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Income Tax Appellate Tribunal, PUNE BENCHES “B”, PUNE
Before: DR.MANISH BORAD & SHRI VINAY BHAMORE
आदेश / ORDER
PER DR.MANISH BORAD, ACCOUNTANT MEMBER:
This appeal filed by the assessee pertaining to the Assessment Year (in short "AY") 2017-18 is directed against the order passed u/s.250 of the Income Tax Act, 1961 [in short “the Act"] by the National Faceless Appeal Centre, Delhi [in short ‘ld.CIT(A)’], dated 27.06.2024 arising out of the Assessment order passed u/s.143(3) of the Act, dated 28.12.2019.
Assessee has raised following grounds of appeal :
“1. The learned CIT(A), NFAC (hereinafter called as Learned CIT(A)) erred in law and in facts in upholding addition amounting to Rs.50,95,685/-made on account of Long-Term capital gain arising out of the sale of rural agricultural land at village Trimbak, Nashik (hereinafter called as said agricultural land) and thereby, confirming assessed total income of appellant to the tune of Rs.94,35,785/- as against the returned income.
2. Learned CIT(A) ought to have granted an appropriate opportunity of being heard to the appellant for making requisite submission considering the principle of natural justice. The appellant intends to make all the requisite submissions along with related documentary evidence. However, the same could not be submitted since the notices have been glossed over by the appellant due to unavoidable circumstances.
3. Learned IT Authorities erred in law and on facts in considering the rural agriculture land as a capital asset; without appreciating the fact that said rural agricultural land is located beyond 8 Km from local limits and the village has a population of more than 10,000/- and as such falls out of the scope of definition of Agricultural Land as defined u/s.2(14)(iii). As such, the appellant contends that, the said land is not a capital asset and as such not liable to tax.
4. Appellant contends that the cost of acquisition is incorrect and as such, the appropriate index cost of acquisition/ improvement ought to be granted.
5. The appellant craves leave to add/modify/delete /amend all/any of the grounds of appeal.”
When the matter was called for, none appeared on behalf of the assessee despite due service of notice of hearing. We therefore proceed to dispose of this appeal exparte qua the assessee after hearing the ld. Departmental Representative.
Pithily, the facts of the case are that the assessee is an individual carrying on the business of land dealing. It was stated that the assessee is deriving income from salary, income from house property, income from business or profession etc. The assessee filed the return of income for the A.Y. 2017-18 on 05.11.2017 declaring income of Rs.43,40,100/- which was revised on same date declaring total income of Rs.31,75,740/-. The case was selected for scrutiny under CASS and notice u/s.143(2) of the Act was issued on 26.09.2018. Notices u/s.142(1) were also issued on 16.08.2019, 19.09.2019 and 29.11.2019 to the assessee calling for information. There was no compliance from the assessee. However, in response to notice u/s.142(1) dated 24.10.2019, the assessee submitted certain details.
Based on the details furnished by the assessee, the Assessing Officer observed that the assessee has sold an agricultural land situated at Anjineri, S.No.1096/2, PN, 42 for a total consideration of Rs.60,00,000/-. It was found that the assessee has not earned any agricultural income and the land was not used for any agricultural purposes. The assessee was called upon to explain as to why the exemption for the sale proceeds from the land should not be brought to tax. In response, the assessee submitted that the assessee has sold one Rural Agricultural Land at Anjineri, S.No.1096/2, PN, 42. As per section 2(14) of the Act, the Rural Agricultural land does not fall under the definition of Capital Asset. It was also stated that the assessee carried out agricultural activities in the said land and the income is also disclosed in the return of income filed. Purchase deed along with the distance of nearest villages around the land, population etc. were filed before the Assessing Officer. However, the Assessing Officer was not convinced with the explanation tendered by the assessee. Relying on the judgments of Hon’ble Supreme Court in the case of Smt. Sarifabibi Mohmed Ibrahim 204 ITR 6310 (SC), CWT Vs. Officer in charge 105 ITR 138 (SC) and the judgment of Hon’ble Gujarat High Court in the case of Dr. Motibhai D.
Patel Vs. CIT (1981) 127 CTR 671 (Guj), the Assessing Officer held that the immovable property sold by the assessee is not an agricultural land and addition under the head ‘Income from Capital gain’ is warranted. Eventually, the AO made addition of Rs.50,95,685/- on account of income from capital gain.
Aggrieved assessee preferred appeal before the ld. CIT(A) who vide impugned order dismissed the appeal in limine for non-prosecution, without discussing anything on merits.
We have heard the ld. Departmental Representative and perused the record placed before us. We find the impugned order passed by the ld. CIT(A) is exparte. The ld. CIT(A)/NFAC dismissed the assessee’s appeal without dealing with the merits even when the assessment records were available with him. Ld. CIT(A)/NFAC is required to pass a speaking order dealing with the merits of the case as contemplated u/s.250(6) of the Act which provides that for adjudicating the appeal, the ld. CIT(A)/NFAC should dispose of the same in writing and shall state the points for determination, the decision thereon and the reason for that decision. The settled position of law mandates the CIT(A) NFAC to dispose of the appeal by adjudicating the issue raised in appeal on merits. In this regard, reference is being made to a decision of the Hon’ble Bombay High Court in the case of Pr.CIT(Central) Vs. Premkumar Arjundas Luthra (HUF) Bombay)/[2017] 297 CTR 614 (Bombay) wherein it was held that NFAC is obliged to dispose of the appeal on merits. The observation of the Hon’ble High Court is reproduced below :
“8. From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act.
Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b)of the Act provide that while disposing of appeal the CIT(A)would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2)of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. Infact the CIT(A) is obliged to dispose of the appeal on merits. Infact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn.
Therefore, it would be noticed that the powers of the CIT(A) is coterminous with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the Section 251(1)(a) and (b)and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act.”
Thus, the Jurisdictional High Court has categorically held that CIT(A) has to decide the appeal on merit and CIT(A) does not have any power to dismiss appeal for non-prosecution.
Since the ld. CIT(A) has not adhered to the provisions of section 250(6) of the Act and has not passed a speaking order, we are of the considered view that, in the interest of natural justice, the issue raised in the instant appeal deserves to be restored to the file of ld. CIT(A)/NFAC for denovo adjudication. For doing the needful reasonable opportunity has to be granted to the assessee to furnish submissions and other evidences if needed, in order to substantiate the exemption claimed by assessee. On due consideration of the same, ld. CIT(A)/NFAC shall pass a speaking order in accordance with law. The assessee is also directed to remain vigilant and not to take adjournment unless otherwise required for reasonable cause, failing which the ld. CIT(A)/NFAC shall be free to proceed in accordance with law. Finding of the CIT(A)/NFAC is set aside and Grounds of appeal raised by the assessee are allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced on this 12th day of November, 2024.