SHISH PALI,NOIDA vs. ITO WARD 3(4), NOIDA
Facts
The Assessing Officer (AO) reopened assessment based on AIR information that the assessee sold three properties for Rs. 1.45 Cr, but did not offer capital gains. Due to non-compliance with various notices (u/s 133(6), 148, 142(1)), the AO completed a best judgment assessment u/s 144, computing capital gains of Rs. 1.20 Cr. The CIT(A) dismissed the assessee's appeal in limine for non-compliance with Section 249(4)(b). Before the ITAT, the assessee contended that they had in fact purchased, not sold, the properties and presented new sale deeds as evidence for the first time.
Held
The ITAT noted that the assessee's claim, supported by new evidence not previously submitted to lower authorities, required factual verification by the departmental authorities. Consequently, the ITAT set aside the CIT(A)'s order and restored the quantum assessment to the AO for fresh adjudication, providing the assessee a reasonable opportunity of being heard. As the underlying addition did not survive due to the remand, the penalty imposed under section 271(1)(c) was deleted.
Key Issues
1. Whether the reopening of assessment u/s 147 was valid when the assessee claimed the facts relied upon were incorrect (purchase vs. sale of properties). 2. Whether the CIT(A) was justified in dismissing the appeal in limine due to non-compliance with Section 249(4)(b). 3. Whether penalty u/s 271(1)(c) could be sustained when the quantum addition was remanded for fresh adjudication.
Sections Cited
Section 271(1)(c), Section 147, Section 148, Section 133(6), Section 142(1), Section 144, Section 249(4)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI
Before: SHRI SAKTIJIT DEY, VICE- & SHRI M. BALAGANESH
PER SAKTIJIT DEY, VICE-PRESIDENT
Captioned appeals by the assessee arise out of two separate
orders of learned Commissioner of Income Tax (Appeals), Noida,
for the assessment year 2009-10. While ITA No. 3399/Del/2019
arises out of quantum proceedings, ITA No.3400/Del/2019 is
against imposition of penalty under section 271(1)(c) of the
Income-tax Act, 1961 (In short ‘the Act’).
ITA No.3399 & 3400/Del/2019 AY: 2009-10
ITA No.3399/Del/2019 (Quantum Appeal)
The assessee has raised the following additional ground:
That the CIT(A)-1, Noida, has erred in law and on facts in sustaining the assessment as the notice u/s148 has not been served on the assessee. Hence, the assessment as such may be quashed. 2. That the CIT(A)-1, Noida has erred in law and on facts in sustaining the assessment as reopening u/s 147 is based on incorrect facts. Hence, the assessment as such may be quashed. 3. That the CIT(A)-1, Noida, has erred in law and on facts in sustaining the assessment as reopening u/s 147 is mechanical in nature and without application of mind. Hence, the assessment as such may be quashed.
Since, the issues raised in the additional grounds are purely
legal and jurisdictional issues, we are inclined to admit them for
adjudication.
Briefly the facts are, the assessee is a resident individual.
Based on AIR information, the Assessing Officer came to know
that in the year under consideration, the assessee had sold three
properties for aggregate consideration of Rs.1,45,72,000/-. Since,
the Assessing Officer had no information as to whether the
assessee has filed any return of income offering such capital gain,
he issued a notice under section 133(6) of the Act to the assessee
seeking information relating to aforesaid transactions. However,
the assessee did not comply. Therefore, having reason to believe 2 | P a g e
ITA No.3399 & 3400/Del/2019 AY: 2009-10
that the income chargeable to tax has escaped assessment, the
Assessing Officer reopened the assessment under section 147 of
the Act. As alleged by the Assessing Officer, the assessee did not
comply with the notices issued under sections 148 and 142(1) of
the Act. Therefore, due to complete lack of response from
assessee’s side, the Assessing Officer proceeded to complete the
assessment to the best of his judgment invoking the provisions of
section 144 of the Act. While doing so, he computed net capital
gain of Rs.1,20,68,220/-. Against the assessment order so
passed, the assessee preferred an appeal before learned first
appellate authority. As observed by learned first appellate
authority, the assessee failed to comply with any of the hearing
notices issued by him. Therefore, he proceeded to decide
assessee’s appeal ex-parte. While doing so, learned first appellate
authority observed that the assessee has failed to pay the amount
equal to the amount of advance tax, which she was required to
pay, in terms of section 249(4)(b) of the Act. Alleging non-
compliance with the provisions of section 249(4)(b) of the Act,
learned first appellate authority dismissed the appeal in limine
without deciding it on merits.
