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Facts
The assessee's case was reopened based on information that possession of property was handed over to developers for construction, leading to capital gains. An additional cash deposit was also treated as unexplained income. The assessee appealed to the CIT(A) after the AO made additions, but the CIT(A) dismissed the appeal.
Held
The Tribunal held that the CIT(A) erred in dismissing the appeal without providing an adequate opportunity for hearing and without deciding the case on merits. Therefore, the matter was remitted back to the CIT(A) for a fresh decision.
Key Issues
Whether the CIT(A) erred in dismissing the appeal without granting an opportunity of being heard and without adjudicating the grounds on merits. Whether the reopening of assessment and the additions made were justified.
Sections Cited
250, 147, 148, 144B, 143(2), 142(1), 2(47)(v), 53A, 68, 234A, 234B, 234C
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Income Tax Appellate Tribunal, “SMC’’BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the order of the ld. CIT(A)/NFAC dated 13.02.2025 vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1073254630(1) passed u/s. 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2015-16.
The assessee has raised the following grounds of appeal:
1. The impugned order of the Commissioner of Income Tax (Appeals), National Faceless Assessment Center, Delhi, [for short 'CIT(A), NFAC'] passed under section 250 of the Income Tax Act, 1961, is opposed to law, weight of evidence, probabilities, facts and circumstances of the Appellant's case.
2. The learned CIT (A), NFAC is not justified in dismissing the appeal of the Appellant without affording adequate opportunity of representation to the appellant on the facts and circumstances of the case.
3. The learned CIT(A), NFAC erred in dismissing the appeal of the appellant and confirming the assessment order for default without going into the merits of the grounds of appeal on the facts and circumstances of the case.
4. The learned CIT(A), NFAC ought to have appreciated that it is a well settled position of law that no appeal can be dismissed merely on grounds of non-prosecution and the grounds of the appeal ought to be adjudicated on the material available on record even in such circumstances.
5. The learned CIT(A), NFAC has erred in dealing with the merits of the matter very superficially only and mechanically confirming the order of the assessing officer on the facts and circumstances of the case.
The appellant denies herself liable to be assessed to Rs. 18,04,44,060/-pursuant to the impugned assessment order u/s 147 r.w.s 144B of the Act as against returned income of Rs.1,44,41,710/- on the facts and circumstances of the case.
The learned Assessing Authority has not assumed valid or proper jurisdiction u/s 147 / 148 of the Act in as much as necessary conditions for re-opening of the assessment are not satisfied. Consequently, the impugned assessment order is liable to be quashed as not in accordance with law on the facts and circumstances of the case.
8. The learned CIT(A) is not justified in confirming the addition of Rs. 16,51,02,353/- as long-term capital gain on the facts and circumstances of the case.
The learned Assessing Authority failed to appreciate that there is no transfer of capital asset within the meaning of section 2(47)(v) of the Act or section 53A of the Transfer of Properties Act, 1882 during the assessment year under appeal and hence there is no taxable capital gain on the facts and circumstances of the case.
10. The learned CIT(A) erred in confirming the addition to the extent of Rs. 9,00,000/- deposits in the form of cash deposit as unexplained money u/s. 68 of the Act on the facts and circumstances of the case.
The learned Assessing Authority erred in not appreciating that there can be no doubt as to the rental income which is one of the sources of cash has already been included as income for the year and therefore the question of substantiating the same with documentary evidences again does not arise on the facts and circumstances of the case.
12 The learned Assessing Authority also failed to take note that there was substantial cash brought forward from the earlier year and there was no reason to disregard the same on the facts and circumstances of the case.
The learned CIT(A), NFAC and the assessing officer are not justified in making the above additions merely on the presumption, surmise and conjecture and not based on any cogent material on the facts and circumstance of the case.
The learned CIT(A), NFAC and Assessing Authority is not justified in levying interest u/s 234A, 234B and u/s 234C of the Act on the facts and Page 3 of 6
circumstances of the case and further the quantum period and are not discernible from the assessment order. 15. The appellant craves leave to add, alter, delete, amend or substitute any or all of the above grounds urged above as may be necessary at the time of hearing. 16. For these and other grounds that may be urged at the time of hearing of appeal, the appellant prays that the appeal may be allowed for the advancement of substantial cause of justice and equity.”
