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Facts
The assessee filed his return for AY 2012-13. Information was received by the AO regarding the sale of an immovable property, which the assessee had not offered for capital gains. The AO completed the assessment ex parte and made additions without allowing deductions for cost of acquisition. The CIT(A) also dismissed the appeal ex parte.
Held
The Tribunal condoned the delay due to a technical error in submitting documents and found that both the AO and CIT(A) had violated principles of natural justice by not allowing the assessee an opportunity to furnish computation of capital gains.
Key Issues
Whether the ex-parte assessment and appellate orders, made without proper opportunity to the assessee due to a technical error, violate principles of natural justice. Whether deductions under Section 48 should be allowed for computing capital gains.
Sections Cited
250, 144, 147, 148, 142(1), 271(1)(b), 271(1)(c), 48
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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: MS.SUCHITRA R. KAMBLE & SHRI MAKARAND V.MAHADEOKARShri Mehul B. Dhrangadhariya, AR Shri Amit Pratap Singh, Sr.DR
आदेश आदेश/O R D E R आदेश आदेश
PER MAKARAND V.MAHADEOKAR, AM:
This appeal by the assessee is directed against the order passed under section 250 of the Income-tax Act, 1961 [hereinafter referred to as “the Act”] by the Commissioner of Income Tax (Appeals), NFAC, Delhi [hereinafter referred to as “CIT(A)”] dated 29.11.2024, for the Assessment Year (AY) 2012–13, confirming the assessment framed by the Assessing Officer under section 144 r.w.s. 147 of the Act vide his order dated 20.11.2019.
Condonation of Delay 2.1 The Registry has pointed out that the appeal has been filed with a delay of 92 days beyond the prescribed time limit. The assessee has filed an application for condonation of delay accompanied by a sworn affidavit explaining that the delay was occasioned due to non-availability of a regular tax consultant. It is submitted that the assessee, being a layperson, was unaware of the procedural formalities and hence could not pursue the matter in time. The delay, according to the assessee, was neither deliberate nor intentional but caused due to bona fide reasons.
We have perused the affidavit and considered the explanation of the assessee. The Learned Departmental Representative (DR) has not raised any objection to the condonation of delay. It is a settled proposition of law that substantive justice should not be denied on account of technicalities or procedural lapses, particularly when the delay is explained to be due to reasonable cause. The Hon’ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji & Others [(1987) 167 ITR 471 (SC)] has held that a liberal approach is to be adopted while dealing with applications for condonation of delay, so as to advance the cause of justice.
3.1 In view of the reasonable cause shown and relying on the ratio laid down by the Hon'ble Supreme Court, we are inclined to condone the delay in the interest of substantial justice. Accordingly, the delay of 92 days is condoned, and the appeal is admitted for adjudication on merits.
Facts of the Case 4.1 The assessee is an individual and had filed his return of income for AY 2012–13 on 31.03.2014, declaring income of Rs.3,22,991/‑. Information was received by the Assessing Officer (AO) from ITO Ward 4(2)(2), Ahmedabad vide letter dated 07.02.2018, indicating that the assessee had jointly sold an immovable property located at Sub Plot No. 5, Shreedhar Bungalows, TP Scheme No. 50, Bodakdev, Ahmedabad, for a total sale consideration of Rs.72,00,000/- (document registered on 26.08.2011) along with another co-owner, with the stamp duty paid at Rs. 3,52,800/-.
4.2 On verification, the AO found that the assessee had not offered any capital gain from the said transaction in the return of income. Based on this information, reasons were recorded and notice under section 148 was issued on 29.03.2019. Subsequent notices under section 142(1) dated 18.07.2019 and 28.09.2019, and a final show cause notice dated 09.11.2019, were issued to the assessee; however, no compliance was made.
4.3 The AO thereafter completed the assessment ex parte under section 144 r.w.s. 147, holding that the entire 50% share of the sale consideration, amounting to Rs.37,76,400/‑, was assessable as capital gain in the hands of the assessee. No deduction on account of cost of acquisition, improvement or expenses was allowed. Penalty proceedings under sections 271(1)(b) and 271(1)(c) were initiated separately. The total assessed income was determined at Rs.40,99,390/‑ as against the returned income of Rs.3,22,991/-.
