JONATHAN PRADEEP,,CHENNAI vs. ITO, NCW - 13 (4),, CHENNAI

This appeal filed by assessee is directed against appellate Order dated 15.03.2019 passed by learned Commissioner of Income Tax (Appeals)-7, Chennai (hereinafter called “the CIT(A)”), in 14)/CIT(A)-7/2017-18 for assessment year (ay) 2013-14, the appellate proceedings before learned CIT(A) had arisen from assessment order dated 28.03.2016 passed by learned Assessing Officer (hereinafter called “the AO”) u/s.143(3) of the Income-tax Act, 1961 (hereinafter called “the Act”) for ay: 2013-14.

Briefly stated the facts of the case are that assessee along with his brother entered into joint development agreement with a developer , Horizon Abodes on 20.01.2012 , handing over a house and land appurtenant thereto in return for two flats each. The total consideration received by both the brothers were to the tune of ` 4.36 crores( ` 2.18 crores each) while the cost of construction was ` 3.36 crores ( ` 1.68 crores each) . The assessee claimed deduction u/s 54 of the 1961 Act with respect to investments made in two residential flats while the AO was of the view that assessee is entitled for deduction u/s 54 of the 1961 Act w.r.t. investment made in one residential flat and hence deduction claimed u/s 54 of the 1961 Act w.r.t. to investment made in second residential flat was denied by AO , vide assessment order dated 28.03.2016 passed by the AO u/s. 143(3) of the 1961 Act leading to additions to the tune of ` 84 lacs as income in the hands of the assessee. Aggrieved by an assessment framed by AO vide assessment order dated 28.03.2016 passed by AO u/s 143(3) of the 1961 Act, the assessee filed first appeal before Ld.CIT(A) which was dismissed by Ld.CIT(A) vide appellate orders dated 15.03.2019 , inter-alia, for non-prosecution, but however, while passing appellate order the Ld.CIT(A) simply upheld assessment order passed by the AO without independently discussing on merits issues raised by assessee in its first appeal filed with learned CIT(A) , as is required under provisions of Sec.250(6) of the 1961 Act.

Aggrieved by an appellate order dated 15.03.2019 passed by learned CIT(A) , the assessee has filed this appeal before tribunal and arguments are advanced by both the rival parties before the Bench. The Ld.Counsel for the assessee submitted that Ld.CIT(A) ought to have adjudicated the issues in appeal filed by assessee on merits by independent application of mind , as is required under provisions of Section 250(6) of the 1961 Act but however learned CIT(A) simply upheld assessment order passed by learned AO. It was prayed that matter may be restored to the file of Ld.CIT(A) for fresh adjudication and an fresh opportunity may be granted to the assessee to appear before Ld.CIT(A) and present its case/arguments/evidences in its defense in denovo appellate proceedings.

We have considered rival contentions and perused the material on record. We have observed that assessee has declared income from salaries and capital gains during the year under consideration in its return of income filed with Revenue . It is observed that the case of the assessee was selected for scrutiny by Revenue for framing assessment u/s.143(3) & 143(2) of the 1961 Act. The return of income declaring income of ` 38,46,570/- was filed by assessee , wherein the AO assessed income of ` 1,22,46,570/- of the assessee while framing scrutiny assessment u/s 143(3) of the 1961 Act, wherein, mainly deduction of ` 84,00,000/- claimed by assessee u/s 54 of the 1961 Act from long term capital gains earned by assessee was disallowed by the AO which was with respect to investment made in second residential house while AO allowed deduction u/s 54 of the 1961 Act w.r.t. to one residential house. The background of the disallowance made by the AO is discussed by us in preceding para of this order. Aggrieved by an assessment framed by the AO u/s 143(3) of the 1961 Act, the assessee filed first appeal before Ld.CIT(A). The assessee did not appear before Ld.CIT(A) despite opportunities granted by learned CIT(A) , but , however, Ld.CIT(A) passed an appellate order without discussing issues in the appeal filed by assessee independently on merits and has , inter-alia, dismissed appeal of the assessee for non-prosecution and simply upheld assessment order passed by the AO without independently discussing all the issues in appeal filed by assessee on merits based on material on record , as is required u/s 250(6) of the 1961 Act. In our considered view, the matter needs to be restored to file of Ld.CIT(A) for fresh adjudication on merits in accordance with the law of all the issues/grounds raised by assessee in its first appeal filed with learned CIT(A). We hereby direct assessee to appear before Ld.CIT(A) and submit all necessary evidences, explanations etc., in support of its contention , when the appeal comes for hearing before Ld.CIT(A) in denovo appellate proceedings in second round of litigation. It is made clear that in case if the assessee still did not come forward and co-operate in denovo appellate proceedings before learned CIT(A), then Ld.CIT(A) shall be at liberty to decide the issue’s on merits in accordance with law. The Ld.CIT(A) is directed to denovo adjudicate all the issues raised by assessee in its first appeal filed with learned CIT(A) denovo on merits in accordance with law. Needless to say that learned CIT(A) shall provide proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law, in denovo appellate proceedings. Thus, the appeal of the assessee stands allowed for statistical purposes. We order accordingly.