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Facts
The assessee sold a property for Rs. 20 lakh against a market value of Rs. 33.52 lakh and did not file an income tax return for AY 2013-14. The Assessing Officer reopened the assessment, issued various notices, and made several additions including under Section 69A for unexplained money and Section 50C for long-term capital gain. The First Appellate Authority (NFAC) dismissed the assessee's appeal ex-parte, citing defective documents and non-compliance.
Held
The Tribunal observed that the assessee was not given adequate opportunity to present his case due to reasons like illness and misdirection of notices to a previous counsel. Considering the interests of substantial justice, the Tribunal restored the matter to the Assessing Officer for fresh assessment with directions to provide a reasonable opportunity of hearing to the assessee, while cautioning the assessee to comply fully.
Key Issues
Whether the CIT(A) was justified in dismissing the assessee's appeal ex-parte without providing an adequate opportunity of being heard, given reasons like the assessee's illness and non-receipt of notices; and whether the additions made by the AO for unexplained money (Section 69A) and long-term capital gain (Section 50C) were justified.
Sections Cited
147, 148, 142(1), 133(6), 144, 69A, 50C, 271(1)(c), 271F, 80TTA, 80C
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Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
Assessment Year: 2013-14 Gopal Ji Mishra v. The Income Tax Officer 6(5) K-1218, Ashiana Lucknow - New Kanpur Road, Lucknow TAN/PAN:AKJPM8317M (Appellant) (Respondent) Appellant by: Shri P. K. Kapoor, C.A. Respondent by: Shri Sanjeev Krishna Sharma, D.R. Date of hearing: 18 03 2025 Date of pronouncement: 20 03 2025 O R D E R
This appeal has been preferred by the assessee against order dated 18.03.2024, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2013-14.
The brief facts of the case are that the Income Tax Department was in possession of information that the assessee had sold property of Rs.20,00,000/- against the market value of Rs.33,52,500/- in the year under consideration. The assessee had not filed the return of income for the year under consideration. The Assessing Officer (AO) reopened the assessment under section 147 of the Income Tax Act, 1961 (hereinafter called “the Act’) and issued notice under section 148 of the Act to the assessee. The AO also issued notice under section 142(1) of the Act to the assessee. However, the assessee, in response to notice under section 148 of the Act, did not file any return of income for the year under consideration, but filed reply and furnished certain documents relating to the sale of property. The AO after considering the reply of the assessee and the documents obtained under section 133(6) of the Act, made various additions and completed the assessment under section 147 read with 144 of the Act, computing the income of the assessee as under:
Addition of Income from Salary : Rs.6,00,000/- Addition of interest income : Rs.29,848/- Addition u/s. 69A of the Act : Rs.15,85,904/- Addition u/s. 50C of the Act : Rs.25,92,873/- Net taxable income (rounded off) : Rs.48,08,630/- 2.1 The AO also initiated penalty proceedings under section 271(1)(c) and 271F of the Act, separately.
Aggrieved, the assessee preferred an appeal before the Ld. First Appellate Authority. The case of the assessee was migrated to NFAC, which dismissed the appeal of the assessee by passing an order ex-parte qua the assessee.
Now, the assessee has approached this Tribunal challenging the orders of the AO as well as the NFAC by raising the following grounds of appeal:
1.1 BECAUSE the ld. "CIT(A)" was not justified in dismissing the appeal in limini by passing the order ex-parte by erroneously holding that the appeal was not maintainable on the ground that it was defective owing to non-attachment of legible documents. 1.2 BECAUSE all the requisite documents were duly attached to Form 35 and the same were clearly legible, consequently the ld. "CIT(A)" was factually in-correct in observing that the attached documents were not legible and on that basis in holding the appeal as defective so as to dismiss the same as not maintainable. 2.1 BECAUSE, on the facts and in the circumstances, the Id. "CIT(A)" was not justified in dismissing the appeal in limine by passing the impugned order ex-parte without affording due and adequate opportunity of being heard to the assessee. 2.2 BECAUSE various notices issued by the authorities below could not be responded to by the assessee due to illness/non-accessibility of registered e-mail account owing to which proper compliance could not be made by the assessee and as such the impugned order deserves to be set-aside and matter restored to the file of Assessing Officer for passing the assessment order afresh after affording reasonable opportunity of being heard to the assessee.
WITHOUT PREJUDICE TO AFORESAID 3. BECAUSE the Assessing Officer was not correct in making an addition of Rs.15,85,904/-; comprising of - (i) cash deposit in Bank of India, Aminabad branch - Rs.6,50,000/-, (ii) cash deposit in Sate Bank of India, Jail Road branch - Rs.2,30,000/- ;and (iii) credit entries by way of cheques/transfer - Rs.7,05,904/- as unexplained money u/s 69A of the Act by holding that the said amounts remained unexplained. 4.1 BECAUSE as per the information on record, aggregate cash deposits during the year in the said bank accounts were to the tune of Rs.6,30,000/- only (which included cash withdrawal of Rs.4,00,000/- from assessee's own bank account in State Bank of India, Jail Road branch), therefore the addition to the tune of Rs.8,80,000/- (out of overall addition of Rs.15,85,904/-) was wholly erroneous and factually incorrect, consequently the Id. "CIT(A)" should have deleted the addition of Rs.8,80,000/-. 4.2 BECAUSE the balance amount of Rs.2,30,000/- (Rs.6,30,000/- minus Rs.4,00,000/-) deposited in SBI Jail Road branch was out of salary of Rs.6,00,000/-received in cash from New Public Inter College, LDA, Lucknow for which a separate addition had been made as per para 2 of the assessment order, as such, no further addition of cash deposits in the bank accounts was called for.
