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Facts
For AY 2017-18, the AO made an ex-parte assessment under sections 147, 144, and 144B, adding Rs. 53,00,000 as long-term capital gain (LTCG) from the sale of immovable property. The CIT(A) dismissed the assessee's appeal ex-parte due to alleged non-compliance with notices, which the assessee claimed were sent to an inaccessible email ID. The assessee, a farmer, contended that the agricultural land sold was not taxable under section 2(14) of the IT Act.
Held
The Tribunal condoned a 332-day delay in filing the appeal. Citing Bombay High Court precedents, it held that the CIT(A) cannot dismiss an appeal for non-prosecution and must decide on merits. It also noted the AO's failure to provide necessary information and proper opportunity to the assessee. Therefore, the assessment order was set aside for de novo adjudication by the AO, with directions to provide all relevant information and a fresh hearing opportunity to the assessee.
Key Issues
1. Whether the CIT(A) erred in dismissing the appeal ex-parte without adjudication on merits. 2. Whether the assessment was valid when the AO failed to provide essential information and proper opportunity to the assessee, violating principles of natural justice. 3. Condonation of delay in filing the appeal before the Tribunal.
Sections Cited
250, 147, 144, 144B, 2(14), 269SS, 142(1), 148, 156, 250(4), 250(6), 251(1)(a), 251(1)(b), 251(2), 246A, 147(a), 131, 271(1)(c)
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: MS.ASTHA CHANDRA & DR.DIPAK P. RIPOTE
ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by the Assessee against the order of ld.Commissioner of Income Tax(Appeal)[NFAC], passed under section 250 of the Income Tax Act, 1961 for the A.Y.2017-18 dated 16.10.2024 emanating from the Assessment Order passed under section 147r.w.s 144 read with section 144B of the Act, dated 27.03.2022. The Assessee has raised the following grounds of appeal :
1. The Ld. CIT(A) has erred in confirming addition on account of long term capital gain of Rs. 53,00,000/- being entire amount received on sale of property while passing ex-party order u/s 144 of the I.T. Act dated 27/03/2022 by the AO.
2. The Ld. CIT(A) has not followed principle of natural justice and dismissed the appeal after providing 3 opportunities only without examining the nature of land, without considering the revenue records (7/12 extract), and without establishing that the land constituted a capital asset.
3. The Ld. CIT(A) has grossly erred in law by dismissing the appeal ex- parte u/s 250 of the I.T. Act without granting proper and meaningful opportunity, even though the appellant never received e-notices because the email IDs on the portal were not belonged to him and not in access to him. This is a violation of the principles of natural justice.
The Appellant craves leave to add, to alter, amend, or delete all or any of the aforesaid grounds of appeal
on or before or at the time of hearing.” Delay :
2. There was a delay of 332 days in filing appeal before this Tribunal. Assessee filed an Affidavit for condonation of delay. We have perused the Affidavit and are convinced that there is reasonable and sufficient cause for delay. Hence, delay is condoned.
Findings & Analysis : 3. We have heard both the parties and perused the records. In this case, ld.CIT(A) has dismissed the appeal of the assessee as assessee failed to file any reply to notices issued by ld.CIT(A). Ld.CIT(A) has not adjudicated the grounds raised by the 2
4. In this case, it is observed that ld.CIT(A) has dismissed the appeal of the Assessee as assessee could not file any reply to the notices issued by ld.CIT(A). Ld.CIT(A) has not adjudicated the grounds of appeal raised by the Assessee. The ld.CIT(A) has not adjudicated grounds raised by the assessee on merits.
5. The Hon’ble Bombay High Court has held in the case of Pr.CIT(Central) Vs. Premkumar Arjundas Luthra (HUF)(Bombay)/[2017] 297 CTR 614 (Bombay) as under : Quote, “8.From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act. Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the 3 Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn.
Therefore, it would be noticed that the powers of the CIT(A) is coterminous with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the Section 251(1)(a) and (b) and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non- prosecution as is evident from the provisions of the Act.” Unquote. 5.1 Thus, the Hon’ble Bombay High Court has categorically held that ld.CIT(A) has to decide the appeal on merit and ld.CIT(A) does not have any power to dismiss appeal for non-prosecution.
