SANTOSH RAMDAS MOZE,PUNE vs. INCOME TAX OFFICER WARD 12(3), PUNE

Although a number of grounds have been raised by the assessee, however, these all relate to the ex-parte order of the Ld. CIT(A) / NFAC in confirming the addition of Rs.1,23,75,000/- made by the Assessing Officer in the order passed u/s 147 r.w.s. 144 r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

Facts of the case, in brief, are that the assessee is an individual and had not filed his return of income for the impugned assessment year. The case of the assessee was picked up in non-filing of return under priority P1 from insight portal as per the Risk Management strategy formulated by the CBDT due to the large transactions done by the assessee. It was noticed that the assessee had sold immovable property for a consideration of Rs.1,23,75,000/- as per statement filed by the Joint Sub-Registrar, Haveli No.1, Pune. In view of the above, the Assessing Officer issued a show cause notice u/s 148A(b) of the Act on 23.03.2022 after obtaining the prior approval of the competent authority. Although time was provided, however, the assessee did not file any response to the show cause notice within the time allowed. The Assessing Officer, therefore, held that it is a fit case for issue of notice u/s 148 of the Act. Accordingly, notice u/s 148 of the Act was issued with the prior approval of the competent authority.

Subsequently notice u/s 142(1) of the Act was issued. In compliance to the notice u/s 142(1) of the Act the assessee submitted a copy of Development Agreement registered on 29.05.2014. The Assessing Officer noticed that the assessee has transferred the property to M/s. R.G. Developers for construction on 50% of the property. The developer had paid Rs.40,00,000/- to the assessee as a refundable security deposit. Further, in the Development Agreement it has been mentioned that the ownership of the property was transferred to the developer and the possession of the property was given to the developer. According to the Assessing Officer, any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 is covered under the provisions of section 2(47)(v) of I.T. Act. And, any gain resulting from transfer of a capital asset is covered under section 45(1) of I.T. Act and hence subject to taxation in the hands of the assessee. In view of the above, the Assessing Officer show caused the assessee to explain as to why the amount of Rs.1,23,75,000/- should not be treated as long term capital gain and be added to his total income. Since the assessee did not respond to the said notice and did not furnish any details regarding the cost of acquisition, the Assessing Officer treated the amount of Rs.1,23,75,000/- as long term capital gain.

Since the assessee did not respond to the notices issued by the Ld. CIT(A) / NFAC, therefore, the Ld. CIT(A) / NFAC, following the decision of Hon’ble Supreme Court in the case of CIT vs. B.N. Bhattachargee & Another reported in (1979) 118 ITR 461 (SC), dismissed the appeal filed by the assessee.

Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal.

The Ld. Counsel for the assessee submitted that although the assessee in Form No.35 has categorically mentioned that the notice of hearing be issued to the assessee physically, however, notices were issued to the e-mail id of the assessee which the assessee could not see since he is not acquainted with the technology. He submitted that in the interest of justice the assessee should be given an opportunity to substantiate his case by filing the requisite details.

The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the Ld. CIT(A) / NFAC.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. It is an admitted fact that due to non-submission of the requisite details, the Assessing Officer in the order passed u/s 147 r.w.s. 144 r.w.s. 144B of the Act determined the long term capital gain at Rs.1,23,75,000/-. Since the assessee did not respond to any of the notices issued by the Ld. CIT(A) / NFAC, the Ld. CIT(A) / NFAC dismissed the appeal for want of prosecution. It is the submission of the Ld. Counsel for the assessee that given an opportunity, the assessee is in a position to substantiate his case by filing the requisite details. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Ld. CIT(A) / NFAC with a direction to grant one final opportunity to the assessee to substantiate his case and decide the issue as per fact and law after providing due opportunity of being heard to the assessee. The assessee is also hereby directed to submit the requisite details before the Ld. CIT(A) / NFAC on the appointed date without seeking any adjournment under any pretext, failing which the Ld. CIT(A) / NFAC is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

In the result, the appeal filed by the assessee is allowed for statistical purposes.