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ITA No.3399 & 3400/Del/2019 AY: 2009-10
Before us, learned counsel appearing for the assessee
submitted that the reopening of assessment has been made on
unsubstantiated reasons to belief. Drawing our attention to the
reasons recorded for reopening of assessment, he submitted that
the Assessing Officer has reopened the assessment alleging that
capital gain derived from sale of three immovable properties has
not been shown by the assessee. Whereas, he submitted, in the
year under consideration, the assessee had not sold any
properties, but in fact, had purchased the properties. In this
context, he drew our attention to the copies of the sale deeds
placed in the paper-book evidencing purchase of properties by the
assessee. Thus, he submitted, since the reopening of assessment
is based on wrong facts, initiation of proceeding under section
147 of the Act is vitiated. Therefore, the assessment order should
be quashed.
However, he fairly submitted that the sale deeds evidencing
purchase of property by the assessee were not filed before the
departmental authorities and are being furnished as additional
evidences before the Tribunal.
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ITA No.3399 & 3400/Del/2019 AY: 2009-10
The learned Departmental Representative submitted, the
assessee neither appeared before the Assessing Officer, nor before
the first appellate authority. He submitted, no evidences were
furnished by the assessee before the departmental authorities to
establish her claim that the information received by the Assessing
Officer is incorrect. Thus, he submitted, in absence of any
response from assessee’s side, the Assessing Officer had no other
alternative, but to proceed for completing the assessment based
on information available on record.
We have considered rival submissions and perused the
materials on record. As could be seen, the Assessing Officer has
reopened the assessment under section 147 of the Act, based on
AIR information that the assessee had sold three properties
during the year. Whereas, she has not offered any capital gain. It
is the say of the assessee before us that the facts, based on
which, the assessment has been reopened are completely wrong
facts and the assessee had, in fact, not sold any land during the
year, but had purchased the land. Therefore, there is no question
of offering any capital gain. In the context of the aforesaid
submission of the assessee, it must be observed, in course of
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ITA No.3399 & 3400/Del/2019 AY: 2009-10
assessment proceedings, the assessee remained totally absent
and did not comply with statutory notices issued by the Assessing
Officer. Therefore, in absence of any compliance by the assessee,
the Assessing Officer was compelled to complete the assessment
ex-parte to the best of his judgment. Even, before the first
appellate authority, the assessee remained absent and the appeal
was dismissed in limine without going into the merits.
For the first time before us, the assessee has taken a stand
that contrary to the observations of the departmental authorities,
the assessee, in fact, had purchased and not sold land during the
year. In this context, the assessee has drawn our attention to
three sale deeds placed in the paper-book. Admittedly, these
evidences were not furnished before the departmental authorities.
Even, the assessee never brought it to the notice of the
departmental authorities that in the year under consideration the
assessee had purchased and not sold land. The veracity of
assessee’s claim that in the year under dispute, the assessee had
purchased the land but has not sold any land, has never been
factually verified by any of the departmental authorities. Without
such verification, assessee’s claim cannot be accepted at face
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ITA No.3399 & 3400/Del/2019 AY: 2009-10
value. However, we are of the view that the plea taken by the
assessee before us that the reopening of assessment is based on
wrong facts, requires factual verification. Accordingly, we set
aside the impugned order of learned first appellate authority and
restore all the issues arising in the appeal, including the issues
raised in the additional grounds to the Assessing Officer for fresh
adjudication, after providing due and reasonable opportunity of
being heard to the assessee.
It is made clear, the Assessing Officer must restrict himself
to the grounds/issues arising in this appeal and cannot expand
the scope of assessment to any other new issue. Grounds are
allowed for statistical purposes.
In the result, appeal is allowed for statistical purposes.
ITA No.3400/Del/2019 (Penalty Appeal)
In view of our decision in the quantum appeal (supra), since,
the issues have been restored back to the Assessing Officer for
fresh adjudication, the addition no longer survive. Therefore, the
penalty imposed on such addition cannot survive, at least for the
present.
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ITA No.3399 & 3400/Del/2019 AY: 2009-10
In the result, penalty imposed under section 271(1)(c) of the
Act is deleted.
To sum up, quantum appeal in ITA No.3399/Del/2019 is
allowed for statistical purposes and penalty appeal in ITA No.
3400/Del/2019 is allowed.
Order pronounced in the open court on 10th July, 2024
Sd/- Sd/- (M. BALAGANESH) (SAKTIJIT DEY) ACCOUNTANT MEMBER VICE-PRESIDENT Dated: 10th July, 2024. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi
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