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Facts
The assessee sold an immovable property for Rs. 16,00,000/- which was valued by the sub-registrar at Rs. 23,10,629/-. The assessee failed to file a return of income for AY 2010-11 despite notices. Consequently, the Assessing Officer (AO) made an ex-parte assessment, treating the sale consideration as short-term capital gain and adding other income as unexplained.
Held
The Tribunal held that while the assessee was ex-parte before the lower authorities, the case should be decided on merits. To ensure natural justice, the appeals were restored to the file of the AO for fresh adjudication with an opportunity for the assessee to present their case. The penalty appeal was also restored to be decided in accordance with the quantum appeal.
Key Issues
Whether the appeals should be decided on merits despite the assessee being ex-parte before lower authorities, and whether a fresh opportunity of hearing should be granted to the assessee.
Sections Cited
147, 144, 271(1)(c), 148, 142(1), 139(1), 271(1)(b), 271F, 271(1)(G), 274
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,’’SMC” JAIPUR
ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM These two appeals filed by the assessee are directed against two different orders of the ld. CIT(A) dated 16.08.2024 & 13.08.2024, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2010-11 in the matter of Section 147/144 and 271(1)(c) of the Act respectively.
KANTA PRASAD SAINI VS ITO, WARD 4(1), JAIPUR 2.1 In the assessee has marched this appeal on the following grounds:-
‘’1. That the ld.CIT(A) has erred in law in dismissing the appeal without effecting proper service of hearing of notice and thereby violated fundamental principles of natural justice.
2. That the ld. CIT(A) has erred in law as well as on facts of the case in upholding the addition of Rs.24,06,950/- without directing the AO to file remand report on merits of the case.
3. That the ld CIT(A) has grossly erred in law and in facts in dismissing the appeal very casually and light heartedly and on stereotyped basis, inasmuch, incarnated facts of penalty appeal on the body of appellate order.’’ the assessee has marched this appeal on the following grounds:-
‘’1. That the ld.CIT(A) has erred in law as well as on facts of the case in confirming the penalty imposed by AO to the tune of Rs.6,44,870/- without even appreciating that quantum appeal was pending.
2. That the ld. CIT(A) has erred in law as well as on facts of the case in turning blind eye to the meticulous submission filed by the appellant and settled jurisprudence on the issue.
3. That the ld. CIT(A) has erred in law as well as on facts in affording reasonable opportunity of being heard.’’ 2.3 In this penalty appeal, Bench noticed that there is a delay of 03 days in filing the appeal by the assessee for which the ld. AR of the assessee has not filed any application for condonation of delay.But the ld. AR of the assessee submitted that the assessee has paid the appeal fees and signed the same on 14.10.2024 and immediately they filed it on 15.10.2028 and KANTA PRASAD SAINI VS ITO, WARD 4(1), JAIPUR the order date of order being 13.08.2024 the time limit expires on 12.10.2024 but the same was filed 15.10.2024 having delay was not intentional be condoned looking to the fact the matter is very old and he prayed that in the interest of justice the same be condone. The bench considered the request of the ld. AR of the assessee but at the same time the ld. AR of the assessee is warned to be careful in filing the application for condonation of delay in future.
2.4 Apropos ground of appealin it is noticed that the ld.CIT(A) has dismissed the appeal of the assessee by observing at para 5 of his order as under:-
Observation and decision:- I have carefully gone through the statement of facts, grounds of appeal and details furnished by the appellant.
