SUSHILA DEVI JANGID,JAIPUR vs. ITO, WD 7(2), JAIPUR

4. In the facts and circumstances of the case and in law, the Ld. Assessing officer has erred in charging assessee with capital gain tax without considering cost of construction/cost of improvement. The action of the Ld. Assessing officer is illegal, unjustified and against the law. Relief may please be granted by quashing the order passed u/s 250.

2.1 Apropos grounds of appeal of the assessee, it is noticed that the ld. CIT(A) dismissed the appeal of the assessee being non-submission of the documents and not filling any reply by the assessee during the course of hearing before him. The observations made by the ld.CIT(A) in his order is reproduced as under:- ‘’Decision: I have carefully considered the submission made by the appellant in form no. 35, the facts of the case as well as gone through the observation and findings of the AO 's assessment order. I find from the grounds of appeal vis-à-vis statement of facts that main dispute of the appellant arises on account of addition made by the AO for unexplained short term capital gain of Rs. 16,00,000/-. It is observed from the assessment order that the appellant was issued notice to offer her explanation regarding the findings of the AO and after duly considered the non submission of the appellant, scrutiny assessment has been completed by the AO making additions of Rs. 16,00,000 in total income. Moreover the appellant is unable to give satisfactory explanation before the AO regarding the details of entitlement of benefit of cost indexation by providing supporting evidence in this regard.

In the appeal proceedings also the appellant miserably failed to file any compliance; neither the appellant nor its authorised representative filed any written submission nor has made any adjournment letter. Therefore the appellant miserably failed to substantiate the grounds taken by her with the supporting documents. This indicates the appellant is not willing to pursue her appeal. In view of above, I do not find any infirmity in the order of the AO and resultantly, I have no hesitation in holding that the impugned order of the AO dated 24-12-2017 is based on apropos consideration of facts and law and hence the same does not warrant interference. Therefore I am of opinion that AO's decision of determining income after addition of Rs. 16,00,000/- under the head capital gain is justified and in accordance with law. Accordingly impugned addition stand confirmed. The grounds in this regard are dismissed.

In the result, the appeal of the appellant is dismissed.’’ 2.2 During the course of hearing, the ld. AR of the assessee has filed the written submission in connection with above grounds of appeal with case laws to support his arguments as the AO made an addition of Rs.16.00 lacs holding it as an unexplained short term capital gain in the hands of the assessee on the ground that the assessee sold a residential property situated at C-30, Shiv Colony-C, Sanganer, Jaipur for a sale consideration of Rs. 16.00 lacs vide sale deed dated 18-12-2009 for which the assessee could not offer any explanation before the AO during the assessment proceedings. In first appeal, the ld.CIT(A) has confirmed the action of the AO as no reply was forwarded by the assessee in spite of various opportunities by the ld. CIT(A). The written submissions as made by the ld. AR of the assessee before us in toto is reproduced as under:-

GIST OF SUBMISSIONS BRIEF FACTS 1. The assessee, a senior citizen, aged 62 years, is an illiterate lady. She had no source of income during F.Y 2009-10 (A.Y 2010-11) and hence did not file her return of income for the relevant A.Y.

2. The assessee sold a residential property situated at C-30, Shiv Colony–C, Sanganer, Jaipur, Rajasthan for a sale consideration of Rs. 16,00,000/- vide Sale Deed dt. 18.12.2009. However, since the assessee never had any other source of income and hence had never filed her return of income in the past, she continued to not to file the return of income for relevant A.Y, due of lack of education and knowledge.

3. Later, as mentioned in the impugned order, reassessment proceedings u/s 147 of the Act for relevant A.Y were initiated upon the assessee on 30.03.2017. However, the assessee was not aware of any notice/intimation about the reassessment proceedings. Consequently, she failed to comply with the notices issued in pursuance of the above referred proceedings.

5. Upon receipt of the said Order u/s 147 r.w.s 144 dated 29.12.2017, the assessee, aggrieved by the said Order, preferred an Appeal before the Ld. CIT (A) in Form 35 dated 27.01.2018.

6. The Income Tax Department did not issue any notice of hearing in the Appeal for over 3 years. It was only on 09.03.2021 that a notice of hearing u/s 250 was issued upon the assessee. It is pertinent to mention herein that the e-mail ID registered on the assessee’s income-tax profile is that of her son’s, who does not check the e-mail regularly. Thus, the assessee remained unaware about this notice of hearing u/s 250 dated 09.03.2021 in pursuance of the Appeal proceedings which remained unattended by the assessee.

