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Income Tax Appellate Tribunal, PUNE BENCHES “C” :: PUNE
Before: SHRI SATBEER SINGH GODARA & DR.DIPAK P. RIPOTE
Assessment Year: 2016-17 Akash, Vs The Income Tax House No.1140, Sector-29, Officer(IT), Noida – 201303. Ward-1, Pune. Uttar Pradesh. PAN: AFIPA4977M Appellant/ Assessee Respondent / Revenue Assessee by None. Revenue by Ms. Neha Thakur – Addl.CIT(DR) Date of hearing 28/08/2024 Date of pronouncement 30/08/2024 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: Brief facts of the case : As per the assessment order, in this case, the assessee is an Individual and Non-Resident Indian in A.Y.2016-17. The Assessing Officer received information on the NMS Portal of Income Tax Business Application(ITBA) of Income tax Department, that the Assessee has entered into transaction of purchase of immovable property amounting to Rs.74,36,000/-, Akash, Noida[A] purchase and sale of shares of Rs.3,90,000/- and Rs.6,47,298/-. Therefore, as per section 148A of the Act, notice dated 21.01.2023 was issued by the Assessing Officer. It is alleged by the Assessing Officer(AO) that assessee failed to file any reply and assessee has not filed any Return of Income u/sec.139(1) of the Income Tax Act, 1961. Therefore, AO recorded reasons for reopening and issued notice u/sec.148 of the Act, through ITBA Portal on 23.02.2023 for A.Y.2016-17. In response to notice u/sec.142(1) dated 03.03.2024, assessee filed copies of two purchase deeds, details of payments and source for the purchase of property, copy of bank statement, copy of passport to prove that he is an NRI and other documents. It is alleged by the AO in the assessment order that assessee had purchased two immovable properties for consideration of Rs.25,00,000/- each, but the stamp duty valuation of the said properties were Rs.37,18,000/-, therefore, AO was of the opinion that provisions of section 56(2)(vii)(b) were applicable. Accordingly, AO issued a show cause notice to the assessee. Assessee again filed an elaborate reply. However, the AO made addition of Rs.24,36,000/- u/sec.56(2)(vii)(b) of the Act. The AO passed a draft assessment order u/sec.144C of the Act dated Akash, Noida[A] 15.03.2024. Accordingly, as per the provisions of section 144C of the Act, assessee had an option to file objections before Dispute Resolution Panel(DRP) within 30 days of receipt of the draft assessment order. It is mentioned in the final assessment order that assessee vide letter dated 19.04.2024 replied to the AO that assessee had filed appeal before the DRP and submitted copy of appeal having DRP stamp. However, AO passed a final assessment order u/sec.147 r.w.s 144 of the Income Tax Act on 17.05.2024. In the final assessment order, in para 12 it is mentioned by the Assessing Officer that since assessee has not filed objections before DRP, the final assessment order is passed. Aggrieved by the final assessment order, assessee filed appeal before this Tribunal.
1.1 Grounds of appeal : “
1. The Honourable DRP has allegedly rejected our objections/applications on the ground that the assesse has not filed application with DRP in person whereas the 4(1) of DRP Rules allows submission through AGENT and Post Office/Courier also works as agent of the assesse. Hence, the discrepancies raised by DRP on the basis of its own presumptions, surmises and conjectures should be quashed.
2. The Honourable DRP has allegedly rejected our objection on the ground that the Form 35A as prescribed is not filed in quadruplicate. The Track report of DTDC courier proves that assesse had sent 4 copies on the basis of weight and height of the courier. Hence, the discrepancies raised by DRP on the basis of its own presumptions, surmises and conjectures should be quashed.
3. The Honourable DRP has allegedly rejected our objection on the ground that the certified Draft Assessment order is not attached (in quadruplicate). It is merely a technical lapse for which the substantial benefit cannot be denied.
4. The Honourable DRP has allegedly rejected the applications on the ground that the application received on 15.04.2024 instead of 13.04.2024 i.e. within 30 days of order by AO. The assesse accessed the order on 20.04.2024 on the mail hence it was within time. Hence, the discrepancies raised by DRP on the basis of its own presumptions, surmises and conjectures should be quashed.
