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Facts
The Assessing Officer (AO) initiated reassessment proceedings under section 147/148 of the Income Tax Act, 1961, against the assessee for AY 2011-12, as no return of income was filed. Information revealed that the assessee sold an immovable property for Rs. 42,00,000/-. The AO completed the assessment under section 144, computing Long Term Capital Gain (LTCG) at Rs. 26,83,020/-, without considering the cost of acquisition as the property was purchased before April 1, 2001.
Held
The Tribunal held that it is proper to remand the matter back to the AO. The AO is directed to confirm if the valuation report has been received from the District Valuation Officer and if so, consider the report to work out the LTCG. The AO is also directed to provide a reasonable opportunity of being heard to the appellant.
Key Issues
Whether the AO erred in calculating LTCG without considering the cost of acquisition as on April 1, 2001, and whether the assessee was denied a reasonable opportunity of being heard.
Sections Cited
250, 147, 148, 144, 54
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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: MS KAVITHA RAJAGOPAL & SHRI RATNESH NANDAN SAHAY
O R D E R Per: Ratnesh Nandan Sahay, Accountant Member:
1. 1. This appeal has been filed by the appellant against the Order of the Ld. CIT (Appeals) passed u/s. 250 of the Income Tax Act [the ‘Act’ in short] 2 Kamal Rane Thru. Legal Heir Indu Rane vide DIN & Order No. ITBA/NFAC/S/250/2023-24/1053452883(1) Dated 01/06/2023 for the Assessment Year 2011-12.
2. Following grounds of appeal have been raised by the appellant: 1. “Ld CIT Appeals erred in upholding the order of the Assessing Officer.
2. Ld CIT Appeals ought to have given reasonable opportunity to the appellant.
3. Ld CIT Appeals erred in considering the Long Term Capital Gain at Rs.2683020/- without considering the cost of acquisition as on 1st April, 2001 since the property is bought earlier to 1st April 2001.”
3. The facts of the case, in brief, are that the Ld. AO received information from AIR and CIB data that the assessee has sold immovable property amounting to Rs.2,10,00,000/- and Time Deposit amounting to Rs.5,00,000/-. It was also found that the assessee has not filed any return of income for the assessment year under consideration i.e. A.Y 2011-12. Hence, the notice for non- filing of return was issued to the assessee on 15/09/2014. However, the assessee did not file the return of income. The AO, therefore, initiated action u/s. 147 of the Act and case was reopened by issue of notice u/s. 148 of the Act by recording reasons and by getting prior approval of the Pr. CIT- 22, Mumbai. The statutory notices, thereafter, were issued and served on the assessee from time to time. In response to that, the assessee submitted the details of the property along with sale deed which was registered on 21/08/2010 for a sale consideration of Rs.42,00,000/- The assessee purchased another property 3 ITA No.2770/M/2023 Kamal Rane Thru. Legal Heir Indu Rane vide agreement dated 26/11/2010 for a cost of Rs.16,00,000/-. However, the assessee did not submit any details of the purchase of the property so that the cost of acquisition could be worked out. The property was, therefore, referred to the valuation sale. However, the AO didn’t wait for the valuation report and completed the assessment u/s. 144 of the Income Tax Act and worked out Long Term Capital Gain (LTCG) of Rs.26,83,020/- with a rider that the rectification/revision order will be passed when valuation report is received from the District Valuation Officer, Mumbai. The Long Term Capital Gain (LTCG) was computed as under: Sale consideration actual received as per agreement 42,00,000/- Less: Indexed cost of acquisition NIL Taxable long term capital gain 42,00,000/- Less: Deduction u/s.54 16,00,000 16,16,980/- Add: Stamp Duty paid 16,980 Taxable Long Term Capital Gain 26,83,020/-
4. Aggrieved by the order of the Ld. AO, the assessee filed appeal before the Ld. CIT (A). The Ld. CIT(A) vide the impugned order confirmed the additions made by the Ld. AO on the ground that the appellant has not submitted any details of the purchase of the property both before the AO and CIT (A).
4 Kamal Rane Thru. Legal Heir Indu Rane 5. The present appeal has been filed before us against the order of the Ld. CIT (A). During the appellant proceedings before us, it was submitted by the appellant that no reasonable opportunity was given to him by the Ld. CIT (A) to explain its case and Long Term Capital Gain was calculated without considering the cost of acquisition on 01/04/2001 since the property was purchased before this date.
We have considered the above submission and we think it proper to remand the matter back to the file of the Ld. AO to confirm whether the valuation report has been received from the District Valuation Officer and if yes, then consider that report and work out the LTCG accordingly. The Ld. AO is also directed to provide adequate opportunity of being heard to the appellant before deciding the issue on merit.
In the result, the appeal is allowed for statistical purpose. Order pronounced in the open court on 08.08.2024.