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Facts
The assessee's appeal was dismissed by the CIT(A) ex-parte due to non-prosecution. The AO had made additions under Section 69 and Section 56(2)(vii) of the Income Tax Act. The assessee's appeal before the ITAT was delayed by 351 days.
Held
The Tribunal condoned the delay in filing the appeal. Since the CIT(A) had dismissed the appeal without adjudicating on merits, the matter was restored to the CIT(A) for a fresh hearing.
Key Issues
Whether the appeal should be restored to the CIT(A) for fresh hearing on merits when it was dismissed ex-parte without considering the case. Whether the delay in filing the appeal should be condoned.
Sections Cited
250, 139(4), 69, 56(2)(vii), 282
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCH “B”, JAIPUR
Before: SHRI GAGAN GOYAL & SHRI NARINDER KUMAR
This appeal by assessee is directed against the order of NFAC, Delhi dated 16.10.2023 passed u/s. 250 of the Income Tax Act, 1961 (in short ‘the Act’) for A.Y. 2016-17.The assessee has raised the following grounds of appeal:
1. The additions made by the AO are arbitrary, excessive, and without proper appreciation of facts and evidence submitted by the appellant.
2. The CIT(A) erred in law and on facts by dismissing the appeal for non-prosecution without adjudicating the merits of the case.
3. The AO erred in law and on facts by making an addition of Rs. 30,32,230/- under Section 69 as unexplained investment. The payment was duly accounted for, supported by evidence, and sourced from the sale proceeds of exempt agricultural land.
4. The AO erred in law and on facts by making an addition of Rs. 28,31,439/- under Section 56(2)(vii). The provision is inapplicable to the buyer of a property, and its invocation was legally untenable, the AO failed to appreciate that the transaction was genuine, duly accounted for, and the discrepancy in value arose solely due to market conditions of the purchased property. Specifically,
5. a) the agricultural land purchased from Smt. Naina Devi was under dispute at the time of purchase, significantly affecting its marketability and valuation. The appellant acquired the property at a genuine market value, which was lower than the stamp duty valuation due to the legal risks and infrastructural limitations involved. The invocation of Section 56(2)(vii) in such a case is unwarranted, as the appellant did not gain any undue benefit or income from the transaction. Judicial precedents have consistently held that stamp duty valuations cannot be the sole basis for addition under Section 56(2)(vii) when properties are encumbered or disputed b) the property was situated at a lower height and lacked proper water supply, further reducing its effective market value. The payment made was in line with the prevailing market rate.
6. The AO erred in law and on facts by adding Rs. 14,41,000 as unexplained expenses despite the availability of bills and vouchers substantiating the land development expenses. The AO failed to consider the appellant's explanation and evidence.
7. The AO failed to provide adequate opportunity to the appellant to present explanations, contrary to the principles of natural justice. The timeline between the issuance of the show-cause notice and the completion of the assessment was inadequate for a fair hearing.
2. The brief facts of the case are that the assessee filed his return of income on 28.03.2017 u/s. 139(4) of the Act at Rs. 2,69,350/-. The case of the assessee was selected for complete scrutiny under CASS on the reason “Claim of Large Exempt Income”, as the assessee claimed exempt income amounting to Rs. 55 Lacs. After a detailed deliberation between the assessee and the AO, the case of the assessee was assessed after making addition of Rs. 30,32,230/- as unexplained investment u/s. 69 of the Act, Rs. 14.41 Lacs as unexplained investment u/s. 69 of the Act and addition under the head other sources amounting to Rs. 28,31,439/- u/s. 56(2)(vii) of the Act. The assessee being aggrieved with the same preferred an appeal before the Ld. CIT(A), who in turn dismissed the appeal of the assessee on ex-parte basis as none appeared or filed any details before the office of the Ld. CIT(A). The assessee being further aggrieved with the same preferred the present appeal before us.
3. We have gone through the order of the AO, order of the Ld. CIT(A) and submissions of the assessee alongwith grounds taken before us. Before we move further, it is brought to our notice by the registry that the appeal of the assessee is time barred by 351 days. In response to the same the assessee filed an application for condonation of delay alongwith a duly notarized affidavit for the same. We have gone through the contents of the same and find the same to be genuine with a reasonable cause is also there making the same fit for condonation of delay. In view of this, the delay in filing of the appeal is duly condoned.
4. It is observed that there is no finding by the office of the Ld. CIT(A) on merits as the matter was disposed ex-parte as on the designated dates none appeared on behalf the assessee vide para 4 of the appeal order. Hence, the Ld. CIT(A) relied on the decision of the CIT Vs. B.N. Bhattacharjee & Another 118 ITR 461 and dismissed the appeal without discussing the merits of the case. In view of this, the matter is restored back to the file of the Ld. CIT(A) for fresh hearing after giving the assessee a proper opportunity of being heard as per section 282 of the Act and the assessee is directed to be vigilant and cooperative enough during the proceedings before the Ld. CIT(A) without seeking any adjournment. In these terms grounds raised by the assessee are allowed for statistical purposes.
In the result the appeal of the assessee is allowed for statistical purposes.
The Order is pronounced in the open court on the 24th Day of April 2025.