KARAMSHIBHAI MEGHJIBHAI PATEL,ANAND vs. THE ITO, WARD-1(3)(4) (PREVIOUSLY THE ITO, WARD-3, NAVSARI), PETLAD
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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: SMT. ANNAPURNA GUPTA & SHRI SIDDHARTHA NAUTIYAL
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 30.01.2024 for Assessment Year 2012-13.
The Assessee has taken the following grounds of appeal:-
“1. The Ld. CIT(A) has erred in law and on facts of the case in dismissing the appeal without providing opportunity of hearing to the appellant, thus resulting in gross violation of principles of natural justice. All the notices issued during the appellate proceedings were sent to some email id not belonging to the appellant which ultimately resulted in an ex-parte appellate order. 2. The Ld. CIT(A) has erred in law and on facts of the case in not admitting the appeal filed by the appellant u/s. 249(4)(b) of the Act without appreciating the facts and circumstances of the case. 3. The Ld. CIT(A) has erred in law and on facts of the case in dismissing the appeal without adjudicating the grounds of appeal and without entering into merits of the case
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In any case, the addition of Rs. 61,68,410/- made by the Ld. AO on account of capital gain on sale of land is not sustainable in the eyes of law. The land sold by the appellant is an agricultural land as per Section 2(14)(iii) of the Act, thus not a capital asset liable to capital gain tax u/s. 45 of the Act. 5. The Ld. CIT(A) has erred in law and on facts of the case in upholding the assessment order passed u/s. 144 r.w.s. 147 of the Act despite the fact that the assessment proceedings have not been conducted in the manner prescribed by the departmental instructions from time to time which were mandatory for compliance insofar as requisite condition of Circular No. 19 of 2019 dated 14.08.2019 of issuing order electronically with a computer-generated DIN quoted in the body of the order is not fulfilled, thus rendering the assessment order non-est and bad in law. 6. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. The action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 7. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in levying interest u/s. 234A/B/C/D of the Act. 8. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in initiating penalty proceedings u/s. 271(1)(c) of the Act. 9. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in initiating penalty proceedings u/s. 271F of the Act. 10. The Appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal.”
The brief facts of the case are that the Ld. Assessing Officer received information that the assessee had sold immovable property on September 22, 2011, for a consideration of ₹61,68,410/-, as per Registration No. 1541/SVL/24/2011. However, the assessee failed to offer the capital gain from this transaction and the assessee did not file any return of income for the year under consideration under Section 139(1) of the Act. Consequently, a notice under Section 148 of the Act was issued by the Ld. Assessing Officer on March 28, 2019, which remained uncompiled with. Thereafter, multiple opportunities of hearings were provided for the assessee to explain the above matter, but no response was received from the side of the assessee. Accordingly, the Ld. Assessing Officer completed the assessment based on the
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available records u/s 144 r.w.s. 147 of the Act, due to assessee's failure to cooperate during the course of assessment proceedings. As per the Ld. Assessing Officer, the sale deed, obtained from the Sub Registrar, Savli, Vadodara, confirmed the sale of non-agricultural land by the assessee, at Moje Gam Haripura, Vadodara District, for a sum of ₹61,68,410/-. The Ld. Assessing Officer was of the view that since the land was a capital asset under Section 2(14)(iii) of the Act, the assessee should have disclosed the capital gains on this sale of land in the return of income, which was not done by the assessee. As a result, the Ld. Assessing Officer added the sale consideration of ₹61,68,410/- to the assessee's income, for the year under consideration.
In appeal, Ld. CIT(Appeals) dismissed the appeal of the assessee on the ground that due taxes for filing of appeal were not paid by the assessee, and hence the appeal filed by the assessee was not maintainable. Ld. CIT(Appeals) noted that the appeal filed in Form No. 35 had certain deficiencies: Firstly, tax on the returned income was not paid, or particulars of payment were not mentioned, and Secondly, Form 35 was incomplete and not properly filled. The Ld. CIT(Appeals) held that an appeal is not admissible under Section 249(4) of the Act, unless the assessee has paid the tax due on the income returned or, where no return has been filed, has paid an amount equal to the advance tax payable. In this case, the assessment order under Section 144 read with Section 147 stated that the appellant did not file a return of income, and the total income was computed at ₹61,68,410/-, with a tax payable of ₹34,54,113/- by the Ld. Assessing Officer, including interest for delayed payment of advance tax. Further, in Column 9 of Form No. 35, which pertains to whether an amount equal to the advance tax was paid, the same was marked "NA" by the assessee. Further, the assessee failed to provide any evidence of
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having paid the advance tax as required under Section 249(4)(b) of the Act on sale of immovable property. Moreover, The assessee also did not file any application seeking exemption from the requirement to pay advance tax under Proviso to Section 249(4)(b) of the Act. Ld. CIT(Appeals) further observed that the assessee’s tax payment record showed that only a sum of ₹1,990/- was paid as taxes, which is far below the required advance tax amount of ₹31,08,701/-, being 90% of the disputed demand. Despite the appellant's incorrect marking of "NA" in column 9 of Form 35, it was evident that the required advance tax had not been paid before filing of appeal. Accordingly, Ld. CIT(Appeals) held that since the advance tax was not paid as required under Section 249(4)(b) of the Act, the appeal could not be admitted. Accordingly, the appeal of the assessee was dismissed by Ld. CIT(Appeals) for statistical purposes.
The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(Appeals), dismissing the appeal of the assessee. Before us, the arguments of the counsel for the assessee were two-fold: firstly, it was submitted that there was no deliberate non-compliance by the assessee during the course of appellate proceedings before Ld. CIT(Appeals). The counsel for the assessee submitted that it is evident from the contents of the order passed by Ld. CIT(Appeals) that all notices of communication were being sent on an incorrect email ID by Ld. CIT(Appeals), which was an email ID different from one mentioned in Form 35 filed by the assessee. This is evident from the fact that the notices were issued by Ld. CIT(Appeals) at shahpatel@yahoo.com, whereas the email address as mentioned in form 35 filed by the assessee was patelmk57@gmail.com. Therefore, it was for the aforesaid reason that the
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assessee could not comply to notices issued by Ld. CIT(Appeals), during the course of appellate proceedings.
Secondly, the counsel for the assessee submitted that a bare perusal of the language of Section 249(4)of the Act shows that when no return of income has been filed by the assessee, then for the purpose of filing/admission of appeal, the assessee is required to pay the amount equal to the amount of advance tax which was payable by him. In the instant case, the additions have been made by the assessing officer on the presumption that the land sold by the assessee was not an agricultural land, whereas, as per the documents available on record, the impugned land sold by the assessee was an agricultural land and hence the sale thereof was exempt from payment of capital gains tax. Accordingly, the counsel for the assessee submitted that there is no requirement for payment of advance tax on sale of impugned land, which was an agricultural land. The basis of appeal before Ld. CIT(Appeals) was that no capital gains tax can be imputed on such sale of land on the assessee, since from the facts and documents on record, the instant land was clearly an agricultural land, on which no capital gains tax was liable to be paid in terms of section 2(14) of the Act.
In response, DR placed reliance on the observations made by Ld. CIT(Appeals) in the appellate order.
We have heard the rival contentions and perused the material on record. In our considered view, looking into the instant facts, the appeal of the assessee is not liable to be dismissed on the ground that for the purpose of admission of appeal, the assessee was under obligation to pay advance tax on the entire disputed demand relating to sale of agricultural land (which was held to be
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non-agricultural land for the purpose of computation of capital gains tax by the assessing officer). In the appeal filed before Ld. CIT(Appeals), the case of the assessee is that the land in question was always an agricultural land and there was no obligation on the assessee to pay any taxes on such sale of land in terms of section 2(14) of the Act. In the case of Balwinder Singh v. ITO 163 taxmann.com 599 (Amritsar - Trib.), the Assessee, an agriculturist, derived agricultural income and sale proceeds on sale of agricultural lands against registered sale deeds. It had also deposited certain amount of cash in its bank account. The Assessing Officer made an addition on account of total deposits including cash deposits with respect to sale of land and advance received. The Commissioner (Appeals) refused to admit appeal for hearing for non-payment of advance tax as per provisions of section 249(4)(b) of the Act. It was observed that the assessee had filed documentary evidence of same before Assessing Officer demonstrating that he had no taxable income for year under appeal and his income was only agricultural income and receipts from sale proceeds sale of agricultural land was exempted income under Act and, therefore, there was no obligation to pay advance tax under section 208.The Tribunal held that Commissioner (Appeals) should have admitted appeal for adjudication on merits, and amount of advance tax payable by assessee for purpose of presenting appeal, as per provisions of section 249(4)(b), should be taken as nil. In the case of Vishnusharan Chandravanshi v. ITO 161 taxmann.com 803 (Raipur - Trib.), the ITAT held that statutory requirement contemplated in section 249(4)(b) would stand triggered only where any obligation is cast upon assessee to pay 'advancetax'. Where assessee had no taxable income, no obligation would be cast upon him to compute and pay any advance tax under sections 208 and 209. Therefore, where assessee had not filed his return of income as he had no taxable income, Commissioner
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(Appeals) could not have held that he had failed to comply with statutory conditions contemplated in section 249(4)(b) of the Act. In the case of T. Govindappa Setty v. ITO 231 ITR 892 (KAR.), the High Court held that where petitioner assessee disputed liability on ground that he could not have been assessed as HUF as on date of filing return and on date of assessment there was no HUF in existence, right guaranteed to petitioner to prefer an appeal could not be taken away under section 249(4) by taking view that petitioner had failed to pay tax due on income shown in return filed.
Accordingly, looking into the instant facts, the appeal of the assessee is directed to be admitted and the issue is set aside to the file of Ld. CIT(Appeals) to be decided on the merits of the case, in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 29/08/2024
Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 29/08/2024 TANMAY, Sr. PS TRUE COPY आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)- 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,
उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad
