UTTARANCHAL ESTATES P.LTD,DEHRADUN vs. DCIT, CIRCLE-27(1), NEW DELHI

This appeal is filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)-9 [hereinafter referred to CIT (Appeals)] New Delhi, dated 27.09.2019 for assessment year 2011-12.

The assessee has raised the following substantive grounds of appeal:- “

The Ld. AO/CIT (A) erred in law and in the fact & circumstances of the case by not granting the benefit of brought forward losses by the Appellant.

The Ld. CIT (A) has erred in law and facts of the case in rejecting the application for additional evidence holding that the Appellant's case does not fall under any of the conditions as per the provisions of Rule 46A ignoring the detailed facts and submitted during the hearings.

Without prejudice to the above grounds, the Ld. AO/ CIT (A) erred in law and in the fact & circumstances of the case by not reducing the cost of acquisition of the property sold by the Appellant while computing the taxable Capital gain.

Without prejudice to the above grounds in view of the fact that none of the notices during the course of the assessment proceedings were received by the Appellant company and the information mentioned the assessment order is incorrect the order is unjust, excessive bad in law and against the Principle of natural justice and the Appellant company prays that the said order be set aside and fresh assessment be done for the said AY 2011-12.

The Ld. AO/CIT (A) has erred on facts and in law in levying/upholding the interest under section 234A and 234B of the Act.

That on facts and in laws, the Ld. AO erred in initiating the penalty proceedings under section 271(1)(c) of the Act for concealment of income.”

At the outset, the ld. Counsel for the assessee submits that the assessment order was passed under section 144 of the Income Tax Act, 1961 (the Act) as best judgement assessment as there was no compliance by the assessee to various notices issued by the Assessing Officer. Ld. Counsel submits that since there was no representation from the assessee company the re-opened 3 assessment was completed by the Assessing officer on 26.12.2018 assessing income of the assessee at Rs.3,38,80,000/- for the reason that the assessee company failed to file any justification of the transaction in respect of sale of immovable property. The ld. Counsel submits that the assessee filed appeal before the ld. CIT (Appeals) along with additional evidences in the form of sale deed of the property sold during the financial year 2010-11 relevant to assessment year 2011-12 and explained that this is the only property sold by the assessee during the assessment year under consideration and income arising from sale of such property is business income. The ld. Counsel submits that the ld. CIT (Appeals) however without admitting additional evidences sustained the addition for the reason that the Assessing Officer has granted sufficient opportunities in the course of assessment proceedings and that the assessee did not comply with the same. The ld. Counsel for the assessee submits that the addition was simply sustained by the ld. CIT (Appeals) without giving any independent finding. Therefore, the ld. Counsel for the assessee submits that the matter may be restored to the file of the Assessing Officer for de novo assessment.

The ld. DR has no serious objection in restoring the matter to the file of the Assessing Officer for de novo adjudication.

Considering the rival submissions of the parties and perusing the orders of the authorities below and the additional evidences furnished before us, we are of the considered view that this matter has to go back to the Assessing Officer for de novo adjudication in accordance with law for the reason that the assessee is engaged in the business of colonizers, builders, developers, contractors and 4 dealers in real estate and to acquire by purchase, exchange, hire or otherwise develop or operate land buildings and hereditaments of any tenure or description including agricultural land etc. If the assessee is engaged in the business of real estate the property sold by the assessee has to be examined under which head the income to be taxed. The Assessing Officer treated proceeds from sale of property under the head capital gains though the assessee as per its memorandum is engaged in the business of real estate. Therefore, in our considered view all these aspects have to be examined by the Assessing Officer de novo. Thus, we restore this issue to the file of the Assessing Officer for de novo assessment in accordance with law after providing adequate opportunity of being heard to the assessee.

In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on : 29/05/2023.