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Facts
The assessee entered into a supplementary joint development agreement for a property, leading to capital gains. The Assessing Officer (AO) initiated reassessment proceedings under section 148 and determined the total income. The assessee filed an appeal before the First Appellate Authority (FAA) with a significant delay.
Held
The FAA dismissed the appeal due to the delay without considering the merits. The Tribunal noted that the assessee had reasonable cause for the delay and condoned it. The Tribunal decided to send the matter back to the AO for fresh consideration.
Key Issues
Whether the delay in filing the appeal before the FAA was justifiable and whether the matter should be remanded to the AO for fresh consideration.
Sections Cited
148, 142(1), 246, 147
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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SMT. BEENA PILLAI & SHRI LAXMI PRASAD SAHU
Per Laxmi Prasad Sahu, Accountant Member
This appeal is filed by the assessee against the order dated 17.05.2024 of the CIT(Appeals)-11, Bangalore for the AY 2010-11 in not condoning the delay and dismissing the appeal.
Briefly stated the facts of the case are that the assessee, Lt. K.L. Srihari, along with others entered into supplementary joint development agreement on 23.7.2009 with the builder, Prestige Estate Projects Pvt. Ltd. under which property bearing municipal nos. 3 & 5, presently clubbed as No.5, Cubbon Road, also known as Raj Bhavan Road, totally measuring 60,201 sq.ft. had been developed into multistoried commercial office building therein. The supplementary agreement was registered as Document No.4397/2009-10 dated 23.7.2009. On perusal of this document, it was observed that assessee had entered into initial agreement (principal agreement) vide Document registered as No.BK-I-268/2006-07 dated 19.4.2006 and as per the terms of this agreement, in consideration of the assessee agreeing to transfer undivided share of 48.53% in the above said land, the builder agreed to construct and deliver 51.47% of super built-up area in the form of office space along with 48.53% of car parking area and other benefits in the constructed area. The assessee earned capital gain, therefore the AO issued notice u/s. 148 of the Act on 30.3.2017 duly served on the LR( Legal Representative) of the assessee after recording reasons, which is incorporated in reassessment order. The LR filed objections for reopening the assessment. Later on a notice u/s. 142(1) was issued to the assessee. On perusal of the documents it was noticed that assessee’s LR did not furnish any information called for, but filed a letter on 30.1.2017. Accordingly show cause notice was also issued and finally the AO completed the reassessment and total income was determined at Rs.4,07,00,384 including income declared by assessee of Rs.58,40,015 and passed order on 22.12.2017.
Aggrieved from the above order, the assessee filed appeal before the First Appellate Authority (FAA) on 10.4.2018 with a delay of 70 days with reasons for delay. Later on the case was migrated to NFAC. Accordingly a notice dated 7.1.2021 was issued to the assessee. The assessee again explained the reasons for delay in filing the appeal before the FAA which is incorporated in para 3.1 of his order. The FAA noted that assessee has filed affidavit only on 20.4.2024 explaining reasons for condonation of delay, however, he could have filed it concurrently with Form 35 on 10.4.2018. He noted that assessee has disregarded the statutory requirements and dismissed the appeal of the assessee without going into the merits of the case. Aggrieved, the assessee is in appeal before the ITAT.
The ld. AR reiterated the reasons for delay in filing appeal before the FAA and submitted that the dispute relates to taxing of capital gain in respect of property belongs to joint property and submitted that Shri K.L. Ramachandra who is also one of the beneficiary approached the jurisdictional High Court in WP No.3955/2018 filed on 24.1.2018 against reopening of assessment u/s. 147 and the High Court on 20.2.2018 observed as under:-
“4. Though normally against the re-assessment order, a regular Appeal would have lied before the CIT(Appeals) under Section 246 of the Income Tax Act, 1961, but to determine the aforesaid question of law which goes to the root of the matter and apparently there is no direct judgment available on the said issue and to avoid multiplicity of litigation in various cases, the Court has entertained this writ petition and the matter would require further consideration by this court.”
Accordingly he requested that the matter may be sent back to AO for fresh consideration.
The ld. DR relied on the orders of lower authorities and submitted that the AO has passed a detailed order, therefore it does not require fresh examination.
Considering the rival submissions, we note that the assessee filed appeal before the FAA with a delay of 70 days which has not been condoned and appeal was dismissed by the FAA. The ld. AR drew our attention to the reasons for delay in filing appeal before the FAA which are incorporated in the order of FAA. On going through these reasons, we note that the assessee had reasonable cause and therefore we condone the delay in filing appeal before the ld. FAA. Considering the proceedings of the case before the AO as well as the FAA, we think it fit to send the matter back to the AO for fresh consideration and decision as per law. The assessee is directed to update the e-mail id, contact No. regular checking to the email and e- portal of the assesse opened in income tax department web site and file necessary documents that would be essential and required for substantiating his case and for proper adjudication by the revenue authorities. Needless to say that reasonable opportunity of being heard be given to the assessee. The assessee is directed to cooperate with the proceedings.
In the result, the appeal by the assessee is allowed for statistical purposes.
Pronounced in the open court on this 27th day of August, 2024.