7. The Income Tax Department further issued another notice of hearing u/s 250 dated 26.11.2024. Upon receipt of this notice, the assessee got to know about the on-going Appeal proceedings with Ld. CIT (A). After which, the assessee sought professional advice and appointed an Authorized Representative (hereinafter referred to as ‘A/R’). The then A/R of the assessee filed for an adjournment for 2 weeks on account of submission being under preparation; which was duly granted up to 19.12.2024 by the department.

8. However, no response was filed by the then A/R of the assessee on the adjourned date, resulting in failure to substantiate the grounds of appeal with supporting documents. Thereafter, the Ld. CIT(A) passed an Order u/s 250 dated 10.01.2025 [PB 7 - 14], upholding the decision of Ld. AO., wherein total income of the assessee was assessed at Rs. 16,00,000/.

9. The present appeal is preferred challenging the said Order of CIT(A), NFAC (hereinafter referred to as ‘CIT(A)’) passed u/s 250 dated 10.01.2025. SUBMISSION 1. GROUND NO. 1: Best Judgement Assessment in the absence of adequate opportunity of being heard is unjust 2. he revenue in the instant case has erred in not providing adequate opportunity of being heard to the assessee, especially when adverse order was proposed to be passed and thus the order passed by Ld. CIT(A), upholding the order of the Ld. AO is bad in law as it is against the principles of natural justice. Natural justice implies fairness, reasonableness, equity and equality. It has a very wide application in administrative discretion which aims to prevent arbitrariness and injustice towards the citizens with an act of administrative authorities. Decisions which violate the principles of natural justice shall stand null and void.

5. It gives right to the party to respond to the evidence against them and to choose legal representative of their own choice. The principles of natural justice form a fundamental fair procedure among the parties during a dispute. It is the duty of every person or body exercising judicial or quasi-judicial functions to act in good faith and to listen fairly to both the sides before passing any order.

7. Therefore, the impugned order has violated the principles of natural justice which is essence of fair trial and in view of the above ground, the impugned order deserves to be quashed and set aside. 2. GROUND NO. 2: Lapse on part of the A/R should not be attributed to the assessee: 1. While passing the order u/s 250, the Ld. CIT (A) has erred in the facts and circumstances of the case by confirming the addition made by the Ld. AO., in the absence of documentary supporting to substantiate the Grounds of appeal

by the assessee.

2. This is because not adequate opportunity of hearing was provided to the assessee. The notice of hearing u/s 250 dated 09.03.2021 remained unattended by the assessee as the assessee was uninformed about it. She did not receive any email/sms/intimation about the same and hence could not file a timely response.

3. As for the second notice of hearing dated 26.11.2024, the then A/R of the assessee had sought for an adjournment for submission of detailed grounds of appeal. However, the A/R failed to file the response on the adjourned date i.e. 19.12.2024, resulting in an adverse Order.

4. In this regard, it is submitted that inaction of the part of A/R cannot be the cause of suffering of an assessee. An assessee should not be penalized for the omissions or errors of their legal representative when the assessee has placed bona fide reliance on them, especially in the present circumstances wherein the assessee is an illiterate senior citizen.

5. Reliance is placed upon various judicial pronouncements supporting assessee’s contention: a. Hon’ble ITAT Ahmedabad Bench ‘SMC’, in case of Bhogibhai Vithalbhai Patel V/s. Asst.Commissioner of Income-tax, [2025] 172 taxmann.com 689 (Ahmedabad - Trib.), wherein the Tribunal has held that— It is found that the assessee submitted affidavits explaining the reasons for non-compliance, asserting that the communication failure was due to his representative’s inaction. The facts clearly indicate that the non-compliance was not due to any wilful default or mala fide intent on the part of the assessee. The lapse occurred due to the negligence of the authorized representative, which was beyond the control of the assessee. Further, an assessee should not be penalized for the omissions or errors of their legal representative when the assessee has placed bona fide reliance on them. In the instant case, the failure of the representative to communicate notices cannot be attributed to any fault of the assessee, who is a senior citizen relying on professional guidance for compliance. [Para 7.1] b. Hon’ble High Court of Karnataka, in case of Chokkadi Vyavasaya Seva Sahakari Bank V/s. Income-tax Officer, [2024] 162 taxmann.com 155 (Karnataka), wherein the Hon’ble High Court has held that— It was contended that as accountant of assessee was not used to online proceedings of income tax department and further as year 2019 was first year of introduction of conduct of electronic mode of conduct of income tax proceedings by way of introduction of E- assessment Scheme 2019, there was a genuine lapse on part of assessee in not exercising complete diligence in attending proceeding. And on facts, reasons for inability and omission on part of assessee to submit its reply and contest proceedings were valid and sufficient and therefore, it would be just and appropriate to show last indulgence in favour of assessee by setting aside impugned order and remitting matter back to Assessing Officer for reconsideration afresh and proceed further in accordance with law. Accordingly, the present appeal may please be allowed and the erroneous demand initiated upon the assessee for A.Y 2010-11 may please be deleted.

