INDERPAL SINGH CHADHA,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX 22(1), MUMBAI

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ITA 21/MUM/2025Status: DisposedITAT Mumbai18 February 2025AY 2012-13Bench: SHRI NARENDER KUMAR CHOUDHRY (Judicial Member), SHRI PRABHASH SHANKAR (Accountant Member)1 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A) dismissed the appeal solely on the ground of non-prosecution without adjudicating the issues on merits. The Tribunal remanded the matter back to the CIT(A) for de novo adjudication, emphasizing the principles of natural justice.

What were the facts?

The assessee preferred an appeal against the order of the CIT(A) for AY 2012-13. The assessee had sold immovable property and offered LTCG, but failed to provide documentation for the cost of acquisition. The CIT(A) confirmed the addition of Rs. 1,26,50,251/-.

What were the issues?

Whether the CIT(A) was justified in dismissing the appeal on grounds of non-prosecution without deciding on merits, and whether principles of natural justice were followed.

Which sections of the Income-tax Act were involved?

Section 45,Section 148,Section 151,Section 250,Section 48,Section 54,Section 54B,Section 54D,Section 54EC,Section 54F,Section 54G,Section 54GA,Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI “C” BENCH, MUMBAI

Before: SHRI NARENDER KUMAR CHOUDHRY, JM & SHRI PRABHASH SHANKAR, AM

For Respondent: Shri Mahesh Pamnani, Sr.DR
Pronounced: 18/02/2025

आदेश / O R D E R

Per Prabhash Shankar, AM:

1.

This appeal preferred by the assessee emanates from the order of the ld. CIT(A), Mumbai, dated 27.02.2024 for A.Y.2012-13 as per the following grounds of appeal :-

1. Addition amounting to Rs, 1,26,50,251/- u/s.45 of the Income Tax Act, 1961: a. The CIT(A) has erred in confirming the addition of Rs. 1,26,50,251/- on sale of immovable property by the appellant where addition is determined as difference of Sale value of consideration of Rs. 1,57,60,901/- and LTCG paid on such sale of Rs. 31,10,650/- without considering the cost of acquisition and exemption claimed by the appellant. The Ld. CIT(A) has erred in confirming the addition of Rs. 26,50,261/- against the cost of acquisition reduced by the appellant from sales consideration white calculating the Capital Gain without taking into consideration provision of Sec 48 of the Income Tax Act c. The Ld. CIT(A) has erred in confirming the addition of Rs. 1,26,50,251/- without considering the bank certificate submitted duly justifying the amount of Rs. 1,00,00,000/- has been deposited in the capital gain scheme within the due date to file return of Income. 2. a. The Ld. AO failed to provide the reasons recorded for reopening the assessment, as required under Section 148 of the Income Tax Act, 1961. This denial of information violates the principles of natural Justice and renders the reopening of assessment bad in law, b. The Ld. AO failed to provide a copy of the mandatory approval obtained from the Principal Commissioner of Income Tax (PCIT) for reopening the assessment under Section 151 of the Act. This omission makes the reopening invalid and unsustainable in law. c. The Ld. AO issued various notices with response deadlines of less than 7 days, which provided insufficient time for the Appellant to adequately respond and present their case. Such short timelines are in clear violation of the principles of natural justice, thereby vitiating the entire assessment proceedings.

3. The Ld. AO has erred in confirming the addition of Rs. 1,00,00,000/- claimed as exemption u/s 54 without taking into consideration the requisite documents duly submitted by the appellant

2.

At the outset, it may be stated here that in this case, appellate order was passed u/s 250 of the Act on 27.02.2024.However,the appeal before this Bench was filed on 2.1.2025,after a delay of almost 11 months. The assessee has filed an affidavit citing his ill-health from the year 2023,lack of familiarity with technology, unawareness of the order received on e-mail of the CA and indisposition of the Chartered Accountant for the said delay with a request to condone the same. After considering the submissions made, delay in filing of the present appeal is condoned.

3.

