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Facts
The assessee claimed exemption u/s 54B of the Income Tax Act on the transfer of land. The Assessing Officer disallowed the exemption, holding that the investment in agricultural land was made beyond the permissible two-year period from the date of asset transfer. The CIT(A) dismissed the appeal for want of prosecution without deciding on merits.
Held
The Tribunal held that the CIT(A) erred in dismissing the appeal without deciding on merits and restoring the issue to the CIT(A) for a final opportunity to the assessee to present their case, with a direction to decide the issue based on facts and law.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal for want of prosecution without adjudicating on merits, and whether the assessee should be granted another opportunity to present their case.
Sections Cited
139, 54B, 54F, 151, 148, 250(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI R. K. PANDA & SHRI VINAY BHAMORE
The above two appeals filed by the assessee are directed against the separate orders dated 27.11.2024 of the Ld. CIT(A) / NFAC, Delhi relating to assessment years 2014-15 and 2015-16 respectively. Since identical grounds have been raised by the assessee in both these appeals, therefore, for the sake of convenience, these were heard together and are being disposed of by this common order. for assessment year 2014-15 as the lead case. Facts of the case, in brief, are that the assessee is an individual and has filed his return of income u/s 139 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on 28.11.2014 declaring total income of Rs.3,27,990/-.
The Assessing Officer noticed while completing the assessment proceedings for assessment years 2016-17 and 2017-18 that the assessee has wrongly claimed deduction u/s 54B/54F. He noted that the assessee has entered into a joint venture with Nandan Buildcon Pvt. Ltd. vide registered joint venture agreement dated 20.01.2011. The terms and conditions of the agreement clearly show that the assessee has transferred the land to the developers for development purpose and the Joint Venture agreement is also a registered agreement. The assessee has shown full value of consideration of Rs.1,14,06,128/-. He deducted an amount of Rs.6,13,982/- as cost of acquisition and the remaining amount of Rs.1,05,92,146/- was claimed as exemption u/s 54B of the Act. Accordingly, the assessee has shown LTCG at Rs.Nil on the capital gains derived from the transfer of same land.
He further noticed that the assessee has claimed the exemption u/s 54B on account of purchase of agricultural land in relevant year, however the capital gain on the transfer of asset is arisen on date of transfer of assets as on 20/01/2011 vide JV Agreement. Thus, the assessee has purchased the agricultural land beyond the period of two years from the date of transfer of original asset as mandated by the provisions of Section 54B of the IT Act. In view of the above facts, the assessee is not entitled for the claim of deduction/exemption u/s 54B as the investment is made beyond the period of two years from the date of transfer of original asset. Therefore, the jurisdictional assessing officer formed belief that income in respect of the information available has escaped assessment for which he reopened the assessment after recording reasons and obtaining necessary statutory approval from the competent authority as per the prevailing provisions of section 151 of the IT Act, 1961. The Assessing Officer thereafter issued notice u/s 148. During the course of assessment proceedings, the assessee in response to such notice filed certain details. In absence of any documentary evidence to his satisfaction regarding the claim of exemption u/s 54B of the Act, the Assessing Officer rejected the claim of exemption u/s 54B of the Act. He accordingly made addition of Rs.1,05,92,146/- and determined the total income at Rs.1,09,20,136/-.
Since the assessee did not make any submission before the Ld. CIT(A) / NFAC despite a number of opportunities granted, the Ld. CIT(A) / NFAC relying on various decisions, dismissed the appeal of the assessee for want of prosecution. However, he did not decide the appeal on merit.
Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal by raising the following grounds:
1. The Ld. Commissioner of Income Tax (Appeals) erred in dismissing the appellant's appeal and confirming the addition of Rs.1,05,92,146/- made by the assessing officer under the following section, as detailed below, on the ground that the appellant failed to respond to the notices. The decision was made without considering the facts of the case or adjudicating the appeal on merits. Sr. No. Nature of Addition Amount 1 Disallowance of exemption claimed Rs. 1,05,92,146/- U/Sec.54B of the Act TOTAL Rs. 1,05,92,146/-
2. The Learned CIT(A) failed to appreciate that it was incumbent upon him to verify whether proper notices had been served before passing an ex-parte order. Therefore, the appellant prays that the order passed by the CIT(A) be set aside.
3. The Learned CIT(A) further erred in summarily dismissing the appellant's appeal on merits, solely relying on the AO's observations in the assessment order, without conducting an independent examination of the case or providing proper reasoning.
Identical grounds have been raised in 2015-16 which read as under:
1.
The Ld. Commissioner of Income Tax (Appeals) erred in dismissing the appellant's appeal and confirming the addition of Rs.3,97,45,055/- made by the assessing officer under various sections, as detailed below, on the ground that the appellant failed to respond to the notices. The decision was made without considering the facts of the case or adjudicating the appeal on merits. Sr. No. Nature of Addition Amount 1 Disallowance of exemption claimed Rs. 3,60,35,153/- U/Sec.54B of the Act 2 Disallowance of exemption claimed Rs. 37,09,902/- U/Sec.54F of the Act TOTAL Rs. 3,97,45,055/- 2. The Learned CIT(A) failed to appreciate that it was incumbent upon him to verify whether proper notices had been served before passing an ex-parte order. Therefore, the appellant prays that the order passed by the CIT(A) be set aside.
3. The Learned CIT(A) further erred in summarily dismissing the appellant's appeal on merits, solely relying on the AO's observations in the assessment order, without conducting an independent examination of the case or providing proper reasoning.
The Ld. Counsel for the assessee at the outset submitted that the notices were sent to the e-mail of the Chartered Accountant who did not inform the assessee for which the assessee was not in a position to make any submission before the Ld. CIT(A) / NFAC. He submitted that in the interest of justice, the assessee should be given an opportunity to substantiate his case by filing the requisite details before the Ld. CIT(A) / NFAC. Further, the Ld. CIT(A) / NFAC has not decided the issue on merit as required u/s 250(6) of the Act. He accordingly submitted that the matter may restored to the file of the Ld. CIT(A) / NFAC.
The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the Ld. CIT(A) / NFAC. He submitted that the Assessing Officer has given valid reasons for rejecting the claim of exemption u/s 54B of the Act since the assessee has not filed any documentary evidence. Further, despite number of opportunities granted by the Ld. CIT(A) / NFAC, he did not make any submission, therefore, in absence of any further evidence, the order of the Ld. CIT(A) / NFAC be confirmed and the grounds raised by the assessee be dismissed.
We have heard the rival arguments made by both the sides and perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC. We find the Assessing Officer in the instant case disallowed the claim of exemption u/s 54B of the Act amounting to Rs.1,05,92,146/- for want of evidence to his satisfaction. We find due to non submission of any details before the Ld. CIT(A) / NFAC despite number of opportunities granted, the Ld. CIT(A) / NFAC dismissed the appeal for want of prosecution. It is the submission of the Ld. Counsel for the assessee that the notices sent by the office of the Ld. CIT(A) / NFAC were delivered in the e- mail of the Chartered Accountant who did not inform the assessee for which all these unfortunate events happened. It is the submission of the Ld. Counsel for the assessee that in the interest of justice, the assessee should be given an opportunity to substantiate his case by filing the requisite details before the Ld. CIT(A) / NFAC. 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 by filing the requisite details and decide the issue as per fact and law. The assessee is also hereby directed to make his submission, if any, 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. Since the assessee has raised identical grounds in 2015-16, the said grounds are also allowed for statistical purposes.
In the result, both the appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the open Court on 28th February, 2025.