3. GROUND NO. 3: Order u/s 147 passed without proper service of notices to the assessee; Order u/s 147 not available on the portal:

1. The Ld. CIT (A) has erred in the facts and circumstances of the case by upholding the Best Judgement Assessment Order u/s 144 r.w.s 147 of the Act issued upon the assessee by the Ld. AO, in the absence of notice/ email/ intimation about the Reassessment proceedings u/s 147 of the Act for relevant A.Y.

3. It may please be further noted that the Reassessment proceedings u/s 147 of the Act for relevant A.Y still reflect as on-going proceedings under ‘For your action’ list on ‘e-proceedings’ tab on the Income Tax profile of the assessee. Also, there is no Order u/s 144 r.w.s 147 dated 24.12.2017 available under ‘For your information’ list on ‘e- proceedings’ tab on the income tax profile of the assessee [PB 17 - 18]. 4. Reliance may please be placed upon various judicial pronouncements upholding the assessee’s contention: a. Hon’ble High Court of Delhi in case of Yogesh Bansal V/s. NFAC, Delhi [2024] 159 taxmann.com 308 (Delhi), wherein it is held that --- The notice issued under section 143(2) was not addressed to the e- mail address of the assessee indicated in return of income filed by him and for this reason he was unaware of notice issued to him. He also contended that assessment order was not available on designated portal and hence impugned order deserved to be set aside. Further, it was held that the Assessing Officer was to be directed to activate designated portal so that assessee could upload replies to notice issued in matter. b. Hon’ble High Court of Madras in case of Tvl. Samikannu Mariappan V/s. State Tax Officer (ST) [2024] 164 taxmann.com 275 (Madras), wherein it is held that --- Where tax proposal was arrived at on best judgment basis because petitioner did not respond to notice or appear at personal hearing and petitioner was not heard before order was issued and petitioner asserts that he was unaware of proceedings, interest of justice warrants reconsideration albeit by putting petitioner on terms. c. Hon’ble High Court of Delhi in case of Bengal & Assam Company Limited V/s. NFAC [2023] 154 taxmann.com 130 (Delhi), wherein it is held that --- Where Assessing Officer issued statutory show cause notices to assessee at e-mail address which was not in use, impugned best judgment assessment order deserved to be set aside. It was further held that Assessing Officer was to be given liberty to pass fresh assessment order after issuance of a formal show cause notice at correct e-mail address.

5. In view of the above ground also, the impugned order deserves to be quashed and set aside.

4. GROUND NO. 4: Addition to the total income of the assessee on account of unexplained short term capital gain on sale of property is untenable in law:

1. 1. It is hereby submitted that the assessee had sold a residential property situated at C-30, Shiv Colony–C, Sanganer, Jaipur, Rajasthan on 18.12.2009 for a sale consideration of Rs. 16,00,000/-. However, because she never had any source of income and hence had never filed her return of income earlier, she did not file her return of income for relevant A.Y too.

2. The Ld. AO thus made an addition of the entire Rs. 16,00,000/- on account of unexplained short term capital gain on sale of the said property, without enquiring into the relief u/s 48 of the Act and taxing the capital gain on the presumption of being short term capital gain.

4. Reliance is placed upon various judicial pronouncements upholding the assessee’s contention: a. Hon’ble High Court of Madras in case of Parvathi Ganesh V/s. Assessment Unit [2024] 168 taxmann.com 441 (Madras), wherein it is held that ---

