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Facts
The assessee sold an immovable property and the sale consideration was less than the stamp duty valuation. The Assessing Officer (AO) made an addition under section 56(2)(vii)(b) of the Act for the difference between the stamp duty valuation and the sale consideration, and also for an unpaid balance amount. The CIT(A) dismissed the appeal, upholding the AO's additions.
Held
The Tribunal observed that the CIT(A) had not considered the assessee's detailed submissions and documentary evidence, nor had the CIT(A) examined the contentions raised by the assessee. The Tribunal found that the CIT(A) had passed the order in a summary manner without affording adequate opportunity to the assessee.
Key Issues
Whether the CIT(A) erred in dismissing the appeal and upholding the additions made by the AO without considering the assessee's submissions and evidence, and without adhering to the principles of natural justice.
Sections Cited
56(2)(vii)(b), 250, 143(3), 143(2), 142(1)
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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI AMARJIT SINGHSHRI SANDEEP SINGH KARHAILShri Girish Shivram Pawar
Date of Hearing – 08/10/2024 Date of Order - 11/10/2024
O R D E R PER SANDEEP SINGH KARHAIL, J.M. The present appeal has been filed by the assessee challenging the impugned order dated 17/04/2024 passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“learned CIT(A)”], which in turn arose from the assessment orderdated 27/12/2017 passed under section 143(3) by the Assessing Officer, for the assessment year 2015-16.
In this appeal, the assessee has raised the following grounds: -
“The following grounds are taken without prejudice to each other - On facts and in law
1. The learned CIT(A) has erred in dismissing appellant's appeal and confirming the action of the AO of making addition of Rs. 65,42,000/- under section 56(2)(vii)(b) of the Act and Rs. 1,53,91,000/- on the presumption that the said amount must have been received by the Appellant without providing reasonable opportunity to the appellant and without verifying whether the notices were served to the appellant or not.
2. The learned CIT(A) failed to appreciate that the notice fixed for hearing were not received by the appellant as the Appellant never received a Notice of Hearing from the CIT(A). This omission constitutes a fundamental violation of the principles of natural justice. The CIT(A) failed to abide by the due procedure of law and hence, such an order issued by the CIT(A) is devoid of legal validity and has no legal standing in the eyes of law.
3. The learned CIT(A) failed to appreciate that he ought to have verified whether proper notice has been served or not, before passing order. Therefore, the appellant urges that the order passed by the CIT(A), be set- aside.
4. The learned CIT(A) has further erred in dismissing appellant's appeal on merits in a summary manner only on the basis of observations of the AO given in the assessment order and thereby passing ex-parte order.”
The present appeal is delayed by 43 days. Along with the appeal, the assessee has filed an application seeking condonation of delay in filing the appeal. In the application, the assessee has stated the following reasons for seeking condonation of delay: -
“2. Reason for Delay: a. Upon receipt of the impugned order dated 17 April 2024, the Appellant approached CA Manish Ladage to seek further assistance. CA Manish Ladage mentioned that an appeal against the impugned order can be filed before the Hon'ble Income Tax Appellate Tribunal. Unfortunately, CA Ladage himself does not himself appear in ITAT and hence suggested the Appellant to seek assistance from other counsel. b. The Appellant's case was handled by one Mr. Bhavesh Chitaliya, who was affiliated with CA Manish Ladage's firm. However, Mr. Chitaliya resigned from the firm and forgot to handover the relevant papers to the appropriate consultant and hence, there was a delay in compiling and consolidating all the requisites documents of the Appellant. c. The Appellant lacked established contacts within the legal fraternity which created significant hindrances in approaching an appropriate ITAT counsel. Fortunately, the Appellant's distant cousin, Mr. Sandeep Pawar, a registered clerk with the High Court, was able to recommend the present counsel. Subsequently, the present counsel agreed to take up the Appellant's case. d. Thus, following the aforementioned circumstances, there was a delay of 44 days in filing the present appeal. e. In view of the above, we humbly request the Honourable Tribunal to kindly condone the delay of 44 days in filing the appeal, considering the reasons mentioned as genuine and reasonable. The delay was neither intentional nor due to negligence but was caused by a bona fide belief and subsequent immediate corrective action.”
We find that the reasons stated by the assessee for seeking condonation of delay fall within the parameters for grant of condonation laid down by the Hon’ble Supreme Court in the case of Collector Land Acquisition, Anantnag Vs. MST Katiji and others: 1987 SCR (2) 387. It is well established that rules of procedure are handmaid of justice. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred. In the present case, the assessee did not stand to benefit from the late filing of the appeals. Given the above and having perused the affidavit, we consider that there is sufficient cause for not filing the present appeals within the limitation period. Therefore, we condone the delay in filing the appeals by the assessee and we proceed to decide the appeals on merits.
