Loading judgment…
Facts
The assessee filed an appeal against the order of the CIT(A) which confirmed the additions made by the AO. The original assessment order and the CIT(A) order were passed ex parte as the assessee's consultant was suffering from ill health, leading to a delay in filing the appeal.
Held
The Tribunal condoned the delay of 239 days in filing the appeal, considering the genuine cause due to the consultant's ill health. Since both the AO and CIT(A) orders were ex parte, the Tribunal restored the issue back to the AO for fresh adjudication.
Key Issues
Whether the assessment proceedings were bad in law due to procedural irregularities and non-compliance with the principles of natural justice, and whether the delay in filing the appeal is justifiable due to the consultant's ill health.
Sections Cited
148, 148A, 250, 56, 69, 234A, 234B, 234C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: SHRI SANJAY GARG & SMT. ANNAPURNA GUPTA
The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), (hereinafter referred to as “CIT(A)”), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi dated 19.04.2024 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2018-19.
Ghanshyamsinh Vaghela vs. ITO] - 2 – 2. The grounds raised by the assessee are as under:
“1. The AO has not followed the procedure prescribed under the Act and hence the whole proceeding is bad in law.
The notice issued u's 148 dated 01/04/2021 or subsequent was never been served upon the assessee and hence it should be treated as void ab initio and hence addition made in the assessment should be deleted.
Under section 148A(a), AO has to "conduct an enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment." So far as the information given and Assessment order passed, it seems that the AO has not carried out any enquiry before issue of any notice u/s 148 and has simply relied upon the information available of Insight Portal. Even the specified authority who has given the approval has also worked mechanically and therefore, without following the procedure of re-opening u/s 148 and others sections AO has issued the notice and hence the whole process of assessment is to be treated illegal and set aside.
AO has not sent any communication to the address of the Assessee and ensure that the notice will be served to the assessee and has simply given the notice on the IT portal assuming that the assessee is always sitting on the IT portal and reply the notice accordingly. No physical notice was sent by the AO, therefore AO without giving a proper opportunity to the assessee has passed the order, which is a violation of principle of natural justice. Sale of Rural Agriculture Land: 5. This is an accepted fact that the Assessee has purchased and sold the rural agriculture land. It is also very much clear from para 5.1 of the Assessment Order that the AO has called the information from the concerned SRO and has verified the purchase and sale along with the price of sale and purchase of the rural agriculture land.
6. In-spite of verifying the details from SRO, AO failed to ascertain whether the profit derived from the sale of rural agriculture land is short term Capital gain or long term capital gain or exempt income. Para 5.2 of the AO clearly indicate that Ghanshyamsinh Vaghela vs. ITO] - 3 – the AO has not taken the judgement best of his knowledge and documents available but has simply added the Sales consideration under the head long-term capital gain, which is exempt being profit derived from rural agriculture land.
AO is aware that the rural agriculture land (Survey no. 985), which was purchased during the year was sold by the assessee. The said fact is also very much clear from the Para no. 5.1, 5.2 and 5.4 of the AO, in-spite of the same AO failed to give the benefit of reduction of the cost and other expenses from the sale consideration.
8. AO also failed to appreciate that all the payments made for the procurement of rural agriculture land are from bank accounts and hence they cannot be added to the income. Simply based on the non-reply of the assessee, AO failed to call for the banking details from the bank and verify the same.
9. AO is aware that during the year assessee has sold the rural agriculture land and subsequently has purchased another rural agriculture land. He failed to appreciate that the source of the purchase of another rural agricultural land is known to him. Inspite of the same he has added the same u's 69 of the Act which is bad in law and should be deleted.
AO has added Rs. 1471427 as the difference in the stamp value and transaction value of two rural agriculture lands u's 56 without giving any documentary evidence or calculation. As per the agreement entered by the assessee, transactional value as per agreement are accepted by the stamp authority as stamped value only and hence no addition should be made.
Further, while considering the difference of transactional value and as per section 56 of the Act, the difference in stamp value and transaction value is only applicable if immovable property is a Capital Assets. Since, the land purchased is a rural agriculture land, which does not fall under the definition of the Capital Assets in the Act, the provision of section 56 is not applicable and hence the addition should be deleted.
The whole assessment proceeding is with bad intention and based on the wrong presumptions and assumptions.
That on the facts and in the circumstances of the case the learned Assessing Officer has grossly erred in making addition.
Ghanshyamsinh Vaghela vs. ITO] - 4 – 14. That on the facts and in the circumstances of the case, the ld. Assessing Officer grossly erred in charging interest u/s 234A, 234B and 234C of the Income Tax Act. Even the interest charged by the AO is not according to law and if not deleted should be counted according to law and provisions of Act.
That on the facts and in the circumstances of the case the ld. Assessing Officer grossly erred in creating an illegal demand against the assessee appellant.
Being Assessee is an agriculturist and has not concealed any income, it is the learned AO who has treated the sale and purchase of rural agriculture land as income, no penalty can be levied and penalty proceedings initiated by AO should be dropped.
Being Assessee is an agriculturist and is not having the taxable income, there is no need to file the Income Tax Return as the Income is below the taxable income. It only based on additions made by the ITO the income (if proved) become taxable and therefore, no penalty can be levied and penalty proceedings initiated by AO should be dropped.
AO without rejecting the adjournment application or giving any further notice has dismissed the appeal which is against the natural justice.
The appellant craves leave to add alter modify or amend any ground on or before the date of hearing.”
