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Facts
The assessee appealed against an order related to assessment year 2012-2013. There was a delay of 104 days in filing the appeal, attributed to the assessee's medical issues. The assessee had sold two properties, but did not offer rental income and capital gains for taxation, leading to a reassessment.
Held
The Tribunal condoned the delay in filing the appeal, citing medical reasons and the principles laid down in MST Katiji. The Tribunal directed the Assessing Officer to allow deduction towards the cost of construction for both floors of the first property, considering it as cost of acquisition. For the second property, the AO was directed to verify the purchase details and allow cost of acquisition.
Key Issues
Whether the delay in filing the appeal due to medical reasons should be condoned? Whether the cost of acquisition and improvement for the sold properties, including construction cost and indexation, are allowable deductions?
Sections Cited
147, 148, 144, 144 r.w.s.148
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, HYDERABAD “SM-A” BENCH: HYDERABAD
Before: SHRI MANJUNATHA G & SHRI RAVISH SOOD
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “SM-A” BENCH: HYDERABAD BEFORE SHRI MANJUNATHA G, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA.No.455/Hyd./2025 Assessment Year 2012-2013 Sri Sampathi Venkata Subbaiah, PUTTUR The DCIT, Central Circle, vs. PIN – 517 583. TIRUPATI. State of Andhra Pradesh. State of Andhra Pradesh. PAN AYRPS2958N (Appellant) (Respondent) For Assessee : Sri S. Rama Rao, Advocate For Revenue : Sri Aluru Venkata Rao, Sr. AR Date of Hearing : 21.08.2025 Date of Pronouncement : 04.09.2025 ORDER PER MANJUNATHA, G.
This appeal has been filed by the assessee against the Order dated 30.09.2024 of the learned Commissioner of Income Tax (Appeals)-12, Hyderabad, relating to assessment year 2012-2013.
At the outset, there is a delay of 104 days in filing the appeal before the Tribunal. The assessee has filed
2 ITA.No.455/Hyd./2025 affidavit explaining the reasons for the delay in filing the appeal before the Tribunal. The assessee submitted that, during the relevant period i.e. from 25.11.2024, he was not well due to Urinary Tract Infection with Pyelonephritis and was undergoing medical treatment as an in-patient with Sri Seshasai Hospital, Puttur from 25.11.2024 to 4.12.2024. At the time of discharging from the hospital, he was advised to take rest for two months i.e. till end of January, 2025. In the first week of February, 2025, again the assessee was admitted in the said hospital for medical treatment of recurrent Urinary Tract Infection with Pyelonephritis, Uncontrolled T2 Diabetes Mellitus. Therefore, the assessee had underwent medical treatment as inpatient from 02.02.2025 to 16.02.2025 and also filed copies of the two medical certificates to the affidavit. Further, at the time of discharge from the Hospital i.e., on 16.02.2025, the doctors have advised the assessee for one month rest i.e. till middle of February, 2025, for restoration of health. Further, it was the submissions of the assessee that, he was contemplating to entrust the preparation and filing of appeal before the 3 ITA.No.455/Hyd./2025 Hon'ble ITAT to an Advocate at Hyderabad and accordingly, as per the advice of the Advocate, the appeal was prepared and filed before the Tribunal on 14.03.2025. He submitted that, reckoning the period of two months from the end of the month in which the appellate order was passed by the learned CIT(A), there is a delay of 104 days in filing the appeal before the Tribunal. He submitted that, due to the above medical grounds, he could not file appeal before the Tribunal within the prescribed time limit and since, there is a ‘sufficient and reasonable cause’ and the circumstances beyond the control of the assessee which prevented the assessee to file the instant appeal before the Tribunal, the delay of 104 days in filing the appeal before the Tribunal may please be condoned in the interest of justice and pleaded to decide the appeal on merits.
Sri Aluru Venkta Rao, Sr. AR for the Revenue, on the other hand, did not strongly opposed for condonation of delay in lieu of medical grounds explained by the assessee with supporting documentary evidences.
4 ITA.No.455/Hyd./2025 4. We have heard both the parties and perused the affidavit filed by the assessee seeking for condonation of delay of 104 days in filing the appeal before the Tribunal. We find that, the reasons explained by the assessee in his affidavit are seems to be genuine and bonafide by taking note of chronology of dates and events furnished by the assessee along with supporting medical certificates to prove the circumstances which are beyond the control of the assessee in not filing the appeal before the Tribunal within the prescribed time limit. We find that, the Hon’ble Supreme Court in the case of Collector, Land Acquisituon vs., MST Katiji [1987] 167 ITR 471 (SC) has laid down certain principles for condoning the delay and also directed the lower Courts to follow a lenient approach for condoning the delay. Going by the principles laid down by the Hon’ble Supreme Court in the case of MST Katiji (supra), there is no dispute if an appeal is dismissed on account of technicalities, a meritorious case may be thrown-out of judicial review. Therefore, while condoning the delay, the Courts must have a liberal approach or lenient approach
5 ITA.No.455/Hyd./2025 considering the reasons given by the petitioners or appellants. Therefore, going by the principles laid down by the Hon’ble Supreme Court in the case of MST Katiji (supra) and also considering the submissions of the assessee with supporting documentary evidences, we condone the delay of 104 days in filing the appeal before the Tribunal and admit the appeal for adjudication.
