BHAWNA BAFNA, JAGDALPUR,BASTAR vs. INCOME TAX OFFICER, WARD- JAGDALPUR, BASTAR

Brief facts in this case are that the assessee culled out from records is that, the appellant is an Individual and during the A.Y. 2015-16, he had e-filed its return of income on 29/01/2016 vide acknowledgement no.940568980290116 declaring total income of Rs.2,66,170/-. The case of the appellant was selected for Limited scrutiny under section 143(3) of the Income Tax Act. The limited scrutiny was to verify the Purchase of Property.

During the Financial Year 2014-15 on 17/07/2014 the assessee along with 19 other co-purchasers had acquired a plot of land at Khadag Bagicha, Praveer Ward, Jagdalpur admeasuring 1 Lakh Sq. Feet., at the total cost of Rs. 2,71,00,000/- where as the market value assessed by stamp value authority of the Said land was Rs. 4,34,94,500/-. The agreement to purchase the said land was made on 11/04/2013 (FY 2013-14) and the said agreement was registered vide Registered Agreement No. A1/83 with the O/o Sub Registrar. As per the terms of agreement final Registry was to be done after other Legal Formalities. The said agreement was done in accordance to the market rates and with reference to the size, high investment cost and location of the Land. The price decided was the fair market price of the Land. The property purchased was subject to several distressing circumstances and as a result of which the market value of land can certainly not be compared with that of any normal land.

As the final registry was done 17/07/2014 the O/o The Stamp Valuation Authority applied the Rate applicable to financial year 2014-2015, while valuing

The assessee on 04/12/2017 submitted an application for reference to the Departmental Valuation Officer u/s 50C(2) of the Income Tax Act, 1961. It was mentioned in the application that the assessee does not agree with Valuation adopted by the stamp value authority stating various adverse features of the property. As per various judicial pronouncements including the Hon’ble jurisdictional CG High Court’s ruling it has become settled law that the AO must refer to the Departmental Valuation Officer if the assessee protests the stamp valuation. But despite several request the AO did not refer the matter to DVO and unilaterally proceeded the with matter.

The A.O. Proceeded with matter and assessed the difference between Stamp Value and Actual Purchase Consideration 8,19,725/- as income from other sources u/s 56(vii)(b)(ii). The Learned AO ignored the fact that the registered agreement to purchase the said land was executed during the FY 2013-14 and some part of the consideration was paid in cheque as required by the proviso to 50C in the same year. So, theref ore, in any case the Stamp Value as per FY 2014-15 guideline was irrelevant.

The assessee has acquired the above mentioned Property Khadag Bagicha, Praveer Ward, Jagdalpur for Rs. 15,09,252/-. This property was purchased out of accumulated savings, unsecured loans from family members and incomes earned over the years. A Point wise submission indicating sources of amounts invested in these properties were made along with relevant evidences regarding the sources. Copies of Bank accounts and confirmations of accounts from various sources, Copies of deed of properties purchased were submitted. Copies of ITR V, With Computation and Capital Account and Balance Sheet for the last 3 financial years were also submitted as a proof of cash and bank balances carried over the years. Confirmations of unsecured lenders were also submitted. The Learned AO disregarded the evidences submitted and assessed Rs. 8,06,656/- as unexplained/unsubstantiated investment on account of Property purchased at Khadag Bagicha. It is pertinent to note that the Learned AO assessed the investment made in property as unexplained only considering current year income. The fact the assessee has been submitting her return of income from over the years and income so reported was accounted for in his capital account and Balance sheet, was totally ignored as self-created Balance Sheet.

Aggrieved the assessee carried the matter in appeal before the CIT(Appeals). It was observed by the CIT(Appeals) that the appeal filed by the assessee before the CIT(Appeals), NFAC to challenge the addition of Rs.8,06,656/- made by Ld AO on account of unexplained/unsubstantiated investment u/s.68 r.w.s.69 of the Act. The assessee was called for hearing on four occasions by Ld CIT(A) but even

The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us.

At the very outset, Ld. AR for the assessee, contradicting the observation of Ld CIT(A) qua the non-submission of any response, had submitted that the assessee has made a written submission on 16.10.2018 before the CIT(Appeals)- 1, Raipur (C.G.), when the appeal was filed under physical mode. Ld AR submitted that, since, the appeal was later on migrated to NFAC in terms of Notification No.76/2020/F. No.370142/33/2020-TPL dated 25.09.2020 issued by the board, it seems, the submission of the assessee filed manually before the CIT(Appeals)-1, Raipur before the case was migrated to NFAC, which supposed to be placed on record and should have been considered, but was not considered by the CIT(Appeals), NFAC, therefore, the assessee was not in default once written submissions was filed by the assessee before the CIT(Appeals) during the process of appellate proceedings. It was prayer of the Ld. AR that the matter should be restored to the file of the CIT(Appeals), so that the assessee’s explanation made in the form of written submission may be discussed and deliberated appropriately on merits.

Ld. Sr. DR vehemently supported the order of the CIT(Appeals) and submitted that adequate opportunities were granted to the assessee by the CIT(Appeals). However, the assessee opted not to comply with the same, thus, the order of Ld CIT(A) deserves to be upheld.

We have heard the ld. authorized representatives of both the parties, perused the material available on record as well as judicial pronouncements. On a perusal of the order of the CIT(Appeals) wherein he had observed that the assessee appellant had not made any compliance to the opportunities afforded to it and also no written submissions was filed by the assessee on the portal, is contrary to the fact on record that the assessee appellant has submitted a written submissions dated 16.10.2018 filed by it before the CIT(Appeals), copy of the said submission is placed before us at Page 1 to 18 of the assessee’s paper book, therefore, we can endorse that the assessee has made his submissions when the appeal was manually filed before the CIT(Appeals). Since the appeal was subsequently migrated to NFAC, it may be the reason that the manually submitted written submission was not reached to or missed attention of Ld CIT(A) NFAC, who had decided the issue. Under such circumstances, the observation of the Ld CIT(A) NFAC is found to be on mistaken conviction that the assessee has not made any written submission based on which the appeal was decided without looking into the issues on its merits. In our considered view, once an appeal is preferred before the CIT(Appeals), it becomes obligatory on his part to dispose the same on merit, and it is not open for him to summarily dismiss the appeal on account of non-prosecution of the same by the assessee. A perusal of Sec.251(1)(a) and (b) of the Act, as well as the “Explanation” to Sec.251(2) of the Act, reveals that the CIT(A) remains under a statutory obligation to apply his mind to all the issues which arise from the impugned order before him. As per mandate of law, the CIT(Appeals) is not vested with any power to summarily dismiss the appeal for non-prosecution. The view above is fortified by the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Premkumar Arjundas Luthra (HUF) (2017) 297 CTR 614 (Bom). In the case mentioned above the Hon’ble High Court observed as under:

We, thus, not being convinced by the view adopted by Ld CIT(A), NFAC by dismissing the appeal for non-prosecution, therefore, set aside his order with a direction to dispose of the same on merits. Needless to say, the CIT(Appeals) shall afford a reasonable opportunity to be heard to the assessee during the de- novo appellate proceedings. The grounds of appeal raised by the assessee are, thus, disposed in terms of our observations herein above.

In the result, appeal of the assessee is allowed for statistical purposes in terms of our aforesaid observations.