3. In the facts of the present case, addition was made to the income of the assessee on account of capital gains earned from sale of land amounting to Rs.40 Lakhs, unexplained investment made in land of Rs.38 Lakhs and interest and other income earned by the assessee amounting to Rs.15.38 Lakhs. The assessee was a non-filer of return and the AO was in possession of information that the assessee had sold immovable property during the year for a consideration of Rs.80 Lakhs and had also earned interest other than interest on securities amounting to Rs.67000/-. Accordingly, the case of the assessee was reopened and assessment framed Ghanshyamsinh Vaghela vs. ITO] - 5 – making the aforestated additions resulting in income of the assesee being assessed at Rs.93,38,427/-. The order of the AO was confirmed by the Ld. CIT(A) in appeal by the assessee against which the assessee has come up in appeal before us raising the above grounds.
4. The appeal is noted by the Registry to be delayed in filing by 239 days. Ld. Counsel for the assessee has filed an application seeking condonation of delay pointing out reasons for the delay. He pointed out before us that on account of ill health of the Consultant of the assessee right from assessment stage, the matter could not be pursued on behalf of the assessee before both the AO and even before the CIT(A) and it is only when the Consultant had completely recovered and he became aware of the passing of the CIT(A) order that the appeal was filed to the ITAT belatedly. Ld. Counsel for the assessee contended that on account of same, both the assessment order and the CIT(A) order were ex parte orders and for the same reason also, the appeal was filed before us belatedly. An application filed before us seeking condonation of delay are as under:
“We humbly submit this application seeking condonation of the delay in filing the appeal to the ΠΑΤ. This is to inform you that the Hon'ble CIT (A) has dismissed the appeal by passing an order u/s 250 of the Income Tax Act, 1961 on 19/04/2024, which was received by the assessee on 27/01/2025 when his Authorised representative verified the IT portal to verify the status of the appeal. Later on, assessee has filed an appeal to the ITAT on 12/02/2025.
Ghanshyamsinh Vaghela vs. ITO] - 6 – Assessee is an agriculturist by profession, and due to the nature of his work, he could not check/verify his emails daily. Therefore, assessee was not aware of the order issued u/s 250. The department has not served the physical copy of the order passed to the assessee. Due to the following reasons authorised representative could not verified the IT Portal from till 25/01/2025, which result into the delay in filling an appeal before the Honourable ITAT. This is to inform you that since November 2023, CA Pradeep Tulsian (Authorised Representative) was having health issues related to his Brain and undergoing medical treatment under the guidance of Dr. Akhil Mukhim (MD). During his treatment, Dr. Akhil Mukhim advised him not to take stress/tension for at least one year and take rest. Due to which he was very much irregular in attending the office. Therefore, the assessee has requested for adjournment from time to time before the CIT(A). The last adjournment was requested against the notice dated 27/03/2024, which was not by the Learned CIT(A) in writing. Ignoring the application for adjournment the CIT(A) has dismissed the appeal and passed the order u/s 250 of the Act on 19/04/2024. The mental health of CA Pradeep Tulsian (AR) was further deteriorated due to combination of medical illness and family obligations such as cultural, logistical and other obligations due to the marriage of his nephew (i.e. Shri Aman Tulsian) which was held on 15.07.2024. A copy of the marriage certificate is attached. Sue to such mental illness, a condition that severely impacted his cognitive and physical ability to function and fulfil professional responsibilities, Dr. Akhil Mukhim has suggested to undergo MRI and other reports of his Brain, which was carried out by him on 28.08.2024. After MRI the doctor has advised him to take complete rest for at least 6 months and withdraw himself from office and other work during the recovery period. Copy of MRI report is attached herewith. At the end of January-2025, CA Pradaeep Tulsian, AR has resumed the office and coming to office for limited period. As soon he resumed the office, he stated verifying the status of the cases which were pending earlier. Therefore, during this process when he checked the IT Portal, he come to know about the order passed by the CIT(A) on 27/01/2025. He immediately contacted the assessee has filed an appeal after compiling the details from the assessee on 12.02.2025. These unforeseen and overlapping events cumulatively caused a delay is preparing and filing the appeal.
Ghanshyamsinh Vaghela vs. ITO] - 7 – We respectfully submit that the delay is neither wilful nor intentional but due to the genuine circumstances mentioned herein above. We request your good self to kindly condone the delay in the interest of justice and allow the matter to be decided on merits. The authorised representative is fully indebted in advance for granting condonation of delay on the ground of Justice, which the assessee should not be suffered.’
Ld. Counsel for the assessee has also attached evidences in the form of medical report of the Consultant during the said period.
Considering the same, we are of the view that the assessee has adduced sufficient cause for the delay in filing of the present appeal before us being attributable to ill health of the Consultant of the assessee. The assessee, as a matter of record, is an agriculturist who is unaware with the Income Tax proceedings, being a non-filer of return of income and, therefore, it is not unreasonable to believe that on account of illness of the Consultant the delay occurred in filing of the present appeal before us, since, he was the only person conversant both with the law and the technology used in the faceless mode of framing assessment and passing appellate orders. We, therefore, consider it fit to condone the delay of 239 days in the filing of present appeal before us and entertain the appeal for adjudication.
7. Having held so, since the orders passed by both the authorities below, i.e AO and Ld.CIT(A), are ex parte and the assessee remained unheard before both the authorities, we consider Ghanshyamsinh Vaghela vs. ITO] - 8 – it fit to restore the issue back to the file of the AO for adjudication afresh.
The assessee is directed to cooperate in the proceedings before the AO who in turn is directed to frame assessment afresh after giving due opportunity of hearing to the assessee.
In the result, appeal filed by the assessee is allowed for statistical purposes.
This Order pronounced on 11/07/2025 Sd/- Sd/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 11/07/2025 S. K. SINHA True Copy आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant ��यथ� / The Respondent. 2. 3. संबंिधत आयकर आयु� / Concerned CIT आयकर आयु�(अपील) / The CIT(A)- 4. �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,