5. No opportunity of being heard has been given by DRP which is against the provisions of Section 144C (11) of Income Tax Act 1961 and blatantly ignored the principal of natural justice before conveying any adverse remarks and thus "so called directions" issued by DRP are liable to be quashed.
No directions appear to have been issued by DRP as evident from the last para of the letter dated 26.06.2024 which reads as "On specific request of the concerned Assessing Officer i.e. ITO-(IT)(l), Pune vide email dated 14.05.2024 the factual report was shared with him. The said AO has passed the Final Assessment Order in your case." Hence the order passed by AO without proper direction by DRP is liable to be quashed.
The act of DRP in just sharing alleged factual position which in fact is falsified by DRP has resulted into unnecessary HARASSMENT and Financial Loss to the assesse.
Ld. A.O. erred in both facts and law by considering sharing of so called factual position falsified by DRP as direction by DRP and passing the order without obtaining actual directions from DRP.
Ld. AO never required assesse to produce any agreement between buyer and seller and assumed absence of such agreement on the basis of own presumptions, surmises and conjectures.
Ld. A.O. erred in both facts and law by taking Stamp Duty Value on the date of Registry instead of Date of payment/agreement which had taken place in 2008-09 on the basis of his own presumptions, surmises and conjectures. Ld. AO never required the assesse to provide circle rates or tried himself to find out circle rate of Financial Year 2008-09 to determine the difference in the circle rate and actual purchase rate for the year 2008-2009 and proceeded to make additions in the Financial Akash, Noida[A] Year 2015-16 on the basis of his own presumptions, surmises and conjectures. Thus, Ld. A.O. erred in both facts and law by invoking section 50C on the basis of registry and treating income from other source under section 56(2)(vii)(b) on the basis of his own presumptions, surmises and conjectures.
11. Ld. AO never gave any reason as to why income is being added in Financial Year 2015-16 instead of Financial Year 2008-09, in spite of the fact that no financial transactions took place in Financial Year 2015-16 with respect to subject flats and proceeded to make additions in the Financial Year 2015- 16 on the basis of his own presumptions, surmises and conjectures. Hence addition is liable to be deleted.
12. Ld. A.O. erred in both facts and law in assuming jurisdiction u/s 147 of the Act is bad in law since the alleged income escaping assessment had been arrived at Rs.24,36,000 by invoking section 50C being time barred as it is below Rs.50,00,000/-. Therefore, the addition is unjustified, unwarranted and against the law and thus not sustainable in the law. Consequently, the additions need to be quashed.”
At the outset of hearing, no one appeared on behalf of the assessee. Submission of ld.DR : 3. The ld.DR for the Revenue relied on the order of DRP and Assessing Officer. The ld.DR vehemently submitted that there was a delay in filing appeal before DRP, therefore, DRP was right in rejecting the application of the assessee. Ld.DR also submitted that assessee had not filed copy of draft assessment order which is the basic requirement for deciding the objections raised by assessee. Therefore, DRP was right in rejecting assessee’s application.
Findings & Analysis : 4. We have heard ld.DR for the Revenue and perused the records. In this case, the assessee had filed objections before Draft Resolution Panel-3[DRP], West Zone, Mumbai by post which was received by DRP on 15.04.2024. However, DRP rejected the Assessee’s application as under: “ You have requested for direction of the DRP issued in your case. In this regard, please be informed that in your case, Draft assessment order was passed on 15.03.2024. You were supposed to file objection with the DRP within 30 days of the date of passing of Draft assessment order. In your case, application was received in this office on 15.04.2024 through speed post whereas, it should have been received on or before 13.04.2024 which led to delay of 2 days.” 4.1 Thus, DRP rejected the assessee’s application merely on the ground that it was not filed within 30 days. It is observed that 13.04.2024 was Saturday, it means, it was a holiday for the Office of the DRP. The next working day was 15.04.2024. DRP received the application on 15.04.2024.
4.2 The Limitation Act, 1963 – Section 4 is as under : “4. Expiry of prescribed period when court is closed.—Where the prescribed period for any suit, appeal or application expires on a day when the court is closed, the suit, appeal or application may be instituted, preferred or made on the day when the court re-opens.”