The brief facts of the case are that as per the information, the assessee handed over the possession of the part property on 01.08.2014 to the developers for constructions of tower/ block No. 1 & 2 out of 7 towers/block for which the JDA was entered. Hence as on 01.08.2014, the capital gains arose in the hand of the assessee on the transfer of the part property for constructions of block No. 1 & 2 of the Sterling infinia project. Based on this information, the case of the assessee was reopened by issuing the notice u/s. 148 of the Act. The assessee in response filed her return of income on 26.08.2022 by declaring total income of Rs.1,44,41,710/-. Thereafter, the notices u/s. 143(2) as well as142(1) of the Act were issued and the assessee filed her detailed submission on various dates. On considering the reply/submissions of the assessee, the AO computed the taxable LTCG of Rs.16,51,02,353/- by adopting fair market value of Rs.7,900/- per sqft.(21061 Sq ft * 7900) to arrive at the sales consideration of Rs. 16,63,81,900/-.
3.1 Further, the AO noticed that the assessee had also deposited cash amounting to Rs.9,00,000/- on 28.11.2014 in Oriental Bank of Commerce. The assessee in its reply stated that it is out of the rent receipts and cash in hand brought from the previous year. The AO held that the assessee had not substantiated the same by furnishing the details of rent received, name and address of the Page 4 of 6 person from whom the rent received along with the rent agreement etc. and accordingly cash deposits of RS.9,00,000/-was also added to the income of the assessee as income from unexplained sources u/s. 68 of the act. The AO accordingly completed the assessment on a total income of Rs.18,04,44,063/- u/s. 147/143(3) of the Act.
Aggrieved by the order of AO passed u/s. 147/143(3) of the Act dated 01.05.2023, the assessee preferred an appeal before the ld. CIT(A)/NFAC.
The ld. CIT(A)/NFAC dismissed the appeal of the assessee by holding that the assessee is not interested in filing any details during the appellate proceedings and avail the opportunity under the principle of natural justice. Further, the ld. CIT(A)/NFAC observed that neither any written submissions were filed nor any adjournment sought and accordingly held that the assessee has no evidence to substantiate grounds taken.
6. Again aggrieved by the order of ld.CIT(A)/NFAC, the assessee has filed the present appeal before this Tribunal.
7. Before us, the ld. A.R. of the assessee vehemently submitted that ld. CIT(A)/NFAC grossly errored in passing the order without providing opportunity of being heard which is a gross violation of the principles of natural justice. Further, the ld. A.R. submitted that ld. CIT(A)/NFAC ought to have passed order on merits taking into consideration the material available on record. Lastly, the ld. A.R. submitted that the assessee had in fact sought an adjournment on 13.02.2025 by stating that her CA was unwell and the assessee also needed time to collate the necessary documents. However, the ld. CIT(A)/NFAC without considering the adjournment
Page 5 of 6 application, passed an order on the very same day i.e. on 13.02.2025 dismissing the appeal of the assessee.
The ld. D.R. on the other hand supported the order of the Authorities below.
9. We have heard the rival submissions and perused the material available on record. It is an undisputed fact that the assessee could not represent her case before the ld.CIT(A)/NFAC. Before us, the assessee submitted the copy of the e-proceedings response acknowledgement filed on 13.02.2025 in which we found that the assessee had requested for further time as her CA was unwell and the assessee was also in the process of collating the documents required to make the submissions before the ld.CIT(A)/NFAC. Further, we also take the note of the fact that the ld.CIT(A)/NFAC had also not passed the order on merit of the case. As per section 250(6) of the Act, the order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision. This being so, in the interest and justice of fair play and as requested by ld. A.R. of the assessee, we deem it fit and proper to remit the entire issue in dispute to the file of ld.CIT(A)/NFAC to decide a fresh in accordance with law. Needless to say, a reasonable opportunity is being heard must be granted to the assessee. The assessee is also directed to co-operate with the proceedings before the ld.CIT(A)/NFAC for the early disposal of Appeal and should not take unnecessary adjournment. We make it clear that in case of further default, the assessee shall not be entitled for any leniency. It is ordered accordingly.
In the result appeal filed by the assessee is partly allowed for statistical purposes.