The solitary issue arising for our consideration in the present case pertains to the addition made under section 56(2)(vii)(b) of the Act.
We have considered the submissions of both sides and perused the material available on record.The brief facts of the case are that the assessee is an individual and for the year under consideration filed his return of income on 30/03/2017 disclosing a total income of Rs.1,47,090/-. The return filed by the assessee was selected for scrutiny and statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the assessee. During the assessment proceedings, it was observed that during the year under consideration, the assessee sold an immovable property at Andheri, Mumbai for a sale consideration of Rs.2,81,00,000/-, however, the stamp duty valuation of the said property was Rs.3,46,42,000/-.Vide letter dated 14.12.2017, the assessee submitted that he took over the rights, title and interest in respect of said property by an agreement dated 13/09/1984, which was not registered, thereby executing a deed of confirmation dated 14/06/2000. The said deed of confirmation was registered on 16/06/2000. It was further observed that the seller executed a conveyance deed in favour of the assessee on 20/10/2014 for a sum of Rs.2,81,00,000/-. Since the stamp value of the said property was Rs.3,46,42,000/-, the assessee was asked to show cause as to why the difference of Rs.65,42,000/- be not considered as income of the assessee under Section 56(2)(vii)(b) of the Act. It was further noticed that the assessee has not paid an amount of Rs.1,53,91,000/- to the seller which was to be paid within two years from the date of the conveyance deed. In response to the show cause notice, the assessee submitted copies of the agreement, confirmation deed, conveyance deed and the details called for. The Assessing Officer (“AO”) vide order dated 27/12/2017 passed under section 143(3) of the Act did not agree with the submissions of the assessee and made the addition of Rs.65,42,000/- under section 56(2)(vii)(b) of the Act. Further, the balance amount of Rs.1,53,91,000/- which was not paid by the assessee, was also considered his income under section 56(2)(vii)(b) of the Act.
The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee by observing as under:
“1. Ground no.1 objects to adding 6542000 u/s. 56(2)(vii)(b) being difference of stamp duty valuation of 34642000 of land and settlement amount of Rs.28100000. The assessee did not have any valid explanation for not invoking the provisions of section 56(2)(vii)(b). As per the agreement the balance amount of Rs. 15391000 has not been paid to the seller whereas it was to be paid within 2 years from the date of conveyance deed, the contention of the assessee is considered but not accepted as the agreement dated 20.10.2014 for actual sale consideration of Rs.28100000. The assessee received the amount in cash as per confirmation deed. The stamp duty valuation of the said property is Rs.34642000/-. There is a difference of Rs.6542000/- (Rs.34642000-Rs.28100000) between the stamp duty value and actual sale consideration. The difference amount of Rs.6542000/- and as per the agreement the balance amount of Rs. 15391000/- is treated as received by the assessee since it was to be paid within two years from the date of conveyance deed with an inadequate consideration is hereby added back to the total income of the assessee as per provisions of section 56(2)(vii)(b) of the IT Act, 1961. The addition of Rs.6542000 & Rs. 15391000 are confirmed.”
As per the assessee, during the appellate proceedings before the learned CIT(A), he filed detailed submissions vide letter dated 15/02/2021, which forms part of the paper book from pages 94-96. However, these submissions were not considered by the learned CIT(A) while dismissing the appeal and upholding the addition made by the AO under Section 56(2)(vii)(b) of the Act.
From the aforenoted findings of the learned CIT(A), vide impugned order, it is evident that neither the detailed submissions filed by the assessee on 15/02/2021 were considered by the learned CIT(A) nor the agreement dated 13/09/1984 and deed of confirmation dated 17/06/2000, placed reliance upon by the assessee, were considered by the learned CIT(A). It is trite that the power of the learned CIT(A) is co-terminus to the AO, however, in the present case the learned CIT(A) did not examine any of the contentions raised by the assessee and nor call for any further information to upheld the additions made by the AO. Therefore, in view of the above, we deem it appropriate to restore the issues raised in the present appeal to the file of the Ld. CIT(A) for denovo adjudication after examination of all the documents/submissions filed by the assessee. The learned CIT(A) shall be at liberty to call for any further information from the assessee and in this regard, the due opportunity to respond be also provided to the AO as per law. Needless to mention, no order shall be passed without affording the reasonable and adequate opportunity of hearing to the parties. With the above directions, the impugned order is set aside and the grounds raised
by the assessee are allowed for statistical purposes.
10. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on /10/2024