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Facts
The assessee filed an appeal against an ex-parte order passed by the CIT(A) for AY 2015-16. The original assessment was made under Section 147, making significant additions based on alleged long-term capital gains and rental income. The CIT(A) dismissed the appeal due to the assessee's non-compliance.
Held
The Tribunal restored the matter to the Assessing Officer for de-novo adjudication. The Tribunal found merit in the assessee's submission that substantial additions were made and issues like Section 50C invocation require factual examination, thus deserving one final opportunity.
Key Issues
Whether the assessee was denied a proper opportunity of being heard before the CIT(A) and Assessing Officer, and whether the matter should be remanded for fresh adjudication considering the quantum of additions.
Sections Cited
147, 151A, 148, 148A, 139(1), 50C, 124(3)
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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI SIDDHARTHA NAUTIYAL & SHRI BHAGIRATH MAL BIYANI
O R D E R PER SIDDHARTHA NAUTIYAL - JM:
The appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 17.09.2024 passed for A.Y. 2015-16.
The Assessee has raised the following grounds of appeal:
“1. That, the learned CIT(A) grossly erred, both on facts and in law, in passing the ex-parte order without giving proper and effective opportunity of being heard to the appellant inasmuch none of the notices claimed to have been issued to the appellant could effectively got served/received by the appellant.
2. That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the Id. AO. 1(4), Indore in framing of the assessment under s. 147 of the Act, without considering and appreciating the material fact that the Id. AO, 1 (4),Indore was not having any jurisdiction to pass the impugned assessment order in contravention of the provisions of s. 151A of the Act.
3. That, without prejudice to the above, the learned CIT(A) grossly erred in not adjudicating the appeal on merits of the case.
4(i). That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the ld. AO, 1(4), Indore in framing of the assessment under s. 147 of the Act, in a case where issuance of the notice under s. 148 of the Income-Tax Act, 1961 and consequent assessment framed, is without jurisdiction, illegal, arbitrary, bad-in-law and void-ab-initio. 4(ii). That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the ld. AO,1(4), Indore for passing the assessment order under s. 147 of the Act in the case of the appellant where issuance as well as servicing of the notice under s. 148 of the Act for the relevant assessment year was quite illegal and void-ab-initio without following the mandatory requirement of the provisions of S.148A of the Act. 4(iii). That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the Id. AO,1(4), Indore for passing the assessment order under s.147 of the Act in the case of the appellant without conducting any independent enquiry, as contemplated under the clause (a) of section 148A of the Act, before issuing the Notice under clause (b) of section 148A of the Act, despite the crucial fact that in the instant case, the conduction of enquiry, after obtaining the necessary approval of the specified authority, was not only required, but it was essential for the very reason that except having some so-called unconfirmed information, no other basis was available with him. 4(iv). That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the ld. AO,1(4) , Indore for passing the assessment order under s.147 of the Act in the case of the appellant, where the learned AO grossly erred in passing the Order under s.148A(d) of the Act, which has eventually resulted into passing of the impugned Assessment Order, without properly considering and appreciating the facts and circumstances of the appellant's case and that too, in a non-speaking manner, without setting out the specific allegations against the appellant.
That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the ld. AO. 1(4), Indore in passing of the assessment order under s.147 of the Act in a case where, the learned Assessing Officer grossly erred in framing the impugned Assessment Order qua a PAN which had already been surrendered by the appellant followed by the intimation to this effect to the ld. AO.
6. That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the ld. AO, 1(4), Indore in determining the total income of the appellant u/s. 147 of the Act at Rs. 88,93,186/- as against the Returned Income of Rs. 8,95,170/- , thereby making additions of Rs.79,98,016/-, which is quite unjustified, unwarranted, excessive, arbitrary and bad- in-law.
