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Facts
The assessee filed an appeal before the CIT(A) for AY 2013-14, which was dismissed due to a delay of over two years and non-compliance with a deficiency letter. The assessee claimed deductions under Sections 54 and 54EC of the Income Tax Act for the purchase of a new flat after selling an old one. The Assessing Officer denied deduction under Section 54 citing issues with the agreement and allowed only a partial deduction under Section 54EC.
Held
The Tribunal found that the CIT(A) had dismissed the appeal without considering the assessee's filed petition for condonation of delay. The Tribunal set aside the order of the CIT(A) and remanded the matter back for fresh consideration, directing the CIT(A) to decide the condonation petition and, if condoned, to decide the appeal on its merits after providing an opportunity of hearing to the assessee.
Key Issues
Whether the CIT(A) erred in dismissing the appeal for non-compliance and delay without considering the condonation petition, and whether the assessee is eligible for deductions under Sections 54 and 54EC.
Sections Cited
Section 143(3), Section 54, Section 54EC, Section 17 of the Registration Act, 1908
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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & SHRI RAHUL CHAUDHARY, JM
A.Y. 2013- 14 against the appellate order passed on 28th August, 2023, wherein the appeal against the assessment order dated 23rd March, 2016 under Section 143(3) of the Income-tax Act, 1961 (the Act) passed by the Asst. Commissioner of Income Tax, Circle 23(3), Mumbai, was dismissed for non-compliance.
Assessee is aggrieved with that and is in appeal before us raising following grounds of appeal:-
1 (b) The learned CIT(A) erred in observing the appeal is filed late by 2 years and 11 months.
1 (c) The learned CIT(A) erred in observing that there is non-compliance to the deficiency letter issued 04- 03-2020, and failed to consider the fact that the appellant has filed letter dt 04-03-2020 which was E filling on 07-03-2020 and it was also physically filed in Tapal CIT (A) 34 Mumbai duly acknowledged on 09-03-2020.
1 (d) The learned CIT(A) erred in not considering the letter dated 22/08/2023 asking clarification as to the "appeal filed beyond time and application of delay not filed and time of seven days given". The appellant complied with this letter and filed explanation vide letter dated 28/08/2023 acknowledgement no 211339651280823.
The learned CIT (A) erred in not considering this letter submissions and erred in observing that there is no compliance.
1 (e) The learned CIT (A) has heard the appeal several times and after submitting the petition for condonation of delay.
2. On the facts and in the circumstances of the case, the learned assessing officer erred in not allowing deduction u/s.54 of the Income Tax Act being investment made in acquisition of the new flat.
3. (a) The learned assessing officer erred in stating that, the agreement dt: 18th October, 2012 did not confer right to the appellant in the new residential flat which is contrary to the facts and evidence on record. The appellant prays that it had acquired right of ownership to the flat purchase being Flat No.1001, 11th Floor, C wing Gurgaon
3. (b) The learned assessing officer also failed to appreciate that, the payment for the purchase of the new flat was made out of the deposit from Capital Gain Deposit Scheme wherein the amount received on sale of old flat was deposited. Thus the appellant had purchase new flat by paying for it.
3 (c) The appellant prays that, the provision of section 54 are applicable and hence the capital gain being exempt. The addition made rejecting the deduction u/s.54 be allowed in full.
The learned assessing officer erred in not allowing deduction on account of transfer fees and donation of Rs.2,75,000/-which deduction be allowed in full since the expenses incurred is wholly and exclusively in connection with such transfer.
5. (b) The learned A.O erred in stating that, both bonds totaling to value of Rs. 1,00,00,000/-(Rs. One Crore Only) have not been place on record.
5. (c) The learned A.O erred in stating that, deduction u/s 54EC cannot be allowed in full and restricted to Rs.50,00,000/-
(d) The appellant prays that, the entire deduction of Rs.1,00,00,000/-(Rs.One Crore only) be allowed since the investment is made as per the provisions of Section S4EC.
The appellant craves leave to add amend or alter any or all of the grounds of appeal.”
