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Facts
The assessee sold a property for Rs. 45,28,000/- for AY 2010-11, but did not file a return or have a PAN. The AO initiated reassessment proceedings u/s 147 and passed an ex-parte assessment order treating the entire sale proceeds as taxable capital gain. A penalty u/s 271(1)(c) was also levied.
Held
The Tribunal observed that the CIT(A) had dismissed the assessee's appeals for non-prosecution. Considering the submissions and the principle of natural justice, the Tribunal restored both the assessment and penalty matters to the AO for fresh adjudication.
Key Issues
Whether the AO correctly assessed the entire sale proceeds as capital gains without allowing deductions for costs and exemptions, and whether the penalty was justified in the absence of proper assessment.
Sections Cited
147, 148, 142(1), 144, 271(1)(c), 48, 54F
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
आदेश/ O R D E R
Per B.M. Biyani, AM:
The captioned two appeals are filed by assessee. The details of appeals are as under: is a quantum-appeal directed against order of first appeal dated 06.12.2024 passed by Commissioner of Income- tax (Appeals), NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 13.12.2017 passed by ITO-3(1), Bhopal [“AO”] u/s 147 r.w.s 144 of the Income-tax Act, 1961 [“Act”].
Page 1 of 5 & 157/Ind/2025 – A.Y. 2010-11 is a penalty-appeal directed against order of first appeal dated 06.12.2024 passed by CIT(A) which in turn arises out of penalty-order dated 14.06.2018 passed by AO u/s 271(1)(c) of the Act.
Since these appeals are inter-related, they were heard together and are being disposed of by this common order for the sake of convenience, brevity and clarity.
The background facts leading to these appeals are such that the AO received an information from Annual Information Return (AIR) revealing that the assessee sold a property for Rs. 45,28,000/- during previous year 2009-10 relevant to AY 2010-11. On further searching, the AO found that the assessee neither had PAN nor filed any return of income of AY 2010-11.
Accordingly, the AO took action u/s 147 through notice dated 22.03.2017 u/s 148 followed by notices u/s 142(1). Ultimately, finding no response from assessee, the AO passed ex-parte assessment-order dated 13.12.2017 u/s 144 assessing the full sale proceed of Rs. 45,28,000/- as taxable income of assessee by way of capital gain. Simultaneously, the AO also initiated proceeding u/s 271(1)(c) through notice dated 13.12.2017 for imposition of penalty qua the income of 45,28,000/- assessed and ultimately imposed a penalty of Rs. 9,00,000/- vide penalty-order dated 14.06.2018. Aggrieved by both orders of AO, the assessee carried matters in two separate appeals before CIT(A), one against assessment-order and Page 2 of 5 & 157/Ind/2025 – A.Y. 2010-11 other against penalty-order. The CIT(A) has, however, dismissed assessee’s twin-appeals for non-prosecution. Still aggrieved, the assessee has come in captioned appeals before us.
Ld. AR for assessee at first submitted that the assessee is a pure agriculturist and did not receive notices from AO, hence could not make submissions before AO. She next submitted that there is a fundamental mistake in assessment-order passed by AO wherein the entire sale-proceed has been assessed as taxable capital gain. She submitted that the provision of section 48 of Income-tax Act, 1961 requires the AO to deduct costs incurred by assessee from sale-proceed and only resultant figure can be taxed as capital gain. However, the AO has not done so and therefore the capital gain assessed by AO is not in accordance with section 48. Further, the assessee is also entitled to exemption u/s 54F which is a statutory claim to be allowed. Therefore, there is a strong necessity of passing assessment-order afresh in accordance with the provisions of Act. Further, the penalty-order passed by AO is linked with the outcome of assessment- order. Therefore in the situation, Ld. AR prayed, it would be appropriate to restore these two matters to the fie of AO with a direction to pass orders afresh in accordance with law after hearing assessee and after considering assessee’s submissions. Ld. AR further submits that the assessee is ready and willing to make a proper representation before AO.
Page 3 of 5 & 157/Ind/2025 – A.Y. 2010-11
Ld. DR for revenue agrees with the prayer of Ld. AR but makes a request to direct the assessee to represent his case before AO and do not seek unnecessary adjournments.
In view of above submissions of parties; having regard to the principle of natural justice and also bearing in mind that no prejudice would be caused to revenue if the present matters are restored at the level of AO, we remand these two matters to the file of AO for adjudication afresh, at the risk and responsibility of assessee. The AO shall give necessary opportunity of hearing to assessee and pass appropriate orders uninfluenced by his earlier orders. The assessee is also directed to remain vigilant and ensure participation in the hearings as may be fixed by AO and do not seek unnecessary adjournments failing which the AO shall be at liberty to pass appropriate orders in accordance with law. Ordered accordingly.
Resultantly, these appeals are allowed for statistical purpose.
Order pronounced in open court on 26/09/2025