5.1 In this case, the appellant, individual, sold immovable property amounting to Rs. 16,00,000/- on 05.11.2009 which was valued by the sub-registrar at Rs. 23,10,629/-for the purposes of charging stamp duty. Further the appellant received an amount of Rs. 96,322/- as per 26AS. The appellant did not file return of Income for AY 2010-11, thus the taxability of capital gain could not be ascertained by the AO. Therefore, notice u/s 148 of the Income-tax Act, 1961 (hereafter referred the Act') was issued by AO on 28.03.2017 after recording valid reasons and taking prior approval from the Pr. CIT-2, Jaipur but the appellant did not file return of income. A letter was issued by the AO on 03.07.2017 alongwith copy of notice u/s 148 for furnishing return of income and said letter was served on the appellant on 06.07.2017. The appellant again remained non-complied. Another notice u/s 142(1) of the Act was issued on 21.07.2017 and served on the appellant on KANTA PRASAD SAINI VS ITO, WARD 4(1), JAIPUR 10.08.2017 to file return of income in response to notice u/s 148 of the Act. No compliance was observed from appellant's side. The AO issued a show cause notice to the appellant on 20.10.2017 informing him in case of further non-compliance the case would be completed u/s 144 of Act as it was time barring. The appellant neither attended the hearing nor submitted any written submission. Therefore, the AO concluded the assessment ex-parte, treating the total sale consideration of Rs. 23,10,629 valued by sub-registrar as STCG and adding the same to the total income. Further the AO added an amount of Rs. 96,322/- received by the appellant in the relevant FY to the total taxable income as unexplained income and initiated penalty u/s 271(1)(c). 271(1)(b) and 271F separately Being aggrieved by this penalty order the appellant filed the present appeal 5.2 It is seen from the facts and circumstances of the case that the AO in the assessment proceedings gave numerous opportunities to the appellant but he failed to comply with any of the statutory notices. Despite getting repeated opportunities through notices u/s 148, 142(1) and show cause notice the appellant did not file return of income. Hence the taxability of the Capital gain could not be verified in absence of return of income. Further in the appeal proceedings, the appellant was sent several notices u/s 250 to furnish details/ documentary evidence to support his statement of facts and grounds of appeal. No documentary evidence was received from the appellant in support of his claim. The AO was sent remand report to verify appellant's claim before appeal through written submission. The AO in his reply mentioned that despite given opportunity to the appellant, he did not make any submission in support of his claim before the AO. As the appellant failed to furnish his return of income u/s 139(1) of the Act or in response to the notices u/s 148 and 142(1) of the Act in the assessment proceedings or any documentary evidence before appeal, I find no infirmity in the order of the AO and thus it is upheld. 5.3 Therefore, the appeal filed by the appellant is dismissed.
2.5 During the course of hearing, the ld. AR of the assessee submitted that the assessee was ex-parte before the lower authorities. However, the ld. CIT(A) sent the additional evidence for seeking the remand report from KANTA PRASAD SAINI VS ITO, WARD 4(1), JAIPUR the AO to verify the appellant’s claim. But in this connection no such positive information was received from the AO as to the claim of the assessee. Thus, the ld. AR submitted that the case of assessee may kindly be set aside to the AO for afresh adjudication but by providing adequate opportunity of being heard to the assessee.
2.6 On the other hand, the ld. DR supported the order of the ld. CIT(A) and submitted that the assessee was lethargic in pursuing his case in spite of various opportunities were granted to the assessee.
