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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
आदेश /O R D E R
PER SHRI S BALAKRISHNAN, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against the order of Learned Commissioner of Income Tax (Appeals)-10, Hyderabad [hereinafter in short “Ld.CIT(A)”] in Appeal No. 10251/2015-16 dated 30.01.2024 for the A.Y. 2016-17.
Uppada Kesavajanardhana Rao 2. Brief facts of the case are, assessee is a non-resident Individual and filed a belated return of income for the A.Y. 2016-17 dated 20.03.2019 and returned short term capital gains of Rs.99,76,950/- and paid taxes thereon of Rs.49,83,790/- including interest of Rs.20,81,160/-. As per the information received by the Assessing Officer from DIT(I&CI) during the financial year 2015-16 relevant to A.Y.2016-17, assessee has sold the property in Survey No.45/Part of Aganampudi Village, Gajuwaka Mandal, Visakhapatnam and entered into joint development agreement with “M/s. Chinni Krishna Builders and Developers” vide document No. 491/2016 on 18.02.2016 for a consideration of Rs.6,58,18,500/-. On the basis of above information, Assessing Officer had initiated the proceedings under section 147 and accordingly, a notice u/s 148 was issued on 30.03.2021. In the response to this notice, no compliance was received. Subsequently, notices u/s 142(1) were issued during the assessment proceedings but no compliance was received. Therefore, Assessing was completed u/s144 r.w.s 147 basing on the information. During Assessment Proceedings, Assessing Officer noticed that return filed by the assessee cannot be considered as valid return as the return was filed beyond the limit as per the section 139 of IT. Act. It was also noticed by the Ld. Assessing Officer that the assessee had suppressed the Short term Capital gain to the extent of Rs.83,95,037/-. Thus, the assessment u/s 144 r.w.s 147 was completed on 11.05.2022 by adding of Rs. 83.95.037/- and assessed STCG of Rs. 1,83,71,987/- thereby raised a demand of Rs. 59,13.280/-.
Page No. 2 Uppada Kesavajanardhana Rao 3. Aggrieved by the assessment order, assessee filed an appeal before Ld.CIT(A). After considering the submissions of the assessee, Ld. CIT(A) partly allowed the appeal of the assessee.
4. Aggrieved by the order of the Ld.CIT(A), assessee is in appeal before us by raising following grounds of appeal: - “1. That under the facts and circumstances of the case, the orders passed u/s 144 r.w.s 147 of the IT Act dt.11-05-2022 confirmed by Commissioner of Income-tax (Appeals)-10, Hyderabad (in short ‘CIT(A)’) dt.31-01-2024, is not in accordance with the provisions of law.
2. The Ld. Commissioner of Income Tax (Appeals) erred in not appreciating the fact the notice u/s 148 of the IT Act dt.31-03-2021 issued through IT portal in not in the name and PAN of assessee. Hence, in the absence of valid notice issued u/s 148 of the IT Act, the subject assessment framed u/s 147 of the IT Act is voidab-initio.
The Ld. Commissioner of Income Tax (Appeals) erred in not appreciating the fact that though the assessment order is dt.11-05-2022 the same is passed and issued beyond the time limit for passing the said order as prescribed under subsection (4) of section 144C of the IT Act which is dt.31-05-2022.
The Ld. Commissioner of Income Tax (Appeals) failed to adjudicate the following issue raised by assessee in Ground no 4 while filing Form 35: Ground no 4 before CIT(A) “The Ld. Assessing Officer is not justified in computing the short term capital gains at Rs.1,83,71,987/- as against short term capital gains of Rs.99,76,950/- returned by assessee.” Issue “With respect to the sale consideration arrived by AO by including the Stamp duty Value of UDS / land, it is submitted that since assessee owns the land already and what he received under JDA is only the Built-up area in lieu of transfer of 1626.20 UDS/land to the builder, it is not correct on the part of AO to include the value of land-UDS falling to the share of assessee.”
For these and such other grounds that may be adduced at the time of hearing, Hon’ble Tribunal is prayed that the Order passed by AO u/s 144 r.w.s 147 of the IT Act be quashed as not valid in the eyes of law and the addition made by AO be deleted, in the interest of justice.”
Page No. 3 Uppada Kesavajanardhana Rao 5. At the outset, Ld. Authorised Representative [hereinafter “Ld.AR”] brought to our notice Form-35 filed before Ld. CIT(A) in which assessee has raised Ground No. 3, which reads as under: -
“3. The Assessment Order though dated 11.05.2022 is barred by limitation as the same was not put in transmission for being served on the assessee on or before 31.03.2022.
The main contention of the assessee is this ground is not being adjudicated by the Ld. CIT(A). In this connection Ld. AR referred to the dates of service of final Assessment Order passed under section 144C of the Act which is the core factor for deciding validity of the final Assessment Order. She referred to Para No. 6.4 of the Ld. CIT(A) order wherein Ld. CIT(A) has restricted himself in adjudicating the issue with respect to non-mention of DIN in the Assessment Order. She therefore pleaded that this issue may be referred back to the file for Ld. CIT(A) for fresh adjudication.
Per contra, Ld. DR relied on the orders of the revenue authorities.