Where Assessing Officer added agricultural income disclosed by assessee in its return as assessee had not provided documents to substantiate that such income was indeed agricultural income eligible for exemption, since assessee before Court filed additional documents to prove that he/she had earned agricultural income, impugned assessment order was to be quashed and assessee was to be given fresh opportunity to place those documents before Assessing Officer for consideration. b. Hon’ble High Court of Orissa in case of Swagatika Rout V/s. Chairman, CBDT, New Delhi [2023] 152 taxmann.com 529 (Orissa), wherein it is held that --- Where assessee failed to file return disclosing a high value transaction of selling her property and AO raised tax demand and interest by passing assessment order under section 147 read with sections 144 and 144B, since no particulars of income were concealed by assessee and in impugned assessment order section 144 was also invoked but AO abdicated his role as adjudicator in making computation by not enquiring about relief under section 48, impugned assessment order was to be set aside. c. Hon’ble ITAT Surat Bench in case of Sai majur & Kamgaroni Sahkari Mandli Ltd. V/s. Income Tax Officer [2025] 172 taxmann.com 120 (Surat-Trib.), wherein it is held that --- Where due to failure of assessee to comply with various notices, Assessing Officer passed Best assessment order treating cash deposit and credit entries appearing in bank account as undisclosed money under section 69A, since assessee before Tribunal submitted paper book containing cash book, bank book, books of account, profit and loss account & balance sheet, copy of Form 26AS and computation of income, one more opportunity should be given to assessee to plead his case before the Assessing Officer. d. Hon’ble ITAT Pune Bench‘A’ in case of Dnyaneshwar Baburao Kathe V/s. Income Tax Officer [2024] 168 taxmann.com 408 (Pune - Trib.), wherein it is held that --- Where assessee, agriculturist, did not file return of income claiming that he had no taxable income, however Assessing Officer noted that assessee had sold land and treated sale consideration as LTCG, since assessment order was passed ex parte, matter was to be remanded back for fresh consideration.

6. The assessing officer should not be vindictive or capricious or should not indulge into assessment with the dishonest intention and also the basis adopted for assessment and/or addition must have a reasonable nexus with the estimation done.

authority while making the 'best-judgment' assessment no doubt should arrive at its conclusion without any bias and on rational basis. That authority should not be vindictive or capricious.”

State Of Kerala vs C. Velukutty [(1966)17 STC 465 (SC)],  wherein it was held by the Hon’ble Supreme Court of India that “The limits of the power are implicit in the expression "best of his judgment". Judgment is a faculty to decide matters with wisdom truly and legally. Judgment does not depend upon the arbitrary caprice of a judge, but on settled and invariable principles of justice. Though there is an element of guess- work in a "best judgment assessment", it shall not be a wild one, but shall have a reasonable nexus to the available material and the circumstances of each case. Though sub-section (2) of section 12 of the Act provides for a summary method because of the default of the assessee, it does not enable the assessing authority to function capriciously without regard for the available material.”

Brij Bhushan Lal Parduman Kumar etc. Vs. Commissioner of  Income Tax, Haryana, Himachal [1979 SCC (Tax) 197], wherein it was held by the Hon’ble Apex Court that “The law relating to ’best judgment assessment’ is same both in the case of income tax assessment and the sales tax assessment. The authority making a best judgment assessment must make an honest and fair estimate of the income of the assessee and though arbitrariness cannot be avoided in such estimate the same must not be capricious, but should have a reasonable nexus to the available material and the circumstances of the case.”

2.3 On the other hand, the ld. DR supported the order of the lower authorities. 2.4 We have heard both the parties and perused the materials available on record. The moot issue in this appeal is that the AO made an addition of Rs.16.00 lacs in the hands of the assessee treating it unexplained short term capital gain which has been confirmed by the ld. CIT(A) as no contrary evidence was provided by the assessee before him. The Bench feels that it is not imperative to repeat the facts of the case as the same has been lucidly explained and the case is required to be restored to the file of the AO for afresh consideration, being it an ex-parte case before lower authorities. Hence the Bench is of the view that lis between the parties has to be decided on merits so that nobody’s rights could be scuttled down without providing the opportunity of being heard to the assessee. Thus, the matter is restored to the file of the AO to decide it afresh by providing one more opportunity of hearing, however, the assessee will not seek any adjournment on frivolous ground and remain cooperative during the course of proceedings. Thus, the appeal of the assessee is allowed for statistical purposes. 2.5 Before parting, we may make it clear that our decision to restore the matter back to the file of the AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by AO independently in accordance with law.

3.0 In the result, the appeal of the assessee is allowed for statistical purposes Order pronounced in the open court on 05 /05 /2025. Sd/- Sd/- ¼Mk0 ,l- lhrky{eh ½ ¼jkBksMdeys'kt;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;dlnL;@Judicial Member ys[kklnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 05 /05 /2025 *Mishra आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Smt. Sushila Devi Jangid, Jaipur 2. izR;FkhZ@The Respondent- The ITO, Wared 7(2), Jaipur. 3. vk;djvk;qDr@CIT 4. विभागीय प्रतिनिधि] आयकरअपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 5. xkMZQkbZy@Guard File { } vkns'kkuqlkj@By order

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