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Facts
The assessee failed to disclose capital gains from property sale and interest income. Assessment proceedings were initiated under the NMS category. The assessee did not file ITR or respond to notices, citing lack of awareness and seeking time. The Assessing Officer made additions for both the sale of property and interest income.
Held
The Tribunal held that the orders passed by the lower authorities were ex-parte and the assessee's submissions were not considered. Therefore, in the interest of natural justice, the matter should be decided on merit. The case was remanded back to the Assessing Officer for a de novo order.
Key Issues
Whether the lower authorities properly considered the assessee's submissions before passing ex-parte orders and if the appeal should be decided on merit or dismissed on technical grounds.
Sections Cited
147, 148, 249(4)(b), 270A, 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, CHANDIGARH BENCH, ‘B’, CHANDIGARH
Before: SHRI LALIET KUMAR & SHRI KRINWANT SAHAY
Order Per Krinwant Sahay, AM : Appeal in this case has been filed by the assessee against the order dated 09.02.2024 of ld. Commissioner of Income Tax, National Faceless Appeal Centre (NFAC), Delhi for A.Y. 2018-19.
2. Grounds of appeal
are as under: - 352-Chd-2024 Ruhi Rana, Panchkula 2
1. The Assessment proceedings for AY 2018-19 was initiated on the basis of Risk Management Strategy under the Category "Non-Filers Monitoring System (NMS) as assessee had made transaction of sale of Immovable Property of Rs. 54,45,000/-.
The Assessee has not replied to Notices and nor filed its ITR u/s 148 as she engaged some counsel but that counsel never responded to notices send by Income Tax department.
3. The Case was decided making addition of Rs. 54,77,343/- and creating demand of Rs. 25,56,691/-.
Aggrieved with the order the Assessee filed appeal but the same was dismissed on the reason that conditions for admission of appeal before CIT (A) as per section 249 (4) (b) was not fulfilled and liable to dismissed.
Brief facts of the case as per the assessment order are as under:-
1. The assessee received Rs.54,45,000/- as sale consideration of an immovable property during financial year 2017-18 but failed to disclose Capital Gains on transactions of her property. No information has been furnished by her regarding cost of acquisition, cost of improvement etc. Hence, 352-Chd-2024 Ruhi Rana, Panchkula 3 total sale consideration amounting to Rs.54,45,000/- is considered as Capital Gains as no benefit of cost of acquisition and cost of improvement may be allowed in this case. Addition of Rs.54,45,000/- is hereby made to the total income of the assessee under head 'Capital Gains' and penalty proceedings under section 270A of the Act are being initiated separately on this issue for under reporting of income.
2. The assessee received interest income of Rs.32,343/- during financial year 2017-18 but failed to disclose this income to the Income Tax Department as she has not filed her return of income. The assessee failed to explain anything about this income during assessment proceedings, therefore, addition of Rs.32,343/- is hereby made to the total income of the assessee under head 'Income from Other Sources'. Penalty proceedings under section 270A of the Act are being initiated separately on this issue for under reporting of income.
4. Against the order of the Assessing Officer, the Assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) in his order has given findings as under:-
“In the present case, the appellant did not file return of income. The AO arrived at the total income of Rs. 54,77,343/- and computed the tax payable at Rs. 25,56,691/- which included the advance tax payable by the appellant. On or before
352-Chd-2024 Ruhi Rana, Panchkula 4 filing the present appeal, the appellant has failed to make the required payment of the amount equal to the amount of advance tax which was payable by him. Further, the appellant neither provided any satisfactory clarification/ explanation in response to the deficiency letter issued by this office nor did he offer any reason, leave alone any good and sufficient reasons, for seeking exemption from the operation of the sec. 249(4)(b) even though sufficient opportunities were provided to him.” and accordingly dismissed the appeal of the Assessee.
Aggrieved with the decision of CIT(A), the assessee is filling appeal before this Tribunal.
During proceedings before us, the Counsel of the Assessee argued that in this case the Assessing Officer passed an order u/s 144 despite that the detailed submissions were filed before him without taking cognizance of the submissions filed, the A.O. has passed the order. Even the ld. CIT(A) in his order has given findings on this issue as under: -
"With regard to the present Letter requiring clarification, it is respectfully submitted that Income Tax Return for the AY 2018-19 is not filed in response to the proceeding under section 147. As already submitted in the Statement if Facts filed along with filing of Appeal in this case: Initially, the Appellant was not aware of the Income Tax Proceedings being under process for AY 2018-19. She came to know of the said proceedings on March 23, 2023 and she immediately responded to the SCN issued with all the 352-Chd-2024 Ruhi Rana, Panchkula 5 requisite documents and details, e) While submitting the aforesaid Reply, it was requested to allow some time to file the ITR in response to the Notice u/s 148 of the Income Tax Act, 1961, since the Appellant was not aware of the Assessment proceedings previously, f) However, grossly ignoring the aforesaid Reply submitted on March 23, 2023; stating the complete facts along with requisite documentary evidences in this regard, the Learned AO proceeded with framing of Assessment Order u/s 147 r.w.s. 144 of the Income Tax Act, 1961. From the aforesaid para, it is hoped that your good self will agree that there is no defect in the Appeal filed in this case for the year under consideration, since the ITR has not been filed due to reasons mentioned above. Hence the Column No. 8 and 9 of Form 35 are rightfully replied as NO. Regards".
We have considered the findings given by the Assessing Officer in the assessment order and the appellate order of the ld. CIT(A). We have also considered the arguments of the Counsel of the assessee. The ld. DR relied on the order of the CIT(A).
We find that despite the fact that Assessee filed detailed submissions (as claimed before the ld. CIT(A) and before the Tribunal), the Assessing Officer did not take cognizance of such details and passed an order u/s 144 of the Act. We have also considered the findings of the ld. CIT(A) and find that ld. CIT(A) has not glen any findings on merit, rather he has 352-Chd-2024 Ruhi Rana, Panchkula 6 dismissed the appeal on technical issue that the Assessee did not file any ITR. We think that since the orders passed by both the authorities below are ex-parte and Assessee’s submission have not been considered by the lower authorities, therefore, keeping in view the element of natural justice, the matter should be decided on merit. Accordingly, we remand this case back to the file of the Assessing Officer for passing an order de novo, in accordance with law, on affording due and adequate opportunity of hearing to the Assessee. The Assessee, no doubt, shall cooperate in the fresh proceedings before the A.O. All pleas available under the law shall remain so available to the assessee. Ordered accordingly.
In the result, the Assessee’s appeal is allowed for statistical purposes.
Order pronounced on 14.05.2025.