Loading judgment…
Facts
The assessee challenged additions made by the AO for long-term capital gains, claiming double taxation for income declared in a previous assessment year, and for house property income. The assessee also contended that a loss from property sale was not properly set off and that the AO failed to follow the Dispute Resolution Panel's (DRP) directions.
Held
The Tribunal noted that the AO's order was a verbatim copy of the draft assessment order and failed to adequately consider the DRP's directions regarding double taxation, rectification under Section 154(2), set-off of losses, and the application of Section 23(1)(b) and (c) of the Income Tax Act. The matter was thus remanded to the AO for reconsideration and rectification in accordance with the DRP's directions.
Key Issues
Whether the AO correctly assessed capital gains without leading to double taxation; whether loss from property sale was properly considered; whether the addition to house property income was valid; and whether the AO complied with DRP directions.
Sections Cited
143(3), 144C(13), 144C(5), 154, 23, 23(1)(b), 23(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘D’, NEW DELHI
Before: Dr. B. R. R. Kumar, Sh. Sudhir Pareek
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order dated 25.05.2023 passed by the AO u/s 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961.
The assessee has raised the following grounds of appeal:
“1. That based on the facts and circumstances of the case and in law, the order passed by the Id. AO under section 143(3) read with section 144C(13) of the Act, pursuant to the directions of the Hon'ble Dispute Resolution Panel (Hon'ble DRP) under section 144C(5) of the Act, assessing the total taxable income of the appellant (being a non- resident) at Rs. 97,69,392 as against the returned income of Rs. 12,61,210/-, is bad in law and on facts. 2. (a) That the Ld. AO has erred on facts and in law in making an addition of Rs. 71,64,182/-, being long-term capital gains on sale consideration of Rs. 2.50 crore received during AY 2020-21, without proceeding with rectification of income of AY 2019-20, being the year in which the entire sale consideration Arti Sareen of Rs. 11.50 crore arising from sale of property was declared and taxes were paid thereon and hence, taxing the amount again in AY 2020-21 has resulted in double taxation of the same income, which is impermissible under law. (b) That in this connection, the Ld. AO has grossly erred in not following the clear directions of Hon'ble DRP to verify the factual claim of the appellant regarding double taxation of the same income from sale consideration of Rs. 2.50 crore brought to tax in AY 2019-20 as well as in AY 2020-21 & to take necessary action as per law including rectification under section 154 of the Act and has infact erred in making an unwarranted remark regarding the bonafide mistake(s) of the appellant, alleging it to be an intentional act despite there being no such allegation by the Hon'ble DRP. (c) That further in this connection, the Id. AO has violated the provisions of Article 265 of the Constitution of India inasmuch as the said Article provides that no tax shall be levied or collected except by the authority of law and tax levied must be within the legislature power.
That the Id. AO/Hon'ble DRP has erred on facts and in law in not allowing the loss (after cost indexation as per law), arising from sale of another property, to be set off against the capital gains of Rs. 71,54,182 in AY 2020-21 which was inadvertently claimed by the appellant in AY 2019-20 instead of AY 2020-21 and which has been so admitted by the Id. AO also. 4. (a) Without prejudice to the above, the Id. AO, pursuant to the directions of Hon'ble DRP has failed to give cognizance to the fact that no prejudice has been caused to the revenue on account of the bonafide mistakes committed by the appellant in declaring the capital gain & loss arising from sale of properties in AY 2019-20 instead of AY 2020-21. (b) That in this connection, if revised/ rectified computations for AY 2019-20 and AY 2020-21 are done in accordance with law, thereby declaring the income and losses as has been held by the Id. AO, but without there being double taxation of the same income, then the appellant would actually be eligible for further relief, primarily on account of cost indexation of immovable properties which have been sold. 5. (a) That the Id. AO has erred on facts and in law in making addition of Rs. 13,44,000 to the total income of the appellant under the head house property by misinterpreting the provisions of section 23 of the Act. (b) That the directions of Hon'ble DRP with regard to the aforesaid ground are vague inasmuch as the Id. AO has been merely directed to pass a speaking order after considering the Page 2 of 5 Arti Sareen submissions of the appellant without there being any specific decision on the merits of the issue.”
At the outset, the ld. Counsel for the assessee submitted that the orders of the AO are ad-verbatim of the draft Assessment Order and the basis which the addition of Rs.71.64 lacs has been made. It was submitted that the directions of the ld. DRP have not been considered with regard to the factual claim of the assessee regarding the double taxation and rectification u/s 154(2) of the Income Tax Act, 1961 with regard to A.Y. 2019-20 so that the assessee is not subjected to double taxation on the amount of capital gain pertaining to sale consideration of MGF property. Similarly, the ld. Counsel prayed that the loss arising on the sale of Bhikaji property in A.Y. 2020-21 as held by the AO needs to be excluded from such capital loss from the return of A.Y. 2019-20.
Further, it was also pointed out that inspite of the clear directions of the ld. DRP at para 4.4.3, the Assessing Officer has not considered the clauses of Section 23(1)(b) and Section 23(1)(c) of the Act.
The ld. DR fairly submitted that the matter must be restored to the Assessing Officer to respectfully abide by the directions of the ld. DRP. Hence, the matter is remanded to the AO who shall consider the directions of the ld. DRP and undertake the rectification as directed.
Page 3 of 5
Sd/- Sd/- (Sudhir Pareek) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 21/08/2024 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR
Page 4 of 5