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Facts
The assessee sold an immovable property for Rs. 74,28,000/- on 18.01.2013. Being a non-filer, a notice u/s 148 was issued, and subsequently, an ex-parte assessment order was passed treating the entire amount as short-term capital gains.
Held
The Tribunal found that the assessee did not make proper compliance before the AO regarding their claims of ancestral property and co-ownership. Therefore, the matter was restored to the AO for fresh adjudication after considering the assessee's submissions and directing the assessee to make requisite compliance.
Key Issues
Whether the CIT(A) erred in confirming the addition of capital gains without appreciating the assessee's claim of ancestral property, co-ownership, and entitlement to indexation.
Sections Cited
147, 144, 144B, 151A, 2(47), 148, 142(1), 250
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Before: SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL & SMT. RENU JAUHRI
Assessee by : Shri V. G. Ginde Revenue by : Ms. Monika H. Pandep Date of Hearing 19.12.2025 Date of Pronouncement 09.01.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the Learned Commissioner of Income-tax (Appeals), Mumbai/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] dated 30.07.2024 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2013-14.
The assessee has raised following grounds of appeal:
1. On the facts and in the circumstances of the case, and in law, the assessment order u/s.147 read with Section 144 read with Section 144B of the Income-tax Act, dated 13.09.2021, passed by the Faceless Assessing Officer ('FAO') of National Faceless Assessment Centre, is bad in law for lack of jurisdiction u/s A.Y. 2013-14 Balaram Janu Bhoir 144B(1) for passing assessment order u/s.147 prior to 29.03.2022, when notification u/s.151A was issued by the Central Government. The appellant, therefore, prays that the impugned assessment order be quashed.
2. On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) erred in confirming the addition of Rs.75,28,000/- as short-term capital gains on account sale of immovable property. The appellant submits that mere execution of a Development Agreement with the Developer during the relevant year for development of the land did not amount to a transfer u/s. 2(47) of the Act, and therefore, no capital gain arose in that year. In any event, the Ld. CIT(A) failed to appreciate that as per the Development Agreement the consideration was to be received by the appellant in the form of construed area to be built by the builder in future. The appellant, therefore, prays that the aforesaid addition be deleted.
3. The appellant further submits that the Ld. CIT(A) erred confirming the entire addition without appreciating that - (a) The subject-matter of land being ancestral property, was a long-term capital asset, and therefore, the resultant capital gain, if any, was to be assessed as long-term capital gain, and not as short-term capital gain; (b) The Ld. AO has assessed the entire sale price as the short-term capital gain, and that the appellant was entitled to deduct its cost of acquisition after indexation in accordance with law; and (c) The appellant was one of the three co-owners of the said land, and, therefore, his share in the capital gain, if any, was only 1/3rd. The appellant, therefore, prays in the alternative, and without prejudice, to the prayers made in Ground No.1 and 2 above, that the Ld. AO be directed to compute the capital gain, if any, as long-term capital gain, after considering the indexed cost thereof, and only 1/3rd share of such capital gain be assessed in the hands of the appellant.”
Brief facts of the case are that as per the information available in Annual Information Statement (AIS), it was found that the assessee sold an immovable property for a consideration of Rs. 74,28,000/- on 18.01.2013. However, the assessee was a non-filer and, therefore, a notice u/s 148 was issued on 09.03.2020 to which no compliance was made. Subsequently, several opportunities were provided to the assessee vide various notices issued u/s 142(1) of the Act. However, in the absence of any compliance on the part of the assessee, an exparte order u/s 144 r.w.s. 147 was passed on 13.09.2021 treating A.Y. 2013-14 Balaram Janu Bhoir the entire amount of Rs. 74,28,000/- as short-term capital gains in the hands of the assessee.
Aggrieved with this order, the assessee filed an appeal before Ld. CIT(A) and submitted in the grounds of appeal
that during the year under consideration, only a development agreement had been entered into and capital gain would be paid at the time of allotment of built-up area to the assessee. A copy of Joint Development Agreement (JDA) was also filed before Ld. CIT(A). However, Ld. CIT(A) dismissed the assessee’s appeal observing that the assessee did not clarify as to how the JDA was related to the sales agreement and held that the transfer of capital asset had taken placed in the year under consideration and transaction was within the purview of definition of transfer u/s 2(47) of the Act. Aggrieved with the order of Ld. CIT(A), the assessee is in appeal before us.
5. We have heard the Parties. It is clear that the assessee did not make proper compliance before Ld. AO with regard to his claim that the subject matter of land was an ancestral property and that the assessee was one of the three co-owners of the said land. Accordingly, the capital, if any, had to be calculated after considering only 1/3rd share in the hands of the appellant and after reducing the indexed cost of acquisition from the amount received as consideration. Since no verification of assessee’s claim has been made before A.Y. 2013-14 Balaram Janu Bhoir the lower authorities, we deem it appropriate to restore the matter back to the file of Ld. AO for a fresh adjudication after considering submissions of the assessee. The assessee is also directed to make requisite compliance before Ld. AO.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 09.01.2025.