NILESH RAGHAVJI SALVA,MUMBAI vs. ITO, WARD 23(2)(4), MUMBAI

ITA 819/MUM/2024Status: DisposedITAT Mumbai07 June 2024AY 2016-176 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found that the impugned order of the NFAC was passed ex parte without affording an effective opportunity of hearing to the assessee. While the NFAC noted that notices were sent through ITBA on multiple dates, the order did not mention whether these notices were served upon the appellant or if any attempt was made to send physical notices. The Tribunal emphasized that an effective hearing is a sine qua non for the provisions of Section 250(2) of the Act. Since no effective hearing was given, the principles of natural justice were violated. Consequently, the Tribunal set aside the impugned order and restored the matter to the file of the NFAC. The NFAC was directed to decide the appeal afresh after giving the appellant an effective opportunity to present its case. The assessee was directed to present its case before the NFAC within 60 days from the date of the order. The appeal was disposed of and partly allowed for statistical purposes.

What were the facts?

The assessee, Nilesh Raghavji Savla, filed an appeal before the Income Tax Appellate Tribunal (ITAT) against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year (AY) 2016-17. The NFAC had dismissed the assessee's appeal ex parte. The Assessing Officer (AO) had determined the total income at Rs. 2,07,06,135/- as against the returned income of Rs. 7,19,770/-. This was primarily due to the AO's disallowance of long-term capital loss claimed on the sale of two flats, instead calculating a long-term capital gain of Rs. 1,99,86,370/-. The AO had also issued a notice of penalty under section 274 read with section 271(1)(c) of the Income Tax Act, 1961. The assessee's appeal before the NFAC was dismissed for failure to file a response and submit arguments.

What were the issues?

1. Whether the National Faceless Appeal Centre (NFAC) erred in passing an order without providing the Appellant a reasonable opportunity of being heard, thus violating the principles of natural justice, under Section 250 of the Income Tax Act, 1961? Assessee's Contention: The NFAC failed to provide a reasonable opportunity of being heard, rendering the appellate order against the principles of natural justice and liable to be set aside. Revenue's Contention: Notices were issued on five occasions, but the assessee failed to respond, necessitating the NFAC to proceed as per law. Therefore, there was no violation of natural justice as sufficient opportunities were afforded but not availed by the assessee. 2. Whether the NFAC erred in confirming the assessment order by determining total income at Rs. 2,07,06,140/- without appreciating the facts and circumstances of the case? 3. Whether the NFAC erred in confirming the AO's computation of Long Term Capital Gains of Rs. 1,99,86,370/- on the sale of Flat Nos. 101 and 102 without giving the benefit of indexation on the cost of acquisition and cost of improvement? Assessee's Contention: The assessee incurred costs of Rs. 18,08,058/- and Rs. 22,18,354/- on acquisition of flats and Rs. 93,80,442/- on improvement for redevelopment, and is entitled to the benefit of indexation on these costs. The disallowance of indexation is unjustified. 4. Whether the NFAC erred in confirming the disallowance of interest expenditure of Rs. 59,12,004/- and Rs. 32,56,718/- incurred on borrowed funds utilized for acquisition of long-term capital assets? Assessee's Contention: The interest expenditure was utilized for the acquisition of long-term capital assets and should be allowed while computing Long Term Capital Gains. 5. Whether the NFAC erred in confirming the disallowance of stamp duty of Rs. 20,16,000/- while computing Long Term Capital Gains? Assessee's Contention: The stamp duty paid has a direct bearing on the cost of the asset and should be allowed while computing Long Term Capital Gains. 6. Whether the NFAC erred in confirming the disallowance of selling expenses of Rs. 5,00,000/- incurred wholly and exclusively for the transfer of the asset? Assessee's Contention: The selling expenses are allowable while computing Long Term Capital Gains. 7. Whether the NFAC erred in confirming the liability to pay interest under sections 234B, 234C, and 234D of the Act?

Which sections of the Income-tax Act were involved?

Section 250,Section 143(3),Section 274,Section 271(1)(c),Section 234B,Section 234C,Section 234D

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI

Before: SHRI. OM PRAKASH KANT & SHRI. RAJ KUMAR CHAUHAN

For Appellant: Shri. K. Gopal
For Respondent: Shri. Ashok Kumar
Pronounced: 07.06.2024

PER RAJ KUMAR CHAUHAN (J.M.):

1.

This appeal is filed by the appellant/assessee against the order dated 29.12.2023 of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the “CIT(A)”], passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”] for the A.Y. 2016-17, wherein the appeal was dismissed ex parte as the assessee has failed to file response

and submit arguments after filing of the appeal from the order of the Nilesh Raghvji Savia; A.Y. 2016-17

Learned A

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 274

All 4,894 judgments and leading authorities on Section 274 →

Recent GST High Court judgments

Search GST case law →