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Facts
The assessee sold an immovable property for Rs. 63,50,000, which was not offered for tax in her return. Reassessment proceedings were initiated under Section 147 based on AIR information. The assessee claimed the income was already offered to tax by her husband, and taxing it again would be double taxation. The Assessing Officer and CIT(A) did not consider the submitted evidence and dismissed the appeal.
Held
The Tribunal found that both the Assessing Officer and CIT(A) failed to consider the material on record and pass orders without appreciating the relevant facts. The Tribunal noted contradictory findings by the CIT(A) and that evidence of the husband offering the income for tax was on record. The penalty under Section 271(1)(b) was deleted as the assessee had a reasonable cause for non-compliance due to lack of knowledge.
Key Issues
Whether the capital gains from the sale of an immovable property, already offered to tax by the husband, can be taxed again in the hands of the assessee, and whether the penalty levied under Section 271(1)(b) was justified.
Sections Cited
147, 271(1)(b), 273B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
order : 19.01.2026 O R D E R [ Per Rahul Chaudhary, Judicial Member:
1. 1. These are two appeals preferred by the Assessee for the Assessment Years 2013-2014. Since the appeals involved identical issues arising from common factual matrix the same were heard together and are, therefore, being disposed off by way of a common order.
2. We would first take up appeal for the Assessment Year 2013-2014 preferred by the Assessee against the order, dated 04/08/2025, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘the CIT(A)’] whereby the Learned & 6947/Mum/2025 Assessment Year 2013-2014 CIT(A) had dismissed the appeal against the Assessment Order, dated 02/09/2021, passed under Section 147 of the Act for the Assessment Year 2013-2014.
The Assessee has raised following grounds of appeal in :
“1. The learned Assessing Officer has erred in taxing the income from capital gains on transfer of immovable property amounting to Rs.63,50,000 in the hands of Assessee based on the AIR-03 information available with the Assessing Officer whereas the said income from capital gains was already offered to tax by the Assessee’s husband during the same AY 2013-14 in the return of income.
The learned AO has thereby taxed the same income twice, once already in the hands of Assessee’s husband and subsequently in the hands of the Assessee by re- opening assessment under section 147 of the Act.
3. The learned Assessing Officer has erred in not considering the submission of the Assessee where the fact that the house property was brought to the notice of the AO in the reply to the show cause notice and the return of income of the Assessee’s husband was submitted during the course of the Assessment.
4. The Learned Assessing Officer has erred in not giving an opportunity to the Assessee to file the sale deed.
5. The Learned CIT(A) erred in confirming the order of the Assessing Officer based on the information available in the Assessment Order without considering the information made available by the Appellant at the time of filing the appeal such as Income tax Return of the appellant’s husband and the sale deed of the property.
6. The Learned CIT(A) erred in not issuing a show-cause notice to the Appellant prior to passing the order unanimously without considering the facts of the matter.
The learned CIT(A) erred in not considering the fact that the passing of order has caused undue hardship to the Assessment Year 2013-2014 assessee, being a middle class employees, due to the resultant income tax demand and interest accrued thereon.”
The facts relevant for adjudication of the present appeal in brief are that reassessment proceedings were initiate in the case of the Assessee for the Assessment Year 2013-2014 on the base of AIR- Information with the Assessing Officer to the effect that the Assessee had sold immovable property during the relevant previous year for a consideration of INR.63,50,000/- which has not been offered tax in the return of income for the Assessment Year 2013- 2014. The Assessee did not comply with the notices initially issued by Assessing Officer. However, the Assessee filed Submission, dated 20/08/2021, in response to show-cause notice dated 17/08/2021 proposing variation/addition. The Assessing Officer was not convince with the aforesaid submissions on account of lack of supporting evidence and therefore, proceeded to assessee the entire sale consideration of INR.63,50,000/- as Short Term Capital Gain in the hands of the Assessee vide Assessment Order, dated 02/09/2021, passed under Section 147 of the Act
Being aggrieved the Assessee challenged the above addition in appeal before the Learned CIT(A). It was contended on behalf of the Assessee that the Assessee was a home-maker and during the relevant previous year did not have any taxable Income. Entire sale consideration from the transfer of immovable property under consideration was disclosed by her husband in the return of income for the Assessment Year 2014-2015. Vide Submission, dated 20/08/2021, the aforesaid fact along with supporting documents were filed during the Assessment Proceedings, however, the Assessing Officer failed to take the same into consideration. It was contended that taxation of same capital gains income in the hands of the Assessee and her husband would amount to double taxation. However, the aforesaid submission did not find favour with the Assessment Year 2013-2014 Learned CIT(A) as the appeal preferred by the Assessee was dismissed vide Order dated,04/08/2025.
