RISHU GARG S/O SH. SURENDER KUMAR GARG,YAMUNANAGAR vs. INCOME TAX OFFICER, WARD-3, YAMUNANAGAR

Briefly stated, the facts of the case are that the assessee is an individual who had not filed the return of income for the year under consideration. It was noticed by the Assessing Officer that during the relevant financial year, the assessee, along with another co-owner, had sold an industrial unit situated at Behat (Saharanpur), Uttar Pradesh, for a consideration of Rs. 60,00,000/-. Based on the said information, the assessment was reopened and ultimately framed ex parte under section 144 read with section 147 of the Act, wherein an addition of Rs. 47,45,570/- was made on account of long-term capital gain.

Aggrieved by the said addition, the assessee preferred an appeal before the Ld. CIT(A). However, it is evident from the impugned appellate order that, despite several opportunities granted during the appellate proceedings, the assessee failed to comply and did not file any substantive submissions. Consequently, the Ld. CIT(A) dismissed the appeal and confirmed the addition primarily on account of non- prosecution and absence of supporting evidence.

Before us, the Ld. The authorised Representative submitted that the authorities below have erred in passing the order without granting an adequate opportunity to be heard. It was contended that the addition had been made without properly appreciating the fact that the property was jointly owned and the entire capital gain could not have been taxed in the hands of the assessee alone. It was further submitted that the order of the Ld. CIT(A) is non-speaking and in violation of principles of natural justice.

The Ld. Departmental Representative, on the other hand, strongly relied upon the orders of the lower authorities and submitted that the assessee failed to cooperate both during assessment as well as appellate proceedings and, therefore, no fault can be found in the orders passed by the authorities below.

We have heard the rival submissions and perused the material available on record. It is an undisputed fact that the assessment in the present case has been framed ex parte under Section 144 of the Act. It is further observed that even before the Ld. CIT(A), the assessee did not effectively participate in the appellate proceedings, and no supporting evidence was placed on record.

However, at the same time, we find merit in the contention of the assessee that the issue involved relates to taxation of capital gains arising from sale of jointly owned property, which requires proper factual verification, particularly with regard to ownership share, cost of acquisition and computation of capital gains. The addition

It is a settled principle of law that no person should be condemned unheard and the principles of natural justice must be adhered to. In the present case, considering the nature of addition and the explanation now sought to be advanced, we are of the considered view that the assessee deserves one more opportunity to substantiate his claim.

Accordingly, in the interest of justice, the impugned order passed by the Ld. CIT(A) is set aside, and the matter is restored to the file of the Assessing Officer for fresh adjudication. The Assessing Officer shall provide adequate opportunity of being heard to the assessee and decide the issue afresh in accordance with law after considering all relevant evidence that may be filed by the assessee.

At the same time, considering the non-cooperative conduct of the assessee during earlier proceedings, we deem it appropriate to impose a cost of Rs. 15,000/-, which shall be deposited by the assessee in the Poor Patients Welfare Fund, PGI, Chandigarh within a period of one month from the date of receipt of this order. Proof of deposit shall be furnished before the Assessing Officer.

The assessee is also directed to fully cooperate in the set-aside proceedings and shall not seek unnecessary adjournments. Failure to comply may result in the Assessing Officer proceeding in accordance with law.

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