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Facts
The assessee's assessment was reopened under section 148, leading to an ex-parte order adding Rs. 1.40 crore by disallowing exemption u/s 10(37) for compensation received from agricultural land acquisition and Rs. 23.54 lakhs as understated interest income. The CIT(A) dismissed the assessee's appeal for non-prosecution, which the assessee challenged before the ITAT, along with jurisdictional issues regarding the reassessment. There was also a 77-day delay in filing the appeal before the ITAT.
Held
The ITAT condoned the delay in filing the appeal. With the consent of both parties, the ITAT set aside the CIT(A)'s order and remanded the matter back to the CIT(A) for fresh adjudication on merits, directing the assessee to cooperate and present all relevant facts and documents without seeking adjournments. The grounds of appeal were allowed for statistical purposes.
Key Issues
Whether the reassessment proceedings were valid given jurisdictional challenges related to sections 148, 151A, 151(ii), 148A and the Supreme Court judgment in Ashish Agarwal; whether the compensation for agricultural land was exempt under section 10(37); whether the interest income was taxable; and whether the CIT(A) was justified in dismissing the appeal for non-prosecution.
Sections Cited
10(37), 148, 151A, 151(ii), 147, 144, 144B, 148A, 148A(d), 148A(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R. K. PANDA & SHRI VINAY BHAMORE
ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the assessee is directed against the order dated 11.04.2025 passed by Ld. CIT(A)/NFAC for the assessment year 2017-18.
There is a delay of 77 days in filing of the present appeal. We are satisfied with the reasons mentioned in the application for condonation of delay duly supported by an affidavit that the applicant was prevented by sufficient cause for not filing the appeal within the prescribed time limit. After hearing Ld. DR, we condone the delay and proceed to adjudicate the appeal.
The appellant has raised the following grounds of appeal :-
1. Because, the ld. CIT(A) failed to appreciate that the entire reassessment proceedings were void ab initio since the notice issued u/s 148 was issued by the JAO and not by the FAO in gross violation of section 151A of the Act and notification dated 29th March, 2022 [Notification No.18/2022/F. No.370142/16/2022-TPL.
2. Because, the ld. CIT(A) failed to appreciate that the entire reassessment proceedings were void ab initio since the approval for reopening was obtained by the Pr. CIT, Thane instead of Pr.CCIT as provided u/s 151(ii) of the Act.
3. Because, the ld. CIT(A) erred in upholding the addition of Rs.1,40,00,000/- under the head "Income from Other Sources" by disallowing the exemption claimed u/s 10(37), failing to appreciate that the Appellant is the legal heir of late Shri Purushottam Sitaram Gaikwad (the former Vahiwatidaar) of the land i.e 'Vithoba Devasthan’ and hence, compensation received by him against compulsory acquisition of the said agricultural land is exempt from tax.
4. Because, the ld. CIT (A) erred in law and on facts in upholding the impugned assessment order although the exemption claimed by the Appellant u/s 10(37) was fully justified in law and all statutory conditions for claiming such exemption stood duly satisfied.
5. Because, the ld. CIT(A) failed to consider the facts of the case wherein, it has been clearly recorded that upon receipt of the compensation by the Appellant, TDS was deducted by the department, thereby acknowledging his legal status vis-à-vis the acquired land.
6. Because, the ld. CIT(A) erred in confirming the addition of Rs.23,54,443/- as interest income under the head "Income from Other Sources" failing to appreciate that the said interest was never actually received by the Appellant but is disputed in civil suit and also locked in FD as bank guarantee.
Because, the ld. CIT(A) has erred in law and on facts in dismissing the appeal solely on the ground of non-prosecution, without appreciating the merits of the case or the grounds raised in appeal.
8. Because, the ld. CIT(A) erred in law in ignoring that the reopening of assessment u/s 148 was without jurisdiction and bad in law, as the notice was issued beyond 3 years without valid approval u/s 151(ii) of the Act, and the copy of such approval from the specified authority was not furnished to the Appellant, violating the mandatory procedural requirements and rendering the entire reassessment invalid.
9. Because, the impugned order reflects non-application of mind and the ld. CIT(A)'s failure to adjudicate the matter on merits, which has resulted in grave injustice to the Appellant. Without Prejudice, The Appellant craves leave to add, amend, alter, or withdraw any of the above grounds at the time of hearing.”