4.4 The assessee filed an appeal before the Ld. CIT(A), NFAC. Multiple notices were issued on the registered email ID on ten different occasions between February 2021 and November 2024. However, the assessee failed to respond to any of the notices, nor did he appear or file submissions. The CIT(A), relying on judicial precedents including CIT v. B.N. Bhattacharjee [(1979) 118 ITR 461 (SC)], Estate of Late Tukojirao Holkar v. CWT [(1997) 223 ITR 480 (MP)], and CIT v. Multiplan India (P) Ltd. [(1991) 38 ITD 320 (Del)], held that the assessee had failed to prosecute the appeal and, in the absence of any material rebutting the findings of the AO, confirmed the addition of Rs.37,76,400/- and dismissed the appeal ex parte.
Aggrieved by the order of CIT(A), the assessee is in appeal before us raising following grounds of appeal:
1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) [CIT(A)] erred in dismissing the appeal ex- parte without giving a fair and adequate opportunity of hearing.
2. The learned CIT(A) has erred |n confirming the addition of Rs. 37,76,400/- made by the Assessing Officer as capital gains without properly appreciating the facts of the case and without considering the absence of proper representation due to genuine reasons.
3. The learned Assessing Officer as well as CIT(A) failed to determine the actual capital gains in accordance with law by not reducing the cost of acquisition, improvement and eligible deductions from the sale consideration under section 48 of the Income Tax Act.
4. The learned CIT(A) has failed to consider that the appellant had not deliberately avoided compliance but was unable to respond due to the absence of a regular tax consultant. 5. The appellant craves leave to add, amend, alter, or withdraw any of the above grounds before or at the time of hearing of this appeal.
During the course of hearing, the Learned Authorised Representative (AR) reiterated the facts and submitted that the assessee had uploaded certain documentary evidences, including the purchase deed and a letter of explanation, through the NFAC portal in response to proceedings. However, due to inadvertence, the documents were submitted under the tab corresponding to penalty proceedings under section 271(1)(c) and hence were not considered in the appellate proceedings under section 250. The AR placed on record a copy of the e-submission acknowledgement, showing the upload of relevant documents. It was submitted that if these documents had been considered, the computation of capital gains could have been made in accordance with section 48 of the Act, which provides for deduction of cost of acquisition and other expenses. The AR requested that one more opportunity be granted to the assessee to present his case on merits.
6.1 The Learned Departmental Representative (DR) fairly submitted that in view of the facts and inadvertent technical error on the part of the assessee, he had no objection if the matter was remanded to the file of the Assessing Officer for de novo adjudication.
We have considered the rival contentions and perused the material available on record. It is an undisputed fact that the assessment was completed ex parte under section 144 r.w.s. 147 and the appeal before the CIT(A) was also dismissed ex parte for non-compliance. The material placed before us, particularly the submission acknowledgement, supports the claim of the assessee that certain documents, including the purchase deed, were in fact submitted but under the incorrect section in the online portal.
7.1 We find that both the Assessing Officer and the CIT(A) have proceeded to make and confirm the addition of the entire gross sale consideration as capital gain without allowing the assessee the opportunity to furnish computation in accordance with section 48 of the Act. This, in our considered view, amounts to violation of principles of natural justice.
7.2 In view of the above and having regard to the submissions of the assessee and the non-objection of the DR, we are of the opinion that the interest of substantial justice would be served if the matter is restored to the file of the Assessing Officer. Accordingly, we set aside the assessment order, as well as the appellate order passed by the Ld. CIT(A), NFAC, and remit the matter back to the file of the Assessing Officer. The Assessing Officer is directed to re-adjudicate the issue de novo, after giving due opportunity to the assessee to furnish all relevant documents, including evidence relating to cost of acquisition, improvement, and computation of capital gains as per law. The assessee is also directed to extend full cooperation in the proceedings.
In the result, the appeal is accordingly allowed for statistical purposes. Order pronounced in the Court on 12th August, 2025 at Ahmedabad.