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Facts
The assessee challenged additions made by the AO for AY 2016-17 (Section 56(2)(vii) and capital gains) and AY 2017-18 (capital gains and Section 57(iii) disallowance). The CIT(A) dismissed the appeals due to the assessee's non-compliance, which the assessee attributed to the death of their legal representative.
Held
The Tribunal condoned the delay in filing the appeals and, accepting the explanation for non-compliance, set aside both appeals to the CIT(A). The CIT(A) is directed to grant the assessee another opportunity and decide the matters on merits.
Key Issues
Whether the CIT(A) erred in dismissing appeals for non-compliance when the assessee's counsel had passed away; and the merits of additions made under Section 56(2)(vii), capital gains, and disallowance under Section 57(iii).
Sections Cited
56, 57, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA
These two appeals are filed by the assessee against the orders of National Faceless Appeal Centre (NFAC), Delhi (in short ‘the CIT(A)’) dated 06.12.2023 and dated 05.01.2024 for the Assessment Years 2016-17 & 2017-18 respectively. As the facts of both cases are identical and some of the issues are common, both the appeals were heard together and are being disposed of vide this consolidated order for the sake of convenience.
& 1328/Ahd/2024 [Sureshbhai Ranchhodbhai Patel vs. ACIT] A.YS. 2016-17 & 2017-18 - 2 – 2. There was delay of 152 days and 121 days respectively in filing of the two appeals. The assessee has filed an affidavit explaining the reason for delay. It is submitted that the legal representative of the assessee, who was representing the matter before the Ld. CIT(A), had expired on 07.09.2023. Due to his death, the assessee was not aware of the appellate orders already passed, which led to the delay in filing of the appeals. Considering the explanation of the assessee, the delay in filing the two appeals is condoned.
The assessee has taken following grounds in these appeals: – A.Y. 2016-17 “1. The learned Commissioner of Income Tax (Appeal)-NFAC Delhi, has grievously erred in facts and law while passing the order under consideration
2. The learned Commissioner of Income Tax (Appeal)-NFAC Delhi, erred in facts and in law in upholding the addition of Rs 6520000/- considering it to be long term capital gain of the appellant.
3. The learned Commissioner of Income Tax (Appeal)-NFAC Delhi, erred in facts and in law in upholding the addition of Rs 506404/- U/S 56 of the Income Tax Act 1961/- 4. The appellant reserves his right to add alter amend modify or cancel any one or more of the grounds of appeal before the finalization of the appeal.”
ITA No.1328/Ahd/2024 – A.Y. 2017-18
“1. The learned Commissioner of Income Tax (Appeal)-NFAC Delhi, has grievously erred in facts and law while passing the order under consideration 2. The learned Commissioner of Income Tax (Appeal)-NFAC Delhi, erred in facts and in law in upholding the addition of & 1328/Ahd/2024 [Sureshbhai Ranchhodbhai Patel vs. ACIT] A.YS. 2016-17 & 2017-18 - 3 – Rs 3,15,00,000/- considering it to be long term capital gain of the appellant.
3. The learned Commissioner of Income Tax (Appeal)-NFAC Delhi, erred in facts and in law in upholding the disallowance of Rs 54,22,228/- U/S 57 of the Income Tax Act 1961.
The appellant reserves his right to add alter amend modify or cancel any one or more of the grounds of appeal before the finalization of the appeal.”
4. The brief facts of the case are that the return of income for A.Y. 2016-17 was filed on 28.03.2017 declaring total income of Rs.21,08,320/-. The case was selected for complete scrutiny under CASS. In the course of assessment, the AO found that the assessee was co-purchaser of non-agricultural land, which was acquired at total consideration of Rs.2,15,07,600/-. However, the stamp duty value of the said property was Rs.2,25,20,408/-. The difference of Rs.10,12,808/- between the two values was considered as income of the assessee under Section 56(2)(vii) of the Income Tax Act, 1961 (in short ‘the Act’) and accordingly addition of Rs.5,06,404/- was made in the hands of the assessee. Further, the sale consideration of Rs.65,20,000/- in respect of other two properties was considered as capital gain and added to income. The assessment was completed u/s.143(3) of the Act on 28.12.2018 at total income of Rs.76,30,256/-.
5. In the A.Y. 2017-18 also addition of undisclosed capital gain of Rs.3.15 Crores was made by the AO in the course of assessment. Further, interest expense of Rs.54,22,228/- was disallowed u/s.57(iii) of the Act as the nexus between the expense and the income earned from other source was not established.
& 1328/Ahd/2024 [Sureshbhai Ranchhodbhai Patel vs. ACIT] A.YS. 2016-17 & 2017-18 - 4 – The assessment for A.Y. 2017-18 was completed u/s.143(3) of the Act on 24.12.2019 at total income of Rs.4,03,06,400/-.
Aggrieved with the orders of the AO, the assessee had filed appeals before the First Appellate Authority, which were decided by the Ld. CIT(A) vide the impugned orders and both the appeals were dismissed.
Shri R. B. Tank Ld. AR of the assessee submitted that the Ld. CIT(A) had not decided the appeals on merits but had dismissed them due to non-compliance on the part of the assessee. The Ld. AR explained that the counsel of the assessee Shri Harishkumar Shanabhai Patel who was representing the matter before the Ld. CIT(A) had expired on 07.09.2023. As a result, no compliance could be made in the course of appeal proceeding. He, therefore, requested that the matter may be set aside to the file of the Ld. CIT(A) with a direction to allow another opportunity to the assessee.
Per contra, Shri Kavan Limbasiya, Ld. Sr. DR had no objection if the matters were set aside to the file of the Ld. CIT(A).
We have considered the rival submissions. It is found that the appeal for both the years were dismissed by the Ld. CIT(A) for the reason that no compliance was made by the assessee in the course of appeal proceeding. For the A.Y. 2016-17, the Ld. CIT(A) had allowed five opportunities and the last opportunity for compliance was on 13.11.2023. Similarly for A.Y. 2017-18, & 1328/Ahd/2024 [Sureshbhai Ranchhodbhai Patel vs. ACIT] A.YS. 2016-17 & 2017-18 - 5 – the Ld. CIT(A) had allowed six opportunities and the last opportunity of compliance was on 11.12.2023. The assessee has brought on record the death certificate of his counsel Shri Harishkumar Shanabhai Patel, as per which, he had expired on 07.09.2023. Therefore, we find a reasonable cause for non- compliance before the Ld. CIT(A) on the last date of hearing. In the interest of justice, we, therefore, set aside both the appeals to the file of the Ld. CIT(A) with a direction to allow another opportunity to the assessee and thereafter re-adjudicate the matters on their merit. The assessee is also directed to make necessary compliance before the Ld. CIT(A) in the set aside proceedings.
In the result, both the appeals of the assessee are allowed for statistical purposes.
This Order pronounced on 29/04/2025
Sd/- Sd/- (SANJAY GARG) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated /04/2025 S. K. SINHA TRUE COPY आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. 2. ��यथ� / The Respondent. संबं�धत आयकर आयु�त / Concerned CIT 3. आयकर आयु�त(अपील) / The CIT(A)- 4. 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,