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Facts
The assessee appealed against an addition of Rs. 38,84,000 made under Section 50C for Assessment Year 2012-13, arising from a disparity between sale consideration and stamp duty valuation of agricultural land. The assessee argued that the underlying sale deed was later cancelled by a Civil Court, making the addition invalid, and that the NFAC dismissed the appeal ex-parte without proper opportunity.
Held
The Tribunal noted that while the assessee had not fully utilized opportunities at lower levels, in the interest of justice, another opportunity should be granted. The matter was restored to the file of the Jurisdictional Assessing Officer for de novo verification and assessment, with directions to provide adequate opportunity to the assessee. The appeal was allowed for statistical purposes.
Key Issues
Validity of reassessment proceedings and addition under Section 50C, especially considering a Civil Court's cancellation of the sale deed, and denial of proper hearing opportunity to the assessee.
Sections Cited
148, 147, 144, 50C, 234A, 234B, 234C, 234D, 244A, 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’: NEW DELHI
Assessee by Shri Ankit Gupta, Adv. Respondent by Shri Om Prakash, Sr. DR Date of Hearing 26/06/2024 Date of Pronouncement 31/07/2024 ORDER
PER S.RIFAUR RAHMAN, AM:
This appeal has been filed by the Assessee against the order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [“Ld. CIT(A)”, for short], dated 12/10/2021 for Assessment Year 2012-13.
The assessee has raised the following grounds of appeal:-
“1. That the notice issued u/s 148 and reassessment order 1) passed u/s 147 r.w.s. 144 are illegal, bad in law and without jurisdiction. 2. That, in view of the facts and circumstances, no satisfaction is recorded by the assessing officer as required u/s 147/148 of the Act prior issuing the notice under section 147 of the Income Tax Act, 1961.
That, no application of mind by the assessing officer while recording the alleged satisfaction, merely reproducing the AIR information on account of Sale of Property of Rs.26,00,000.00 against value of Circle rate at Rs. 1,55,36,000.00 and failed to establish the live nexus between tangible material and income escaped assessment, which is vague, incorrect and baseless, hence, the proceedings initiated is illegal, bad in law and without jurisdiction. The NFAC has erred in upholding the validity of the proceedings initiated U/s 147 read with section 148.
The addition/ disallowances made by the assessing officer are illegal, unjust, highly excessive and are not based on any material on record by the assessing officer. The total income of the appellant has been wrongly and illegally computed by the assessing officer at Rs.39,05,270.00 as against declared income of Rs.21,270.00. The CIT (A) has erred in confirming the addition to Rs.38,84,000.00, which is highly arbitrary and unjustified. 5. That, the NFAC has erred in dismissing the appeal of the assessee appellant in ex-party manner, without appreciating that the hearing was fixed between the period, when the Income Tax Filing Portal was not proper, therefore, the opportunity given cannot be held as proper opportunity of hearing in the interest of justice. 6. That the Assessing Officer/NFAC, in view of the facts and circumstances of the case erred on facts and in making the addition of Rs.38,84,000.00 on account of 50C, which is unjust, arbitrary, unlawful, highly excessive, based on surmises and conjectures and cannot be justified by any material on record. 7. That, the assessing officer as well as NFAC has erred in ignoring the fact, that, the Sale Deed relied by the assessing officer for making the addition U/s 50C has already been held as invalid and void ab initio by the district court, therefore, the addition made by the assessing officer and uphold by the NFAC is highly arbitrary, unjustified and tenable. The assessing officer and NFAC has failed to appreciate the documentary evidences filed by the assessee and made the addition/ disallowances without any basis and reasons, which is highly presumptive, arbitrary, excessive and unjust
The assessing officer and NFAC has erred in making the several observations, in the impugned order and assessment 9) orders, which are purely based on presumption, surmises and conjectures and against the material available on records.
9. That the explanation given and evidence produced, material placed and available on record have not been properly considered and judicially interpreted and the same do not justify the additions/ allowances made. The observations made by the assessing officer on different issues are either not relevant or are purely based on presumptions. 10. That, the interest U/s 234A, 234B, 234C, 234D and 244A have been wrongly and illegally charged as the appellant could not have foreseen the disallowances/additions made and could not have included the same in current income for payment of Advance tax. The interest charged under various sections is also wrongly worked out. 11. That the Assessing Officer and NFAC has erred in issuing the notice U/s 271(1)(c) and initiating the penalty proceedings ) when the assessee appellant has not concealed the particular of any income or furnished inaccurate particulars of such income. 12. The Appellant craves leave to add, amend, alter and or modify the grounds of appeal of the said appeal.”
3. The appeal filed by the assessee before us with a delay of 111 days and the reasons submitted by the assessee as per affidavits are as under: “That the NFAC order was received by the counsel on the income tax portal of the Assessee, he also advise him to get engaged the counsel who handle the matters before Hon'ble ITAT at Delhi, but due to the medical condition of the CHACHA Shri Sureshpal of the assessee, he is suffering with Heart and Liver infection alongwith T.B., due to the said condition, the assessee is always in travel for the treatment of his uncle such as Ambala, Saharanpur and Rishikesh Therefore, due to mental stress and regular involvement in the treatment of his CHACHA. The assessee could not filed the appeal in time before the Hon'ble ITAT. The copies of the prescriptions are being enclosed, for your ready reference. As soon as, there in some improvement, in the health of his CHACHA, the assessee
contacted the counsel and instructed him to take the necessary action and also to prepare and file the appeal.” 4. On the other hand, the DR objected to the submissions of the Ld. AR and submitted that the reasons are not believable and not properly justified.
After considering the submissions of the assessee and it was submitted that he was busy attending his uncle Shri Suresh Pal, who was suffering from serious ailment and we deem it fit to condone the delay.
