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Facts
The assessee filed a return declaring Nil income for AY 2017-18, which was selected for limited scrutiny regarding capital gains on property sale. The Assessing Officer (AO) completed the assessment under section 144 after the assessee failed to provide supporting documents for claimed deductions. The Commissioner (Appeals) dismissed the assessee's appeal ex-parte.
Held
The Tribunal noted that both the assessment and appellate orders were passed ex-parte and the assessee was not given a proper opportunity. Additional evidence was filed by the assessee, which requires verification. The Tribunal set aside the orders of the authorities below and restored the matter to the AO for de novo assessment.
Key Issues
Whether the lower authorities erred by passing ex-parte orders without providing adequate opportunity to the assessee and considering all evidence, particularly concerning capital gains computation and deductions.
Sections Cited
143(3), 142(1), 144, 48, 50C, 250(6), 250(4)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AGRA (SMC
Before: SHRI RAMIT KOCHAR
2017-18 has arisen from the appellate order dated 30.03.2024 [DIN & Order No. ITBA/NFAC/S/250/2023-24/1063693154(1)], passed by learned Commissioner of Income-tax (Appeals), NFAC, Delhi, which appeal before learned CIT(A) in turn has arisen from the assessment order dated 30.11.2019 passed by Assessing Officer u/s. 143(3) of the Income-tax Act, 1961(Order No. ITBA/AST/S/143(3)/2019- 20/1021375088(1)).
Grounds of Appeal raised by the assesseein Memo of appeal filed with ITAT, Agra Bench, Agra, including the additional grounds of appeal raised before the Tribunal ,reads as under :
“1. On the facts & in the circumstances of the case the learned CTT (A) was not justified in not appreciating the fact that the property in question was in possession of tenants, that there was a duress sale & just relied in Assessing Officer's assessment order in which appellants contentions & submission were not considered. The appellant prays that on the basis of additional evidence about improvements/construction made a registered valuer's report as on 1.04.1981 U/R 39 of ITAT Rules, capital gain be determined.
2. The appellant craves leave to add amend any ground at the time or before hearing of appeal.” Ground No. 3 (Additional Legal Ground) "That the appellate order passed by the NFAC dated 30.03.2024 is not in accordance with the provisions of Section 250(6) of the Income Tax Act, they have passed the order without giving therein the points for determination, the decision thereon and the reasons for such decisions, the order passed under Section 250 of the Income Tax Act dated 30.03.2024 is bad in law, liable to be set aside." Ground No. 4 (Additional Legal Ground) "That the NFAC, while passing of the appellate order under Section 250 of the Income Tax Act, has not asked for any remand report from the AO nor has made any enquiry as per Section 250(4) of the Income Tax Act, required for giving of just decision, the order passed by the NFAC is not judicious, liable to be set aside." Ground No. 5 (Additional legal ground)- "That while passing the appellate order, the NFAC has completely ignored the facts that while passing the order, the AO has not even allowed the deduction in respect of the cost of the immovable property, subject matter of capital gain, which is required to be deducted while computing of capital gain, therefore, the orders passed by the authorities below are passed without application of mind, ignoring the facts and the submissions made by the assessee. The order passed by the NFAC is bad in law, liable to be set aside." Ground No. 6 (Additional legal ground)- 2 | P a g e
"That the AO while computing the long term capital gain has not followed the provisions of sub-Section (2)(b) of Section 50(C) of the Income Tax Act, by which if the value as per circle rate exceeds the actual sale consideration, matter has to be referred to the valuation cell, which the AO has not referred. The long term capital gain computed by the AO is against the provisions of sub-Section (2)(b) of Section 50(C) of the Income Tax Act. The addition made, computing the long term capital gain by the AO, sustained by the NFAC is liable to be deleted."
Brief facts of the case are that the assessee filed return of income for the impugned assessment year ,on 02.08.2017 , declaring total income of Rs. Nil. Return was processed by Revenue u/s. 143(1). Case of the assessee was selected by Revenue for framing limited scrutiny assessment under CASS on the reasons “capital gains/loss on sale of property”. The Assessing Officer issued statutory notices u/s. 143(2) and 142(1) from time to time during the course of assessment proceedings.
