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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE
PER DUVVURU RL REDDY, Judicial Member :
Both these appeals are filed by the assessee against the orders of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“Ld. CIT(A)-NFAC”] vide DIN & Order No. ITBA/NFAC/S/250/2023-24/1059603688(1), dated 11/01/2024 arising out of the order passed U/s. 143(3) of the Act and DIN & Order No. ITBA/NFAC/S/250/2023- 24/1059601065(1), dated 11/01/2024 arising out of the order passed U/s. 154 of the Act for the AY 2016-17. Since both these appeals are pertaining to the same assessee, for the sake of convenience, these appeals are clubbed, heard together and disposed of in this consolidated order.
At the outset, it is noticed from the appeal record that there is a delay of 77 days in each case (ITA No. 237 & 238/Viz/2024) in filing these appeals before the Tribunal. Explaining the reasons for belated filing of the appeals, the Ld. AR drew my attention to the affidavits filed by the assessee along with a petitions seeking for condonation of delay and read out the contents of the affidavits, which are common in both the condonation petitions, as under:
“1. ………..
2. Assessee was while going to her Counsel’s office to sign the appeal papers on 08/03/2024 but on the previous day while travelling on a two-wheeler, slipped and fell down sustained injury of right ankle. Immediately got the medical treatment and was advised for bed rest. In this process going to Counsel’s office for signing the appeal papers slipped out of the mind. Whereas on 20/05/2024, received a phone call from the income tax office for payment of taxes and then realized that appeal was not filed. Accordingly, approached the Counsel requesting to prepare the documents which was done on 26/05/2024 and the appeal was filed on 03/06/2024 causing a delay of 88 days.
3. In the light of the above, it is respectfully submitted that this delay in filing the appeal belatedly was not as a result any negligence or lack of diligence, but solely due to the unfortunate and unforeseen circumstances surrounding my health. Doctor’s certificate in support of petition is attached herewith. 4. ….. 5. …..”
On perusal of the contents of the affidavits filed by the assessee as well as the submissions of the Ld. AR, I find that the assessee is prevented by a reasonable and sufficient cause in filing these appeals beyond the prescribed time limit with a delay of 77 days. Therefore, I hereby condone the delay of 77 days in filing these two appeals before the Tribunal and proceed to adjudicate the appeals on merits in the following paragraphs.
Briefly stated the facts of the case are that the assessee is an individual deriving income from financial consultancy and rental income. Assessee filed her return of income for the AY 2016-17 on 09/05/2016 declaring a total income of Rs. 2,99,100/-. Subsequently, the case was selected for limited scrutiny under CASS for the reason ‘large investment in property as compared to total income’. Thereafter, statutory notices U/s. 143(2) and 142(1) of the Act were issued and called for certain information. In response, the assessee submitted that she along with her husband purchased a residential house worth Rs. 25,56,000/- vide Document No. 6224/2015 registered at SRO, Rajanagaram. The source of investment is the advance amount received on the development agreement entered with Bhavya Builders vide Doc. No. 12772/2015 registered at SRO, Rajahmundry by the assessee and her husband. The Ld. AO on verification of the assessee’s return of income observed that the assessee has not paid any capital gains tax on the development agreement entered with Bhavya Builders and therefore, the assessee was issued a show cause notice and required to furnish
5 the valid explanation along with documentary evidences as to why the capital gains were not paid on the development agreement worth Rs. 3,06,18,000/-. The Ld. AO, after examining and discussing the issue at length vide page 2 of the assessment order, observed that since the assessee did not furnish the purchase document and the year of purchase of the property, indexed cost of acquisition cannot be ascertained and is treated as NIL. Accordingly, the Ld. AO completed the assessment by making addition of Rs. 44,12,340/- [the assessee’s share in the value of the land transferred of Rs. 88,24,680/-] and added the same total income of the assessee under the head capital gains as the assessee holds 50% of the share in the property. Thus, the Ld. AO raised a demand notice U/s. 156 of the Act and also initiated the penalty proceedings U/s. 271(1)(c) of the Act and passed the assessment order U/s. 143(3) of the Act, dated 30/12/2018. Aggrieved by the order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A)-NFAC.
5. On appeal, the Ld. CIT(A)-NFAC passed ex-parte order since there is no response on behalf of the assessee with respect to the notices issued to the assessee to furnish the explanation along with documentary evidence in regard to the claim made by the 6 assessee in her appeal and dismissed the appeal of the assessee.
While dismissing the assessee’s appeal, the Ld. CIT(A)-NFAC uphold the decision of the Ld. AO and sustained the addition made by him. Aggrieved by the order of the Ld. CIT(A)-NFAC, the assessee is in appeal before the Tribunal by raising the following grounds of appeal:
“1. The order passed U/s. 250 of the Act dated 11/01/2024 upholding the Assessing Officer order U/s. 143(3) of the Act dated 30/12/2018, determining the total income at Rs. 47,11,440/- inclusive of disputed capital gains of Rs. 44,12,240/- is erroneous under the given facts and circumstances of the case.
2. The Ld. CIT(A) disposed of the case ex-parte, depriving the assessee reasonable and sufficient opportunity to present her case. This action violates the fundamental principles of natural justice, thereby rendering the impugned order prejudicial.
3. The Ld. CIT(A) ought to have known that the impugned order lacks a finding on the merits of the case, contravening the provisions of section 250(6) of the Act. The failure to address the substantive issues renders the order null and void in the eyes of law.
4. The Ld. CIT(A) failed to recognize that the subject development agreement, upon which the Assessing Officer based the determination of capital gains, is currently under dispute and subject to litigation in a court of law. Therefore, the imposition of assessed capital gains is warranted as the liability is contingent upon outcome of the case.
Without prejudice to the aforementioned grounds, it is stated that the determination of capital gains is not in compliance with the provisions of section 48 of the Act. The deduction for the transferred cost of the property has not been accounted for, and the claim U/s. 54 has been disregarded, further resulting in erroneous assessment.
In consideration of the above-stated grounds, and other reasons to be submitted during the course of the hearing, the appellant respectfully prays for the impugned order to be set-aside in the interest of justice.”
7 6. At the outset, the Ld. Authorized Representative [“Ld. AR”] submitted before me that the Ld. CIT (A)-NFAC has passed ex-parte order without providing proper opportunity to the assessee of being heard. It was therefore pleaded that the matter may be remitted back to the file of the Ld CIT (A)-NFAC in order to provide one more opportunity to the assessee of being heard.
Ld. Departmental Representative [“Ld. DR”], on the other hand, vehemently opposed to the submissions of the Ld. AR and argued that several opportunities had been provided to the assessee however, on the given dates of hearing, neither the assessee nor her Representative has responded to the notices issued nor filed any details / submissions as called for by the Ld. CIT (A)-NFAC. It was further submitted that, under these circumstances, the Ld. CIT (A)-NFAC had no other option but to pass ex-parte order based on the materials available on record. Hence, it was pleaded that the order passed by the Ld. CIT(A) does not call for any interference.
I have heard the both the sides and carefully perused the materials on record. On examining the facts of the case, I find that the Ld. CIT (A)- NFAC had posted the case on several occasions. However, there was no response on behalf of the assessee before the CIT(A)-NFAC on the dates of hearing with regard to the details / submissions as called for by the 8 Ld. CIT(A)-NFAC. Therefore, the Ld. CIT (A)-NAFC was left with no other option except to adjudicate the appeal ex-parte and dismissed the appeal. In this situation, considering the issues involved in the appeal, I am of the considered view that the Ld. CIT(A)-NFAC ought to have decided the case on merits instead of dismissing the appeal ex-parte. However, considering the prayer of the Ld. AR, and in the interest of justice, I hereby remit the matter back to the file of Ld. CIT (A)-NFAC in order to consider the appeal afresh and decide the case on merits by providing one more opportunity to the assessee of being heard in accordance with the principles of natural justice. At the same breath, I also hereby caution the assessee to promptly co-operate before the Ld. CIT (A)-NFAC in the proceedings failing which the Ld. CIT (A)-NFAC shall be at liberty to pass appropriate order in accordance with law and merits based on the materials on the record. It is ordered accordingly.
In the result, appeal filed by the assessee is allowed for statistical purposes as indicated hereinabove.
ITA No. 238/Viz/2024 (AY 2016-17)
Briefly stated the facts of the case are that the assessee is an individual filed her return of income for the AY 2016-17 on 09/05/2016 declaring total income of Rs. 2,99,100/-. The case
9 was selected for scrutiny under CASS for the reason ‘large investment in property as compared to total income’. The assessment was completed U/s. 143(3) of the Act on 30/12/2019 and the assessed income was determined at Rs. 47,84,936/-. Aggrieved by the addition made by the Ld. AO, the assessee filed an appeal before the Ld. CIT(A)-NFAC. Further, the assessee filed a rectification application on 15/03/2021 requesting the Ld. AO to rectify the following mistakes:
The share of joint owner P. Anand about 100 sq yds was not deducted from sale consideration.
2. Indexed cost of the land given for the development was also not reduced to compute the capital gains. 3. Deduction U/s. 54F was also not considered while computing the value of long term capital gains. 4. The development agreement was not properly implemented by the developer and it is in the court. Hence no capital gains arises. After considering the rectification application filed by the assessee and on perusal of the assessment record, the Ld. AO rejected all the four issues raised in the assessee’s rectification application. Aggrieved by the Ld. AO rejection of the rectification application, the assessee preferred an appeal before the Ld. CIT(A)-NFAC.
