HARJINDER SINGH,DERABASSI vs. INCOME TAX OFFICER, CHANDIGARH

That the Ld. CIT failed to consider the reply of the Assessee dated 17.02.2021 supported with the relevant annexure of passbook substantiating that the amount of Rs. 20,00,000 was received from the brother of the Assessee, hence the money received as a gift from relative was not taxable as per the provisions of section 56(2)(x) of the Income Tax Act, 1961. 6. That the Assessment Order issued under section 143(3) is liable to be quashed as the same is not bearing DIN in the prescribed format in accordance with the Circular No. 19/2019 issued by CBDT dated 14.08.2019. 7. That the Applicant craves to add, amend, modify or alter any grounds at any time or before the hearing/decision of the application.

Briefly, the facts of the case are that the assessee is an individual agriculturist. During the year under consideration, the assessee sold agricultural land jointly owned with other co-owners for a total consideration of Rs.5,55,00,000/-, out of which the assessee’s share was Rs.92,50,000/-. The assessee invested the sale proceeds in the purchase of other agricultural lands within the prescribed period and claimed exemption under section 54B of the Act. The return of income was filed in response to notice under section 148 declaring nominal income. The case was reopened and assessment was completed under section 143(3) read with section 147 of the Act.

1 The Assessing Officer observed that the assessee had not filed the return of income originally and that the exemption claimed under section 54B was not supported by sufficient documentary evidence. According to the AO, the assessee failed to establish that the land sold was used for agricultural purposes during the two years immediately preceding the date of transfer. The AO further noted that the Jamabandi furnished did not conclusively prove agricultural operations and that ownership of land was also not clearly established. Accordingly, the AO disallowed the exemption under section 54B and made an addition of Rs.86,61,250/- as long-term capital gain. Further, the AO noticed a credit entry of Rs.20,00,000/- in the bank account of the assessee for which no satisfactory explanation was furnished, and therefore treated the same as unexplained income. Penalty proceedings were also initiated.

Against the order of the AO the assessee went in appeal before the Ld. CIT(A). Before the CIT(A), the assessee filed an appeal with a delay, which was condoned. Notices were issued to the assessee to file submissions and supporting documents. Although some submissions and documents were placed on record, the Ld. CIT(A) observed that the assessee failed to adequately substantiate his claim of agricultural use of land and also did not furnish complete details regarding the bank transactions. The Ld. CIT(A) further observed that no effective compliance was made by the assessee despite sufficient opportunities. Relying upon judicial precedents relating to non-prosecution of appeals, the CIT(A) dismissed the appeal and confirmed the additions made by the AO without adjudicating the issues on merits.

Against the order of the Ld. CIT(A) the assessee preferred in appeal before the Tribunal.

During the course of hearing, the Ld. AR submitted that the assessee is an illiterate agriculturist and was not well conversant with income-tax procedures, due to which proper compliance could not be made at earlier stages. It was contended that the assessee had subsequently obtained Fard Girdawari and other revenue records evidencing agricultural operations carried out on the land sold during the relevant period. The Ld. AR argued that these crucial evidences were not properly examined by the lower authorities. It was further submitted that the Ld. CIT(A) erred in dismissing the appeal for non-prosecution instead of deciding the issues on merits. The Ld. AR pleaded that in the interest of justice, the matter should be restored to the file of the Ld. CIT(A) for fresh adjudication after considering all evidences.

Per contra, the Ld. DR supported the orders of the lower authorities and submitted that the assessee failed to discharge the onus cast upon him to prove eligibility for exemption under section 54B. It was argued that repeated opportunities were granted, but the assessee did not furnish complete and reliable evidence. Therefore, the CIT(A) was justified in dismissing the appeal.

We have heard the rival submissions and perused the material available on record. We find that the Ld. CIT(A) has dismissed the appeal primarily on account of alleged non-prosecution without adjudicating the issues on merits. It is well-settled law that the first appellate authority is duty- bound to dispose of the appeal on merits after examining the facts and evidences, even if the assessee fails to appear. Considering the fact that the assessee claims to be an agriculturist and has stated that relevant documentary evidence such as Fard Girdawari was obtained at a later stage, we are of the considered view that the issues require fresh examination. In the interest of substantial justice, we deem it appropriate to set aside the impugned order and restore the matter to the file of the Ld. CIT(A) for de novo adjudication after providing reasonable opportunity of being heard to the assessee and after considering all evidences that may be produced. The assessee is directed to cooperate fully and file all necessary documents in support of his claim. Accordingly, the appeal of the assessee is allowed for statistical purposes.

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

""थ"/ The Respondent 3. आयकर आयु"/ CIT 4. आयकर आयु" (अपील)/ The CIT(A) 5. िवभागीय "ितिनिध, आयकर अपीलीय आिधकरण, च"ीगढ़/ DR, ITAT, CHANDIGARH 6. गाड" फाईल/ Guard File