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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आदेश / ORDER
PER D. KARUNAKARA RAO, AM
There are two appeals filed by the assessee under consideration involving A.Y. 2011-12. ITA No.2085/PUN/2016 is filed by the assessee against the order passed by the CIT(A)-2, Pune, dated 25-05-2016 u/s.144 of the Act; whereas the ITA No.2086/PUN/2016 filed by the assessee is against the order passed by CIT(A)-2, Pune, dated 11-05-2016 u/s.271(1)(b) of the Act.
2 ITA Nos.2085 & 2086/PUN/2016 Jagannath Sajan Kote
We shall first take up the appeal ITA No.2085/PUN/2016 of the
assessee
ITA No.2085/PUN/2016 – Order u/s.143(3) of the Act. A.Y. 2011-12
Facts of the case in brief are that the assessee is an individual and
filed the return of income on 31-02-2012 declaring loss of Rs.33,920/-.
AO issued various notice u/s.143(2) of the Act on various dates for which
there was no response. Based on the information provided by the
assessee, bank statement from Axis Bank and the information obtained
from the office of Sub-Registrar, Rahata, the AO observed that the
assessee sold the property situated at S.No.137/5, Shirdi, admeasuring 1
Hector and 6R for a consideration of Rs.90,10,000/-. It was also noted
that assessee was holding 1 hector and 34R of agricultural land and did
not report any income from the same. On getting the information on a
sale instance of an Agricultural land at Shirdi for the year 1981/1982, the
AO arrived at the cost of acquisition of Rs.1,20,000/- per hector of the
assessee for computation of capital gains. Accordingly, the AO worked
out the capital gain at Rs.62,38,108/-.
Further, the AO levied the penalty u/s.271(1)(b) of the Act at
Rs.60,000/- for 6 instances, i.e. @10,000/- for each of the instance.
Eventually, the AO passed an exparte assessment u/s.144 of the Act on
14-03-2014 and made addition of Rs.62,38,108/-.
During the First Appellate proceedings also, the assessee remained
absent despite issue of notice u/s.250 of the Act. Hence the CIT(A) also
passed an exparte order on 25-05-2016 confirming the addition made by
the AO. CIT(A) also confirmed the said penalty levied u/s.271(1)(b) of the
Act by the AO too.
3 ITA Nos.2085 & 2086/PUN/2016 Jagannath Sajan Kote
Aggrieved with the orders of CIT(A) the assessee filed the present
appeals before the Tribunal with the following grounds :
Grounds in respect of quantum addition :
“1. The Ld.CIT(A)-2, Pune erred in law and on facts in confirming the addition made by the Ld. ITO, Ward-1, Ahmednagar (hereinafter referred to as the Ld.AO) amounting to Rs.62,38,110/- on account of Long Term Capital Gain.
The Ld.CIT(a)-2, Pune and the Ld. AO erred in law and on facts in considering the cost of acquisition as on 01-04-1981 as Rs.1,27,200/- instead of Rs.12,72,000/- as determined by the Government Approved Valuer.
Alternatively and without prejudice to the above grounds, the Ld.CIT(A)-2, Pune and the Ld. AO erred in law and on facts in not referring to the matter to the valuation officer.
The appellant craves, leave to add/modify/delete all or any of the grounds of appeal.”
Grounds in respect of penalty u/s.271(1)(b) of the Act :
“1. The Ld.CIT(A)-2, Pune erred in law and on facts in confirming the penalty levied u/s.271(1)(b) of the ITA, 1961 by the Ld. ITO, Ward-1, Ahmednagar (hereinafter referred to as the Ld. AO) amounting to Rs.60,000/-. Appellant could not make effective compliance before the Ld. AO due to reasonable cause.
Alternatively and without prejudice to above grounds, the Ld.CIT(A)- 2, Pune and the Ld. AO erred in law and on facts in not restricting the penalty imposed u/s.271(1)(b) of the ITA, 1961 to the first default only, i.e. upto Rs.10,000/-.
The appellant craves, leave to add/modify/delete all or any of the grounds of appeal.”
Before us, at the outset, Ld. Counsel for the assessee submitted
that the Tax consultant of the assessee who was looking after the Tax
matters of the assessee was sick and eventually expired on 27-06-2017.
Ld. Counsel filed the Death Certificate issued by the Municipal
Corporation, Ahmednagar on 11-07-2017. Further, Ld. Counsel
submitted that there is irregular attendance of the tax consultant to the
assessee’s tax matters over the period of time, which led to non-
attendance before the assessment as well as appellate proceedings.