We have heard both the sides and perused the material available on record. Admittedly, as pointed out by Ld. AR in Para No. 6.4 Ld. CIT(A) has adjudicated Ground No. 3 as follows: -
“6.4. In ground No. 3, appellant contended that the Assessment Order passed on 11.05.2022 was time barred and the same had to be served to the appellant on or before 31.03.2022. The claim of the appellant that assessment order was not within time limit as per 153(2) of the IT Act is not correct. It is verified from the assessment records that the draft order
Page No. 4 Uppada Kesavajanardhana Rao u/s 144C of the income tax act has been passed on 27.03.2022 with DIN No. ITBA/AST/F/ 144C/2021-22/1041758971(1), wherein objection/ acceptance was sought from the appellant against the draft order within thirty days of receipt of this order. However, no objection was received from the appellant against the draft order. Therefore, Assessing Officer has passed the order on 11.05.2022 keeping in view of the section 144C(4). The relevant portion of the section 144C(4) is reproduced herewith for reference: " 144C; (2) On receipt of the draft order, the eligible assessee shall, within thirty days of the receipt by him of the draft order; (a) file his acceptance of the variations to the Assessing Officer; or (b) file his objections, if any, to such variation with, (i) the Dispute Resolution Panel; and (ii) the Assessing Officer (3) The Assessing Officer shall complete the assessment on the basis of the draft order. if (a) The assessee intimates to the Assessing Officer the acceptance of the variation; or (b) no objections are received within the period specified in sub section (2). (4) The Assessing Officer shall notwithstanding anything contained in section 153. pass the assessment order under sub section (3) within one month from the end of the month in which. (a) the acceptance is received; or (b) the period of fling of objections under sub-section (2) expires." In view of the above provisions of the I.T Act, Assessment order passed on 11.05.2022 within the time limit stipulate in the section 144C. With respect to the argument of the appellant that the assessment order passed without DIN, it can be seen that from the records that Assessing Officer issued intimation letter along with Assessment order on 02.06.2022 is having DIN No.ITBA/AST/M/147/2022-23/1043295615(1), which was duly served on 03.06.2022. Therefore, the appellant's contention is not found acceptable and accordingly, ground no. 3 is hereby dismissed.”
Page No. 5 Uppada Kesavajanardhana Rao 9. From the above paragraph of the Ld. CIT(A), we find that the Ld. CIT(A) has not discussed the issue regarding Ground No. 3 raised by the assessee with respect to time barring of the final assessment order which has been issued to the assessee on 02.06.2022. The only contention of the assessee is even though the Final Assessment Order is dated 11.05.2022 the service of the order was through ITBA portal was made on 02.06.2022 after the generation of DIN on the same date and served on 03.06.2022. Further, we also find from the paper book submission of the Ld. AR that the final Assessment Order was booked for post on 02.06.2022. Section 144C(13) prescribes that the final Assessment Order should be served on the assessee within the period of thirty (30) days. However, in the instant case, it is noticed that the final Assessment Order has been served on 02.06.2022, where assessee has raised this limitation before the Ld. CIT(A). We therefore direct the Ld. CIT(A) to adjudicate Ground No. 3 with respect to limitation prescribed under section 144C(13) of the Act by providing an opportunity to the assessee, following the principle of natural justice.
Further the Ld.AR also submitted that the Ld. CIT(A) has also not adjudicated Ground No. 4 with respect to the inclusion of cost of land in the sale consideration while computing the capital gains by the assessee. The main contention of the Ld. AR is that the cost of the land which is already owned by the assessee is also included in the sale consideration computed by virtue of the Page No. 6 Uppada Kesavajanardhana Rao joint development agreement. Ld. AR pleaded that the assessee for relinquishing part of the land to the developer gets in consideration the super built-up area and hence cost of the super built-up area should be considered as the sale consideration for the purpose of computation of capital gain. However, Ld. AR submitted that the Ld.CIT(A) while adjudicating this ground has adjudicated the consideration towards car parking space but has not directed the Ld. Assessing Officer to remove the cost of the land which is already owned by the assessee. She therefore pleaded that, the Ld.CIT(A) may be directed to address this issue raised by the assessee in the grounds of appeal.
Per contra, the Ld.DR relied on the orders of the Revenue authorities.
We have heard both the sides and perused the material available on record. Ground No. 4 raised by the assessee before Ld. CIT(A) reads as follows: - “4. The Ld. Assessing Officer is not justified in computing the short-term capital gains at Rs. 1,83,71,987/- as against short term capital gains of Rs.99,76,950/- returned by assessee.”
It is an undisputed fact that Ld.CIT(A) while adjudicating Ground No. 4 has considered only the car parking area and has failed to consider value of land (UDS) already owned by the assessee. Ld. CIT(A) in Paragraph No. 6.5 observed as follows: -
“6.5 In ground No.4, appellant claimed that the Assessing Officer wrongly calculated the short term capital gain.
Page No. 7 Uppada Kesavajanardhana Rao It can be clearly seen, as per JDA appellant's share in car space parking is only to the extent of 1620 sq. ft and developer's share was 9610 sq. ft., out of total car space 11230 sq. ft. While recalculating the STCG, Assessing Officer has considered the entire car parking space as appellant's share and calculated the entire value of car parking in the hands of the appellant 11230@580=65,13,400/-. Whereas the appellant has been allotted only 1620 sq. ft and accordingly the value of this car parking space should have been of Rs. 9,39,600/-(appellant's share 1620 sq. ft.@580). Therefore, Assessing Officer is directed to re-compute the Capital gain accordingly. The claim of the appellant is therefore allowed to that extent. Further, as the appellant has withdrawn claim of cost of improvement for his inability to produce supporting documents, the addition made by the AO on account of disallowance of cost of improvement is hereby confirmed. Therefore, the ground No. 4 ls partly allowed.”
Even though, the assessee has raised a specific ground regarding the inclusion of cost of land in the computation of short-term capital gain this issue was not addressed by the Ld.CIT(A). There is merit in the argument of the Ld.AR and therefore we direct the Ld.CIT(A) to adjudicate the ground on merits by providing reasonable opportunity to the assessee.
Since ground No. 3 and 4 are remitted back to the file of the Ld.CIT(A) which is the core issue of this appeal, the other grounds raised by the assessee are not adjudicated.
In the result, appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open court on 12th September, 2024.