KAMAL SINGH,INDORE vs. INCOME TAX OFFICER, INDORE

The Assessing Officer, however, held that since the assessee had neither filed the original return within the due date under section 139(1) of the Act nor filed the return within the time prescribed in response to notice under section issued notice u/s 148 of the Act. of the Act, the deductions claimed under sections 54F and 54B of the Act were not allowable. Accordingly, the Assessing Officer treated the entire sale consideration, after reducing the capital gain already offered, as undisclosed long-term capital gain and made an addition of ₹1,06,58,921/- to the total income. The Kamal Singh vs. ITO A.Y. 2015-16 - 3 - assessment was completed assessing the total income at ₹1,09,16,710/- and penalty proceedings under sections 271(1)(c) and 271(1)(b) were also initiated.

Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals) contending that the addition of ₹1,06,58,921/- was illegal and unjustified and that the Assessing Officer failed to appreciate the facts properly. However, during the appellate proceedings, several notices were issued by the CIT(Appeals) on different dates calling upon the assessee to file written submissions and supporting documents, specifically in respect of the claim of deductions under sections 54F and 54B of the Act. The assessee failed to respond to any of the notices and did not place any material on record to substantiate his claim. In view of repeated non-compliance and absence of any supporting evidence, the CIT(Appeals) upheld the action of the Assessing Officer, confirmed the addition and dismissed the appeal of the assessee.

The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.

We have heard the rival contentions and perused the material on record. From the facts placed before us, it is evident that the assessee did not file the return of income within the prescribed time and also did not diligently comply with the notices issued during both assessment and appellate proceedings. At the same time, we find that the issues involved relate to the allowability of deductions under sections 54F and 54B of the Act, which are substantive claims and require proper verification of facts and supporting documents. The learned CIT(Appeals) has dismissed the Kamal Singh vs. ITO A.Y. 2015-16 - 4 - appeal mainly on account of non-compliance by the assessee and without examining the claim of deductions on merits. In our considered view, while the conduct of the assessee in repeatedly not responding to statutory notices cannot be appreciated, the matter still requires adjudication on merits so that substantial justice is done. However, the assessee cannot be allowed to take advantage of his own non-cooperation before the tax authorities.

In the interest of justice, we therefore deem it appropriate restore the matter to the file of CIT(Appeals) for de-novo consideration. The learned CIT(Appeals) shall re-adjudicate the appeal afresh in accordance with law after affording one final and effective opportunity of being heard to the assessee and after examining all supporting documents and evidence that the assessee may place on record in support of his claim under sections 54F and 54B of the Act.

At the same time, considering the repeated non-compliance and lack of diligence on the part of the assessee before the tax authorities, we impose costs of ₹5,000/- on the assessee, which shall be paid before the learned CIT(Appeals) at the time of fresh hearing. The assessee is also directed to fully cooperate in the appellate proceedings and not to seek unnecessary adjournments.

With these directions, the appeal of the assessee is allowed for statistical purposes in the interest of justice. This Order pronounced on 23/12/2025