ANITA GUPTA,GWALIOR V. .COMMISSIONER OF INCOME TAX (APPEALS),NATIONAL FACELESS APPEALS CENTRE (NFAC), NATIONAL FACELESS APPEAL CENTRE (NFAC)

ITA 7/AGR/2022

AI Insights

The case involves Smt. Anita Gupta, who appealed against the order of the CIT(Appeals) which had upheld the assessment order made by the Assessing Officer (AO). The AO had made two main additions to the income of the assessee: disallowing a loss from commodity trading and treating a larger share of capital gains from the sale of agricultural land. The CIT(Appeals) dismissed the appeal ex-parte due to non-compliance by the assessee in responding to notices. The Tribunal found that the CIT(Appeals) had not adjudicated the issues on merits and thus remanded the case back for a fresh decision.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 23182 (ITAT-AGRA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAILENDRA SRIVASTAVA
• Keywords: Set aside; Opportunity of being heard; Additional evidence; Salary income; Capital Gains; Assessment record; Non compliance
• Section: 143(3); 142(1); 143(2)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AGRA (SMC) BENCH, AGRA BEFORE: SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA No.07/Agr/2022 Assessment Year: 2013-14 Smt. Anita Gupta, 106,White House , 37, City Centre , Gwalior-474011 M.P. PAN: ABEPG5528N v. Income Tax Officer, Ward 3(2), Gwalior Madhya Pradesh . (Appellant) (Respondent) Assesseeby :None Revenue by : Sh. Shailendra Srivastava, Sr. DR Date of hearing : 26.12.2024 Date of Pronouncement : 26.12.2024 ORDER This appeal in ITA No. 07/Agr/2022 for the assessment year 2013-14 has arisen from the appellate order dated 06.11.2021 (DIN& Order No. ITBA/NFAC/S/250/2021-22/1036750760(1)) passed by learned Commissioner of Income-tax(Appeals),NFAC, Delhi,which in turnhas arisen from the assessment order dated 28.03.2016passed by the Assessing Officer u/s. 143(3) of the Income-tax Act, 1961. ITA No. 07/Agr/2022 2 2. Brief facts of the case are that the assessee filed her return of income declaring income of Rs.6,49,070/-,on 28.03.2014. The case of the assessee was selected for framing scrutiny assessment through CASS. Statutory notices u/s 143(2) and 142(1) were issued by the AO during assessment proceedings. The assessee participated in the assessment proceedings . The AO observed that the assessee was engaged in the commodity trading and incurred the loss of Rs. 76,549/- . The assessee has deducted the loss from income from other sources. The AO observed that as per Section 57, only that expenditure (not being capital) which is laid out wholly and exclusively for the purpose of making or earning income from other sources is allowable as deduction. The AO observed that the said amount of Rs.76,549/- incurred as loss is not eligible for such deduction as the same is not incurred wholly and exclusively for the purpose of making or earning of income under the head ‘ income from other sources’ . Thus, the said loss was disallowed by the AO and added to the total income of the assessee. 2.2 The AO further observed that the assessee has sold immovable property value of which is quoted as Rs. 1,30,00,000/- . The said land ITA No. 07/Agr/2022 3 is an agricultural land situated within limits of Gwalior Municipal Corporation. The assessee claimed that it is jointly held by her with two other parties, and her share is 25%. The AO observed that the assessee could not produce evidence to substantiate that her share is 25%. The AO treated 1/3 share of the said property as her share of sale consideration and brought the same to tax. 3. Aggrieved, the assessee filed first appeal with ld. CIT(Appeals). The Ld. CIT(Appeals) issued as many as four notices, but there was no compliance from the assessee. The Ld. CIT(Appeals) dismissed the appeal of the assessee ex-parte in limine without deciding the issues arising in the appeal on merits, by upholding the additions as were made by the AO. The assessment order was confirmed and the appeal of the assessee stood dismissed by the learned CIT(A). The appellate order dated 06.11.2021 passed by ld. CIT(A) is reproduced hereunder: “1. In this Faceless Appeal proceedings, letters/notices were issued on 16.01.2021, 07.07.2021, 24.09.2021 and 27.10.2021. 