The assessee is an individual. The Assessing Officer observed that the assessee has shown sale of property in the ITR for the assessment year 2017-18 for Rs.22,50,000/- and claimed benefit u/s. 48 amounting to Rs.30,10,778/-, showing net capital loss of Rs.7,60,778/-. The assessee did not complied with the several notices issued by the AO during assessment proceedings. The assesseeentered appearance before the Assessing Officer at the fag end when the assessment was getting time barred, and submitted copy of sale deed of property sold, but no documents were provided by the assessee to substantial its claim for 3 | P a g e deduction u/s.
The assessee was asked by the AO to submit the details alongwith evidences. The assessee submitted reply, which was not found to be satisfactory by the AO, and the Assessing Officer completed assessment u/s. 144 of the Act, as the matter was getting time barred on the basis of material available on record. In absence of any supporting evidences for claiming deduction u/s 48, the Assessing Officer computed the income chargeable to tax as under: a). Full value of consideration of the all properties sold = 49,66,681. (b). Cost of acquisition (assessee has not provided any details in this regard the value of transfer is being taken/mentioned as per sale deeds) = 4,22,170/- (c). Cost of improvement(assessee has not provided any details in this regard) = NIL (d). Capital gain = [(a-b)-c]=[(49,66,681 – 4,22,170)=45,44,511/- 3.2 The Assessing Officer also observed that the value of property sold (share of assessee) as per Stamp Valuation Authority is Rs.49,66,681/- ,whereas the assessee has adopted Rs.22,50,000/-. The AO made additions on account of under reported the value of Rs. 27,16,681/- towards income of the assesee under the head ‘Capital Gains’. The Assessing Officer also observed that the assessee has not provided any supporting documents regarding deduction u/s 48 amounting to Rs. 30,10,778/- as claimed by the assessee. The AO made additions to the income of the assessee to the tune of Rs. 25,88,608/- (Rs. 30,10,778/- -
4 | P a g e Rs. 4,22,170/-) . Since, the assessee has reported loss under the head capital gains to the tune of Rs. 7,60,778/- , the AO made additions to the tune of Rs. 45,44,511/- to the income of the assessee under the head ‘capital gains’ , and loss of Rs. 7,60,778/- was disallowed/rejected by the AO.
Aggrieved, the assessee filed first appeal with ld. CIT(Appeals) .
The CIT(Appeals) dismissed the appeal of the assessee ex-parte, as there was no compliance by the assessee to the notices issued by the CIT(Appeals), and ld. CIT(A) observed that the assessee has not discharged its onus. The additions made by the AO were sustained/ upheld by ld. CIT(A).
Still aggrieved, the assessee has filed second appeal with ITAT, and the ld. Counsel for the assessee at the outset submitted that both the orders viz. assessment order as appellate order passed by learned CIT(A) were passed ex-parte by the authorities below and the assessee was not given proper opportunity. It was submitted that the authorities below have even not allowed the benefit of deduction of cost of acquisition. It was submitted that the assessee sold as many as three properties(in which the assessee was having share), but all the properties sold were not considered by the AO for computing income chargeable to tax. Ld. Counsel for the assessee submitted that the 5 | P a g e assessee has now filed evidences for purchase of property as well for sale of properties, which could not be filed before the authorities below.
These are additional evidences filed for the first time before the Tribunal ,and the prayers were made to admit the same. It was submitted that in this case proper enquiry/verifications are required as even the properties sold (share of the assessee in the properties sold) were not considered by the AO in proper perspective, and it requires proper enquiry/verification by the AO. The prayers were also made to set aside the matter back to the file of Assessing Officer for framing denovo assessment after makingproper enquiry/verification, to compute the income chargeable to tax under the provisions of 1961 Act. It was also submitted that the Assessing Officer has adopted the value of the property sold as adopted for payment of stamp duty by stamp valuation authority , as full value of consideration, keeping in view the provisions of section 50C of the Act. The assesseeis challenging the adoption of such value as adopted by the AO as full value of consideration, and the matter should be referred to the Departmental Valuation Officer(DVO) for valuation of the property sold to identify full value of consideration. The assessee will also file its own valuation report. Further, it was submitted that the ld. CIT(Appeals) has passed an ex-parte order, which is not in consonance with the provisions of section 250(6) of the Act, as the 6 | P a g e appeal has not been decided on merits by the ld. CIT(Appeals), and the assessment order was simply upheld by ld. CIT(A).