Jaya Juneja vs. ITO A.Y. 2015-16 - 3 - 7(i). That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the ld. AO, 1(4), Indore in making an addition of Rs.77,98,0167- in the appellant's income, on account of long-term capital gain from sale of two immovable properties by invoking the provisions of s.50C of the Act, without properly appreciating the written submissions made by the appellant along with ample of documentary evidences. 7(ii). That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the ld. AO, 1(4), Indore in making an addition of Rs.77,98,016/- in the appellant's income, without considering the material fact that the capital gain/(loss) from sale of subject immovable properties was already shown by the appellant and her husband in their respective original returns of income filed under s.139(l) of the Act for the relevant assessment year. 7(iii). That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the Id. AO, 1(4), Indore in making an addition of Rs.77,98,016/- in the appellant's income, by adopting the market value of the immovable properties under s.SOC of the Act without considering and appreciating the material fact that the market value of the subject immovable properties as stated in the registered sale deeds were comprising of two plots and the building thereon but the appellant was only the owner of the plots and not of the building constructed thereon, as clearly stated in the registered sale deeds. 7(iv). That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the ld. AO, 1(4), Indore in making an addition of Rs.77,98,016/- in the appellant's income, without first making a reference to the DVO as per the requirement of section 50C(2) of the Act. 7(v). That, without prejudice to the above and without in any manner admitting the market value of the subject immovable properties as the sale consideration, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the ld. AO, 1(4), Indore in computing the long-term capital gain of the appellant from sale of two immovable properties without granting legitimate deductions towards cost of acquisition, improvement and as also, transfer expenses genuinely incurred by the appellant and her husband. 8(i). That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the ld. AO, 1(4), Indore in making an addition of Rs. 2,00,000/- in the appellant's income, on account of rental income from two immovable properties, merely on surmises and conjectures, without first raising any single query on this issue during the course of entire assessment proceedings.”
The brief facts of the case are that the assessee, Smt. Jaya Tuneja, an individual, filed her original return of income for A.Y. 2015-16 under section 139(1) of the Income-tax Act, 1961 (“the Act”) on 28.08.2015 Jaya Juneja vs. ITO A.Y. 2015-16 - 4 - declaring total income of ₹8,95,170/- and long-term capital loss of ₹12,53,299/-. Subsequently, based on information available with the Assessing Officer that the assessee had sold immovable property for a consideration of ₹1,37,23,750/-, the Assessing Officer initiated proceedings under section 148A of the Act. In response to the notice under section 148, the assessee filed a return of income on 26.04.2022 declaring the same income and capital loss as declared in the original return. During the reassessment proceedings the Assessing Officer was not satisfied with the explanations furnished by the assessee. The Assessing Officer invoked the provisions of section 50C of the Act in respect of sale of two immovable properties and computed long-term capital gain by adopting the stamp duty valuation, resulting in an addition of ₹77,98,016/-. The Assessing Officer further made an addition of ₹2,00,000/- on account of alleged rental income from the said properties. Accordingly, the assessment was completed under section 147 of the Act assessing the total income at ₹88,93,186/- as against the returned income of ₹8,95,170/- filed by the assessee.
Aggrieved by the assessment order, the assessee filed an appeal before the Ld. CIT(Appeals) in which the assessee raised multiple grounds. During the appellate proceedings, several notices of hearing were issued calling upon the assessee to file submissions and evidences in support of the grounds of appeal
. However, the assessee did not file any written submissions or evidences despite repeated opportunities. The Ld. CIT(A) therefore noted that the assessee was not diligent in pursuing the appeal and invoked the legal principle that filing of an appeal alone is not sufficient and the same must be effectively pursued. While dealing with Ground No. 1 relating to jurisdiction of the Assessing Officer, Jaya Juneja vs. ITO A.Y. 2015-16 - 5 - the Ld. CIT(A) held that the assessee never challenged the jurisdiction during the assessment proceedings and, in view of section 124(3) of the Act, the ground was not maintainable. Accordingly, this ground was dismissed. Grounds Nos. 2 and 3, challenging the reopening of assessment and alleging non-compliance with the procedure under section 148A, were dismissed by holding that notice under section 148A(b) had in fact been issued and that at the stage of reopening, only prima facie material is required. Reliance was placed on the judgment of the Hon’ble Supreme Court in Raymond Woollen Mills Ltd. v. ITO (236 ITR 34) to hold that sufficiency of material cannot be examined at this stage. Ground No. 4 alleging that the order under section 148A(d) was non-speaking was also rejected by CIT(Appeals) on the ground that the Assessing Officer had passed a reasoned order discussing the issue in detail. Grounds Nos. 5 to 11, which were interrelated and pertained to the addition of ₹77,98,016/- on account of long-term capital gains by invoking section 50C of the Act, were examined by the CIT(Appeals) on merits. The Ld. CIT(A) noted that the Assessing Officer had rejected the assessee’s claim of construction on leasehold land due to absence of evidence regarding the timing of construction, that the assessee failed to substantiate the claim that part of the sale consideration was offered in the hands of her husband, and that the transaction appeared to be collusive in nature since the assessee and her husband were directors in the purchasing company which had capitalized the enhanced value and claimed depreciation. As no evidence was furnished by the assessee during appellate proceedings to rebut these findings, the Ld. CIT(A) upheld the action of the Assessing Officer and dismissed Grounds Nos. 5 to 11. Grounds Nos. 12 and 13 related to the addition of ₹2,00,000/- as income from house property. The Ld. CIT(A) observed that as per the Jaya Juneja vs. ITO A.Y. 2015-16 - 6 - lease deeds, the assessee was entitled to annual lease rent of ₹1,00,000/- from each property and the same was not offered to tax in the return of income. Since the assessee failed to furnish any explanation or evidence during appellate proceedings, the addition was confirmed and these grounds were dismissed. Ground No. 14 being general in nature did not require separate adjudication and was also dismissed. In view of the above findings and the continued non-compliance by the assessee during appellate proceedings, the Ld. CIT(Appeals) dismissed the appeal in entirety, upholding the assessment order passed by the Assessing Officer.
5. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. Before us, the ld. counsel for the assessee submitted that that the assessee has a good case on merits and looking into the substantial quantum of additions involved, the assessee may be granted one more opportunity of hearing before the Assessing Officer to present the case on merits. In response, Ld. DR placed reliance on the observations made by CIT(Appeals) in the appellate order, but did not object the matter being restored to file of the Assessing Officer in the interests of justice.
We have heard the rival contentions and perused the material on record.
In view of the totality of the facts and circumstances of the case and in the interests of justice, we are of the considered view may be restored to the file of the Assessing Officer for de-novo adjudication. Though it is a matter of record that the assessee remained non-compliant at the stage of Jaya Juneja vs. ITO A.Y. 2015-16 - 7 - first appellate proceedings and the Ld. CIT(Appeals) has dismissed the appeal after recording detailed findings, we find force in the submission of the Ld. counsel for the assessee that, considering the substantial quantum of additions made and the fact that issues relating to invocation of section 50C of the Act and determination of long-term capital gains involve examination of factual aspects and supporting evidences, the assessee deserves one final opportunity to present her case on merits. It is a settled position of law that assessment proceedings are quasi-judicial in nature and the object of such proceedings is to assess the correct taxable income in accordance with law, and for this purpose adequate and effective opportunity must be afforded to the assessee. In this regard, reliance may be placed on the judgment of the Hon’ble Supreme Court in Tin Box Company v. CIT (2001) 249 ITR 216 (SC), wherein it was held that where the assessee did not get a proper opportunity before the Assessing Officer, the matter should be restored for fresh consideration. Similar view has been expressed by the Hon’ble Supreme Court in Kapurchand Shrimal v. CIT (1981) 131 ITR 451 (SC), holding that an appellate authority has the power and duty to correct errors in the proceedings and to remit the matter for fresh adjudication so that justice is rendered in accordance with law.
Accordingly, without expressing any opinion on the merits of the additions made on account of long-term capital gains by invoking section 50C of the Act or the addition made towards rental income, we restore the matter to the file of the Assessing Officer for de-novo consideration. The Assessing Officer shall examine the issues afresh in accordance with law after affording the assessee a reasonable and effective opportunity of being heard and after considering such evidences and explanations as may be furnished by the assessee. The assessee is also directed to cooperate fully in the remand proceedings and to place all relevant material on record, failing which the Assessing Officer shall be at liberty to proceed in accordance with law on the basis of material available on record.
In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced on 17 /12/2025