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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
आदेश / O R D E R
Per Mahavir Singh, Vice President :
This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-7, Chennai, in dated 28.11.2019. The Assessment was framed by Asst. Commissioner of Income Tax, Non Corporate Circle- 7(1), Chennai for the relevant Assessment Year 2016-17 vide order
2 -: dated 18.12.2018 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
At the outset, the Ld. counsel for the assessee stated that the order of the A.O is exparte and even the CIT(A) has not considered the submissions made by the assessee and the remand report was given to the assessee at the last minute. He took us through the order of the CIT(A) and the adjudication done by CIT(A) by a non-speaking order and he simply affirmed the A.O’s finding in remand report. He referred to para 6 of the CIT(A) order, which reads as under:
“6. A copy of remand report received from the AO was forwarded to appellant to examine the report and offer his comments on or before 27.11.2019. Till date no reply was received from appellant or AR. Under the circumstances, I have no reason to interfere with the AO's order since the appellant has failed to co-operate with the AO in the remand proceedings.”
The Ld. counsel for the assessee took us through the grounds raised vide ground Nos.4 to 9, which reads as under:
The CIT (Appeals) failed to appreciate that having noticed the documents placed on record in relation to the legal notices sent towards cancellation of the sale deed on account of default in payment of the sale consideration by the buyer and further having noticed the fact that the possession of the impugned asset is still with the Appellant, the CIT (Appeals) ought to have deleted the capital gains computed on such presumed transfer.
The CIT (Appeals) failed to appreciate that the Assessing Officer during the remand proceedings had rejected the plea of the Appellant solely on the ground of non-appearances and there was failure in independent application of mind on the part of the Assessing Officer to analyze the documents placed on record during the appellate proceedings under Rule 46A of the Income Tax Rules, 1962.
3 -: 6. The CIT (Appeals) erred in sustaining the re-computation of long term capital gains pertaining to the property transacted on 25.09.2015 without assigning proper reasons and justification.
7. The CIT (Appeals) failed to appreciate that the Assessing Officer having not conducted appropriate enquiry into the claim of cost of acquisition of the said property, the entire re-computation of long term capital gains was wrong and incorrect.
The CIT (Appeals) failed to appreciate that non-adjudication of the grounds raised
by the Appellant on the two issues by solely relying on the remand report was wrong, erroneous and not sustainable in law.
9. The CIT (Appeals) failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law.
4. The Ld. counsel for the assessee stated the facts that the assessee has sold two properties i.e., one for a consideration of Rs. 3.18 Cr. and another for a consideration of Rs. 3.01 Cr. The assessee has not declared sale consideration of first property i.e., Rs. 3.18 Cr. in the return of income and also claimed very high value of cost of acquisition for indexation in respect of second property at Rs. 2,88,59,219/- as against the sale consideration of Rs. 3.01 Cr. The A.O during the course of assessment proceedings served many notices and issued show cause notice as to why the sale consideration of Rs. 3.18 Cr. be not assessed for long term capital gain and also as regards to second property for which sale consideration of Rs. 3.01 Cr. was received as to why the claim of cost of acquisition with the indexation of Rs. 2,88,59,219/- be not restricted at Rs. 1,00,94,354/-.
The assessee has not replied the show cause notice as well as did not 4 -: furnish any document in support of any of the claim. The assessee has not attended before the CIT(A), despite several notices. The assessee only appeared once through his representative Shri A.S.
Sriraman, Advocate and filed written submissions for admission of additional evidence and the relevant submissions are reproduced in A.O’s order at para 4, wherein plea was taken that as regards to first sale of property i.e., for which transactions of Rs. 3.18 Cr. was declared. The assessee has not received any payment from the buyer and legal notice was issued in regard to the same for cancelling the sale deed on account of default of non-payment of sale consideration.
The assessee contended before the A.O and CIT(A) that the said crucial information and documents could not be brought before the A.O during the scrutiny assessment proceedings on account of prolonged illness and ultimately passing away of the assessee’s father on 13.12.2018. The assessment was completed on 18.12.2018. It seems from the remand report that the assessee was provided ample opportunities and even the CIT(A) has also posted the case for hearing, but it is not clear whether after receipt of remand report the CIT(A) has fixed the hearing only once, i.e., on 27.11.2019 as is noted by CIT(A) in para 6, which is reproduced above, para-2 of this order.
5 -: 5. In view of the above facts and grounds raised, the Ld. counsel for the assessee has only requested that let the matter go back to the file of the A.O for fresh adjudication. On the other hand, the Ld. Sr.
DR Shri P. Sajit Kumar strongly opposed for setting aside of the matter for the reason that ample opportunities were provided to the assessee by the A.O as well as CIT(A). On query from the Bench, the Ld. Sr.
DR could not controvert the fact that neither the A.O nor the CIT(A) has considered the vital issue whether the assessee has received full consideration or not as legal action is initiated by the assessee as claimed by him, all these facts needs verification. However, we agree with the arguments of Ld. Sr. DR that ample opportunities were provided. In such circumstances, we will set aside the order of CIT(A) and that of the A.O, but subject to a cost of Rs. 10,000/- to be paid to Tamil Nadu State Legal Services Authority at Hon’ble High Court of Madras.
In the entirety of facts of the case and keeping in view of the natural justice, we set aside the order of lower authorities i.e., the order of CIT(A) and that of the A.O and remand the matter back denovo to the file of A.O for re-doing the assessment after allowing reasonable opportunity of being heard to the assessee in relation to these transactions. Accordingly, the matter is restored back to the file
6 -: of A.O with the above direction and the assessee has to pay the cost of Rs. 10,000/- to the Tamil Nadu State Legal Services Authority at Hon’ble High Court of Madras and shall submit this evidence to the A.O before he takes up the assessment.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced on 20th day of July, 2022 in Chennai.