R AND R INFRASPACE PRIVATE LIMITED,NA vs. ARIVS.PRINCIPAL COMMISSIONER OF INCOME TAX VALSAD, VALSAD

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ITA 532/SRT/2024Status: DisposedITAT Surat02 January 2025AY 2013-14Bench: coming to the conclusion that income be added u/s 68 instead of being taxed under the head "income from capital gain". As the ingredients laid down u/s 68 are not satisfied, the order is bad in law and erroneous. The said receipts of Rs.1,55,63,560/- were sale proceeds of the inventory of premises held by assessee, from which their purchase price of raw materials, direct costs and other relevant expenses debited to P/L a/c ought to have been deducted before arriving at the taxable income. T1 pages

AI SummaryDismissed

Facts

The assessee's appeal is against the order of the Ld. PCIT passed under section 263 of the Income Tax Act, 1961, for AY 2013-14. The Ld. PCIT revised an assessment order concerning the sale of immovable property. The assessee did not appear for hearings despite notices, and the appeal was decided based on the revenue's submissions.

Held

The Tribunal found that the assessee had not filed returns, had not appeared for re-assessment proceedings, and did not contest the revisional proceedings or the appeal. Given the lack of response and submitted details from the assessee, the Tribunal found no justification to interfere with the Ld. PCIT's order.

Key Issues

Whether the PCIT's order under section 263 was justified without considering the pending appeal before CIT(A) and whether the income from the sale of property was rightly treated under section 68 or as capital gains.

Sections Cited

263, 147, 144, 144B, 148, 68, 139(1)

AI-generated summary — verify with the full judgment below

िनधा"रती की ओर से /Assessee by None राज" की ओर से /Revenue by Shri Ravi Kant Gupta– CIT-DR सुनवाई की तारीख/Date of hearing 02.01.2025 उद्घोषणा की तारीख/Date of 02.01.2025 pronouncement Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of Ld. Principal Commissioner of Income-tax, Valsad [for short to as “Ld. PCIT”] passed under section 263 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 14.03.2024 for assessment year (AY) 2013-14, in revising of assessment order passed by Assessing Officer under section 147 r.w.s. 144 r.w.s. 144B of the Act dated 25.03.2023 for assessment year 2018-19. The assessee has raised the following grounds of appeal: “1. The Hon’ble PCIT ought to have waited till the appeal of the assessee before Hon’ble CIT(A) could be disposed off. An order passed u/s 263 without taking cognizance of a pending appeal before Hon’ble CIT(A) is bad in law and erroneous. The Hon’ble PIT ought to have considered the facts evident from the Tax Audit report filed by the assessee and arguments put forward by the R & R Infraspace Pvt. Ltd. assessee in Form 35 before coming to the conclusion that income be added u/s 68 instead of being taxed under the head “income from capital gain”. As the ingredients laid down u/s 68 are not satisfied, the order is bad in law and erroneous. The said receipts of Rs.1,55,63,560/- were sale proceeds of the inventory of premises held by assessee, from which their purchase price of raw materials, direct costs and other relevant expenses debited to P/L a/c ought to have been deducted before arriving at the taxable income. The income ought to have been taxed under the head “income from business and profession”.

2. None appeared on behalf of assessee, despite service of notices of hearing of this appeal on more than two occasions by way of RPAD as well as through e-mail. The registered notice sent at the address provided in Form-36 is returned bank by Postal Authorities. Today neither representative of the assessee appeared nor filed application of adjournment, thus, we left no option except to hear the submission of learned Commissioner of Income-tax Departmental representative (Ld.CIT-DR) for the revenue and to decide this appeal on the basis of material available on record.

3. The ld CIT-DR for the revenue submits that during the relevant financial year (FY) i.e. in 2012-13, the assessee sold immovable property on consideration of Rs.1.55 crore. No return of income was filed by assessee, though audit report inform-3CA and 3CD were filed reporting net income of Rs.69,09,822/- . Thus, case of assessee was reopened by issuing notice under section 148 of the Act. Even during re-assessment proceedings, assessee has not filed return of income in response to notice under section 148, nor filed any submission in response to various show causes notices. Assessment was completed under section 144 rws 147 & 144B on 29.03.2022. In the assessment order, the Assessing officer treated the sale consideration of Rs. 1.08 Crore as Capital 2 R & R Infraspace Pvt. Ltd. Gain. The assessment was revised by Ld. PCIT by taking view that the assessee has not furnished any details of immovable property nor offered any income on sale of property despite allowing opportunity and the sale consideration was to be added under section 68 of the Act and to be charged @ 30% instead of 20%. The Assessing Officer suo moto considered sale consideration as capital gain and taxed accordingly. The order of Ld. PCIT was erroneous and prejudicial to the interest of revenue. The assessee was given opportunity to contest revisional proceedings by issuing show cause notice through e-mail address as Sped Post. The assessee chose not to contest the said proceedings and again assessee is not contested the appeal and same was set aside the assessment order with a direction to pass fresh assessment order after giving reasonable and sufficient opportunity of being heard to assessee. The assessee again, despite filing this appeal failed to appear and neither filed any documentary evidence or any submissions, the appeal of the assessee may be dismissed.