Brief facts of the case are that, the assessee is an individual and has not filed his return of income for the assessment year 2012-2013. As per the information received from the ADIT (Investigation Unit)-4(4), Tirupati, it was noticed that, a rental agreement was entered by the assessee on 15.06.2011 with M/s. Sheshachala PG College, Puttur to rent-out his property. The assessee has also sold immovable property to the tune of Rs.40,68,000/-. The assessee has not admitted rental income and capital gains. Therefore, assessment has been reopened under section 147 of the Income Tax Act, 1961 [in short "the Act"] on the ground that, income chargeable to tax has been escaped assessment. A notice under section 148 of the Act dated
6 ITA.No.455/Hyd./2025 29.03.2019 was issued and served on the assessee. As there was no compliance from the assessee to the notice issued under section 148 of the Act, a letter dated 13.08.2019 was issued to the assessee, requiring him to file the return of income. But, there is no response from the assessee to the letter too. Hence, a show-cause notice under section 144 of the Act dated 25.11.2019 was issued to the assessee, proposing additions towards capital gain derived from sale of property. Once again, the assessee did not choose to file any response to the show-cause notice. Therefore, the Assessing Officer passed best Judgment assessment order under section 144 r.w.s.148 of the Income Tax Act, 1961 and determined the total income of the assessee at Rs.47,68,000/- by making addition of Rs.7 lakhs towards income from house property and addition of Rs.40,68,000/- towards income from sale of immovable property.
On being aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). Before the CIT(A), the assessee has filed detailed written submissions on the issue, which has been reproduced at 7 ITA.No.455/Hyd./2025 Para-5.1 at pages-7 to 14 of the learned CIT(A) order. The sum and substance of the arguments of the assessee before the learned CIT(A) are that, the Assessing Officer has erred in computing income from sale of property without allowing cost of acquisition and improvement to the property. The assessee had also filed detailed computation, explaining the consideration received from transfer of property, cost of acquisition of the property including year of construction of building, extent of building constructed on the property etc. The learned CIT(A) after considering the relevant submissions of the assessee and also taking note of relevant reasons given by Assessing Officer observed that, the assessee has sold two properties i.e., one as per the Sale Deed Document No.1849/2011 super built-up area of 2255.5 square feet in ground floor of the building on the land area 347.58 square yards for a consideration of Rs.31,40,000/-. The assessee had also sold another property vide Sale Deed Document No.1848/2011 consisting of 515.55 varias of land for a consideration of Rs.9,28,000/-. As per the submission of the assessee, the 8 ITA.No.455/Hyd./2025 above properties were purchased on 02.05.2001 and 18.01.2003 and 13.12.2004 which were supported by the documentary evidences. Further, as per the assessee, the construction cost in financial year 2002-2003 was at Rs.35,56,457/-. However, no proof of cost of construction incurred was submitted. Therefore, the learned CIT(A) after considering the relevant submissions of the assessee observed that, since the assessee could not file relevant evidences for cost of acquisition of the property and construction of building in the year 2002-2003, directed the Assessing Officer to consider the construction of the building immediately before the date of existence of rent agreement on 15.06.2011. The learned CIT(A) further observed that, since the assessee has constructed the building for the purpose of running an educational institution, has adopted construction cost of Rs.261/- per square feet on a total constructed area of 2255.5 square feet on the building existed in the ground floor and directed the Assessing Officer to allow deduction towards cost of acquisition against sale of property for a consideration of 9 ITA.No.455/Hyd./2025 Rs.31,40,000/-. In so far as second property sold for an amount of Rs.9,28,000/-, the learned CIT(A) has not allowed any deduction towards cost of acquisition on the ground that, assessee could not furnish any evidence for purchase of property.
Aggrieved by the order of the learned CIT(A) the assessee is now, in appeal before The Tribunal.
Sri S. Rama Rao, Advocate-Learned Counsel for the Assessee referring to Sale Deed for sale of the property no.1 for a consideration of Rs.31,40,000/- submitted that, as per the Schedule of the property appearing in the Sale Deed, there is a two floor building consisting of 2255.5 square feet on the ground floor and 2255.5 square feet on the first floor of the building. But, the learned CIT(A) has allowed deduction towards cost of acquisition of property only in respect of 2255.5 square feet in ground floor and has not considered the building in first floor. He, therefore, submitted that, since there is no dispute on the rate of construction, the Assessing Officer may be directed to allow
10 ITA.No.455/Hyd./2025 deduction towards cost of acquisition of the property being construction of building for remaining extent of 2255.5 square feet existing on the first floor of the building. Learned Counsel for the Assessee further referring to Sale Deed copies for purchase of property in respect of sale of second property for a consideration of Rs.9,28,000/- submitted that, the assessee has furnished relevant copies of sale deed for purchase of property, but, the learned CIT(A) has not allowed deduction towards even cost of land. Therefore, he submitted that, a direction may be given to the Assessing Officer to allow deduction towards cost of acquisition of land.
