M/S CAPARO VEHICLES PRODUCTS INDIA LTD.,,NEW DELHI vs. DCIT,, NEW DELHI

This appeal has been preferred by the assessee against order dated 1.3.2017 passed by the Ld. Commissioner of Income Tax (Appeals) -35, New Delhi (CIT{A}) and pertains to assessment year 2013-14.

Caparo Vehicles Products India Ltd. vs DCIT 2.0 The brief facts of the case that the assessee company is engaged in the business of manufacturing of automobile and auto parts and also provides consultancy services and coil blanking work. The return of income was filed declaring a loss of Rs. 60,77,388/-. The case was selected through CASS for examining the details with respect to high ratio of refund against the tax deducted at source and huge interest expenses relatable to exempt investments in light of provisions of section 14A of the Income Tax Act, 1961 (hereinafter called ‘the Act’). Thereafter, the assessment was completed at an income of Rs. 29,41,946/- after making disallowance u/s 14A to the tune of Rs. 8,91,082/- and an addition of Rs. 81,28,000/- on account of capital gains.

2.1 The assessee carried the matter before the Ld. First Appellate Authority challenging the additions/disallowances. The Ld. CIT (A) accepted the asseseee’s contention regarding the disallowances u/s 14A and deleted the disallowance. However, the addition of Rs. 81,28,000/- on account of capital gains on sale of property was upheld. The assessee is now before the ITAT challenging the computation of capital gains.

Caparo Vehicles Products India Ltd. vs DCIT 3.0 None was present on behalf of the assessee/appellant when the case was called out for hearing. Perusal of the order sheet entries shows that this appeal was earlier dismissed for non prosecution vide order of a coordinate bench on 12.12.2017. This order was recalled vide order dated 17.10.2019 and was fixed for hearing today before this bench. However, no one has appeared on behalf of the assessee today also and no application for adjournment has also been filed. Therefore, we are of the considered opinion that the assessee is not at all serious about pursuing this appeal before us and we, therefore, deem it appropriate to proceed with the hearing of the appeal ex parte qua the assessee.

4.0 The Ld. Sr. DR vehemently supported the orders of the lower authorities with respect to the addition made on account of capital gains. The Ld. Sr. DR also submitted that the assessee had not shown any interest in pursuing the appeal before the Tribunal and, therefore, the appeal should be dismissed in limine.

5.0 We have heard the Ld. Sr. DR and have also perused the order of the lower authorities. In the assessment order it has been noted by the AO that the assessee had sold a plot bearing No. 317

Caparo Vehicles Products India Ltd. vs DCIT at Sector 3, phase 2 ,HSIIDC, Bawal, Revari for a sale consideration of Rs. 5 crores which was sold to M/s. Caparo MI Steel Processing Pvt. Ltd. which was related party of the assessee.. It has been further noted by the AO that assessee was asked to produce a copy of the sale deed and computation of capital gains and from the perusal of the sale deed, AO noted that the circle rate for the purpose of registration has been adopted at Rs. 5,81,28,000/- whereas the assessee had only declared Rs. 5 crores as the sale consideration. The AO went on to hold that in terms of provision of section 50C of the Income Tax Act, 1961 (‘the Act’) the sale consideration was to be taken at Rs. 5,81,28,000/- and not Rs. 5 crores as taken by the assessee. The AO, accordingly, made an addition of Rs. 81,28,000/-. The Ld. CIT (A) discarded the assessee’s contention before her that the market rate prevailing at the time of Board Resolution dated 14.10.2011 for the sale of property should be taken as the sale price which was Rs. 5 crores. The Ld. CIT (A) also noted that no agreement to sell between the assessee and M/s. Caparo MI Steel Processing Pvt. Ltd. was produced for verification. The Ld. CIT (A) went on to uphold the addition.

Caparo Vehicles Products India Ltd. vs DCIT 5.1 Having given a careful consideration, we feel that although the assessee has been utterly negligent in pursuing this appeal, interest of justice would be served if the issue is restored to the file of the Ld. CIT (A) for re-examining the facts and adjudicating the issue afresh after giving proper opportunity to the assessee to present its case. The assessee shall be at liberty to produce copy of sale agreement and other documents on which it might choose to rely upon. The assessee is also directed to cooperate fully during the second round before the Ld. CIT (A) and appear whenever called upon to do so failing which the Ld. CIT (A) shall be at liberty to proceed ex parte to decide the case ex parte qua the assessee in accordance with law.

6.0 In the final result the appeal of the assessee stands allowed for statistical purposes.

Order pronounced in the open court on 27th January, 2020.