HYTAISUN MAGNETICS LTD.,AHMEDABAD vs. THE INCOME TAX OFFICER, WARD-2(1)(3),, AHMEDABAD

These two appeals are filed by the Assessee against two separate orders dated 26.03.2018 & 12.10.2017, passed by the PCIT-2 & CIT(A)-2, Ahmedabad respectively, for the Assessment Year 2012-13.

The Assessee has raised the following grounds of appeal :-

Firstly we are taking up wherein the PCIT has observed that the Assessing Officer has passed the assessment order dated 29.02.2016 without proper application of mind and also without making proper enquiries and verification. The facts of the case are that information was in possession of the Assessing Officer that during the F.Y. 2011-12, the assessee company sold immovable property for a amount of Rs.2.50 Crores which was registered with Sub-Registrar, Mehsana on 16.03.2012. The Sub-Registrar valued the said property at Rs.6,84,18,918/- for the purpose of stamp duty and registration fees. As per the provisions of Section 50C of the Income Tax Act, 1961, the assessee company should have declared capital gain arising on such transaction and, therefore, the Assessing officer made addition of Rs.4,09,10,877/- as income from Long Term Capital Gain (LTCG). The Assessing & 2708/Ahd/2017 Assessment Year: 2012-13

Being aggrieved by the order under Section 263 of the Act, the assessee filed appeal before us.

At the time of hearing, none appeared on behalf of the assessee despite giving several notices. No fresh address/new address has been given to the registry and hence we are proceeding on the basis of the submissions quoted in the order dated 26.03.2018 passed by the PCIT and Assessment Order.

The Ld. DR submitted that the Assessing Officer has made addition on account of LTCG on the very same issue which has been dealt by the PCIT under Section 263 of the Act.

The Ld. DR relied upon the order under Section 263 of the Act passed by the PCIT.

We have heard Ld. DR and perused all the relevant material available on record. The contention of the assessee before the PCIT was that the assessment order itself is null and void as the same is based on nonest return and, therefore, the PCIT cannot have jurisdiction under Section 263 of the Act. From the perusal of the records, it can been seen that the brought forward worked out under Section 115JB after setting aside unabsorbed claim of Rs.5,78,94,557/- from A.Y. 2001-02 which is not disputed by the PCIT. The Assessing Officer has clearly made addition in respect of income from LTCG . The relevant documents were before the Assessing Officer & 2708/Ahd/2017 Assessment Year: 2012-13

In respect of Assessing Officer under Section 50C of the Act of Rs.4,09,10,877/- but since the return of income filed by the assessee was treated as nonest by the Assessing Officer, penalty under Section 271(1)(c) of the Act cannot be levied in the absence of return of income as per the assessee’s grounds of appeal. From the perusal of the records, we can see that the penalty was levied on the basis of addition under Section 50C of the Act but during the course of assessment proceedings, the differential amount of Rs.5,08,79,556/- was proposed for addition in the Assessment Order and the valid addition of LTCG was made accordingly. The Assessing Officer never doubted the genuineness of the documents and the details furnished by the assessee before the Assessing Officer. The assessee has not concealed the relevant particulars of income or furnished inaccurate particulars of income and, therefore, penalty under Section 271(1)(c) of the Act does not sustain. Appeal filed by the assessee is, therefore, allowed.

In the result, both the appeals of the assessee are allowed.