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Facts
The assessee sold an immovable property but failed to file her return for AY 2012-13. The case was reopened u/s 147, and due to non-compliance, the AO proceeded ex-parte, invoking Section 50C and adding Rs. 11,76,020/- as long-term capital gain, treating the cost of acquisition as 'Nil'. The CIT(A) upheld this ex-parte assessment.
Held
The Tribunal condoned the delay in filing the appeal and noted that the ex-parte orders meant the case was not adjudicated on merits. Considering multiple factual assertions by the assessee regarding the year of transfer, ancestral property, indexed cost, and applicability of Section 50C, which were not examined by lower authorities, the Tribunal restored the matter to the AO for de novo adjudication. A cost of Rs. 5,000/- was imposed on the assessee for non-compliance, to be deposited in the "Prime Minister's National Relief Fund".
Key Issues
Whether the reassessment under section 148 and ex-parte order under section 144 were valid; whether the addition of long-term capital gain under section 50C, without considering indexed cost of acquisition or referring to a Valuation Officer, was correct; and condonation of delay in filing the appeal.
Sections Cited
Section 250, Section 148, Section 144, Section 147, Section 142(1), Section 50C, Section 48, Rule 34 of ITAT Rules, 1963
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Before: SHRI DINESH MOHAN SINHA & SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R
PER BIJAYANANDA PRUSETH, AM:
This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, 'the Act’) dated 13.06.2024 by the Commissioner of Income-tax (Appeals), NFAC, Delhi [in short “the CIT(A)”] for the assessment year (AY) 2012-13.
The grounds of appeal
raised by the assessee for the appeal are as under:
1. On the facts and in the circumstances of the case, as well as the applicable law, the learned Assessing Officer has erred in reopening the assessment by issuing notice under section 148 of the Income Tax Act, 1961.
2012-13 Rupal Devang Naik 2. On the facts and circumstances of the case as well as law on the subject, the learned Assessing Officer has also erred, both factually and legally, in passing an ex-parte order under section 144 of the Income Tax Act, 1961.
The learned Assessing Officer has incorrectly added a sum of Rs 11,76,020/- as long-term capital gain, based on the facts and legal provisions of the case.
4. On the facts and circumstances of the case as well as law on the subject, the learned Assessing Officer has also made an error in invoking section 50C of the Act without referring the matter to the Department's Valuation Officer to determine the fair market value of the property sold.
On the facts and circumstances of the case as well as law on the subject, the learned Assessing Officer has failed to account for the indexed cost of acquisition while calculating the income from long-term capital gains, which is erroneous in law and fact.
That the order of the ld. Comm. Of Income Tax is against the law, facts and evidence of the case.
7. The appellant reserves the right to modify, add, or withdraw any grounds of appeal
before or during the course of the hearing.”
3. The appeal filed by the assessee is barred by limitation by 65 days in filing of this appeal and an application for condonation of the delay was filed. In the aforesaid application, it is stated by the assessee that delay in filing the appeal was due to her unawareness of the CIT(A) order; therefore, she could not file the appeal within prescribed time limit. Assessee has submitted that the delay was not intentional and requested to condone the delay in the interest of justice. Ld. Sr. DR for revenue did not raise any objection to the condonation request of the assessee. After hearing both the parties, we note that delay in filing appeal by the appellant was not deliberate or intentional. The appellant, anyway, does not seem to benefit from the small delay in filing the appeal. It is well accepted that 2012-13 Rupal Devang Naik when substantial justice and technical consideration are pitted against each other, cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of non- deliberate delay. Considering the totality of facts, the delay is condoned.
Brief facts of the case are that information was received in case of the assessee that during the FY 2011-12 (AY 2012-13) that she had jointly sold an immovable property amounting to Rs.94,08,150/-. The assessee had not filed her return of income for AY 2012-13. Therefore, case of the assessee was reopened u/s.147 of the Act and notice u/s.148 of the Act was issued on 28.03.2019. During the re-assessment proceedings, several notices u/s.142(1) of the Act and show cause notices were issued; however, no reply was received from the assessee. The Assessing Officer (in short, ‘AO’) invoked the provision of section 50C which stipulates that the fair market value (FMV) as valued by the stamp valuation authority (SVA) should be taken for the purpose of section 48 of the Act. Accordingly, sale consideration in case of assessee for purpose of calculation of LTCG was taken at Rs.11,76,020/-. In absence of any submission furnished by the assessee viz., purchase deed, etc., the indexed cost of acquisition was taken as ‘Nil’ and the capital gains were worked out at Rs.11,76,020/- and added to the total income of the assessee. Accordingly, the AO framed the order u/s 144 r.w.s. 147 of the Act, determining total income at Rs.11,76,020/-.