Sri Aluru Venkata Rao, Sr. AR for the Revenue, on the other hand, supporting the order of the learned CIT(A) submitted that, although, the assessee refers to various documents including vernacular language copy of Sale Deed and translated copy of the Sale Deed, it is not clear whether the said documents were furnished before the learned CIT(A) or not. Therefore, he submitted that, the matter may be remitted to the file of learned CIT(A) or 11 ITA.No.455/Hyd./2025 Assessing Officer to consider relevant evidences furnished by the assessee to allow deduction towards cost of acquisition and cost on improvement.
We have heard both the parties, perused the material on record and gone through the orders of the authorities below. Admittedly, the assessee has sold two properties i.e., one for a consideration of Rs.31,40,000/- and second one for a consideration of Rs.9,28,000/-. The Assessing Officer has made addition towards total consideration received for sale of property, in absence of any evidence for cost of acquisition and cost on improvement. The learned CIT(A) allowed cost of acquisition being cost of construction in respect of sale of first property for a consideration of Rs.31,40,000/-, however, in respect of sale of second property for a conservation of Rs.9,28,000/-, no deduction has been allowed towards cost of acquisition, in absence of relevant details. Learned Counsel for the Assessee has filed relevant copies of Sale Deed of property, copies of Purchase Deeds in respect of respective financial years and also cost of acquisition of the property and year of 12 ITA.No.455/Hyd./2025 construction. Upon perusal of the relevant copies of Sale Deeds for sale of two properties, there is no dispute with regard to consideration received for transfer of property. In fact, the Assessing Officer has also not disputed the consideration received for sale of property. The only dispute is with regard to cost of acquisition of the property being purchase cost of property and construction of building. As per the recitals of the Sale Deed including relevant Schedule provided therein in respect of sale of property for a consideration of Rs.31,40,000/-, there is a building to the extent of 2255.5 square feet in ground floor and first floor. The learned CIT(A) allowed deduction towards cost of construction of building to the extent of 2255.5 square feet existed on the ground floor of the property. In respect of building existed on the first floor of the property, the learned CIT(A) has not allowed any deduction. In so far as the rate of construction of the property the learned CIT(A) has adopted Rs.261/- per square feet as cost of construction of the building. The only dispute is with regard to year of construction. The assessee has claimed that, the building 13 ITA.No.455/Hyd./2025 was constructed in the year 2002-2003, for which, he refers to the recitals of the Sale Deed, where the construction of building was referred to in the year 2002. The learned CIT(A) directed the Assessing Officer to allow indexation benefit from the year 2011 only on the basis of rental agreement entered into by the assessee with the tenant. Since, the construction of building was not disputed and further, the year of construction was also mentioned in the recital of the Sale Deed, in our considered view, the benefit of indexation should be allowed from the year of construction i.e., from the financial year 2002-2003.
Coming back to the cost of construction of the building. There is no dispute that, there was a two floor building consisting of 2255.5 square feet in each floor. In fact, the learned CIT(A) has allowed deduction towards cost of construction of the building existed on ground floor by adopting cost of construction @ Rs.261/- per square feet and the same has been accepted by the Revenue. Since, there is no dispute on the existence of building in the first floor to the extent of 2255.5 square feet, which is evident
14 ITA.No.455/Hyd./2025 from the recitals of Sale Deed, in our considered view, the learned CIT(A) was erred in not allowing deduction towards cost of construction of building to the extent of 2255.5 existed on the first floor of the building. Therefore, we direct the Assessing Officer to allow cost of acquisition being cost of construction of building existed in the ground floor to the extent of 2255.5 square feet and first floor to the extent of 2255.5 square feet by adopting cost of construction of Rs.261/- per square feet.
In so far as sale of second property for a consideration of Rs.9,28,000/-, the assessee has furnished copies of Purchased Deed and argued that, the Assessing Officer may be directed to allow cost of acquisition of the property, while computing capital gain. From the details filed by the assessee, we are unable to verify which is the relevant copy of Sale Deed for cost of construction of property sold for a consideration of Rs.9,28,000/-. In case, the assessee is able to file relevant copies of Sale Deed to prove purchase of property against the sale of property for consideration of Rs.9,28,000/-, then, the Assessing Officer
15 ITA.No.455/Hyd./2025 is directed to verify the claim of the assessee and allow cost of acquisition as per the details submitted by the assessee.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 04.09.2025.