PRATIBHA SHARMA,MUMBAI vs. ITO WD 21(2)(5), MUMBAI

The dispute in the present appeal is confined to disallowance of deduction claimed under section 54 of the Income Tax Act, 1961 (for short “the Act”). Of–course, the assessee has also raised the issue of violation of rules of natural justice by the Departmental Authorities.

Brief facts are, the assessee, an individual, did not file any return of income voluntarily for the impugned assessment year. Subsequently, on the basis of AIR information revealing that the assessee has earned capital gain on sale of property as well as received salary income, re–opened the assessment under section 147 of the Act by issuing a notice under section 148 of the Act. As observed by the Assessing Officer, the notice issued under section 148 of the Act returned back un–served with the postal remark “left without instruction”. Even notices issued 142(1) and 143(2) of the Act issued to the assessee returned un–served. Therefore, the Assessing Officer proceeded to complete the assessment under section 144 r/w section 147 of the Act to the best of his judgment. On the basis of information available on record, the Assessing Officer treated the consideration received from sale of property amounting to ` 21 lakh as well as salary of ` 3,79,068 as income of the assessee for the impugned assessment year and completed the assessment accordingly. Against the assessment order so passed the assessee preferred appeal before the learned Commissioner (Appeals). However, learned Commissioner (Appeals) also sustained the addition made by the Assessing Officer.

The learned Authorised Representative submitted, the assessee was not given sufficient opportunity to represent her case before the 3 Pratibha Sharma Assessing Officer. He submitted, before the first appellate authority, though, the assessee had furnished fresh evidences in support of her claim, however, the learned Commissioner (Appeals) completely ignored the evidences submitted by the assessee and sustained the addition made by the Assessing Officer. Thus, the learned Authorised Representative submitted, an opportunity may be given to the assessee to explain her case with regard to the disputed additions before the Assessing Officer.

The learned Departmental Representative relied upon the observations of the learned Commissioner (Appeals).

I have considered rival submissions and perused materials on record. The limited submission made by the learned Authorised Representative before me is to grant an opportunity to the assessee to represent her case before the Assessing Officer with supporting evidences. As could be seen from the facts on record, due to non– representation by the assessee, the Assessing Officer completed the assessment making subject additions on account of sale of property and salary income. Further, it is seen from record, though, before the first appellate authority the assessee has furnished certain evidences in support of the salary income and tax deducted at source as well as investment of capital gain in new house property, however, the 4 Pratibha Sharma learned Commissioner (Appeals) did not take cognizance of such evidences, since, the assessee had not filed any return of income even in response to notice issued under section 148 of the Act. In my considered opinion, the assessee deserves an opportunity to explain her stand against the taxability of the disputed income by furnishing supporting evidences. Therefore, I am inclined to restore the issue relating to the disputed additions to the Assessing Officer for de novo adjudication after due opportunity of being heard to the assessee. It is made clear, the assessee must comply to the notices/query to be raised by the Assessing Officer and represent her case in a proper and effective manner. With the aforesaid observations, grounds are allowed for statistical purposes.

In the result, assessee’s appeal is allowed for statistical purposes. Order pronounced in the open Court on 05/10/2018