BHANU PRATAP,BAREILLY vs. ITO-1(1), BAREILLY

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ITA 133/LKW/2024Status: DisposedITAT Lucknow28 November 2024AY 2011-12Bench: SHRI ANADEE NATH MISSHRA (Accountant Member)23 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal dismissed the grounds related to the jurisdiction of the Assessing Officer to initiate reassessment proceedings. It held that the approvals granted by the superior authorities (Additional CIT and Principal CIT) were not mechanical. The Tribunal noted that these authorities recorded their satisfaction in their own handwriting and, as per Section 151 of the Act, were not required to provide elaborate reasons when satisfied with the Assessing Officer's recorded reasons. Reliance was placed on the judgments in Arun Duggal vs. DCIT and Experion Developers (P.) Ltd. vs. Additional Commissioner of Income Tax, which held that mechanical approval is not established merely by the absence of elaborate reasoning. Therefore, the satisfaction was considered properly derived. However, the Tribunal found that the Assessing Officer had erred in taxing the entire sale consideration amounting to Rs. 4,27,455/- as income without deducting the indexed cost of acquisition and/or cost of improvement. This was inconsistent with the provisions of the Income Tax Act for computing capital gains. Accordingly, the matter was restored to the Assessing Officer for computing the income under the head capital gains in accordance with law. The appeal was partly allowed for statistical purposes.

What were the facts?

The assessee, Shri Bhanu Pratap, filed an appeal before the Income Tax Appellate Tribunal (ITAT) challenging an order dated December 20, 2023, passed by the Commissioner of Income Tax (Appeals) [CIT(A)]. The appeal was filed beyond the prescribed time limit by 24 days, which was condoned by the Tribunal on medical grounds. The original assessment order, passed ex-parte under Section 144/147 of the Income Tax Act, 1961, on December 26, 2018, made an addition of Rs. 4,27,460/- on account of Long Term Capital Gain (LTCG). The CIT(A) had dismissed the assessee's appeal against this assessment order. The ITAT noted that no representative appeared for the assessee during the hearing.

What were the issues?

1. Whether the Assessing Officer erred in assuming jurisdiction to initiate reassessment proceedings under Section 147/148 of the Income Tax Act, 1961, given the alleged mechanical approval by superior authorities and vague reasons recorded. Assessee's contention: The reassessment proceedings were invalid because the sanction for reopening was mechanical and lacked application of mind by the superior authorities (Additional Commissioner and Principal Commissioner). The reasons recorded were vague and incomplete, failing to account for the cost of purchase and thus not arriving at correct capital gains. The entire sale consideration was treated as income, disregarding the cost of acquisition. Revenue's contention: The revenue relied on the orders of the Assessing Officer and the CIT(A). The CIT(A) in his order noted that the Assessing Officer made attempts to verify information and issued verification letters, to which the appellant did not properly respond. The CIT(A) also held that the superior authorities' approvals were not mechanical, as they recorded their satisfaction in their own handwriting and were not required to provide elaborate reasons, citing the case of Arun Duggal vs. DCIT and Experion Developers (P.) Ltd. vs. Additional Commissioner of Income Tax. 2. Whether the Assessing Officer erred in treating the entire share of sale consideration as income without giving credit for the cost of purchase of the property while determining income from sale of property.

Which sections of the Income-tax Act were involved?

Section 144,Section 147,Section 148,Section 151,Section 50C,Section 54F,Section 253(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, LUCKNOW BENCH ‘SMC’, LUCKNOW

Before: SHRI ANADEE NATH MISSHRA

For Respondent: Shri Sanjeev Krishna Sharma

2011-12 against impugned appellate order dated 20/12/2023 (DIN & Order No.ITBA/NFAC/S/250/2023- 24/105816437(1) of Commissioner of Income Tax (Appeals) [“CIT(A)” for short].

(B) This appeal has been filed by the assessee, beyond time limit prescribed under section 253(3) of IT Act. As per noting of registry, this appeal is time barred by 24 days. The assessee has submitted application for condonation of delay in filing of the appeal on medical ground, supported by medical certificate; pleading that the delay was unintentional and beyond the control of the assessee and has requested to admit the appeal for hearing. The learned Sr. Departmental Representative for Revenue did not express any objection to assessee’s application for condonation of delay in filing of the appeal. In view of the foregoing, and in specific facts and circumstances of the present appeal before us, the delay in filing of this appeal is condoned; and the appeal is admitted for hearing.

(C) The assessment order in this case was passed on 26/12/2018 u/s 144/147 of the Income Tax Act, 1961 (“IT Act” for short) ex-parte qua the assessee by making addition of Rs.4,27,460/- on account of Long Term Capital Gain. The assessee filed appeal against the assessment order in the office of learned CIT(A). Vide DIN & Order No.ITBA/NFAC/S/250/2023- 24/105816437(1) dated 20/12/2023, the assessee’s appeal was dismissed by the learned CIT(A). The present appeal has been filed by the assessee against the aforesaid impugned appellate order dated 20/12/2023 passed by the learned CIT(A).

(D) At the time of hearing, there was no representative from the assessee’s side. In the absence of any representation from assessee’s side, we have heard learned Sr. Departmental Representative. He relied on the orders dated 26/12/2018 and dated 20/12/2023 passed by the Assessing Officer and the learned CIT(A) respectively.

(D.1) The first ground of appeal is regarding the jurisdiction of the Assessing Officer to initiate proceedings u/s 148 of the IT Act. The second ground of appeal is regarding validity of reassessment proceedings on the ground that the reasons recorded suffered from infirmities and the belief of the Assessing Officer was erroneous. The aforesaid two issues have been dealt with by the learned CIT(A) in detail in his impugned appellate order dated 22/12/2023. The relevant portion of the order dated 22/12/2023 of learned CIT(A) is reproduced as under:

(D.2) Materials on record have been perused. No submissions (written or oral) have been made from the assessee’s side during appellate proceedings in Income Tax Appellate Tribunal. No materials have been brought for the consideration of the Bench requiring any interference with the impugned appellate order of the learned CIT(A). The learned CIT(A) has passed a detailed and well reasoned order in the facts and circumstances of the present case. In the absence of any material to warrant interference with the impugned order of learned CIT(A), the order of the learned CIT(A) on aforesaid issues is upheld. Accordingly, ground No. 1 & 2 of the appeal are dismissed.

(D.3) Ground No. 3 of the appeal is regarding giving credit for cost of purchase of property while determining income from sale of property. On perusal of the assessment order it is found that the Assessing Officer has taxed the entire sale consideration amounting to Rs.4,27,455/- as income of the assessee without deducting (indexed) cost of acquisition and/or cost of improvement. This act of the Assessing Officer is inconsistent with provisions of Income Tax Act regarding computation of capital gain. The Assessing Officer is directed to compute income under the head capital gains in accordance with law by deducting (indexed) cost of acquisition and/or cost of improvement from the sale consideration of the property for the purpose of determining income under the head capital gain. For this limited purpose, the matter is restored to the file of the Assessing Officer. Accordingly ground of appeal is partly allowed.

(E) In the result, the appeal of the assessee is partly allowed for statistical purposes.

(Order pronounced in the open court on 28/11/2024)

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