4 ITA Nos.2085 & 2086/PUN/2016 Jagannath Sajan Kote
Further, on merits, he submitted that the cost of acquisition adopted by
the AO is unfair as the valuation report of the assessee was not properly
appreciated by the authorities. Asking for one more opportunity, Ld.
Counsel made a statement at Bar that he shall appear before the
authorities without fail with documents necessary for passing of the
proper assessment.
On the issue of levy of penalty u/s.271(1)(b) of the Act, Ld. Counsel
for the assessee submitted that non-attendance before the authorities is
not willful and the same is attributable to the bonafide reasons.
Therefore, Ld. Counsel requested for cancelling the penalty considering
the reasonable cause of the ill-health of the then tax consultant.
Ld. DR for the Revenue submitted that the assessee did not attend
to the statutory notices issued by the Department either before the AO or
before the CIT(A) and did not cooperate at all. Considering the assessee’s
conduct and the details available on record, Ld. DR prayed for confirming
the orders of AO/CIT(A) on both the quantum addition as well as on the
penalty issue.
We heard both the sides and perused the exparte orders of the
Revenue, i.e. AO and the CIT(A) as well as the papers filed before us. We
also noticed the revised Form No.36 filed by the assessee after removal of
the defects. Assessee also filed copies of the valuation report which was
submitted already before the CIT(A).
Regarding the quantum addition of Rs.62,38,108/-, we are of the
opinion that this appeal should be remanded to the file of AO for fresh
adjudication. Reasons include (1) there is no representation before the
AO as well as CIT(A) and the authorities had to complete the proceedings
5 ITA Nos.2085 & 2086/PUN/2016 Jagannath Sajan Kote
in time as they are time barring; (2) when exparte orders are made, it is
possible that the documents furnished by the assessee could not be
properly defended before the AO/CIT(A); and (3) there is possibility of
wrong appreciation of facts generally in any case, when there is no
representation by the assessee or his representative. Therefore, the entire
appeal along with the issues raised therein stands now remanded to the
file of AO fresh adjudication. It goes without saying that AO shall grant
reasonable opportunity of being heard to the assessee in accordance with
the set principles of natural justice. Assessee is also directed to present
before the AO and file the requisite documents relating to the said capital
gains. Accordingly, the grounds raised by the assessee are allowed for
statistical purposes.
In the result, the appeal of the assessee is allowed for statistical
purposes.
ITA No.2086/PUN/2016 – Penalty u/s.271(1)(b) of the Act. A.Y. 2011-12
This appeal relates to the penalty levied by the AO u/s.271(1)(b) of
the Act on the quantum addition made by the AO. The facts of the
quantum addition are already in the preceding paragraphs.
After hearing both the sides, we find it is undisputed fact that the
tax consultant who was handling the matters was suffering from illness
over the period of time and he ultimately passed away in the year 2017.
Considering the same, we are of the opinion that assessee has a
reasonable cause, in principle. However, it is the duty of the assessee to
make an alternate arrangement when the time barring matters are
involved. The duty is cast on the assessee to discharge the same. On
considering the failure of the assessee on one side and at the same time,
6 ITA Nos.2085 & 2086/PUN/2016 Jagannath Sajan Kote
the AO’s duty of making assessment on the other side, we find this is a fit case for levy of an exemplary penalty for default of non-attendance before the AO. Therefore, we are of the opinion that the penalty should be restricted to one instance or default and grant relief in respect of the other five instances. Thus, the AO is directed to restrict the penalty to Rs.10,000/- for one instance only. The assessee gets part relief on this penalty issue. Accordingly, the grounds raised by the assessee are partly allowed.
In the result, the appeal of the assessee is partly allowed.
To sum up, ITA No.2085/PUN/2016 filed by the assessee is allowed for statistical purposes and ITA No.2086/PUN/2016 filed by the assessee is partly allowed.
Order pronounced on 03rd day of August, 2018. Sd/- Sd/-
(िवकास अव थी /VIKAS AWASTHY) (डी. क�णाकरा राव/D. KARUNAKARA RAO) �ाियक सद�/JUDICIAL MEMBER लेखा सद�/ACCOUNTANT MEMBER पुणे / Pune; िदनांक / Dated : 03rd August, 2018. Satish
आदेश की 'ितिलिप अ)ेिषत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��थ� / The Respondent. 2. 3. The CIT(Appeals)-2, Pune 4. The Pr.CIT-1, Pune 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “बी” ब"च, पुणे / DR, ITAT, “B” Bench, Pune. गाड% फ़ाइल / Guard File. 6.
आदेशानुसार / BY ORDER,
// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune