Loading judgment…
Facts
The assessee, engaged in land development, filed an income tax return for AY 2012-13. During the year, a sale transaction occurred, but the stamp duty valuation was significantly higher, leading to an addition of short-term capital gain under section 50C. The assessment was framed under section 143(3) r.w.s. 147.
Held
The CIT(A) dismissed the assessee's appeal due to non-compliance with notices. The Tribunal noted that while notices were issued, their service on the assessee was not explicitly detailed. The Tribunal restored the matter to the CIT(A) for fresh adjudication.
Key Issues
Whether the addition under section 50C for short-term capital gain was justified, and whether the assessee was denied natural justice by the CIT(A)'s dismissal of the appeal.
Sections Cited
143(3), 147, 50C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: DR. ARJUN LAL SAINI, AM. &
O R D E R PER DINESH MOHAN SINHA, JM: Captioned appeal filed by the assessee is directed against the order passed by the National Faceless Appeal Centre [(in short “NFAC/Ld.CIT(A)”] vide order dated 01/05/2024, which in turn assessment order passed by Ld. Assessing Officer u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short “the Act”).
Grounds of appeal raised by the assessee are as followed: 1). CIT(A)-NFAC erred in Law and facts in confirming the addition of short term capital gain made by AO Rs. 29,56,695/- u/s 50C of the Income Tax Act, 1961 (the act) for the income in the nature of business ITA-431/RJT/2024 (AY-2012-13) Ranchhodbhai Vs. ITO Ward-1(2)(2), Rajkot.
Rs. 1,22,770/- from sale of industrial plots jointly owned by the appellant and other 4 (Four) Co- owners. 2) The appellant craves leave to add, alter, modify or substitute any ground of appeal at the time of hearing.
Facts of the case are that assessee is engaged in the business of land developing and also having rent and salary income. Assessee filed his return of income for A. Y. 2012-13 on 28/03/2013 by declaring total income of Rs. 2,80,200/-. During the year under consideration, the assessee has entered into the sale transaction worth Rs. 14, 99,000/-. However the value of the properties for the purpose of the section 50C of the I.T. Act, 1961 is Rs. 1,23,38,782/- which give rise to difference of Rs. 1,08,39,782/- which attracts the provision of section 50C of the I.T. Act, 1961, since the sale value as per sale deed and value adopted or assessed by the stamp valuation authority for the purpose of the payment of stamp duty in respect of the transfer of above properties. Total share of the assessee in the section 50C of the I.T. Act, 1961 value comes to Rs. 36,13,264/-. Therefore the proceedings u/s 147 of the I. T. Act was initiated by the Ld. AO.
Assessment was framed u/s 143(3) r.w.s. 147 of the Act treating the transaction made as unexplained and undisclosed and also penal action as per Act shall be initiated. Assessee’s income was assessed at Rs. 32,36,900/- with an addition of Rs. 29,56,695/- u/s 50C.
Aggrieved by the order of the Ld. AO assessee carried the matter to the Ld. CIT(A). Ld. CIT(A) has dismissed the appeal of the assessee on account of non compliance with the notices issued during the proceedings.
ITA-431/RJT/2024 (AY-2012-13) Ranchhodbhai Vs. ITO Ward-1(2)(2), Rajkot.
Aggrieved by the order passed by the Ld. CIT(A) assessee is in appeal before us.
During the course of hearing the Ld. Counsel for the assessee submitted that assessee is a joint owner of a property with four other co-owners and the notices issued by the Ld. CIT(A) for the hearing could not be complied since no notices were served on assessee. However Ld. Counsel for the assessee requested for one more opportunity to explain the case before the lower authority.
On the contrary Ld. Sr. DR for the revenue relied on the order of the Ld. CIT(A). However Ld. DR had not objected to the prayer of the assessee.
We have heard the matter and perused the record before us we note that six notices were issued by the Ld. CIT(A) for the hearings and final opportunity was given to the assessee on 25/04/2024 but the assessee had not responded to the notices. We note that order of the Ld. CIT(A) speaks about the issue of the notice but not about the service of the same notices upon the assessee. We further note that Ld. CIT(A) dismissed the appeal on ground that assessee had not filed any evidence or details in support of his claim. Assessee is having salary and rental income. The return of income was filed by the assessee with the department and assessee had taken permission from the competent authority in respect of land is not agricultural land. Assessee is a land developer and sold part of a property. It is brought to our notice that in the other co-owners’ case transaction was recorded as business transaction and income as business income. We note that assessee could not plead his case successfully before the ld. CIT(A). We note that it is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being ITA-431/RJT/2024 (AY-2012-13) Ranchhodbhai Vs. ITO Ward-1(2)(2), Rajkot. heard to contest his case. Therefore, without delving much deeper into the merits of the case, in the interest of justice, we restore the matter back to the file of Ld. CIT(A) for de novo adjudication and pass a speaking order after affording sufficient opportunity of being heard to the assessee, who in turn, is also directed to contest his stand forthwith. Therefore, we deem it fit and proper to set aside the order of the ld. CIT(A) and restore the matter back to the file of the ld. CIT(A) for fresh adjudication after providing due opportunity to the assessee.
The appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 20/01/2025.