In this case, ld.AR submitted that Assessee is a Farmer and do not have any knowledge of Income Tax. Ld.AR invited our attention to the Affidavit of the Assessee which is duly notarized. The relevant paragraphs of the Affidavit of the Assessee are reproduced here as under : “1. That I am not sufficiently educated to understand the income tax laws and implication of various notices issued. I am a farmer, having sold agricultural land situated outside PCMC limits, which I believed to be not taxable as per section 2(14) of the LT. Act. 2. That I had no professional assistance and had no knowledge of faceless proceedings or portal compliances. I did not receive any physical notices nor was 1 aware that I had to log in to the ITBA portal regularly. Thus, the delay in responding to AO as well as CIT(A) occurred unintentionally and due to circumstances beyond my control 3 That all assessment notices u/s 142(1), 144, 148 and appellate notices 4 u/s 250 were sent to my consultant's e-mail IDs (murgeshdeshpande009@gmail.com snassociates09@gmail.com) which were not in my use 4. That the Assessment Order for A.Y. 2017-18 was passed ex-parte u/s 147 r.ws. 144 rw.s. 144B on 27/03/2022 bearing DIN ITBA/AST/S/147/2021-22/1041717146(1). assessing income at 55,00,000. That pursuant to the above, a Notice of Demand u/s 156 dated 27/03/2022, bearing DIN ITBA/AST/S/156/2021- 22/1041717185(1) was issued determining a demand of 23,36,040.
That I filed an appeal before the first appellate authority CIT(A) on 10/10/2022, which was registered as Appeal No. NFAC/2016- 17/10175590. That the learned CIT(A)/NFAC passed an order u/s 250 of the 1. T. Act on 16/10/2024, DIN ITBA/NFAC/S/250/2024- 25/1069704323(1), dismissing the appeal ex-parte due to alleged non- compliance on the ITBA portal.”
It is observed that Assessment Order for A.Y.2017-18 was passed u/s.147 r.w.s 144 of the Act. The Assessing Officer has mentioned reasons for reopening in para 2 of the Assessment Order, the same are reproduced here as under : “01. The assessee is an individual. On verification, it is found that the assessee has neither filed return of income nor paid the due taxes for A.Y. 2017-18.
An information has been received from insight Portal on 25/03/2021 in the case of Balu Vitthal Pavale for AY 2017-18. As per information, the assessee Balu Vitthal Pavale & others sold an immovable property for total consideration amount of Rs. 1,24,50,000/- which includes cash received of Rs.98,50,000/- in the said transaction which is the Violation of section 269SS of the Income-tax Act, 1961. The assessee has received Rs 37,00,000/- (cash) (violation of section 26955 of the Income-tax Act, 1961) and Rs. 16,00,000/- (cheque) in this transaction as a sale consideration. Therefore, assessee's total consideration is Rs.53,00,000/- in the said transaction.
On verification, it is found that the assessee has not filed return of income for A.Y 2017-18. However, the assessee has earned income from capital gain on account of sale of immovable property valued at Rs.1,24,50,000/- The assessee's share in this transaction is 5 Rs.53,00,000. I have therefore, reason to believe that the income Rs.53,00,000/- has escaped assessment within the meaning of provisions of section 147(a) of the IT Act, 1961.” 8. Based on the reasons, Assessing Officer issued notice u/s.148 dated 29.03.2021. As per the Assessment Order, Assessing Officer issued notices u/s.142(1), however, no notice was complied by Assessee. Hence, Assessment Order was passed under section 144 of the Act, determining the total income at Rs.55 lakhs.
In this case, it is alleged that assessee has sold along with other persons immovable property for Rs.1,24,50,000/-. According to the Assessing Officer, the Assessee’s Share was Rs.53 lakhs.
It is important to mention here that Assessing Officer has nowhere specified the details of impugned sale. Assessing Officer has not provided to the Assessee the copies of the information alleged to have been available with the Assessing Officer. It is mandatory to provide copy of the information available with the Assessing Officer to the Assessee.