As per the assessment order, it was noted that during the year, assessee had sold immovable property for Rs. 3,25,00,000/-. In the original return the assessee had offered 31,10,650/- as long term capital gain after deducting the cost of Acquisition Rs. 26,50,251/- and deduction u/s 54/54B/54D/54EC/54F/54G/54GA Rs. 1,00,00,000/-. However, the assessee had not submitted any documents regarding the purchase of said property. Hence, cost of acquisition could not be ascertained in absence of any valid document. The assessee asked to file the documentary evidence vide show cause dated 13.12.2019. The assessee replied the show cause notice but did not file any documentary evidences regarding the cost of acquisition of the property. In the absence of any details furnished by assessee, the sources of acquisition of the property sold also remained unexplained. Therefore, full value of consideration in hands of assessee was Rs. 1,57,60,901/- as the assessee had offered LTCG of Rs. 31,10,650/- in the original return. Hence, difference between the full value of consideration and LTCG paid Rs. 1,26,50,251/- was added to the total income of the assessee under the head Capital Gains u/s 144 of the Income Tax Act,1961.

4.

Even in the appellate proceedings, there was no compliance.

The assessee did not come forward with any explanation to the impugned addition despite adequate opportunity of hearing. During appellate proceedings, numerous notices under section 250 of the Act were issued to the assessee, which has also been tabulated by the ld. CIT(A) as under:-

Date of Notice issued Date of hearing on Mode of Notice Reply/Remarks u/s.250 or before 23/01/2021 08/02/2021 Online/ITBA No reply. 25/08/2021 31/08/2021 Online/ITBA No reply. 07/02/2024 19/02/2024 Online/ITBA No reply.

5.

In the appellate proceedings, the initial burden lies on the assessee to prove that the facts and the findings of the Assessing Officer are incorrect with the help of verifiable documents. In this case, the assessee did not choose to avail the opportunities in the appellate proceedings which has led to the only conclusion that he had no evidence or explanation against the order of the Assessing Officer. Accordingly, the ld.CIT(A) dismissed the appeal on account of non-prosecution.

6.

Before us, ld. AR submitted that the principle of natural justice had not been followed in its case. The ld. CIT(A) has passed the impugned order without providing sufficient opportunity of hearing to it.

The ld AR submitted that another opportunity may be provided to the assessee so that it could be able to represent its case before the ld. CIT(A).On the other hand, ld. Sr. DR relied on the assessment and appellate orders.

7.

We have heard the rival parties and perused the material available on records. It is observed that the ld.CIT(A) dismissed the appeal solely on the ground of non-prosecution. He failed to adjudicate the issues raised in the grounds of appeal and did not examine the material available on record. Such dismissal without deciding the appeal on merits is contrary to the principles of natural justice. It is settled law that it is the duty of the appellate authority to dispose of an appeal on merits after considering the material on record, even if the appellant fails to appear.

8. However, it is equally true that it is the fundamental duty of the assessee to diligently pursue the appeal and comply with the notices and proceedings initiated by the Revenue authorities. The framework of the Act and the e-proceedings system rely heavily on the co-operation and active participation of the taxpayer. Despite the notices under section 250 of the Act by the CIT(A), no substantive explanation was submitted. The failure of the assessee to make any response reflects gross negligence and an indifference that is unacceptable. The principles of natural justice operate both ways, while the Revenue authorities are required to provide a reasonable opportunity of being heard, the taxpayer is equally obligated to co-operate with the authorities and utilize the opportunities extended. In the present case, despite receiving adequate opportunities, the assessee displayed a casual approach and indifference, which not only delayed the appellate proceedings but also burdened the judicial system. Such conduct cannot be condoned.

9. In light of the non-compliant attitude of the assessee, levy of cost needs to be evaluated in this case as cost serves as a necessary deterrent to ensure that taxpayers act with due diligence in pursuing their appeals and respecting the timelines and processes laid down under the law. It also emphasizes the principle that while justice must be ensured, the system cannot cater to indolence or negligence on the part of the assessee.

10. As the ld. AR has requested before us that the assessee shall be given one more opportunity and this request which was not objected by the ld. DR, in such a scenario, we are of the opinion that the scales of justice demands that the matter should be verified and revisited at the level of ld. CIT(A) and accordingly, we are of the considered view that the matter should be remanded back to the file of ld. CIT(A) for de novo adjudication by him while applying the principles of natural justice after affording sufficient opportunity of being heard to the assessee.

11.

Moreover, considering assessee’s non-compliant and non-co- operative attitude and lack of diligence in pursuing the appeal, we impose a cost of Rs.11,000/- on it. The cost shall be deposited to the credit of the Income Tax Department within 15 days of the receipt of this order and proof of payment shall be submitted before the ld.CIT(A). Thus, the grounds of appeal

of the assessee stand allowed for statistical purposes.

12. In the result, the appeal of the assessee stands allowed for statistical purposes. Order pronounced in the open court on 18/02/2025.

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