VAIJNATH GUNDAPPA KSHIRSAGAR THROUGH L/H. SHRI SHIVKUMAR SADRAMAPPA KSHIRSAGAR,LATUR vs. INCOME TAX OFFICER WARD -1, LATUR

The assessee has raised the following grounds of appeal :- “1. The Ld CIT(A), NFAC, erred in dismissing the appeal on technical ground without deciding the Grounds of Appeal on merits. 2. The Ld CIT(A), NFAC, erred in not appreciating that the land under sale was agricultural land and the sale proceeds were not liable to Long Term Capital Gains tax. 3. The Ld CIT(A), NFAC, erred in not appreciating that the assessee had invested an amount of Rs. 1,50,00,000/-out of the sale proceeds of agricultural land in purchasing agricultural land within the stipulated time and he was entitled to deduction under section 54B. 4. Without prejudice to Ground Nos. 1, 2 and 3 the Ld CIT(A), NFAC, erred in not appreciating that the Ld AO had brought to tax the entire sale proceeds of agricultural land of Rs.1,55,00,000/- and also the

Briefly stated, the facts of the case are that the assessee is an individual and did not file his return of income for AY 2011-12. Based on the AIR information, it was found that the assessee had sold immovable property valued at Rs.3,05,00,000/- (Rs.1,55,00,000/- + Rs.1,50,00,000/-) registered at Latur and Ausa respectively. As the assessee had not filed his return of income for AY 2011-12 and not offered capital gains in respect of the said immovable property for taxation, the Ld. Assessing Officer (“AO”) had reason to believe that income arising on sale of property amounting to Rs.3,05,00,000/- had escaped assessment. Accordingly, the case of the assessee was reopened by issuing of notice u/s 148 of the Income Tax Act, 1961 (the “Act”) followed by the other statutory notice(s) issued and duly served upon the assessee from time to time. However, the assessee failed to comply with any of the notices including the show cause notice which resulted in an ex-parte assessment completed u/s 144 r.w.s. 147 of the Act on 26.12.2018 by the Ld. AO thereby making an addition of Rs.26,10,000/-on account of Long Term Capital Gain to the income of Rs.3,76,760/- returned by the assessee. Thereafter, it was noticed that while completing the assessment u/s 144 r.w.s. 147 of the Act, the Ld. AO has inadvertently taken the return of income of Rs.3,76,760/- instead of Rs.Nil and Long Term Capital Gain of Rs.26,10,000/- instead of Rs.3,05,00,000/- which resulted in under assessment of Rs.2,78,90,000/-. As this mistake was an arithmetical and mistake apparent from record it was rectified by the Ld. AO vide his order dated 16.01.2019 passed u/s 154 of the Act.

Aggrieved by the impugned addition made by the Ld. AO, the assessee filed an appeal before the Ld. CIT(A)/NFAC through his legal heir. Despite service of notice(s) of hearing issued during the appellate

We have heard the Ld. Representatives of the parties and perused the material available on record. The Ld. AR submitted that the non- compliance before the lower authorities was not intentional. The assessee expired during the assessment proceedings and it took some time to bring the legal heir of the assessee on record which resulted in non-compliance of notice(s) issued by the lower authorities. It is an admitted fact that there was non-compliance before the Ld. AO as well as before the Ld. CIT(A)/NFAC which resulted in an ex-parte order(s) passed by them qua the assessee. It is also an admitted fact that the assessee expired on 19.12.2013, the fact of which was duly brought to the notice of the Ld. AO as well as the Ld. CIT(A) by the assessee’s legal heir. From the perusal of order of the Ld. CIT(A)/NFAC, we find that the Ld. CIT(A)/NFAC has passed the impugned order for non-prosecution by relying on the decision of the Apex Court in the case of CIT Vs. B.N. Bhattarcharjee and Another, 10 CTR 354 (SC) and the Hon’ble Madhya Pradesh High Court in the case of Estate of Late Tukojirao Holkar Vs. CWT (223 ITR 480) and the Hon’ble Bombay High Court in the case of M/s. Chemipol Vs. Union of India in Excise Appeal No. 62 of 2009 and dismissed the appeal of the assessee by upholding the addition made by the Ld. AO on merits of the case. We find some force in the arguments advanced by the Ld. Counsel for the assessee that the non- compliance before the Ld. AO as well as before the Ld. CIT(A)/NFAC was not intentional. No doubt, the Ld. CIT(A)/NFAC may decide the appeal ex- parte where the assessee does not prosecute his appeal in spite of several opportunities. None-the-less, he has to adhere to the legislative mandate enshrined in sub-section (6) of section 250 of the Act which requires him to state the points for determination, the decision thereon and the reason for the decision. Thus, in our view, his order is in violation of the provisions of section 250(6) of the Act. Before us, the Ld. AR submitted that the assessee has a strong case on merits and in the interest of justice, the assessee should be granted an opportunity to present and substantiate its case by filing all the relevant details/explanation/evidence before the lower

In the result, the appeal of the assessee is allowed for statistical purposes.