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Facts
The assessee's case for AY 2016-17 was reopened u/s 148 due to a difference in capital gains arising from the deviation between recorded sale consideration and stamp duty valuation of immovable property, with the AO invoking Section 50C and taxing ₹2.93 crore as undisclosed income. The assessee appealed to the NFAC, which dismissed the appeal in-limine as 'infructuous' because the original assessment order was subject to revision u/s 263, and a fresh assessment u/s 147 r.w.s. 263 had already been passed.
Held
The ITAT held that the NFAC erred in dismissing the appeal in-limine as 'infructuous', stating that each proceeding under the Income Tax Act is distinct and the outcome of one does not automatically determine another. The NFAC was legally mandated by Sections 251(1)(a) and 250(6) to adjudicate the issues on merit. Therefore, the tribunal set aside the NFAC's order and remanded the matter for de-novo adjudication and a speaking order.
Key Issues
Whether the NFAC was justified in dismissing the assessee's appeal in-limine as infructuous due to a subsequent revision order under Section 263. Whether the NFAC failed its statutory duty to adjudicate the merits of the appeal concerning Section 50C and the validity of reassessment proceedings.
Sections Cited
253(1), 250, 147, 144B, 148, 50C, 143(2), 263, 143(3), 246A, 251(1), 250(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PANAJI BENCH, GOA
Before: HON’BLE SHRI PAVAN KUMAR GADALE & SHRI G. D. PADMAHSHALI
ORDER PER G. D. PADMAHSHALI; By the present appeal filed u/s 253(1) of the Income- tax Act, 1961 [‘the Act’] the assessee challenges DIN & Order No 1081036005(1) dt. 23/09/2025 passed by National Faceless Appeal Centre, Delhi [‘Ld. CIT(A)/NFAC’] u/s 250 of the Act which emanated from assessment order dt. 29/09/2021 passed u/s 147 r.w.s. 144B of the Act by National Faceless e-Asstt. Centre, Delhi [‘Ld. AO’]. ITAT-Panaji Page 1 of 8 Sonali Mahendra Naik Gaunekar Vs ITO ITA No.: 312/PAN/2025 AY: 2016-17 The facts of the case briefly stated as; the assessee 2. is an individual who filed her return of income declaring income of ₹5,75,17,590/-. The case of the assessee, after recording reasons and obtaining approval from competent authority by notice dt. 19/02/2020 u/s 148 of the Act, was reopened for re- assessing difference of capital gain arising out of deviation in the value of sale consideration recorded/shown vis-à-vis stamp duty valuation adopted in relation sale of immovable property by the assessee. Invoking the provisions of section 50C of the Act the Ld. AO brought difference of capital gain of ₹2,93,33,256/- to tax as undisclosed income vide an assessment order dt. 24/09/2021 framed u/s 147 r.w.s. 144B of the Act.
3. Aggrieved by aforestated assessment the assessee filed an appeal before Ld. NFAC on 20/10/2021, which ITAT-Panaji Page 2 of 8
Sonali Mahendra Naik Gaunekar Vs ITO ITA No.: 312/PAN/2025 AY: 2016-17 came to be dismissed in-limine. Aggrieved thereby the assessee came in present appeal. on following grounds; Failure to adhere to mandatory procedure for reopening of assessment vitiates the assessment order
1. The NFAC failed appreciate that the AO had issued the notice u/s 143(2) of the Act and proceeded with the assessment proceedings even before providing the recorded reasons and without disposing of the objections of the Appellant. Therefore, the reopening of assessment is bad in law and the order of the dated 29.09.2021 is liable to be quashed and set-aside. Wrongly dismissing the appeal as infructuous 2. The NFAC grossly erred in law and facts by dismissing the appeal of the Appellant as "infructuous" and wrongly observing that there was no point in adjudicating the appeal merely because the assessment order which was challenged before the NFAC had been sought to be revised by taking recourse to section 263.
The NFAC failed to appreciate that the subsequent passing of the order u/s 263 or the order u/s 263 /w 143(3) had no bearing on the appeal filed before the NFAC and that the said proceedings were independent. Notwithstanding the subsequent Proceedings, it was not only lawful but also necessary in the interest of justice for the NFAC to have adjudicated the appeal.
Non applicability of section 50C(1) of the Act on account of the First & Second Provisos introduced by Finance Act, 2016 4. The National Faceless Appeal Centre (NFAC) failed to appreciate that the first and second provisos to section 50C(l) of the ITAT-Panaji Page 3 of 8 Sonali Mahendra Naik Gaunekar Vs ITO ITA No.: 312/PAN/2025 AY: 2016-17 Act introduced by Finance Act, 2016, being curative in nature, are retrospective and applicable for AY 2016-17.
