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Facts
The assessee sold immovable property and equities shares without filing a return of income. Notices were issued, but the assessee did not respond. The Assessing Officer completed the assessment by adding the sale consideration as capital gains.
Held
The Tribunal found that notices were sent via email despite the assessee explicitly opting out of email communication. This lack of proper communication prevented the assessee from presenting their case. Therefore, the case was remitted back to the CIT(A) for a fresh decision with an opportunity for the assessee to be heard.
Key Issues
Whether the assessee was properly notified regarding assessment and appellate proceedings when notices were sent via email against their explicit preference for physical notices.
Sections Cited
147, 148, 144
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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K
Per Laxmi Prasad Sahu, Accountant Member :
This is an appeal filed by the assessee against CIT(A)’s order vide DIN &Order No: ITBA/NFAC/S/250/2024-25/1074769649(1) dated 20.03.2025.
Briefly stated the facts of the case are that as per the information available in the income tax web portal for Financial Year 2017-18, the assessee has sold immovable property but did not file return of income. Accordingly, noticed was issued to the assessee under section 148 of the Act. From the information it was noticed that assessee along with another person sold immovable property for a consideration of Rs.53,83,000/-. Further, the assessee had sold equities shares amounting to Rs,13,26,390/- but there is no capital gain offered. Therefore, it was observed that the assessee had escaped income within the meaning of the provision of section 147 of the Act. Accordingly, various notices were issued to the assessee but assessee did not respond to any of the notices. Thereafter, a show cause notice dated 27.02.2023 was issued to the assessee and assessee submitted reply and it was observed that the said property was purchased by the assessee in the Financial Year 1998-99 and sold during the Financial Year 2017-18 but it was noted that the assessee had not furnished purchase cost of the said property. Therefore, cost of acquisition was not granted to the assessee. Accordingly, the entire sale consideration was added as long term capital gain. Further, in respect of purchase / sale of equity shares for Rs.13,17,172/-, assessee did not offer capital gain. Therefore, the difference amount of Rs.11,99,887/- was also added as short term capital gain and assessment was completed under section 147 r.w.s 144 of the Act.
Aggrieved from the above Order, assessee filed appeal before the CIT(A).During the appellate proceedings, the learned CIT(A) issued various notices of hearing the case on different dates which is tabulated in para 5.1 of his Order but there was no response from the assessee’s side. Accordingly, the appeal was decided on the basis of the documents available and dismissed the appeal of the assessee.
Aggrieved from the above Order, assessee filed appeal before the Tribunal. The learned AR submitted that in Form No.35 it was specifically mentioned by the assessee for “whether notices / communications may be sent on email” as “No” and email was sent to the assessee and he submitted that in Form No.35 it was clearly mentioned that notices are not to be send through email, however, the learned CIT(A) communicated the notices of hearing through email. Therefore, it is not the mistake of the assessee for not responding to the notices and requested that further chance may be given to the assessee and undertook that assessee shall comply with the notices.
On the other hand, learned DR relied on the Order of authorities and submitted that assessee is non-filer inspite of having taxable income. Accordingly, it was assumed that there is escapement of income as per provisions of section 147 of the Act and notice was issued to the assessee. The assessee did not file return of income in response to notice issued. He did not reply to the various notices issued by both the lower authorities. Even the cost of acquisition of the sale of property was not established by the assessee. Therefore, AO completed the assessment under section 144 of the Act and before the learned CIT(A), after providing several opportunities to represent his case, assessee did not respond to the notices and hence objected to any further chance to the assessee. It was submitted that there is no system to send any physical notice by NFAC. Therefore, it was sent on the email provided by the assessee.
In the rejoinder, the learned Counsel submitted that why in From No.36 the option has been provided if the notices are to be send only on the emails. So, this column may be removed in Form 35. Assessee opted not to send notices through email. Inspite of that, the Department has sent notices through email. It is a mistake on the part of learned CIT(A); why the assessee should suffer the mistake of the Revenue. Therefore, assessee must be given opportunity to represent his case.
Considering the rival submissions and on perusal of the entire material available on record and Orders of authorities below, we noted that assessee is a non-filer. Therefore, notice under section 148 of the Act was issued to the assessee and during the assessment proceedings, it was observed that the assessee had sold the capital asset but purchase cost of the said property could not be established by the assessee as well as there was no response with regard to the purchase / sale of equity shares and during the appellate proceedings, various notices were issued to substantiate the case of the assessee but there was no response to any of the notices.
On going through From No.35, it was observed that in the column regarding notice communication, the assessee has mentioned as “No”. Inspite of that notice was sent on the email provided by the assessee. Considering the submissions of both the parties, we found substance on the submission of the learned AR. Before us, the learned Counsel has filed Paper Book Page Nos.1 to 55 which is placed on record in which assessee has placed From 26AS, copy of sale deed and purchase deed, valuation report, copy of transaction statement showing purchase and sale of listed equity shares and copy of notice. We noted that the assessee had denied to send notice through emails inspite of that the learned CIT(A) has send notices through emails which is not correct. Considering the arguments of the learned DR that the physical notice is not sent as per new scheme only soft copy of the notices can be sent through email, therefore it is noted that the column provided in Form No.35 is not relevant since the asessee could not represent his case for want of communication / notices. Therefore, considering the facts of the case and in the interest of justice, we are remitting this issue back to the file of the learned CIT(A) and decide the issue as per law after giving reasonable opportunity of being heard to the assessee and assessee is directed to substantiate his case with documentary evidence and not seek unnecessary adjudication for early disposal of the case. In case of failure, no second leniency shall be granted to the assessee.
In the result, appeal filed by the assessee is allowed for statistical purposes.