2. However, not a single notice has been even responded to. 3. The appellant has not controverted the order against which this appeal has been filed. ITA No. 07/Agr/2022 4 4. Hence, the order is confirmed. 5. In the result, the appeal is dismissed.” 4. Aggrieved, the assessee filed second appeal with the Tribunal, and None appeared on behalf of the assessee when this appeal was called for hearing before the SMC Bench.Ld. Sr. DR, Shri Shailendra Srivastava appeared on behalf of Revenue, and relied upon the order of ld. CIT(Appeals). The ld. Sr. DR fairly submitted that the matter can be restored back to the file of ld. CIT(A) for fresh adjudication, as the ld. CIT(A) has not decided the issues arising in the appeal on merits. It was submitted that the assessee is equally responsible for its woes as the assessee did not comply with any of the four notices issued by ld.CIT(A) during the first appellate proceedings. 5. After hearing ld. Sr. SR and perusing the material on record, I have observed that the assessee derives her income from salary and rent. The case of the assessee was selected by Revenue for framing scrutiny assessment through CASS. The AO made two additions to the income of the assessee. The same are discussed in preceding para’s of this order and are not repeated. The assessee filed first appeal with ld. CIT(A), wherein the assessee challenged the addition ITA No. 07/Agr/2022 5 of Rs. 9,78,974/- as was made by the AO on account of long term capital gain by treating the share of the assessee in the property sold at 1/3 instead of 25% as claimed by the assessee. The assessee has filed in statement of fact filed before the ld. CIT(A) that originally there were four co-owners of the property being agricultural land which was now sold during the year under consideration, each co-owner having 25% shares. It is stated that two co-owners later sold their share to one Shruti Infrastructure Private Limited who now holds 50% share, while assessee continue to hold 25% share. The ld. CIT(A) dismissed the appeal of the assessee ex-parte in limine without deciding the issues arising in the appeal on merits. The ld. CIT(A) issued as many four notices as stated in appellate order but there was no compliance by the assessee. The ld. CIT(A) simply dismissed the appeal of the assessee by a non-speaking cryptic order , and upheld the assessment order without deciding the issues arising in the appeal on merits, mainly on account of non compliance by the assessee to the four notices issued by ld. CIT(A). The appellate order passed by ld. CIT(A) is reproduced hereunder: “1. In this Faceless Appeal proceedings, letters/notices were issued on 16.01.2021, 07.07.2021, 24.09.2021 and 27.10.2021. ITA No. 07/Agr/2022 6 2. However, not a single notice has been even responded to. 3. The appellant has not controverted the order against which this appeal has been filed. 4. Hence, the order is confirmed. 5. In the result, the appeal is dismissed.” I have observed that the ld. CIT(Appeals) has not decided the appeal on merits, and the appeal of the assessee was dismissed ex-parte in limine without deciding the issues arising in the first appeal on merit in accordance with law by simply upholding the assessment order, mainly on the grounds of non-compliance by the assessee to the notices issued by ld. CIT(A). The appellate order passed by ld. CIT(A) as reproduced above is a non speaking cryptic order passed ex-parte in limine without deciding the issue arising in the appeal on merits. Even, there is no mention as to the service of the notices being effected by ld. CIT(A) on to the assessee. The ld. CIT(A) is required and obligated to pass appellate order in compliance with the provisions of section 250(6), as ld. CIT(A) is required to pass reasoned and speaking order on merits in accordance with law. Reference is drawn to provisions of Section 250(6), wherein ld. ITA No. 07/Agr/2022 7 CIT(A) has to state point for determination, his decision and reasons thereof. The ld. CIT(A) even did not made any enquiry with respect to the claim of the assessee that she owns 25% share in the property being sold on which the long term capital gain has arisen, while the AO brought to tax 1/3 share of profits in the hands