VIJAYA DURGA PENUMALA,RAJAHMUNDRY vs. INCOME TAX OFFICER, WARD-2(1), RAJAHMUNDRY

This appeal filed by the assessee is against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“Ld. CIT(A)-NFAC”] vide DIN & Order No. ITBA/NFAC/S/250/2023-24/1059602715(1), dated 11/01/2024 arising out of the order passed U/s. 271(1)(c) of the Income Tax Act, 1961 [“the Act”] for the AY 2016-17.

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.

On perusal of the contents of the affidavit filed by the assessee as well as the submission of the Ld. AR, we find that the assessee is prevented by a reasonable and sufficient cause in filing the appeal beyond the prescribed time limit with a delay of 3 84 days. Therefore, we hereby condone the delay of 84 days in filing the appeal before the Tribunal and proceed to adjudicate the appeal 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 vides 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 4 assessee was issued a show cause notice and required to furnish 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/-. In this regard, the Ld. AO calculated the capital gains on the development agreement to be Rs. 54,03,020/-. The Ld. AO also observed that the assessee and her husband have transferred 490.26 sq yds to M/s. Bhavya Builders and the fair market value of the land is at Rs. 18,000/- per sq yd and therefore the value of the land transferred worked out at Rs. 88,24,680/-. The Ld. AO also observed that the consideration received by the assessee and her husband is less than the value of the land transferred. Therefore, the Ld. AO was of the opinion that the provisions of section 50C of the Act are attracted in the case of the assessee and hence the share of the assessee and her husband is treated at Rs. 88,24,680/- which includes 3 flats received by the assessee. Thereby, the Ld. AO has considered the assessee’s share to be half of the total share ie., 44,12,340/- [Rs. 88,24,680 ÷ 2]. The Ld. AO also initiated the penalty proceedings U/s. 271(1)(c) of the Act for concealment of particulars of income vide notice U/s. 274 r.w.s 271(1)(c) of the Act dated 29/12/2018 and the same was served on 30/12/2018. Since there is no response from the assessee even after providing

In the light of the above ground and other reasons the appellant earnestly prays for the impugned order to be set aside in the interest of justice.”

At the outset, the Ld. Authorized Representative [“Ld. AR”] submitted before us 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.

We have heard the both the sides and carefully perused the materials on record. On examining the facts of the case, we 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 Ld. CIT(A)- NFAC on the dates of hearing with regard to the details / submissions as called for by the 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 appeal in-limine. In this situation, considering the issues involved in the appeal, we are 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 as well as strictly following the principles of natural justice, we 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, we

In the result, appeal filed by the assessee is allowed for statistical purposes as indicated hereinabove.