Being aggrieved, the Assessee had preferred the present appeal before the Tribunal on the grounds reproduced in paragraph 3 above.
7. By way of Ground No. 3 it has been contended on behalf of the Assessee that the Assessing Officer had failed to consider the Submission, dated 20/08/2021, filed by the Assessee during the assessment proceedings. Similarly, in Ground No. 4, 5 and 6, it has been contented on behalf of the Assessee that even learned CIT(A) failed to appreciate the correct facts and dismissed the appeal without granting the Assessee sufficient opportunity. During the course of hearing the Learned Authorised Representative for the Assessee had reiterated the stand taken before the Assessing Officer and the CIT(A). It was contended that the learner CIT(A) has passed the order dismissing the appeal preferred by the Assessee without considering the information made available and without issuing an show cause notice to the Assessee. Therefore, the Assessee was constrained to file copy of purchase/sale agreements relating to transfer of immovable properties in support of its contentions as additional evidence before the Tribunal. In this regard, reliance was placed upon the application for admission of additional evidence forming part of the paper-book filed by the Assessee.
Per Contra, the Learned Departmental Representative supported the order passed by the Learned CIT(A) and submitted that the Assessee had been non-compliant during the assessment as well as appellate proceedings before the Tribunal. Since the submission made by the Assessee were not supported by documentary evidence, the Assessing Officer/CIT(A) were justified in making/sustaining the addition on account of capital gains since the Assessment Year 2013-2014 sale deed contained the name of the Assessee.
We have considered the rival submission and have perused the material on record.
The case set up by the Assessee is that the entire sale consideration arising from the transfer of immovable property under consideration has already been disclosed and offered to tax by the husband of the Assessee. During the course of hearing the Learned Authorised Representative for the Assessee had referred to the Submission, dated 20/08/2021, and application seeking admission of additional evidence accompanied by agreement relating to purchase/sale of property. We note that the Learned CIT(A) appeal has noted that the Assessing Officer had rejected the contention of the Assessee that capital gains were not liable to tax in the hands of the Assessee observing that the Assessee had not furnished sale deed with regard to purchase/sale of immovable property. Since the Assessee did not respond to the notice of hearing issue during the appellate proceedings, the Learned CIT(A) rejected the grounds raised
by the Assessee in appeal relying upon the observations of the Assessing Officer. However, on perusal of findings retuned by the Learned CIT(A) in paragraph 5 of the order impugned, we find that the Learned CIT(A) has recorded that name of the Assessee was mentioned in the uploaded copy of purchase and sale deed. Thus, we note that the Learned CIT(A) had returned findings which are contradictory. Further, even the finding returned by the CIT(A) that the Assessee had not furnished any evidence to show that the husband of the Assessee had offered to tax consideration received from transfer of immovable property is contrary to the material on record. We note that the Assessing Officer had in paragraph 2 of the Assessment Order recorded submission of the Assessee. It was specifically recorded by the Assessing Officer that a copy of return of income filed by the husband of the Assessee (i.e. Mr. Mangesh Iyer) Assessment Year 2013-2014 was enclosed with the Submission, dated 20/08/2021, as Annexure –
3. Perusal of the Submission dated 20/08/2021, filed by the Assessee we find that the Assessee had furnished the return of income filed by the Assessee for the Assessment Year 2014-2015. In the submission it was also stated that the immovable property transferred was purchased in 2007. In support the Assessee had filed computation of income, Profit & Loss Account, Balance Sheet and Return of Income of her husband for previous year 2007-2008 (relevant to the Assessment Year 2008-2009). Despite the aforesaid information, no independent inquiry was carried out by the Assessing Officer and entire sale consideration was added in the hands of the Assessee as Shot Term Capital Gains. The Learned CIT(A) also failed to consider the submission made by the Assessee as recorded in the assessment order itself and dismissed the appeal. In view of the aforesaid we find merit in the contention advanced on behalf of the Assessee that, both, Assessing Officer and the Learned CIT(A) failed to take into consideration the material on record and passed the respective orders without appreciating and inquiring into relevant facts. Therefore, keeping in view that totality of the prevailing facts and circumstances, we deem it appropriate and in the interest of justice set aside the addition of short term capital gains of INR.63,50,000/- made in the hands of the Assessee with the directions to the Assessing Officer to adjudicate the issue afresh after granting a reasonable opportunity of being heard. The Assessee would be at liberty to place before Assessing Officers such document/details/agreements as the Assessee may deem fit in support of its contents. Since, we have restored the issue back to the file of the Assessing Officer, all the rights and contents of the Assessee are left open. It is clarified that in case Assessing Officer shall return a finding as to whether the entire sale consideration arising from the transfer of the immovable property under consideration has been offered to tax by the husband of the Assessment Year 2013-2014 Assessee in the return of income for the Assessment Year 2013- 2014 and whether the same has been accepted by the Revenue. The Assessee is also directed to cooperate in the proceedings before the Assessing Officer and keep track the proceedings through the ITBA Portal. It is clarified that in case the Assessee fails to enter appearance and/or fails to file submissions/documents in the proceedings before the Assessing Officer, the Assessing Officer would be at liberty to pass order dealing with the contentions raised by the Assessee on the basis of material on record. In terms of the aforesaid, Ground No. 3, 4, 5 and 6 raised by the Assessee are allowed for statistical purposes while all the other grounds raised by the Assessee are dismissed as having been rendered infructuous.