Hon’ble Bombay High Court which is the Jurisdictional High Court, in the decision of Sahebrao Deshmukh Co-op Bank Ltd., Vs. ACIT [2023] 455 ITR 92 (Bombay)[10-02-2023]has given following directions : 6 Quote “16. In the present case, the Assessing Officer appears to have acted in complete contravention of the general directions issued by this Court in matters, where a notice under section 148 of the Act, for reopening of assessment is issued by the revenue.
To begin with, the Assessing Officer was duty bound to issue, alongwith the notice under section 148 of the Act, the reasons which formed the basis for reopening of assessment, the satisfaction note and order of the Principal Commissioner of Income Tax, who granted approval to issuance of the said notice alongwith the note of the Assessing Officer in support of his request for approval, the appraisal report from the DDIT (Inv)Bhavnagar, and the statements of Shri Shripal Vora at Bhavnagar, recorded under section 131 in the search and seizure of the premises of M/S Sanyam Gems Pvt. Ltd, which were referred to in the notice. None of these documents, were sent to the Petitioner in compliance with the general directions issued by this Court. Itis also borne from the record that despite several requests from the Petitioner, specifically demanding a copy of all these documents, the Assessing Officer has refused to furnish copies of the same to the Petitioner. Thereafter, the Assessing Officer has, by order dated 22-3-2022 rejected the request of the Petitioner for furnishing all these documents without assigning any reasons for such rejection nor dealing with the specific objections and the request made by the Petitioner in its order. In fact, the order dated 22-3-2022 is diametrically opposed to the specific observations of this Court at para 4 in Tata Capital Financial Services Ltd. (supra). Thereafter, despite a specific request for a personal hearing by the Petitioner before passing the assessment order, the Assessing Officer has neither granted the same nor dealt with the request and has gone ahead and passed the assessment order on 31-3- 2022, without hearing to the Petitioner. This arbitrary act of the Assessing Officer is also contrary to the specific directions of this Court contained in para 8(d) in Tata Capital Financial Services Ltd. (supra), 7 wherein Assessing Officers have been directed to give a personal
Considering all the above circumstances and applying the ratio of the judgment of this Court in Tata Capital Financial Services Ltd. (supra), and specific directions contained therein to the revenue, we are of the considered opinion that the Assessing Officer has acted in gross violation of the directions in Tata Capital Financial Services Limited. (supra), and in contravention of the provisions of Article 14 of the Constitution of India. Consequently, the impugned orders i.e. order dated 31-3-2021 issued under section 148 of the Act, order rejecting the objections to reopening dated 22-3-2022 passed by the Respondent No. 2, Assessment order dated 31-3-2022, Notice of demand dated 31-3- 2022 issued under section 156 of the Act, and Penalty notice dated 31- 3-2022 issued under section 271(1)(c) of the Act, are quashed and set aside.
The matter is now remanded back to the Assessing Officer, who shall provide the Petitioner with the satisfaction note of the Principal Commissioner of Income Tax, granting approval for issuance of Notice under section 148 of the Act, the appraisal report from DDIT (Inv), and bank statements of M/S Sanyam Gems Pvt. Ltd., the statement of Shri Shripal Vora at Bhavnagar, recorded under section 131 of the Act, and all other documents and material, which form the basis of the reasons recorded by the Assessing Officer for issuing notice under section 148 of the Act. After furnishing all these documents to the Petitioner, the Assessing Officer shall comply with the specific directions laid down by this Court in paragraph 8 in Tata Capital Financial Services Ltd. (supra), and after giving an opportunity of hearing to the Petitioner, shall proceed to pass its orders.” Unquote.
11.1 Thus, it has been held by Hon’ble Bombay High Court that it 8 is mandatory for Assessing Officer to provide the information which Assessing Officer to Assessee. We have observed that the procedure has not been followed by Assessing Officer. However, it is also a fact that Assessee has not complied the notices on the ground that the notices were served on the Email address of the Tax Consultant of the Assessee.
In these facts and circumstances of the case, in the interest of justice, we set-aside the Assessment Order to Assessing Officer for denovo adjudication. Ld.Assessing Officer shall provide opportunity to the assessee. Assessing Officer shall follow the directions of Hon’ble Jurisdictional High Court. The Assessee shall file all the necessary documents before the ld.Assessing Officer. Accordingly, grounds of appeal raised by the assessee are allowed for statistical purpose.
In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open Court on 14 January, 2026.