5. The NFAC erred in ignoring the fact that the date of the agreement fixing the amount of consideration preceded the date of registration of the agreement. Therefore, the stamp duty value as on the date of such agreement ought to have been considered for the purpose of section 50C(1) of the Act.
6. Since the Appellant had already offered sale consideration which was in excess of the stamp duty valuation as on the date of the agreement fixing the amount of consideration, no addition in terms of section 50C could have been made.
1. No income has escaped assessment and hence, reopening of assessment is bad in law. 7. The NFAC failed to appreciate that the Assessing Officer erred in reopening the assessment of the Appellant by issuance of notice dated 19.02.2020 u/s 148 of the Act by completely misapplying the provisions of section 50C of the Act.
Not dealing with the submissions of the Appellant 8. The NFAC erred in not dealing with the submissions of the Appellant and further failed to appreciate that even the Assessing Officer had failed to consider the detailed submissions made by the Appellant. Hence, the impugned order is violative of principles of natural justice and the addition sustained by the NFAC is liable to be deleted.
ITAT-Panaji Page 4 of 8 Sonali Mahendra Naik Gaunekar Vs ITO ITA No.: 312/PAN/2025 AY: 2016-17 4. We have heard rival party’s submissions on limited ground number 3 which inter-alia concerning in limine dismissal of appeal by the Ld. NFAC and subject to rule 18 of ITAT-Rules, 1963 perused material placed on record and considered facts in the light of settled position of law. We note that, in the course of first appellate proceedings it has come to the notice of the Ld. NFAC that, the order of assessment challenged before him u/s 246A of the Act for the AY 2016 was subjected to revision u/s 263 of the Act by the Ld. PCIT and by order dt. 19/02/2024 framed thereunder the said assessment order has been set-aside to the file of Ld. AO for de-novo assessment, and pursuant thereto a fresh assessment u/s 147 r.w.s. 263 is already passed by order dt. 27/03/2025.
In view thereof, the Ld. NFAC was of the view that, since the issue under revision directed by the Ld. PCIT and consequential assessment order passed u/s 147 ITAT-Panaji Page 5 of 8 Sonali Mahendra Naik Gaunekar Vs ITO ITA No.: 312/PAN/2025 AY: 2016-17 r.w.s. 263 of the Act has dealt with the same issue as assailed in the present appeal, therefore cause of appeal stands vitiated. In the event the Ld. NFAC simply dismissed the appeal of the appellant in-limine holding appeal of the assessee as infructuous for adjudication.
Each proceeding under the Act is distinct and separate, therefore culmination of a proceedings initiated under the statute may it be assessment, re-assessment, approval, rejection or withdrawal etc., gives rise to distinct and separate rights (if any) to the parties with coincided liabilities attached to it (if any). The outcome of one proceeding does not automatically determine the outcome of any other proceedings. Except otherwise provided, [like search assessment], no proceedings initiated under the provisions of statues shall abate for the reasons or owning to any other proceedings. Therefore the exactitude of any legal or other challenge agitated against specific proceedings, decision or order ITAT-Panaji Page 6 of 8 Sonali Mahendra Naik Gaunekar Vs ITO ITA No.: 312/PAN/2025 AY: 2016-17 by stretch of imagination be turned down for the reasons of pendency of coincided proceedings of the same assessee for same assessment year or for any other assessment year.
In our considered view, solitarily taking into consideration the assessment year, the Ld. NFAC opted out from adjudication and dismissed the appeal palpably to void multiplicity of litigation. However, while doing so the Ld. NFAC could hardly draw or at least shown to have drawn any legal support from the statute or from any binding judicial precedent. Au contraire, when dealing with the appeal filed u/s 246A of the Act, the provisions of section 251(1)(a) of the Act mandates the Ld. NFAC to cease the first appeal conclusively either ‘confirming or reducing or enhancing or annulling’ the assessment. Further while doing so the Ld. NFAC in view of the mandatory provisions of section 250(6) was duty bound to identify the issues to be adjudicated in such appeal, ITAT-Panaji Page 7 of 8 Sonali Mahendra Naik Gaunekar Vs ITO ITA No.: 312/PAN/2025 AY: 2016-17 to state in clear terms the decision arrived thereon and to provide the basis/support in forming such conclusion/decision.
The impugned in limine dismissal to void multiplicity of litigation finds no merits and much less sanction from the statute, therefore has suffered from the provisions of section 251(1) and 250(6) of the Act. For the reason, we set-aside the impugned proceeding and the impugned order for its remand to the file of Ld. NFAC at the stage of its institution with a direction to be dealt therewith de- novo accordance with law and for passing a speaking order. The ground No 3 of the appeal stands allowed for statistical purposes.
In result, the appeal is allowed for statistical purpose in aforestated terms. In terms of rule 34 of ITAT Rules, 1963 the order pronounced in the open court on date mentioned hereinbefore.