2012-13 Rupal Devang Naik 5. Aggrieved by the aforesaid assessment order, assessee preferred appeal before CIT(A). The CIT(A) issued several notices to the assessee, however, no response was received from the assessee. Therefore, CIT(A) adjudicated the appeal of the assessee after considering the grounds of appeal
, statement of facts and the assessment order and confirmed the addition made by the AO of Rs.11,76,020/- on account of long term capital gains. He dismissed the appeal of the assessee.
6. Aggrieved by the order of CIT(A), assessee filed present appeal before the Tribunal. The Ld. AR of the assessee submitted that mere fact of sale of immovable property of Rs.94,08,150/- cannot be the ground for reopening the case of assessee for reassessment. Since, assessee’s share in the property is only 12.5% and after allowing deduction of cost of acquisition, the income does not exceed basis exemption limit, therefore, there is no escapement of income. The Ld. AR contended that the assessee is an ordinary person who is not well conversant with income tax matters, therefore, assessee could not comply with the notices issued during the assessment proceedings. Regarding the addition made of Rs.11,76,020/- on account of undisclosed capital gains, the Ld. AR stated that the actual sale of land was made in the year 2002 and also possession was duly transferred in that year. Hence the capital gain should have been taxed in the relevant AY and not in the AY 2012-13, merely on the ground that sale deed 2012-13 Rupal Devang Naik was executed in AY 2012-13. The Ld. AR also stated that since impugned land was an ancestral property, hence, AO ought to have allowed deduction of indexed cost of acquisition based on FMV of impugned land as on 01.04.1981. In addition to this, Ld. AR contended that AO should have made reference to DVO for determining fair market value of the impugned land as on date of sale, which remained to be done at the end of AO. In absence of valuation report of DVO, the AO was not justified in making addition on the basis of Jantri value of property. The Ld. AR requested to delete the addition made by the AO of Rs.11,76,020/-.
The Ld. Sr. DR for the revenue supported the orders of the lower authorities and submitted that the assessee repeatedly failed to comply with the statutory notices, leaving the authorities with no option but to proceed ex parte.
We have heard both the parties and perused the materials on record carefully. We note that assessment order as well as appellate order have been passed ex parte due to non-appearance of the assessee. Although non- compliance cannot be lightly condoned, the consequence of such orders is that the matter has not been adjudicated on merits at all. The assessee has now brought multiple factual assertions before us regarding year of actual transfer, nature of ancestral property, computation of indexed cost, correctness of stamp duty valuation, mandatory reference to DVO u/s 50C(2) and quantum of her 2012-13 Rupal Devang Naik share in property. None of these facts were ever examined by the AO or CIT(A) due to the absence of representation. 8.1 It is well settled that assessments should not result in unjust enrichment of the exchequer merely because the taxpayer did not participate. Besides, disputes involving valuation, cost of acquisition, year of transfer and applicability of section 50C require detailed verification which cannot be done for the first time at appellate stage. In view of the same, we are of the considered view that the matter should be restored to the file of the AO for de novo adjudication. However, due to non-compliance by the assessee before the lower authorities, it could be appropriate to impose cost of Rs.5,000/- (Rupees Five Thousand only) which shall be deposited by the appellant to the credit of “Prime Minister’s National Relief Fund” within one month from the date of receipt of this order. Subject to the payment of this cost, the matter is set aside to the file of the AO for fresh assessment. The AO shall provide adequate opportunity of being heard to the assessee and the assessee shall place all relevant documents on record. The ground is allowed for statistical purposes. 8.2 We clarify that the AO shall decide the matter afresh, uninfluenced by any observations made herein, which are only for the limited purpose of remand.
In the result, the appeal of the assessee is treated as allowed for statistical purposes.