MR SATISH PADMANABH BHAT,BHAYENDER vs. ACIT 12 (1)91), MUMBAI

The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals)-20 *for short ‘the CIT(A)’+, Mumbai, dated 24.09.2029, which in turn arises from the order passed by the Assessing Officer (AO) under section 147 of the Income Tax Act, 1961 *hereinafter referred to as ‘the Act’+, dated 15.12.2018. The assessee has assailed the impugned order on the following grounds before us:

The assessee was holding 60% of the shares in the company M/s Astral Glass Pvt. Ltd. By the order dated 26-03-2010 passed by the Hon’ble High Court Bombay in company petition No 16 of 2007, company petition No. 511 of 2007 and company petition No. 159 of 2009, the company was ordered to be wound up. The said order of the Hon’ble High Court of Bombay was received by the assessee in the 2 Mum 2020- Mr. Satish Padmanabh Bhat Financial Year 2010-11 relevant to A.Y. 2011-12 under consideration. As a result of the order of the Hon’ble High Court the long term assets held by the assessee in the shape of the shares of M/s Astral Glass Pvt. Ltd. were extinguished in the Financial Year 2010-11, the year in which the assessee received the order of the Hon’ble High Court. This has resulted in long term capital loss on extinguishment of the shares. If the proper opportunity of hearing was granted by the Commissioner of Income Tax (Appeals) to the assessee, the assessee would have furnished proper explanation along with relevant evidence and would have provided proper computation of the chargeable Capital Gains by incorporating therein, the long term capital loss arising from extinguishment of shares In the company M/s Astral Glass Pvt. Ltd. Bombay.”

Briefly stated, the assessee had sold an immovable property during the year under consideration for Rs. 17,00,000/-. On gathering the aforesaid details from AIR information, the AO taking cognizance of the fact that the assessee had not filed any return of income, re-opened his case under section 147 of the Act. Notice under section 148 was issued to the assessee. However, the assessee failed to comply with the aforesaid notice and did not file any return of income. During the course of the assessment proceedings, though the assessee was represented by his counsel however, as he despite specific directions by the AO neither fled his return of income nor came forth with the requisite information, therefore, the AO was constrained to frame the assessment vide his order passed under section 144 r.w.s 147 of the Act, dated 15.12.2018, wherein the entire sale consideration of Rs. 73,00,000/- was assessed as his income.

The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. However, we find that the assessee despite having been put to notice about the hearing of the appeal had chosen not to appear before us. We, thus, are constrained to proceed with and dispose off the appeal as per Rule 24 of the Appellate Tribunal Rules, 1963 i.e. after hearing the respondent revenue and perusing the orders of the lower authorities.

The ld. Departmental Representative (DR) relied on the orders of the lower authorities.

We have given a thoughtful consideration to the issue before us. Admittedly, there can be no second thought on the fact that the assessee had consistently adopted a lackadaisical approach and had neither complied with the directions of the A.O nor appeared before the CIT(A). Before us, the conduct of the assessee was no better, and as observed by us hereinabove he had failed to participate in the course of the appellate proceedings before us. Be that as it may, we find substance in the claim of the assessee that as the CIT(A) had not only declined his request for adjournment, but had also not considered the submissions which were filed by him along with Form No.35 on the e-portal of the Department, therefore, he was not afforded sufficient opportunity of being heard. Apart from that, we find that it is the claim of the assessee that the CIT(A) had not only wrongly classified the sale transaction as STCG, as against the LTCG, but had also erred in not directing the AO to consider the cost of acquisition/indexed cost of acquisition of the property in question while Mum 2020- Mr. Satish Padmanabh Bhat computing the capital gain. In the backdrop of the aforesaid facts, we though deprecate the conduct of the assessee who had throughout been non-cooperative, but cannot remain oblivious of the fact that there are certain infirmities arising from the order of the CIT(A) as regards the mode and manner of quantification of the income resulting from the sale of the property in question. We, thus, in all fairness are of the considered view that the matter requires to be re-visited by the AO, who is directed to re- adjudicate the issue after affording an opportunity of being heard to the assessee. Needless to say, the AO shall in the course of the de novo assessment proceedings allow an opportunity of being heard to the assessee who shall remain at liberty to substantiate his claim on the basis of supporting documentary evidence/material.

Resultantly, the appeal filed by the assessee is allowed for statistical purposes, in the terms of our aforesaid observations.