PRAMILA SINGHAL,NEW DELHI vs. ITO, NEW DELHI

No proper opportunity of being heard has been provided to the Assessee before passing the order. Thus the order passed is against the principles of natural justice.

The Addition has been made and confirmed purely on suspicion and without any cogent material in hand. 4. The order of the learned and CIT (Appeals) is bad in Law and is against the facts of the case. 5. The order of the Learned Assessing Officer and CIT (Appeals) is a non-speaking one as it does not spell out clearly the reasons of addition. 6. The order of the learned assessing office and CIT (Appeals) is hasty, without application of mind and against the principles of natural justice.” 2. The facts in brief are that assessee has sold following properties during the year:- a) Plot no.1/953, Sec 1, Vasundhra, Ghaziabad, UP for Rs. 26,88,000 on 28/8/2008 (owned by two persons, assessee’s share not ascertainable). b) 10-D/42, Vasundhra, Sec 10, Ghaziabad, UP for Rs 17,16,000 on 3/10/2008. c) Plot no.10A/161, Vasundhra, Ghaziabad, UP for Rs 35,64,000 on 6/10/2008. d) Plot no.1/956, Sec 1, Vasundhra, Ghaziabad, UP for Rs 13,44,000 on 28/8/2008.

Ld. CIT (A) in the impugned order noted that on various dates on which notice was sent for hearing either adjournment was sought or none attended in response to such notices. Accordingly, he proceeded to decide the appeal on merits, holding that assessee is not interested in prosecuting the appeal. Accordingly, he has confirmed the addition after observing and holding as under: “7. I have considered the action of the Assessing Officer and specifically noted the evasive attitude of the appellant both during the assessment proceedings as well as the appellant proceedings. The undisputed fact is that the appellant did not disclose the sale of properties in its return of income. Clearly, the action of the Assessing Officer cannot be faulted with.”

Before us, ld. counsel for the assessee submitted that it is an undisputed fact that, the amount credited in the bank account was on account of four properties sold by the assessee for sums aggregating to Rs.93,12,000/-. Even if the assessee could not substantiate the cost of acquisition or the cost of purchase, income could not have been taxed u/s.68. He further prayed that matter should be remanded back to the file of the Assessing Officer to compute the income of the assessee in accordance with law, i.e., Long Term Capital Gain, because receipts from sale of a capital asset cannot be taxed under head ‘income from other source’ or u/s. 68 or u/s.69.

On the other hand, ld. DR submitted that neither before the Assessing Officer nor before the Ld. CIT (A), the assessee could file any explanation or evidence regarding benefit of special rate of taxation of capital gain and before the Ld. CIT (A) despite several opportunities the assessee failed to even comply with the notice of hearing. Thus, order passed by the Assessing Officer and Ld. CIT (A) should be confirmed.

After considering the submissions made by the parties and on perusal of the impugned orders, we find that assessee during the course of assessment proceedings, has filed copy of her bank statement and certain details from where Assessing Officer gathered that assessee has sold four properties during the year which has not been disclosed in the return of income. The details of the properties sold and the entire receipt thereof has been incorporated above. Since, assessee has neither disclosed the sale transaction nor has offered for tax in the return of income or has furnished any details of any capital gain, the Assessing Officer has taxed the entire sales reflected in the bank statement as income from other sources and has invoked Section 68 and Section 69A simultaneously. Once, it is an undisputed fact that amount of Rs.93,12,000/- is on account of receipt of sale of capital asset, then the correct head of income to be taxed will be under the head “computation of income from capital gains”. Even though, assessee all throughout has been non compliant before the authorities below but even while making the best judgment the Assessing Officer has to compute and assessed the income in accordance with law.

Under the facts and circumstances of the case, we are remanding back the matter to the file of the Assessing Officer to compute the sale of properties under the head ‘capital gain’; and assessee is directed to provide all necessary documents for the purchase of the property or any cost of acquisition and also the copy of sale deeds, in order to correctly assessed the income under the head ‘Long Term Capital Gain’. The Assessing Officer will provide due and effective opportunity to the assessee and assessee is also directed to co-operate in the proceedings before the Assessing Officer. Accordingly, the grounds raised before us is remitted to the file of the Assessing Officer.

In the result, the appeal of the assessee is partly allowed for statistical purposes.