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Facts
The assessee challenged an ex-parte assessment order for A.Y. 2018-19, adding Rs. 11,91,181/- as bogus Long Term Capital Gain (LTCG), which was confirmed by the CIT(A) on grounds of being time-barred. The assessee denied receiving the LTCG or entering the alleged transactions, stating the ex-parte assessment under Section 144 was due to non-compliance caused by illness, leading to a 164-day delay in appealing to the CIT(A).
Held
The Income Tax Appellate Tribunal (ITAT) found sufficient cause to condone the 164-day delay in filing the appeal before the CIT(A), holding that the CIT(A)'s refusal to entertain the appeal on merits was incorrect. Acknowledging the assessee's categorical denial of the transactions and the shift of onus to the revenue, the ITAT set aside the CIT(A)'s order and remanded the issue to the Assessing Officer for a fresh determination, ensuring proper opportunity and information sharing with the assessee.
Key Issues
1. Whether there was sufficient cause to condone the delay in filing the appeal before the CIT(A). 2. Whether the addition of Long Term Capital Gain (LTCG) was justified given the assessee's denial and the revenue's lack of evidence. 3. Whether an ex-parte assessment without proper opportunity due to the assessee's illness was valid.
Sections Cited
147, 144, 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “SMC” DELHI
Before: SHRI PRADIP KUMAR KEDIA
PER PRADIP KUMAR KEDIA - A.M.: The captioned appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [‘CIT(A)’ in short] dated 23.01.2024 arising from the assessment order dated 13.03.2023 passed by the Assessing Officer (AO) under Section 147 r.w.s. 144 of the Income Tax Act, 1961 (the Act) concerning A.Y. 2018-19.
As per the grounds of appeal, the assessee has challenged the additions made by the AO towards bogus Long Term Capital Gain (LTCG) amounting to Rs.11,91,181/- and confirmed by the CIT(A) on the grounds of appeal being barred by limitation.
3. When the matter was called for hearing, the ld. counsel for the assessee submitted at the outset that the LTCG in question was never received by the assessee and the assessee has never entered into alleged transaction giving rise to any LTCG alleged by the AO. The ld. counsel referred to an affidavit placed before the CIT(A) dated 12th September, 2023 [pages no.16 and 17 of the CIT(A)] as well as the police complaint filed in this regard dated 17.09.2023 [page no.15 of the CIT(A)]. The ld. counsel thus submitted that additions itself are prima facie without any evidence. The assessee has not entered into any transactions giving rise to the impugned LTCG and therefore, not reported the same in his return of income. The additions were made by the AO in an ex-parte order under Section 144 of the Act due to non compliance of notices issued between a very short periods of about one month. The notice under Section 142(1) was issued on 18.01.2023 and thereafter on 27.02.2023. The assessee could not comply as he was diagnosed with Tuberculosis and was undergoing treatment for the same. The assessment was thus framed ex-parte on 13.03.2023 without any further opportunity. The ld. counsel thereafter submitted that the matter was carried before the First Appellate Authority albeit with a delay of 164 days. Detailed documentary evidences were filed before the CIT(A) which can be seen from the first appellate order itself. The CIT(A) himself admits that submission on multiple occasions have been made as noted at page 2 of the first appellate order. The copy of affidavit denying the transactions, copy of affidavit seeking condonation of delay, police complaint etc. form part of the first appellate order. The ld. counsel thereafter submitted that from the assessment order, it is not discernible as to on which transaction such capital gain sought to be assessed. The assessee is in complete dark on the issue. The CIT(A) under the circumstances ought to have condoned the delay and ought to have admit the appeal for adjudication on merits. The ld. counsel thus urged for cancellation of the first appellate order and verification of the transactions giving rise to the capital gains at the level of the AO for just and proper conclusion.
The ld. DR for the Revenue, on the other hand, submitted that he has nothing to say in addition to what has been stated in the respective orders passed by the CIT(A) and the AO.
I have carefully considered the rival submissions and perused the first appellate order as well as assessment order.
The assessee has demonstrated mitigating circumstances for condoning the delay in filing appeal in terms of affidavit placed before the CIT(A).
I also observe that the assessee has dutifully complied with various notices and filed submissions on various occasions before the CIT(A). On seeing the facts in perspective, I find sufficient cause exists for condonation of delay before the CIT(A). Thus, the action of the CIT(A) denying condonation of delay and refusing to entertain the appeal for decision on merits cannot be countenanced.
I now advert to the facts presented before me on behalf of the assessee. The assessee vociferously contended that the whereabouts of the transactions giving rise to the capital gains is in the unknown territory. The assessee on its part has filed police complaint and has categorically denied having entered into any transactions giving rise to impugned capital gains. The onus therefore shifts on the revenue who is alleging existence of chargeable LTCG.
Thus, in the fitness of things, I deem it just and proper to restore the issue to the file of the AO rather than to the CIT(A) as the verification of the transactions and suitable reply from the assessee thereon is warranted, if so desired by the AO. The first appellate order is thus set aside and matter is restored back to the file of the AO for determination of the issue afresh in accordance with law. Needless to say, proper opportunity shall be given to the assessee to respond to the queries raised in this regard. The AO shall provide the details of purported transactions giving rise to impugned LTCG and other material available with him in this regard as a measure of fair play. The AO shall pass speaking order on facts available. The assessee is also cautioned to dutifully attend the proceedings before the AO for just and proper conclusion on the issue.
In the result, the appeal of the assessee is allowed for statistical purposes. Order was dictated and pronounced in the open Court on 20th June, 2024.