At the time of hearing, the Ld. AR submitted as under:
“1) That, the assessee and other co-owners was entered into agreement to sale with Shri Nihal Chand Khatri, in 1991 through Registered Agreement to Sale dated 20.10.1991, for the sale of agriculture land measuring 31 Bigha having Khasra No.296M situated at Vill. Panjora Baroor, Distt. Saharanpur against the loan availed from Shri Nihal Chand Khatri of Rs.5,00,000.00, on the term and condition, that, the said loan was repaid with in 2½ Years and the agreement will be cancelled thereafter. 2) That, the assessee and his co-owners has repaid the loan and request, the Shri Nihal Chand Khatri to cancel the alleged agreement to sale executed between them on 20.10.1991. On the request, the Shri Nihal Chand Khatri assured the assessee and his co-owner, that, he will get the said agreement canceled. 3) Thereafter on 16.05.2004, the assessee and his co-owners came to know, that, Shri Ramesh Kumar has purchased two residential plot out of the disputed property through sales deed dated 23.11.1998 and 16.01.1999 executed by the Shri Anoop Kumar through General Power of Attorney alleged executed on 30.10.1991, which was conspired and forged done by Shri Nihal Chand Khatri and Shri Anoop Kumar and Shri Ramesh Kumar and the same was never done by the assessee and his co-owners. 4) The assessee and the co-owner filed the civil case, before the Hon'ble Civil Court, Senior Division, Saharanpur having a case no.CS No.306/2004. The copy of the Plaint file is enclosed, at page no.78 to 103 of the Paper Book. 5) Also, other than the aforesaid property, Shri Nihal Chand Khatri and Shri Anoop Kumar has sold the properties out of the disputed one to other persons also. The possession has also be given to the said purchasers by Shri Anoop Kumar and Shri Nihal Chand Khatri. 6) Meanwhile, the assessee and his co-owners has sold the disputed land of Rs.26,00,000.00 to Shri Shairam and Shri Manjeet Singh through sale deed in July, 2012. The copy of Sale Deed is being enclosed, at page no.22 to 77 of the Paper Book.
7) On the basis of the said Sale Deed, the assessing officer has initiated, the re-assessment proceedings and made the alleged addition U/s 50C, due to the difference between the Sale Consideration of Rs.26,00,000.00 and the Stamp Duty Valuation of Rs.1,55,36,000.00. 8) Thereafter, a Settlement has been arrived between all the stake holders of the disputed property through prestige personalities of the Village and Panchayat i.e. the assessee and his co-owners and Shri Nihal Chand Khatri, Shri Anoop Kumar, Shri Ramesh Chand, Shri Shairam and Shri Manjeet Singh. 9) That, as per the aforesaid settlement dated 11.08.2017, the impugned sale deed executed between the assessee and his co-owner Shri Shairam and Shri Manjeet Singh will be canceled after paying the amount of Rs.30,00,000.00 to Shri Manjeet Singh and Rs.12,00,000.00 to Shri Shairam. The copy of Settlement dated 11.08.2017 is being enclosed, at page no.22D of the Paper Book. 10) Thereafter, the aforesaid settlement has been filed before the Civil Court, through application marked as document no.226A, in which the request has been made, that, the settlement has arrived between the stake holders will be treated as part of degree. The letter filed before the Civil Court is at page no.81 to 83 of the Paper Book.
11) Thereafter, the Civil Court on 29.03.2018 passed an order, in the disputed matter, that, the request for accepting the settlement, as per document no.226A has been accepted and the sale deed has been cancelled. The copy of the same is enclosed, at page no.22b and 22c of the Paper Book. In view of the above, the basis of addition made i.e. the sale deed executed has been cancelled by the Civil Court, therefore, the addition made U/s 50C does not survive, as the there is no valuation by the Revenue Authority. In view of the above facts and circumstances, kindly allow the appeal and oblige.”
The Ld. AR further submitted that the facts in this case was not properly appreciated by the Assessing Officer and this needs to be verified with the various evidences brought on record by the assessee and he submitted that NFAC has confirmed the order of the Assessing Officer without giving proper opportunities to the assessee and they were issued hearing notices dated 06/07/2021, 13/07/2021 and 07/10/2021 and dismissed the appeal of the assessee on 12/10/2021. With the observation that assessee has not submitted any document during the course of assessment and also not responded to the CIT(AU). They observed that the claim made by the assessee is remains un-substantiated and cannot be allowed. He prayed that this issue may be remitted back to Jurisdictional Assessing Officer (JAO) for proper verification of the various documents.
On the other hand, the Ld. DR objected to the submissions of the assessee and he submitted that the assessee has not utilized the various opportunities extended to him during the assessment proceedings as well as appellate proceedings.
8. Considered the rival submissions and material placed on record. On a perusal of the assessment order and First Appellant Authority order, I find that even though the Assessing Officer and Ld. CIT(A) provided opportunity on several occasions, assessee could not appear nor complied to the notices issued. Considering the totality of facts and keeping in view the additions/disallowance made by the Assessing Officer, I am of the opinion that assessee should be given one more opportunity of being heard. Accordingly, in the interest of justice, I am of the view that this matter should go back to the file of the Jurisdictional Assessing Officer for denovo verification and assessment. Assessee shall cooperate with the proceedings before the Assessing Officer without taking unnecessary adjournments. Needless to say that the Jurisdictional Assessing Officer shall give adequate opportunity of being heard to the assessee. Thus, this appeal is restored to the file of the Jurisdictional Assessing Officer accordingly.
In the result, appeal filed by the assessee is allowed for statistical purpose. Order pronounced on 31st July, 2024.