DILIP KUMAR PACHORI,PRATAPGARH V. DCIT (CIRCLE) INTL. TAX, JAIPUR

MA 44/JPR/2024

AI Insights

The case involves Shri Dilip Kumar Pachori, who filed a Miscellaneous Application against the order of the Income Tax Appellate Tribunal (ITAT), Jaipur, which had dismissed his earlier appeal due to non-appearance. The dismissal was contested on the grounds that the assessee was out of India and had sent an adjournment request via email, which was not considered by the ITAT. The ITAT acknowledged the oversight and recalled the earlier order, allowing the appeal to be heard on its merits. The case also involved a dispute over the levy of penalty under section 271(1)(c) of the Income Tax Act, which was to be decided based on the outcomes of the quantum proceedings where the income was treated as capital gains.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 28511 (ITAT-JAIPUR)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAUTAM SINGH CHOUDHARY VH
• Assessee Lawyers: RAKESH LODHA; VH
• Keywords: Set aside; Capital asset; Opportunity of being heard; Capital Gains; Principle of natural justice
• Section: 254(2); 271(1)(c)

Judgement Text

" vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM MA No. 44/JP/2024 (Arising out of vk;dj vihy la- ITA No. 588/JP/2024) fu/kZkj.k o\"kZ@Assessment Year : 2016-17 Shri Dilip Kumar Pachori Village & Post. Parsola, Dhariyawad Distt. Pratapgarh (Raj.) cuke Vs. The DCIT (Intl. Taxation) Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: BBSPP 2607 L vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Rakesh Lodha, CA-VH jktLo dh vksj ls@ Revenue by : Shri Gautam Singh Choudhary (JCIT-VH) a lquokbZ dh rkjh[k@ Date of Hearing : 29/01/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement : 04/02/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM The present Miscellaneous Application has been filed by the assessee u/s 254(2) of the Act against the order of ITAT, Jaipur Benches, Jaipur in ITA No. 588/JP/2024 dated 10.07.2024 praying therein following reasons to suitably modified or recalled of its order: “The appellant most respectfully begs to submit as under: 1. The appeal in my case was decided in ITA No. 588/JP/2024 vide order dated 10-07-2024. The Hon'ble Tribunal however decided the said MA No. 44/JP/2024 Dilip Kumar Pachori vs.DCIT 2 appeal on the ground that none was present for assessee on the date of hearing of appeal and appeal was dismissed for non-prosecution. 2. It is respectfully submitted that, I was not present in India, when notice for hearing on 26-06-2024 was issued, so, I have sent request for adjournment through email at [e-mail]. on 20-06- 2024 at 11.01 AM, since, I was out of India at that time, and could not contacted and appointed an authorized representative by signing power of attorney to appear before Hon'ble Bench. (the copy of screen shot of email sent and copy of letter of adjournment is attached herewith). 3. It was second date of hearing, and I was expected to get an adjournment from the Hon'ble Bench, but, it is found that this communication was not made available on the record before the Hon'ble Members, so, it was treated by Hon'ble Bench that I am not serious in prosecuting the appeal. 4. That I am working at Kuwait for last 40 years and not regularly residing in India, under the circumstances, could not appointed authorized representative to appear before the Hon'ble Bench. In these peculiar circumstances, I was prevented by sufficient and reasonable cause from appearing before the Hon'ble Tribunal on the appointed dated or appointed someone to appear on my behalf. However, the present appeal filed with definite intends to pursue the said matter. 5. In these circumstances, it is requested that the said appeal may kindly be recalled and be decided on merits of the case. 6. It is therefore very humbly prayed that order passed in IT A No. 588/JP/2024 vide order dt. 10-07-2024 may kindly be recalled.” 2. On the other hand, ld. DR supported the order of ITAT, Jaipur (supra) praying that the assessee wants to get ITAT’s order reviewed in the grab of Miscellaneous Application. 