The brief facts of the case show that assessee is a non-resident individual being resident of Abu Dhabi/ Dubai. He owned a flat at Mumbai, which was sold on 9th October, 2012. The assessee claimed deduction under Section 54 as well as under Section 54 EC of the Act. The assessee filed return of income on 19th February, 2014, declaring total income of ₹58,13,533/-. The return was picked up for scrutiny and notice under Section 143(2) of the Act was issued on 3rd September, 2014, the assessee has shown income from other sources and long term capital gain.
5. The assessee preferred the appeal before the learned Commissioner of Income-tax (Appeals).The learned CIT (A) noted that there is a delay in filing of the appeal by two years and 11 months and therefore, deficiency letter was issued to the assessee on 4th March, 2020, however, as per ld CIT (A), assessee did not file any communication for condonation of delay, he dismissed the appeal for non-compliance, non-
6. Before us, the learned Authorized Representative submitted that against deficiency letter dated 4th March, 2020, issued by the learned CIT (A), assessee filed its response electronically on 7th March, 2020 and further furnished physically to learned CIT (A)-13, Mumbai on 9th March, 2020. The assessee also submitted a letter dated 28th August, 2023, in response to letter dated 22nd August, 2023, on this issue. The National Faceless Appeal Centre, Delhi [the learned CIT (A)], ignored both these letters and dismissed the appeal of the assessee for non-prosecution. He referred to his paper book containing 44 pages to show these respective letters. He therefore submitted that without considering the explanation of the assessee regarding delay in filing of the appeal and further clarification, the appeal was disposed off against the assessee. Further, on the merits of the case, he submitted that with respect to the deduction under Section 54 of the Act is covered in favour of the assessee as there is endorsement in the name of the assessee coupled with payment to the buyer. He also submitted that the learned Assessing Officer has wrongly relied upon the decision of the Hon'ble Supreme Court in case of Suraj Lamp & Industries (P.) Ltd. vs. State of Haryana 14 taxmann.com 103 (SC) rendered in respect of Section 54 of the Transfer of Property Act and applied thereto for denial of deduction under Section 54 of the Act. He submit that Hon'ble Delhi High Court, after considering the above decision has held that even where the assessee acquired property by provisional booking, he was eligible for deduction under Section 54 of the Act. He also submitted that assessee can also draw a support from the decision of the Hon'ble Supreme Court in case of
The learned Departmental Representative supported the order of the learned lower authorities.
We have carefully considered the rival contentions and perused the orders of the lower authorities. We find that the a. assessment order in this case was passed by the learned Assessing Officer on 23rd March, 2016. b. Against which the assessee filed an appeal before the learned CIT (A)- 34 in manual form on 21st April, 2016. c. The learned CIT (A)-34 passed an order on 12th March, 2019, stating that assessee is required to file the appeal in electronic mode mandatorily with effect from 1st March, 2016 and therefore, the paper appeal filed by the assessee was not valid. d. As the assessee was to file appeal in electronic mode up to 15th June, 2016, this appeal was disposed off as not maintainable vide Para no.5.3 of the order of the learned CIT (A). e. It was held that the assessee is at liberty to file the appeal electronically as per provision of Rule and seek condonation of delay in filing of appeal which may be examined at the appropriate time. f. Meanwhile on 8th March 2019, itself the assessee filed appeal in form no.35 electronically. h. The assessee responded on 28 August 2023, stating that assessee has already filed application for condonation of delay before learned CIT (A)-34 on 4 March 2020, before the appeal was migrated to the Faceless Appeal Centre. It also enclosed the letter dated 4 March 2020, in the form of petition for condonation of delay stating above facts. i. Despite the same, the learned CIT (A) has held that assessee has not filed any request for condonation of delay. j. In fact, the assessee has filed appeal electronically on 8 March 2019 and on 4 March 2020, the petition for condonation of delay. k. This fact was also pointed out to the National Faceless Appeal Centre, vide letter dated 28 August 2023.
The learned CIT (A) did not consider the same and dismissed the appeal as delayed and hence not maintainable. We find that even when the petition for condonation of delay was filed, same was not considered by the learned CIT (A) and therefore, the order of the learned CIT (A) without considering the petition for condonation of delay and held that assessee has not filed any such petition is not sustainable in law. Therefore, we set aside the whole appeal back to the file of the learned CIT (A) with a direction to consider the condonation petition dated 4th March, 2020 also to consider the communication dated 28th August, 2022
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 05.01. 2024.