Learned Sr. DR submitted that the orders of the authorities below are ex-parte, but it is assessee who is at fault, as the assessee did not participated in the assessment proceedings as well as appellate proceedings before the ld. CIT(Appeals).
I have considered rival contentions and perused the material on record. I have observed that the assessee filed its return of income on 02.08.2017 ,declaring total income of Rs. Nil. The assessee is an individual. The case of the assessee was selected by Revenue for framing limited scrutiny under CASS on the reason “capital gains/loss on sale of property”. Statutory notices u/s. 143(2) and 142(1) were issued by the Assessing Officer to the assessee during the course of assessment proceedings. The assessee participated in the assessment proceedings at the fag end when the assessment was getting time barred. The assessee has shown sale of property in the ITR for the assessment year 2017-18 for Rs.22,50,000/- and claimed benefit u/s. 48 amounting to Rs.30,10,778/-, showing net capital loss of Rs.7,60,778/-.
The assessee submitted sale deed of property sold, but could not file documents in support of claim for deduction u/s.
48. Since the matter was getting time barred, the Assessing Officer made best judgment 7 | P a g e assessment based on material on record by computing the income of the assessee as under : a). Full value of consideration of the all properties sold = 49,66,681. (b). Cost of acquisition (assessee has not provided any details in this regard the value of transfer is being taken/mentioned as per sale deeds) = 4,22,170/- (c). Cost of improvement(assessee has not provided any details in this regard) = NIL (d). Capital gain = [(a-b)-c]=[(49,66,681 – 4,22,170)=45,44,511/- The assessee filed first appeal with ld. CIT(Appeals), but there was no compliance by the assessee to the notices issued by ld. CIT(A) during appellate proceedings, which led to dismissal of appeal by the ld. CIT(Appeals) ex-parte in limine without deciding the issues arising in appeal on merits, and assessment order passed by the AO was upheld .
The assessee has now filed copies of purchase deed for purchase of property, which is placed on record in file. The assessee has also claimed that it sold three properties(share in properties), and copies of sale deed are enclosed. It is claimed that the AO has not even considered the same. Further, the AO has adopted higher stamp duty valuation as adopted by stamp valuation authorities as full value of consideration as against the contractual sale value as reflected in the sale deed, keeping in view provisions of Section 50C. The assessee has also contested the invocation of section 50C and has prayed that higher stamp duty valuation as adopted by stamp valuation authority as full value of consideration is not justified and matter may be referred to 8 | P a g e DVO for valuing the property. I have observed that the additional evidences have been filed by the assessee by way of purchase deeds of the properties claimed to be sold by the assessee as also sale deed copies. These evidences could not be filed before the authorities below as the ld. Counsel stated that these being old purchase and sale deeds were not available at the time of assessment, but now the assessee has produced these evidences and prayers are made to set aside the matter back to the Assessing Officer for framing denovo assessment after due verification/enquiry. These additional evidences require verification/enquiry by the authorities below. The assessee has also prayed for referring the matter to the DVO to compute full value of consideration, keeping in view provisions of Section 50C as the value adopted by stamp valuation authorities by the AO is now challenged by the assessee. Under the facts and circumstances of the case and in the interest of justice, I set aside both the orders of the authorities below and restore the matter back to the file of Assessing Officer for framing de novo assessment after providing proper opportunity to the assessee. The assessee is also directed to comply with the directions of Assessing Officer ,otherwise the Assessing Officer shall be at liberty to framedenovo assessment in accordance with law on merits. I clarify that I have not commented on merits of the issue arising in this appeal. The 9 | P a g e evidences filed by the assessee indenovo assessment proceedings shall be admitted by the AO , and adjudicated on merits in accordance with law. I order accordingly.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 12/02/2025