5. BECAUSE the Assessing Officer was also not correct in making an addition of Rs.7,05,904/- (out of overall addition of Rs.15,85,904/-) because out of the said amount a sum of Rs.6,99,800/- represented the car loan taken by assessee from Bank of India and the rest amount of Rs.6,104/- was also not of the nature of income. 6.1 BECAUSE the Assessing Officer was not correct in making the addition of Rs.25,92,873/- as long-term capital gain on sale of an immovable property. 6.2 BECAUSE while computing the long-term capital gain at Rs.25,92,873/- the Id. Assessing Officer firstly did not consider the cost of improvement incurred by the assessee and secondly the Id. Assessing Officer wrongly adopted the stamp value of Rs.33,52,500/- as the sale consideration as against the actual sale consideration of Rs.20,00,000/- declared in the sale deed and consequently the addition of Rs.25,92,873/- made under the head 'Long-Terin Capital Gain' was liable to be deleted. 6.3 BECAUSE on the facts and in the circumstances, the Id. Assessing Officer erred in not referring the matter of valuation to the DVO, as per provisions of sub-section (2) of section 50C and in straight away adopting stamp value of Rs.33,52,500/- as the sale consideration, consequently the ld. "CIT(A)" ought to have deleted the addition of Rs.25,92,873/- and should have directed the Id. AO to refer the valuation to the DVO.
7. BECAUSE the Assessing Officer, while computing the total income of the appellant, should have granted deduction u/s 80TTA of the Act to the tune of Rs.10,000/-.
8. BECAUSE the Assessing Officer, while computing the total income of the appellant, should have granted due deduction u/s 80C of the Act.
BECAUSE initiation of penalty proceedings u/s 271(1)(c) of the Act in the assessment order was contrary to the provisions of law and facts of the case owing to lack of requisite satisfaction and consequently the Id. "CIT(A)" should have directed the Assessing Officer to drop the penalty proceedings.
BECAUSE the order appealed against is contrary to facts, law and principles of natural justice. 11. BECAUSE each ground taken in appeal is mutually exclusive and without prejudice to each other. 12. The appellant craves leave, to add, delete or modify any of the grounds before or at the time of hearing of appeal.
During the course of hearing before me, the Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that when the appellate proceedings were initiated by the ld. CIT(A), Covid-19 pandemic was at peak and there was complete lock-down in the Country. He further submitted that the notice issued by the Office of the ld. CIT(A) on 29.09.2023 and Defect Memo dated 21.11.2023 and 08.03.2024 were sent to the email id of the earlier Counsel of the assessee, who did not inform the same to the assessee. The Ld. A.R. also submitted that the assessee was a heart patient and had undergone bypass surgery, and subsequently pacemaker was inserted twice and, therefore, the assessee could not be represented before the ld. CIT(A). He submitted that these averments are duly supported by Affidavit of the assessee, Shri Gopal Ji Mishra and Medical Reports of Max Super Specialty Hospital, New Delhi. The Ld. A.R. also submitted that the AO has passed the order without giving adequate opportunity to the assessee. The Ld. A.R. submitted that the notice under section 142(1) of the Act issued by the AO was dated 23.06.2016 and that in response to the same, the assessee had filed reply on 29.06.2016 and that the order was passed by the AO on 30.06.2016, i.e., on the very next day of filing of the reply by the assessee, vide dated 29.06.2016. The Ld. A.R. further submitted that some deficiencies were also there in the order of the AO, as the order had been passed in haste without proper appreciation of facts. The Ld. A.R. prayed that the matter may be restored to the file of the AO for passing the assessment order de novo after providing a reasonable opportunity of hearing to the assessee.
The Ld. Senior D.R. had no objection to the restoration of appeal to the file of the Assessing Officer.
I have heard both the parties and have also perused the material on record. Looking into the facts of this case, I am of the considered view that the Assessee deserves one more opportunity to present his case and, therefore, in the interest of substantial justice, I restore this file to the Office of the Assessing Officer with the direction to provide one more opportunity to the Assessee to present his case and produce the necessary evidences, if any, in support of the transactions entered into by the Assessee. I also caution the Assessee to fully comply with the directions of the Assessing Officer in the set-aside proceedings when called upon to do so, failing which, the Assessing Officer would be at complete liberty to pass the order in accordance with law, based on the material available on record even if it is ex-parte qua the assessee.
In the result, the appeal of the assessee stands allowed for statistical purposes.
Order pronounced in the open Court on 20/03/2025.