On appeal, the Ld. CIT(A)-NFAC passed ex-parte order in the absence of any response on behalf of the assessee with respect to 10 the notices issued and dismissed the appeal of the assessee by observing as under: “7.4. I have perused the ground of appeal, statement of facts and the rectification order. The assessee has not produced any material to controvert the findings of the Ld. AO. In the event, I have no reason to interfere with the findings of the Ld. AO. In such circumstances, I dismiss the claim of the appellant.”
Aggrieved by the order of the Ld. CIT(A)-NFAC, the assessee is in appeal before the Tribunal by raising the following grounds of appeal: “1. The orders passed U/s. 154 r.w.s 143(3) of the Act dated 20/09/2021, upheld by the Ld. CIT(A) through orders passed U/s. 250 of the Act dated 11/01/2024 do not go along with the facts of the case and the provisions of the law.
2. The disposal of the case by the Ld. CIT(A) ex-parte without affording the assessee reasonable and sufficient opportunity to present her case constitutes violation of the principles of natural justice, thereby rendering the impugned order unjust and prejudicial.
3. Furthermore, the absence of finding on the merits of the case by the Ld. CIT(A) violates the provisions of section 250(6) of the Act. This failure to address the substantive issues renders the impugned order void.
4. Without prejudice to the aforementioned grounds, it is stated that the Ld. CIT(A) ought to have adjudicated on various errors committed by the Ld. AO. The failure of the Ld. AO to rectify these errors demonstrates a legal infirmity in the orders of the Ld. CIT(A).
5. In the light of the abovestated grounds to be argued during the course of hearing, the appellant prays for the impugned order to be set aside in the interest of justice.”
11 12. At the outset, the Ld. Authorized Representative [“Ld. AR”] submitted before me that the Ld. CIT (A)-NFAC has passed ex-parte order without providing proper opportunity to the assessee of being heard. It was therefore pleaded that the matter may be remitted back to the file of the Ld CIT (A)-NFAC in order to provide one more opportunity to the assessee of being heard.
Ld. Departmental Representative [“Ld. DR”], on the other hand, vehemently opposed to the submissions of the Ld. AR and argued that several opportunities had been provided to the assessee however, on the given dates of hearing, neither the assessee nor her Representative has responded to the notices issued nor filed any details / submissions as called for by the Ld. CIT (A)-NFAC. It was further submitted that, under these circumstances, the Ld. CIT (A)-NFAC had no other option but to pass ex-parte order based on the materials available on record. Hence, it was pleaded that the order passed by the Ld. CIT(A) does not call for any interference.
I have heard the both the sides and carefully perused the materials on record. On examining the facts of the case, I find that the Ld. CIT (A)- NFAC had posted the case on several occasions. However, there was no response on behalf of the assessee before the CIT(A)-NFAC on the dates of hearing with regard to the details / submissions as called for by the 12 Ld. CIT(A)-NFAC. Therefore, the Ld. CIT (A)-NAFC was left with no other option except to adjudicate the appeal ex-parte and dismissed the appeal. In this situation, considering the issues involved in the appeal, I am of the considered view that the Ld. CIT(A)-NFAC ought to have decided the case on merits instead of dismissing the appeal ex-parte. However, considering the prayer of the Ld. AR, and in the interest of justice, I hereby remit the matter back to the file of Ld. CIT (A)-NFAC in order to consider the appeal afresh and decide the case on merits by providing one more opportunity to the assessee of being heard in accordance with the principles of natural justice. At the same breath, I also hereby caution the assessee to promptly co-operate before the Ld. CIT (A)-NFAC in the proceedings failing which the Ld. CIT (A)-NFAC shall be at liberty to pass appropriate order in accordance with law and merits based on the materials on the record. It is ordered accordingly.
In the result, appeal filed by the assessee is allowed for statistical purposes as indicated hereinabove.
Ex-consequenti, both the appeals filed by the assessee are allowed for statistical purposes as indicated herein above.
13 Pronounced in the open Court on 31st July, 2024.
Sd/- (दु�वू� आर.एल रे�ी) (DUVVURU RL REDDY) �याियकसद�य/JUDICIAL MEMBER Dated :31/07/2024 OKK - SPS आदेश की �ितिलिप अ�ेिषत /Copy of the order forwarded to:- 1. िनधा�रती/ The Assessee – Vijaya Durga Penumala, 74-8-20, Siri Apartments-2, Prakash Nagar, Rajahmundry, Andhra Pradesh – 533103. 2. राज�व/The Revenue – Income Tax Officer, Ward-2(1), Aayakar Bhawan, Veerabhadrapuram, Rajahmundry, Andhra Pradesh – 533105.
3. The Principal Commissioner of Income Tax, 4.आयकर आयु� (अपील)/ The Commissioner of Income Tax (Appeals), 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, िवशाखापटणम/ DR, ITAT, Visakhapatnam 6.गाड� फ़ाईल / Guard file आदेशानुसार / BY ORDER
Sr. Private Secretary ITAT, Visakhapatnam