3. Heard both the parties and perused the material available on record. The bench prima facie noticed that the appeal of the assessee was dismissed on account of non-appearance and the MA No. 44/JP/2024 Dilip Kumar Pachori vs.DCIT 3 bench while disposing the appeal noted that the assessee has not filed written submissions / arguments, controverting the order of ld. CIT(A) and ultimately same was dismissed with giving an opportunity of being heard to the assessee. Ld. AR of the assessee in support submitted that the matter was fixed for hearing before the Bench 26-06-2024 but he had sent request for adjournment through email at [e-mail]. on 20-06-2024 at 11.01 AM, since, assessee was out of India at that time, and could not contacted and appointed an authorized representative by signing power of attorney to appear before Hon'ble Bench. Therefore, the order of the bench is against the principle of natural justice and therefore, this mistake being apparent on record of not discussing the adjournment application made by the assessee and the merits of the case. Therefore, the Bench is of the view that lis between the parties has to be decided on merits so that nobody’s rights could be scuttled down without providing an opportunity of being heard to the assessee. Based on this observation the Miscellaneous Application filed by the assessee is allowed. MA No. 44/JP/2024 Dilip Kumar Pachori vs.DCIT 4 4. Now after recalling the order, the case needs to be fixed for afresh hearing but in the present case. Since the issue is related to the levy of penalty u/s 271(1)(c) of the Act, arising out of an order of ld. CIT(A) against the confirmation of addition on merits. On this aspect of the matter as argued that the ITAT Jaipur Bench in the quantum appeal filed by the assessee in his case vide ITA no. IT(IT)A No. 04/JP/2023 dated 27.01.2025, held as under:- 9. We have heard the rival contentions and perused the material placed on record. The assessee vide ground no. 3 challenged the addition of Rs. 45,20,361 made by the ld. AO. The brief facts related that dispute are that the assessee made an investment of Rs. 24,04,200/- in LIC Bima Nivesh Bond Scheme on 20.08.2005 and received maturity amount of Rs. 45,20,361/- after ten years on 20.08.2015 in his bank account. As there was no claim when the amount invested by the assessee from the income and therefore, the contributions made under life insurance policies are not revenue expenditures. At best, they can be termed as investment and, thus, a capital asset. Therefore, return on investment amounts to capital receipt which is not liable to income-tax, as it is not included in the definition of ‘income’ under section 2(24). Of course, under clause (vi) of section 2(24), income includes ‘any capital gains chargeable under section 45’. So, only accretion to capital assets can be charged to tax as capital gains. Since the capital asset involved is a long-term capital asset, it will be chargeable to lower the rate of taxation under section 112 with full benefits of indexation thereon. Therefore, ground no. 3 raised by the assessee is allowed in terms of the observations so made. Since we have allowed the ground no. 3 the assessee on merits, the ground no. 1 & 2 being technical does not require our findings as they remained educative in nature. Resultantly, the appeal filed by the assessee is allowed in terms of the observation as discussed herein above. MA No. 44/JP/2024 Dilip Kumar Pachori vs.DCIT 5 As is evident from the above order of the ITAT in quantum proceeding we have held that the money received in the hands of the assessee be charged to tax as capital gain and not the whole receipt. Since that issue is set aside to the file of ld. AO the issue of levy of penalty also needs to be decided along with the quantum proceeding. 5. Ld. DR did not dispute the fact that the present appeal is for levy of penalty and in the quantum proceeding is allowed by the ITAT as above. 6. On the merits of the case we have heard the parties perused the record. As held in the quantum proceedings the bench held that the receipt from LIC be taxed as capital gain after allowing the benefit of indexed value of the original amount invested. After calculating that benefit of indexation if any income remains as not offered and taxable the ld. AO shall decide the issue of levy of penalty afresh in accordance with law. Therefore, the present order of levy of penalty does not survive. Ld. AO in the quantum proceeding decides the issue of levy of penalty if any income remains as taxable in accordance with law. In the light of the above discussion, we allowed the Miscellaneous Application filed by the assessee and after recalling MA No. 44/JP/2024 Dilip Kumar Pachori vs.DCIT 6 the said ex-party order of ITAT in ITA 588/JP/2024, we consider the appeal of the assessee based on the discussion so recorded here in above. In the result, Miscellaneous Application as well as appeal of the assessee are allowed as indicated herein above. Order pronounced in the open Court on 04/02/2025 Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judcial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 04/02/2025 *Ganesh Kumar, Sr. PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Shri Dilip Kumar Pachori, Pratapgarh 2. izR;FkhZ@ The Respondent- DCIT, (Circle) International Taxation, Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (MA No. 44/JP/2024) vkns'kkuqlkj@ By order lgk;d iathdkj@Asst. Registrar "