4.3 Thus, as per Section 4 of the Limitation Act, 1963 when the limitation period expires on a holiday, application may be instituted on the next working day. In this case, admittedly, assessee’s application was received on 15.04.2024(Monday) which was the next working day. Therefore, as per Section 4 of the Limitation Act, 1963, Assessee’s application was within time. Therefore, we are of the considered opinion that DRP has erred in rejecting assessee’s application on the ground of limitation.
4.4 DRP has also mentioned following reasons for rejection of the application : 1) The application is not filed with DRP in person as per Rule 4(1) of the I.T.Rule. 2) Form No.35A, as prescribed, is not filed in quadruplicate. 3) Certified Draft Assessment Order is not attached (in quadrapulate). 4) The application is received on 15.04.2024 which is beyond the time limit prescribed u/s 144C(2) of the I.T.Act, 1961. 4.5 The DRP alleges that assessee had not submitted certified copy of the assessment order, Form No.35A was not filed in quadruplicate. These are the defects in appeal application. For this, DRP should have issued a defect memo. DRP has become Akash, Noida[A] hyper-technical. Assessee had filed application by post which is sufficient compliance of the Rule 4(1) of the I.T.Rules. The substantial justice is more important.
4.6 In this case, the AO has invoked provisions of section 56(2)(vii)(b) of the Act, which came into effect from 01.10.2009. However, in the assessment order, in para 4 the Assessing Officer has admitted that as per the sale deeds, the assessee had made payments as under : Date Amount 13.05.2008 - Rs.20 lacs each 09.06.2008 - Rs.20 lacs each 12.08.2008 - Rs.10 lacs each 4.7 It is also accepted by the AO in the assessment order para 4 that all these payments were made by drawing cheques on ICICI Bank. Accordingly, in Para 4 of the assessment order, AO held source of the investment is explained. Thus, in the assessment order, AO has admitted that assessee had purchased two immovable properties each for Rs.25 lacs, and source of the said investment was explained properly. It is also observed from the assessment order that entire payment was made in F.Y.2008-09. It is also observed that assessee had submitted copy of sale deeds 4.8 Section 56(2)(vii)(b) is reproduced here as under : (vii) where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009,— (a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum; (b) any immovable property,— (i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property; (ii) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration: 4.9 The CBDT had issued Circular Number 5 of 2010 dated 3rd June, 2010 explaining the amendments, the relevant part of the CBDT circular is reproduced here as under : “ 23.4 Applicability- These amendments have been made applicable with effect from 1st October, 2009 and will accordingly apply in relation to transactions undertaken on or after such date.”
4.10 Thus, the amendment is applicable to transactions undertaken after 01/10/2010. In this case the AO has admitted that entire payment was made by the assessee as purchaser to seller on or before 12/08/2008. The assessee has also filed copy of Agreement dated 20/08/2008 before us, however it is not clear whether the impugned agreement was filed before the AO or not! Akash, Noida[A] 4.11 The AO/DRP needs to analyze section 56(2)(vii)(b) proviso which states that where the date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not same, the stamp duty value on the date of the agreement may be taken for the purpose of this section. In this case, before us, assessee has also filed copy of agreement to purchase dated 20.08.2008(which is in hindi). The AO has not discussed about this impugned agreement dated 20.08.2008 which does mention about the payments referred by the AO in the assessment order.
4.12 Thus, in this case, apparently facts have not been properly analyzed by the AO. We have already mentioned that AO has nowhere mentioned Date of Registration, which is crucial as the Section 56(2)(vii)(b) came into effect from 01/10/2009 and assessee claimed that there is an agreement dated 20.08.2008.
4.13 We have already mentioned about that Dispute Resolution Panel has rejected assessee’s application erroneously, though assessee had filed application within the time.
Akash, Noida[A] 4.14 In view of the above, we set-aside the order of the DRP to the DRP for de-novo adjudication. DRP shall provide opportunity of hearing to the assessee. Assessee shall file all necessary documents before the DRP. Accordingly, grounds of appeal raised by the assessee are allowed for statistical purpose.
In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open Court on 30th August, 2024.