of the assessee as long term capital gains. Even assessment records were not called for by ld. CIT(A). No enquiry was even made by ld. CIT(A) with Sub- Registrar. Reference is drawn to provisions of Section 250(4).The appellate order passed by ld. CIT(A) is subject to further appeal with ITAT u/s 253. The appellate order passed by ITAT is subject to further appeal before Hon’ble High Court u/s 260A. The judgment and order passed by Hon’ble High Court is also subject to challenge before Hon’ble Supreme Court. Thus, the appellate order passed by ld. CIT(A) is not a final order, as it is subject to challenge before higher appellate authority. Thus, Reasons which weighed in the minds of the adjudicating authority while adjudicating appeal on merits of the issues are cardinal as the higher appellate authority can then adjudicate appeal on the issues arising in appeal before them, based on decision and reasoning of ld. CIT(A) in deciding the issues. ITA No. 07/Agr/2022 8 If the ld. CIT(A) simply dismiss the appeal merely because the assessee did not comply with the notices issued by ld. CIT(A) in limine without adjudicating issues arising in the appeal on merits , such order is not sustainable in the eyes of law keeping in view provisions of Section 250(6) , and also higher appellate authorities will be deprived to see what weighed in the mind of the ld. CIT(A) while adjudicating appeal as it will be an order passed without reasoning on the issues on merits . The appellate order of the CIT(A) is clearly in violation of section 250(6) of the Act and liable to be set aside. Merely stating the assessment order passed by AO is upheld, and that the assessee has not submitted details/documents is not sufficient. The ld. CIT(A) is not toothless as his powers are co- terminus with the powers of the AO, which even includes power of enhancement. It is equally true that the assessee also did not complied with the notices issued by ld. CIT(A) and did not file the requisite details/documents to support his contentions. Thus, the assessee is equally responsible for its woes. The assessee has filed before ITAT additional evidences by way of paper book carrying 30 pages. The same is placed on record in file. The copy of registered ITA No. 07/Agr/2022 9 deed dated 10.11.2006 evidencing purchase of the property as well reflecting that there were 4 co-owners of the said property. The assessee has filed copy of khasra and other documents . The assessee has also filed registered sale deed dated 28.03.2013. These documents filed as additional requires verification by the authorities. The assessee has stated in her application dated 18th March, 2024 filing additional evidences, that her son was suffering from blood cancer when assessment proceedings were going on, while she did not received any of the four notices issued by ld. CIT(A).The said application dated 18th March, 2024 filed by the assessee along with additional evidences are placed on record in file. Keeping in view the entire factual matrix as culled out above in the preceding para’s of this order, it will be fair to both the parties as well in the interest of justice, that the appellate order of ld. CIT(Appeals) be set aside and the matter be remanded back to the file of ld. CIT(Appeals) for fresh adjudication after giving proper opportunity of being heard to both the parties w.r.t. the issues arising in the appeal .The assessee is directed to comply with the notice issued by ld. CIT(Appeals) during the appellate proceedings in set aside remand ITA No. 07/Agr/2022 10 proceedings, otherwise ld. CIT(A) shall be free to decide the appeal ex-parte on merits in accordance with law, after complying with provisions of Section 250(6). I clarify that I have not commented on merits of the issues. Thus, the appellate order passed by ld. CIT(A) is set aside and matter is restored back to the file of ld. CIT(A) for fresh adjudication. I order accordingly. 6. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on26.12.2024 on the conclusion of hearing in the presence of ld. Sr. DR, and reduced to writing and signed on 31.12.2024 Sd/- (RAMIT KOCHAR) ACCOUNTANT MEMBER Dated: 31.12.2024 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT Assistant Registrar ITAT Agra "