2.7 We have heard both the parties and perused the materials available on record. Brief facts of the case are that the assessee is an individual who sold the immovable property amounting to Rs.16.00 lacs on 5-11-2009 and it was valued by the Sub-Registrar at Rs.23,10,629/- for the purpose of charging stamp duty. The assessee also received an amount of Rs. 96,322/- as per 26AS. It is noted that the assessee did not file the return of income for the A.Y. 2010-11 and thus taxability of capital could not be ascertained by the AO in spite of various notices and show cause notice dated 20-10-2017 informing him in case of non-compliance the case would be completed u/s 144 of the Act and it is time barring matter. However, the assessee neither attended the hearing nor submitted any written KANTA PRASAD SAINI VS ITO, WARD 4(1), JAIPUR submission. Therefore, the AO concluded the assessment ex-parte and treated the total sale consideration of Rs.23,10,629/- as valued by the Sub- Registrar as STCG and added the same to the total income of the assessee. In first appeal, the ld. CIT(A) confirmed the action of the AO by holding as under:-
‘’As the appellant failed to furnish his return of income u/s 139(1) of the Act or in response to the notices u/s 148 and 142(1) of the Act in the assessment proceedings or any documentary evidence before appeal, I find no infirmity in the order of the AO and thus it is upheld. ‘’ It is an admitted fact that the assessee is ex-parte before the AO and before the ld. CIT(A). Therefore, he could not put forth his defence. It was the bounded duty of the assessee to appear before the statutory authorities as and when called for. It is noticed that various opportunities were provided to the assessee for settling the issue. However, we are 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 opportunity of being heard to the assessee. Even the bench is of the aware of the facts that the ld. AO was requested to forward his remand report on the evidence so submitted by the assessee. Hence, the matter is required to be 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 KANTA PRASAD SAINI VS ITO, WARD 4(1), JAIPUR ground and remain cooperative during the course of proceedings. Thus the appeal of the assessee is allowed for statistical purposes. 2.8 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. 2.9 Apropos ground of appeal of penalty u/s 271(1)(c), it is noticed that the ld. CIT(A) dismissed this appeal of the assessee by observing as under:- ‘’5. Observation and decision: I have carefully gone through the statement of facts, grounds of appeal and details furnished by the appellant. 5.1 In this case, the appellant, an individual sold an immovable property amounting to Rs. 16,00,000/- on 05.11.2009 which was valued by sub registrar at Rs. 23,10,629/-for the purpose of charging stamp duty. Further the appellant received an amount of Rs. 96,322/- in the FY. 2009-10 relevant to the A.Y 2010
11. The appellant did not file return of income for the A.Y. 2010-11. Therefore after getting necessary approval from the Pr.CIT-2, Jaipur notice under section 148 of Income-tax Act, 1961 (hereafter referred the Act) was issued by the AO to which the appellant did not comply. Hence assessment was completed u/s 147/144 of the Act by the AO. In the assessment proceedings notices u/s 271(1)(G)/274 on 15.11.2017 and show cause notice on 13.04.2018 were served to the appellant to which he remained non-complied. Therefore, the AO imposed a penalty ex-parte of Rs. 6,44,870/- uls 271(1)(C) of the Act on the total assessed concealed income of Rs. 24,06.950/- Being aggrieved by this penalty order the appellant filed the present appeal KANTA PRASAD SAINI VS ITO, WARD 4(1), JAIPUR The appellant in his ground no. 182 submitted that the AO erred in determining the reason whether there was a concealment of income or furnishing inaccurate particulars of income in the order imposing penalty. It is seen from the facts and circumstances of the case that the AO in the assessment proceedings gave numerous opportunities to the appellant but he failed to comply with any of the statutory notices. Despite getting repeated opportunities through notices u/s 148, 142(1) and show cause notice the appellant did not file return of income. Further in the penalty proceedings notices u/s 271(1)(C)/274 on 15.11.2017 and show cause notice on 13.04.2018 were served to the appellant to which he remained non-complied. As the appellant failed to furnish his return of income u/s 139(1) of the Act or in response to the notices u/s 148 and 142(1) of the Act in the assessment proceedings or any documentary evidence before appeal and even remained non- compliant against notices u/s 271(1)(C)/274 of the Act and show cause notice in the penalty proceedings whether there was concealment of income or furnishing inaccurate particulars of income occurred cannot be ascertained distinctively. Therefore, I find no infirmity in the order of the AO and thus the penalty order is upheld. Subsequently, grounds raised by the appellant are hereby dismissed. 5.5 In the result, the appeal filed by the appellant is dismissed.
2.10 The Bench has heard both the parties and perused the materials available on record.As regards the penalty appeal of the assessee relating to Section 271(1)(c) of the Act, the Bench feels that since the quantum appeal of the assessee has been restored to the file of the AO for afresh adjudication, therefore the fate of penalty appeal will be in accordance with the decision of quantum appeal. Hence, the same is restored to the file of AO to act in accordance with law.