SRIDHAR, USA,SHREWSBURY MA, USA vs. INCOME TAX OFFICER, (INT TAXN)-1, HYDERABAD

At the outset, we noticed that learned AR filed an affidavit, explaining the reasons for the delay, stating that due to some technical reasons, the network was not working in his office on that day and finally appeal was filed on 25/01/2024, causing a delay of two days and explained that the delay in filing the appeal was due to technical reasons in the office of learned AR, and there is no fault of the assessee. Learned AR prayed that the delay was unintentional and inadvertent due to the circumstances beyond the control of the assessee. There is no reason as to why this explanation of the learned AR cannot be accepted. Recording the same, we condone the delay and proceed to hear the matter on merits.

Learned AR submitted that the learned Assessing Officer passed the draft assessment order on 20/02/2023, assessee filed the objections on 20/03/2023, but the learned DRP dismissed the objections on 09/11/2023 holding that the assessee did not file the objections in the prescribed form 35A and, therefore, the learned DRP does not get jurisdiction to delve into the merits of the case. Learned AR submitted that having entertained the objections and keeping the matter pending for nearly eight months, the learned DRP should not have dismissed the objections. His alternative argument is that if there were no objections filed in the eye of law, the learned Assessing Officer was supposed to pass the final assessment order within thirty days from the date of the draft assessment order, but in this case, since the learned Assessing Officer passed the final assessment order dated 24/11/2023, the assessment is bad under law and is liable to be quashed.

In respect of merits, he submitted that having entered into a sale cum GPA with M/s. Lotus Associates for a consideration of Rs. 60 lakhs in the assessment year 2014-15, the assessee offered the capital gains to tax in that year itself, and subsequently, in the assessment year 2015-16, when the said plot was sold by M/s. Lotus Associates to M/s. Surya Lakshmi Constructions, the assessee did not involve in that transaction and has nothing to do with the same. According to the learned AR, all these facts were verified by the learned Assessing Officer during the remand proceedings at the instance of learned DRP, but unfortunately, the learned DRP dismissed the objections of the assessee on technical grounds and, therefore, even going by the merits, since the assessee effected the transfer and paid the capital gains tax in the assessment year 2014-15 itself, and did not associate himself with the transactions that took place in the assessment year 2015-16, no tax liability will be incurred by the assessee. He submitted that since the remand report is not considered by the learned DRP, and as a matter of fact, the learned Assessing Officer determined the question of fact in favour of the assessee, the issue may be restored to the file of the learned Assessing Officer for verification of the year of transfer and payment of capital gains tax and also that the assessee has nothing to do with the transaction that took place in the assessment year 2015-16.

Learned DR submitted that since the assessee did not file the objections in the prescribed proforma, the learned DRP was justified in declaring to decide the issue on merits and, therefore, the assessee cannot build a case on unfounded facts.

We have gone through the record in the light of the submissions made on either side. It could be seen from the draft assessment order itself that at many places, the learned Assessing Officer recorded that the SRO value of the plot was Rs. 60 lakhs and the assessee sold the same under the sale deed dated 16/03/2015 for a sum of Rs. 60 lakhs. However, the learned Assessing Officer recorded that the document value is less than SRO value.

Further there is no denial of the fact pleaded by the assessee that the learned DRP called for a remand report and the learned Assessing Officer submitted the same. Since the learned DRP declined to exercise jurisdiction and refused to decide the issue on merits, all those things have not entered the directions of the learned DRP and the opinion of the learned DRP is not to be found.

In these circumstances, the verification of the fact whether the transfer took place in the assessment year 2014-15 and the assessee offering the capital gains tax in that year itself and also whether or not the assessee involved in the transaction of assessment year 2015-16, assumes importance and such verification will hopefully give quietus to the issue. Hence, we set aside the impugned order and restore the issue to the file of the learned Assessing Officer and cause verification of the fact whether the transfer took place in the assessment year 2014-15 and the assessee offering the capital gains tax in that year itself and also whether or not the assessee involved in the transaction of assessment year 2015-16, by affording an opportunity to the assessee. Grounds are answered accordingly.

In the result, appeal of the assessee is treated as allowed for statistical purposes.