4. The appellant has also raised the following additional grounds of appeal :- “1. That the Appellant had preferred an appeal before the hon'ble ITAT for AY 2017-18, challenging the disallowance of exemption of Rs. 1,40,00,000/- claimed u/s 10(37) and the addition of Rs. 23,54,443/- as interest income.
2. That subsequently, it was observed that two vital grounds had been inadvertently omitted from being included in the "grounds of appeal" attached with Form
36. The undersigned seeks leave to amend the said "grounds of appeal" in respect of the impugned assessment year by adding the following ground in addition to the existing grounds:
11. BECAUSE, the original notice dated 29.06.2021 issued u/s 148 of the Act, is void ab initio and without jurisdiction, having been issued without following the mandatory procedure prescribed under the Finance Act, 2021, which substituted Sections 147 to 151 and inserted Section 148A with effect from 01.04.2021 and the directions issued by the hon'ble Supreme Court in the judgment of Union of India vs Ashish Agarwal bearing Civil Appeal no, 3005/2022; BECAUSE, the notice issued u/s 148 dated 26.07.2022 is void ab initio and without jurisdiction as though the notice makes a reference to an alleged order u/s 148A(d) dated 25.07.2022, no such order has been shown to exist, has never been served upon the Appellant, and is not available on the income-tax portal. Further, no proceedings u/s 148A were ever conducted, no notice u/s 148A(b) was issued, no opportunity of hearing was granted.”
Facts of the case, in brief, are that the assessee is an individual claimed to be one of the Vahivatidar (in the Marathi dictionary means ‘occupant’) claimed exemption u/s 10(37) at Rs.1,40,00,000/- for the year under consideration. However, it was noted by the Assessing Officer that the assessee was only the occupant of the property and the owner was Vithoba Devasthan and hence the exemption claimed by the assessee is an inadmissible claim and the amount of Rs.1,40,00,000/- received by the appellant is liable to be taxed under the head ‘Income from other source’. Further, it was also observed by the Assessing Officer from Form 26AS that the assessee received interest amounting to Rs.23,54,443/- from the Bank of Maharashtra. However, the assessee showed income under ‘income from other source’ at Rs.7,53,421/- only and hence, the assessee understated the interest income under the head ‘income from other source’ at Rs.16,01,022/- and the same has escaped assessment. Subsequently, the case was reopened for scrutiny. The Assessing Officer issued notice u/s 148 of the IT Act for filing the return of income. The assessee neither responded to the said notice nor filed the return of income. In absence of any documentary evidence from the assessee and non-filing of the ITR in response to the notice u/s 148 of the IT Act, the Assessing Officer was constrained to pass an ex-parte order u/s 147 r.w.s. 144 r.w.s. 144B of the IT Act by determining total income at Rs.1,71,07,863/-. The above assessed income includes (i) addition of Rs.1,40,00,000/- as disallowance of exemption claimed u/s 10(37) and (ii) Rs.23,54,443/- as income from other source.
Being aggrieved with the above assessment order, the assessee preferred an appeal before Ld. CIT(A)/NFAC. Since the assessee remained absent, Ld. CIT(A)/NFAC dismissed the appeal filed by the assessee.
It is the above order against which the assessee is in appeal before this Tribunal.
We have heard Ld. Counsels from both the sides and perused the material available on record including the paper book furnished by the assessee. In this regard, we find that the assessee has raised various grounds of appeal
, however in ground no.7 the assessee has challenged dismissal of the appeal by Ld. CIT(A)/NFAC solely on the ground of non-prosecution. In this regard, we find that Ld. CIT(A)/NFAC has issued six notices of hearing to the assessee and the assessee admittedly failed to respond to any of the above notices of hearing. However, before us both the parties have raised no objection if the matter is restored to the file of Ld. CIT(A)/NFAC for fresh adjudication.
9. Considering the totality of the facts of the case and in the interest of justice and without going into merits of the case as well as with the consent of both the parties, we set-aside the order passed by Ld. CIT(A)/NFAC and remand the matter back to him with a direction to decide the appeal afresh as per fact and law after providing reasonable opportunity of hearing to the assessee. The assessee is also hereby directed to respond to the notices issued by Ld. CIT(A)/NFAC in this regard and to produce relevant documents/evidences/submission, if any, to substantiate the grounds of appeal including additional grounds of appeal without taking any adjournment under any pretext, otherwise Ld.