In result the appeal preferred by the Assessee is treated as allowed for statistical purposes.
Next, we will take up the appeal for the Assessment Year 2013-2014 preferred by the Assessee against the order, dated 04/08/2025, passed by the Ld. CIT(A) whereby the Learned CIT(A) had dismissed the appeal against the Penalty Order, dated 16/03/2022, passed under Section 271(1)(c) of the Act for the Assessment Year 2013- 2014.
The Assessee has raised following grounds of appeal in ITA No.6947/Mum/2025:
“1. The learned Assessing Officer has erred in levying penalty under section 271(1)((b) without taking cognizance of the fact of assessee’s submission and that the Assessee had submitted the required information. 2. Notwithstanding the facts that the assessee had filed the submission and demonstated the act of compliance the penalty under section 271(1)(b) cannot exceed Rs.10,000 irrespective of the number of non-compliance Assessment Year 2013-2014 appeal.
3. The Learned CIT(A) erred in confirming the order of the Assessing Officer based on the information available in the Assessment Order without considering the information made available by the Appellant at the time of filing the appeal such as Income Tax Return of the appellant’s husband and the sale deed of the property.
4. The Learned CIT(A) erred in not issuing a show-cause notice to the Appellant prior to passing the order unanimously without considering the facts of the matter.
5. The learned CIT(A) erred in not considering the fact that the passing of order has caused undue hardship to the assessee, being a middle class employee, due to the resultant income tax demand and interest accrued thereon.”
We have considered the rival submission and have perused the material on record.
The Assessee is aggrieved by the action of CIT(A) confirming the levy of penalty of 30,000/- levied upon the Assessee under Section 271(1)(b) of the Act in relation to assessment proceedings for the Assessment Year 2013-2014. We have already set aside the addition made by the Assessing Officer vide Assessment Order, dated 02/09/2021, for the Assessment Year 2013-2014. We have noted hereinabove that the Assessee had filed Submission, dated 20/08/2021, before the Learned CIT(A) which were not taken into consideration by the Learned CIT(A). Thus, while the assessee had not responded to notices dated 29/09/2020, 05/07/2021 and 07/08/2021 issued by the Assessing Officer, subsequently, the Assessee had filed Submission, dated 20/08/2021 in response to notice dated 17/08/2021. During the appellate proceedings it was explained that the Assessee responded to the notices issued by the Assessing Officer which were served electronically as soon as the Assessee got knowledge of the same. It was submitted that non- Assessment Year 2013-2014 compliance with the notices issued by the Assessing Officer was not deliberate. Section 273B of the Act provides that, inter alia, penalty under section 271(1)(b) need not be imposed, if it is proved that there was a reasonable cause for the said failure to comply with the notices. In the present case, we are of the view that the Assessee had reasonable cause for not complying with the notice being lack of knowledge. Given the fact that the Assessee filed Submission, dated 20/08/2021, soon after getting knowledge of about the assessment proceedings also supports the stand taken by the Assessee. Accordingly, granting the benefit of Section 273B of the Act to the Assessee in the facts and circumstances of the present case, we delete the penalty of INR.30,000/- levied upon the Assessee under Section 271(1)(b) of the Act. In view of the aforesaid, Ground No.1 and 2 raised by the Assessee (as reproduced in Paragraph 13 above) are allowed while all other grounds are dismissed as having been rendered infructuous.
In result, the present appeal preferred by the Assessee is allowed.