitted that Ld.AO did not give deduction of Rs.9,00,000/-, being the cost of land only at the time of working out the capital gain. It was submitted that Ld.AO did not considered the cost of construction of Rs.1,72,29,936/- while arriving at the short-term capital gain and hence the Ld.AO erred in determining the actual capital gain. It was further submitted that short term capital gain is to be divided among 11 members, and the share of profit of the assessee will be only Rs. 1,23,870/-. 3.1 The Ld. CIT(A) however while considering the appeal observed as assessee has not filed any written submission despite opportunities being given by the notice issued. Further the Ld. CIT(A) observed that assessee had opted for ‘VSV scheme 2020’ and form 2 was issued to the assessee under such circumstances the Ld. CIT(A) dismissed the appeal on the presumption that form 3 is issued and appeal is withdrawn. Aggrieved by the order of the Ld. CIT(A) assessee is in appeal before this Tribunal.
4 ITA 810/Mum/2025; A.Y. 2013-14 Sulochana Suresh Mankumare 4. The Ld.AR at the outset submitted that, the assessee has filed present appeal before this Tribunal with the delay of 250 days and that assessee was not aware of the impugned order being passed, as she was under medical treatment. Subsequently, assessee’s brother expired and thus the assessee could not take cognizance of the appellate proceedings, causing delay in filling the present appeal before this Tribunal. The Ld.AR prayed that the delay may be condoned in the interest of justice, as assessee has made out sufficient read cost that laid to the delay. 4.1 On the contrary the Ld.DR opposed the condonation though he could not controvert the submissions of the assessee. We have perused the submissions advanced by both sides in light of records placed before us.
Having regard to the submissions by the assessee, we refer to the decision of Hon’ble Cochin Bench of this Tribunal in the case of Midas Polymer Compounds Pvt. Ltd. dated 25.6.2018, condoned the delay of 2819 days by observing as follows:
6. We have heard the rival submissions and perused the record. There was a delay of 2819 days in filing the appeal before the Tribunal. The assessee has stated the reasons in the condonation petition accompanied by an affidavit which has been cited in the earlier para. The assessee filed an affidavit explaining the reasons and prayed for condonation of delay. The reason stated by the assessee is due to inadvertent omission on the part of Shri Unnikrishnan Nair N, CA in taking appropriate action to file the appeal. He had a mistaken belief that the appeal for this year was filed by the assessee as there was separate Counsel to take steps to file this appeal before the ITAT. Therefore, we have to consider whether the Counsel’s failure is sufficient cause for condoning the delay. The Madras High Court considered an identical 5 ITA 810/Mum/2025; A.Y. 2013-14 Sulochana Suresh Mankumare issue in the case of Sreenivas Charitable Trust v. Dy. CIT (280 ITR 357) and held that mixing up of papers with other papers are sufficient cause for not filing the appeal in time. The Madras High Court further observed that the expression sufficient cause" should be interpreted to advance substantial justice. Therefore, advancement of substantial justice is the prime factor while considering the reasons for condoning the delay.
6.1 On merit the issue is in favour of the assessee. But there is a technical defect in the appeal since the appeal was not filed within the period of limitation. The assessee filed an affidavit saying that the appeal was not filed because of the Counsel’s inability to file the appeal. The Revenue has not filed any counteraffidavit to deny the allegation made by the assessee. While considering a similar issue the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder: (1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late (2) Refusing to condone delay can result in a meritorious matter being thrown at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. (3) 'Every day's delay must be explained' does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, commonsense and pragmatic manner. (4) When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a nondeliberate delay. (5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. (6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical 6 ITA 810/Mum/2025; A.Y. 2013-14 Sulochana Suresh Mankumare grounds but because it is capable of removing injustice and is expected to do so.
6.2 When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of nondeliberate delay. In the case on our hand, the issue on merit regarding allowability of deduction u/s. 80IB of the Act was covered in favour of the assessee by the binding Judgment of the jurisdictional High Court. Moreover, no counter-affidavit was filed by the Revenue denying the allegation made by the assessee. It is not the case of the Revenue that the appeal was not filed deliberately. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. As observed by Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount to legalise injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalising an illegal 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 2819 days has to be condoned.” Based on the above ratio the delay in filling the present appeal stands condoned. 5.1 On merits of the case, it is noted that, the Ld. CIT(A) dismissed the appeal on the ground that assessee proceeded in VSV. However, due to lack of fund assessee could not make the payment as per Form 2. It is also noted that, the assessee owns only 1/11th of share in the property, and has incurred certain expenditure towards the constriction. We find that the Ld.AO computed short term capital gains without having regards to the 7 ITA 810/Mum/2025; A.Y. 2013-14 Sulochana Suresh Mankumare fact that what was sold by the assessee and co owners includes land along with constructed premises. It is further not known what is the total share that assessee would received based on any capital contribution. Considering the totality of facts, we deem it appropriate to remit this issue back to the Ld.AO for de novo consideration. The Ld.AO is directed to considered the claim of assessee having regards to the evidences furnished in accordance with law. Needless to say that proper opportunity is 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 27/03/2025 Sd/- Sd/- (OMKARESHWAR CHIDARA) (BEENA PILLAI) Accountant Member Judicial Member Mumbai: Dated: 27/03/2025 Poonam Mirashi, Stenographer Copy of the order forwarded to: