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Facts
The assessee is aggrieved by an order of the CIT(A) which upheld a rectification order passed by the AO. The AO rectified the assessment order under Section 154, increasing the total income by disallowing certain exemptions claimed under Sections 54B and 54F.
Held
The Tribunal found that the assessee was non-cooperative and failed to provide necessary documentation or submissions during appellate proceedings. The Tribunal held that the appeal was premature in challenging penalty proceedings and that the grounds regarding the AO's jurisdiction and the disallowance of exemptions lacked merit based on the factual analysis.
Key Issues
Whether the AO was justified in rectifying the assessment order by disallowing exemptions under Section 54B and 54F, and whether the CIT(A) erred in dismissing the appeal without a proper decision on merits.
Sections Cited
253, 154, 143(3), 250, 246A, 54B, 54F, 111B, 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI BHAGIRATH MAL BIYANI & SHRI PARESH M JOSHI
आदेश/ O R D E R
Per Paresh M Joshi, J.M.:
This is an appeal filed by the Assessee Under Section 253 of the Income Tax Act, 1961 (hereinafter referred to as the “Act” for sake of brevity) before this Tribunal as and by way of a second appeal. The assessee is aggrieved by order bearing Number ITBA/NFAC/S/ 250/2025-26/1075630496(1) dated 15.04.2025 passed by the Ld. CIT(A), U/s 250 of the Act which is hereinafter referred to as the “impugned order”. The relevant Assessment
Page 1 of 12 from 01.04.2013 to 31.03.2014.
FACTUAL MATRIX 2.1 That as and by way of an assessment order made u/s 154 which rectified the assessment order made on 18.11.2016 at Rs.13,81,230/- u/s 143(3) of the Act, the total income was recomputed from Rs.13,81,230/- to Rs.1,12,73,663/-. That the aforesaid order u/s 154 is dated 02.03.2020 which bears DIN No:- 20141226711 which is hereinafter referred to as the “Impugned Rectification Order”.
2.2 That the assessee being aggrieved by the aforesaid “Impugned Rectification Order” prefers the first appeal u/s 246A of the Act before the Ld. CIT(A) who by the “Impugned Order” has dismissed the first appeal of the assessee on the grounds and reasons stated therein. The core grounds and reasons are stated as under:
“8.0 In view of the discussion as above and facts of the case, it seems that the appellant has nothing to add in this matter, despite getting five (05) opportunities. The appellant has only filed an appeal in the form No.35. The appellant has not filed any written submission/document with respect to ground Page 2 of 12
Bhagwat Prasad Malviya A.Y. 2014-15 raised in form-35. In the given circumstances and paucity of any evidence supporting the appellant's ground of appeal, it is difficult to take a view on merits against the Rectification order passed by the AO. 9.0 Now, I am deciding the matter based on material available on record. 9.1 This appeal is filed by the assessee against the rectification order dated 02.03.2020 passed by the Income Tax Officer, Ward 3(1), Bhopal under section 154 of the Income Tax Act, 1961 for the assessment year 2014-15. 9.2 The assessee had filed a return of income for AY 2014- 15, and the assessment was completed under section 143(3) on 18.11.2016, determining the total income at Rs. 13,81,230. Subsequently, the Assessing Officer (AO), on examination of records, noted an apparent mistake in the computation of exemption claimed under sections 54B and 54F. A rectification notice u/s 154 was issued, and after considering the assessee's submissions, the AO passed a rectification order disallowing part of the claimed exemptions amounting to Rs. 1,12,73,663 and added it to the total income. 9.3 The assessee has filed an appeal against the said order, raising the following grounds: 9.5 Ground relates to are bad and opposed to facts, equity, and law. 9.6 This ground is general in nature and does not call for specific adjudication. However, all facts, law, and equity have been duly considered in the following grounds. Hence, this ground is dismissed. 9.7 Ground 2 relates to that the AO erred in making assessment u/s 154/143. 9.8 This ground challenges the jurisdiction of the AO under section 154. However, section 154 permits rectification of Page 3 of 12
Bhagwat Prasad Malviya A.Y. 2014-15 mistakes apparent from record. In the present case, the following apparent errors were observed by the AO: The assessee claimed exemption of Rs. 1,69,64,508 u/s 54B. However, of this, an amount of Rs. 7,79,754 was for agricultural land purchased before the date of sale (15.07.2013 vs sale on 07.09.2013), violating the condition under section 548 that purchase must be after the date of transfer. An amount of Rs. 1,53,57,901 claimed under Capital Gains Account Scheme was deposited in an ordinary FD account, in the name of another person (Shri Avadh Narayan Malviya), and not in the notified Capital Gain Account in assessee's name, thus failing the conditions laid under Rule 111B and section 54B/54F. 9.9 These were apparent from the record and do not require long-drawn investigation. Hence, invoking section 154 is found to be justified. This ground is dismissed. 9.10 Ground 3 relates to that the AO erred in disallowing exemption of Rs. 1,12,73,663 u/s 54B and 54F without proper justification. 9.11 This ground lacks merit in view of the factual analysis done by the AO. The breakup of disallowance is clearly justified as follows: Section 54B: 9.12 The exemption was claimed on multiple purchases, but only the land purchased on 21.12.2013 for Rs. 35,49,845 was within the permitted time window post-sale (07.09.2013). The land purchased on 15.07.2013 for Rs. 7,79,754 was prior to the date of transfer, hence ineligible under section 548. There is no nexus provided by the appellant that land purchased earlier was in anticipation of transaction under consideration for capital gain purpose. Therefore, AO correctly restricted exemption under section 54B to Rs. 35,49,845.
Bhagwat Prasad Malviya A.Y. 2014-15 Section 54F: 9.13 The assessee claimed to have invested Rs. 1,53,57,901 in a fixed deposit, but this was in the name of a different person and not in the designated Capital Gains Account. The FD matured on 05.04.2014, and no evidence was provided that the amount was utilized for purchasing a residential house after that. 9.14 Only one investment in residential property (Rs. 21,41,000 on 26.07.2013) was supported by documentation, which AO correctly allowed under section 54F. 9.15 Hence, out of the total claimed exemption of Rs. 2,18,28,500, only Rs. 56,90,845 was found allowable. The balance Rs. 1,12,73,663 was rightly disallowed. This ground is, therefore, dismissed. 9.16 Ground 4: That the AO was not justified in initiating penalty proceedings under section 271(1)(c). 9.17 This ground is premature as the penalty order, if any, is a separate proceeding. The mere initiation of penalty under section 271(1)(c) cannot be challenged in an appeal against a rectification order. The assessee shall have an opportunity to contest such penalty, if levied, in separate proceedings. This ground is dismissed. 10.0 The appeal is dismissed.” 2.3 The Ld. CIT(A) in the impugned order additionally has recorded following also:-
“7.0 DECISION: 7.1 I have carefully considered the facts of the case, rectification order of the AO and grounds of appeal filed by the appellant. In order for this appeal to be decided on merits, it is imperative that among other submissions, the relevant documents should be furnished by the Appellant.
Bhagwat Prasad Malviya A.Y. 2014-15 However, despite several opportunities granted to the appellant, the assessee has chosen not to respond and has never filed any written submission in support of its grounds of appeal. 7.2 It is well settled that the law assists those who are vigilant, not those who sleep over their rights. This principle is embodied in the dictum: vigilantibusnon dormientibus jura subveniunt. The right to appeal under Chapter XX of the Income-tax Act, 1961, is an invaluable right of a tax payer, therefore, it needs to be exercised with due caution and care by the assessee. The facts on record indicate that, the appeal was filed on 21.07.2020, which is more than three years ago and thereafter, in response to various notices of hearing issued by this Office, from time to time, the appellant remained non-co-operative. The events and details of the non-attendance by the appellant, on the said dates are as under:
Date on Sr. Date of issue which Remarks No. of notice hearing fixed
Hearing Notice has been DELIVERED to the appellant via mail IDs mentioned 1. 24.08.2020 28.08.2020 below, the appellant has not responded.umartax123@gmail.com
Hearing Notice has been DELIVERED to the appellant via mail IDs mentioned 2. 30.12.2020 14.01.2021 below, the appellant has not responded.umartax123@gmail.com
Date on Sr. Date of issue which Remarks No. of notice hearing fixed
Hearing Notice has been DELIVERED to the appellant via mail IDs mentioned below, the appellant has not 3. 29.04.2022 17.05.2022 responded.umartax123@gmail.com,pan dey_ca@hotmail.com,bmfuel5917@gm ail.com
Hearing Notice has been DELIVERED to the appellant via mail IDs mentioned
25.11.2024 02.12.2024 below, the appellant has not responded.
Umartax123@gmail.com & bhikambuilders2@gmail.com
Hearing notice has been delivered to the appellant via mail Ids mentioned below the appellant has not responded. 5 20.03.2025 27.03.2025
Umartax123@gmail.com & bhikambuilders2@gmail.com
Bhagwat Prasad Malviya A.Y. 2014-15 7.3 During the course of appellate proceedings, as is discussed above, neither the appellant nor his AR filed any written submission, despite getting several opportunities. It is pertinent to mention here that notices has been issued to the appellant from more than past 6 months, but the appellant has not bothered to file submission & relevant documents in respect of the grounds of appeal raised in this appeal. The conduct of the appellant indicates lack of interest in prosecuting this appeal. In this regard, reliance is placed on Gujarat High Court Judgment in case of Fairdeal Filaments Ltd vs. C.I.T. 302 ITR 173. Therefore, it is not required to give any further opportunity to the assessee.”
2.3 That the assessee being aggreived by the “Impugned Rectification Order” has preferred the instant second appeal before this Tribunal & has raised following grounds of appeal in the form no.36 against the “Impugned Order” which are as under:-
“1.The ld AO was not justified in passing the order, which is badinlaw, void ab initio, barred by limitation, illegal, contrary to the facts and circumstances of the case, liable to be annulled. 2.The Id CIT(A) was not justified in confirming the order, which is bad-in-law, void ab initio, barred by limitation, illegal, contrary to the facts and circumstances of the case, liable to be annulled.
The Id CIT(A) was not justified in ex-parte dismissing the appeal of the appellant, without deciding the appeal on merits, and that a fair and meaningful opportunity was not available to the appellant to present his case.
Bhagwat Prasad Malviya A.Y. 2014-15 4. The Id CIT(A) was not justified in confirming the addition of Rs. 4 1,12,73,663/- without considering the facts and circumstances of the case. 5. The appellant carves leave to add, amend or modify any of the grounds of appeal.”
3. Record of Hearing 3.1 That the hearing in the matter took place before this Tribunal on 02.12.2025 when Ld. AR for and on behalf of the assessee appeared before us and interalia contended that the “Impugned Order” is illegal, bad in law & not proper. It thus deserves to be set aside. The Ld. AR has submitted before us at the out set & at the threshold that the “ Impugned Order” is an exparte order in the nature & thus deserves to be set aside. In fact three different email IDs are there where the notices have gone in fact. It was also submitted that the original return of income was accepted. Few notices pertains to the Covid-19 period too. In between the notices of the opportunities there is a large gap of one year too. It was finally submitted briefly that the “Impugned order” be set aside & matter be remanded back to the file of CIT(A) on denovo basis. The Ld. DR appearing for &
Page 9 of 12 submission made by the Ld. AR.
Observation Finding & conclusions 4.1 We now have to decide the legality validity & the proprietary of the “Impugned Order” basis records of the case & rival contentions canvassed before us.
4.2 We have carefully perused the records of the case as presented to this Tribunal by both the Ld. AR & the Ld. DR to determine the legality, validity of the “Impugned Order” basis law & by following the due process.
4.3 We basis records of the case & after hearing & upon examining the contentions are of the considered view that both the Ld. AR & Ld. DR are ad idem that the “Impugned Order” should be set aside & that the matter should be remanded back to the file of the CIT(A) so as to enable him to pass a fresh order after taking into consideration the entire gamut of the case from all the angles on denovo basis. The assessee is directed to Cooperate with the Department and not to seek any adjournment
Page 10 of 12 of the “Impugned order” five opportunities letters have gone to three/four different email Ids. Notice dated 24.08.2020 & 30.12.2020 went to umartax123@gmail.com, Notice dated 29.04.2022 went to umartax123@gmail.com, pandey_ca@hotmail.com & bmfuels917@gmail.com, notice dated 25.11.2024 went to umartax123@gmail.com & bhikambuilders2@gmail.com. Notice dated 20.03.2025 went to umartax123@gmail.com & bhikambuilders2@gmail.com. Hence the assessee is also directed to give any two suitable e-mail ID one primary & a another one which are accessed by him on day to day basis so that the Ld. CIT(A) could serve on email such fresh notices in order to avoid any further mishaps as had happened earlier in the earlier round of litigation.
4.4 In view of the premises drawn up by us we set aside the “Impugned Order” & remand the case back to the file of the Ld. CIT(A) on denovo basis, with directions as aforesaid.
Page 11 of 12 5.1 In the premises drawn up by us the “Impugned Order” is set aside & case of the assessee is remanded to the Ld. CIT(A) on denovo basis.
5.2 In result the appeal of the assessee is allowed for statistical purposes.
Order pronounced in open court on 04.12.2025.