SRINIVAS REDDY KOTHAGADI,RANGA REDDY DISTRICT vs. INCOME TAX OFFICER, WARD-1, VIKARABAD

Succinctly stated, the A.O., observed that the assessee, along with his two other family members, had sold land situated at Guddimalkapure Village, Hyderabad, the market value of which as adopted by the Stamp Valuation Authority was more than the sale consideration disclosed in the sale deeds, which, thus, attracted the provisions of Section 50C of the Act. However, the A.O. observed that the assessee had not filed his return of income for the year under consideration. Accordingly, the A.O. initiated proceedings u/s 147 of the Act. Notice under Section 148 of the Act, dated 28.03.2019 was issued to the assessee.

During the course of assessment proceedings, the A.O. at the request of the assessee referred the valuation of the subject land to the District Valuation Officer (DVO). However, as the assessment was getting time-barred and the report from the DVO was yet to be received, therefore, the A.O. adopted the value taken by the Stamp Valuation Authority, i.e., Rs. 2,15,11,610/- and worked out the Long-Term Capital Gain (LTCG) in the hands of the assessee vide his order passed u/s 147 r.w.s. 144 of the Act, dated 13.12.2019.

Aggrieved, the assessee carried the matter in appeal before the CIT(A). As the assessee, despite having been afforded five opportunities had failed to participate in the proceedings before the CIT(A), therefore, the latter was constrained to proceed with and dispose of the appeal vide an ex-parte order. The CIT(A), observing that no infirmity did arise from the view taken by the A.O. who had correctly applied the provisions of Section 50C of the Act, upheld his order and dismissed the appeal.

The assessee, being aggrieved, has carried the matter in appeal before us.

We have heard the learned authorized representatives of both parties, perused the orders of the lower authorities and the material available on record.

Shri A.V. Raghuram, Advocate, the learned Authorized Representative (for short, “ld. AR”) for the assessee, at the threshold of hearing of the appeal, submitted that the assessee had for no fault on his part remained divested of an opportunity to participate in the proceedings before the CIT(A) and prosecute his case. Elaborating on his contention, the ld. A.R submitted that though the assessee, in the “Memorandum of Appeal” i.e. Form No. 35, had specifically opted out of from service of the notices/communications from the office of the CIT(A) through e- mail, but on neither of the five occasions on which the appeal was fixed for hearing any hard/physical copy of the notice intimating the fixation of the hearing of appeal was ever served upon him. The ld.AR submitted that as the assessee had suffered the dismissal of his appeal without having been validly put to notice about the fixation of the same, therefore, the order passed by the CIT(A) cannot be sustained and is liable to be struck down on the said count itself.

Per contra, Dr. Sachin Kumar, the Learned Senior Departmental Representative (for short, Ld. DR) relied on the orders of the lower authorities. The Ld. DR submitted that, as the notices intimating the fixation of hearing of the appeal on all the five occasions were served to the assessee through his ITBA portal, therefore, no infirmity could be attributed to the validity of the service of the said notices. The Ld. D.R to buttress his claim done, had tried to draw support from Rule 127 of the Income-tax Rules, 1962. The Ld. D.R submitted that, as per Rule 127(1)(a) and (b), dropping of the notices at the e-mail address provided by the assessee in his income-tax return was a valid service.

Apropos the Ld. DR's claim that as per Rule 127(2)(b) of the Act, the service of the notices by dropping the same in the e-mail address provided by the assessee in his income-tax return is to be construed as a valid service, we are unable to concur with the same. As the assessee had specifically opted out of service of notices/communications through e-mail, therefore, there could be no justification for the CIT(A), to have brushed aside the said material aspect, and carried out the service of notices by dropping the same in his e-portal account. For the sake of clarity, the relevant extract of Form No.35 is culled out as under: 12. We have thoughtfully considered the contentions advanced by the Authorized Representatives. Admittedly, it is a matter of fact borne from the record that despite the assessee had opted out of service of notice/communication from the office of CIT(A) through e-mail, on neither of the occasions any hard/physical copy of the notice intimating the fixation of the appeal was ever served upon him. Although, it is the Ld. D,R’s claim that there is no mechanism for carrying out service of notices otherwise than through e-mail, but we are unable to persuade ourselves to concur with the same. As an assessee-appellant at the stage of filing an appeal before the CIT(A) is provided with an option in the “Memorandum of Appeal” i.e Form No. 35 regarding the mode of service of notice/communication, therefore, the aforesaid contention of the Ld. DR being devoid and bereft of any substance cannot be accepted.

Based on our aforesaid deliberations, we are of the considered view that as the assessee in the present case, in the absence of any notice intimating the fixation of hearing of the appeal validly served upon him, had remained divested of an opportunity to participate in the assessment proceedings and put forth his case before the CIT(A), therefore, the matter in all fairness requires to be restored to his file with a direction to re- adjudicate the same. The CIT(A) is directed to re-decide the appeal vide a speaking order qua the issues based on which the impugned order of assessment had been assailed by the assessee- appellant before him. Needless to say, the CIT(A) shall in the course of set-aside proceedings afford a reasonable opportunity of being heard to the assessee. As we have restored the matter to the file of the CIT(A) for fresh adjudication, therefore, we refrain from adverting to the merits of the case which are left open.

Resultantly, the appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations.

As the facts and the issue involved in the present appeal remain the same as were there before us in the appeal filed by Shri Srinvas Reddy Kothagadi Vs. ITO, Ward 15(1), Hyderabad in A.Y. 2012-13, therefore, the order therein passed shall apply mutatis mutandis for disposing of the present appeal i.e for A.Y. 2012-13.

Resultantly, the appeal filed by the assessee is allowed for statistical purposes in terms of the aforesaid observations.

To sum up, both the appeals of captioned assessees are allowed for statistical purposes in terms of the aforesaid observations.