GAURI SAGAR SHIVALE,PUNE V. ITO WARD 8(3), PUNE

ITA 101/PUN/2025

AI Insights

The case involves an appeal by the assessee, Gauri Sagar Shivale, against the order of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi, which pertained to the Assessment Year 2014-15. The primary issue was the non-disclosure of a security deposit receipt of Rs. 59,96,966/- from a development agreement in the assessee's return, leading to a reassessment and addition of Rs.2,24,96,100/- as Long Term Capital Gain (LTCG). The Ld. CIT(A) dismissed the appeal on procedural grounds without considering the merits, which led to the current appeal before the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 711742 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2014-2015
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMNATH P. MURKUNDE
• Assessee Lawyers: NIKHIL S. PATHAK
• Keywords: Set aside; Capital asset; Reassessment proceedings; Principle of natural justice
• Section: 147; 148; 142(1); 6

Judgement Text

" आयकर अपीलीय अधिकरण “ए” न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER AND MS. ASTHA CHANDRA, JUDICIAL MEMBER आयकर अपील सं. / ITA No.101/PUN/2025 धििाारण वर्ा / Assessment Year : 2014-15 Gauri Sagar Shivale, S. No. 32/4, Nimbalkar Nagar, BRT Road, Near Rajiv Gandhi College, Tathawade, Mulshi, Pune-411033 PAN : BJIPP4685G Vs. Income Tax Officer, Ward – 8(3), Pune अपीलार्थी / Appellant प्रत्यर्थी / Respondent Assessee by : Shri Nikhil S. Pathak Department by : Shri Ramnath P. Murkunde Date of hearing : 15-05-2025 Date of Pronouncement : 21-07-2025 आदेश / ORDER PER ASTHA CHANDRA, JM : The appeal filed by the assessee is directed against the order dated 28.12.2024 of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [“CIT(A)”] pertaining to Assessment Year (“AYs”) 2014-15. 2. Briefly stated, the facts of the case are that the assessee is an individual. For the relevant AY 2014-15, the assessee filed her return of income on 30.03.2016 declaring total income of Rs.2,98,672/-comprising of income from other sources. The Ld. Assessing Officer (“AO”) was in receipt of certain information in respect of receipt of security deposit of Rs. 59,96,966/- pursuant to the development agreement entered into by the assessee and her family. However, the assessee had not disclosed the said receipt in her return of income for AY 2014-15. The Ld. AO, therefore, opined that this income has escaped the assessment. He, accordingly, reopened the case by issuing notice u/s 148 of the Act. In response to the notice u/s 148 of the Act, the assessee furnished a belated return of Printed from counselvise.com 2 ITA No.101/PUN/2025, A.Y. 2014-15 income on 03.02.2023 declaring gross total income of Rs.3,28,120/-. As income from other sources after claiming deduction u/s 80TTA of Rs.10,000/-. 2.1 During the course of the reassessment proceedings, the Ld. AO made enquiry about the development agreement entered into by the assessee vide issue of notice(s) u/s 142(1) of the Act and also issued a show cause notice asking the assessee to show cause as to why the addition should not be made taxing the capital gain arising on account of the said development agreement. In response thereto, the assessee furnished her response raising objections against the above addition proposed to be made by the Ld. AO. Before the Ld. AO, the assessee contented that no capital gain has arisen on mere execution of development agreement the same does not to „transfer‟ u/s 2(47) of the Act. However, the Ld. AO did not find the submission(s) of the assessee satisfactory and for the lack of sufficient documentary evidence, he proceeded to complete the assessment vide order dated 12.05.2023 passed u/s 147 read with section 144B of the Act determining the assessed income at Rs. 2,27,94,772/- by making an addition of Rs.2,24,96,100/- on account of alleged Long Term Capital Gain (“LTCG”) arising in the hands of the assessee pursuant to the development agreement. 3. Aggrieved, the assessee filed appeal before the Ld. CIT(A) who without admitting the appeal dismissed the appeal of the assessee on the ground that the assessee has not filed valid return of income as well as not paid an amount equal to the amount of advance tax which was payable by the assessee on assessed income. The relevant observations and findings of the Ld. CIT(A) is reproduced below : “3. I have examined facts of the case as also gone through relevant provisions of Income Tax Act (the Act) in the present case, the appellant fled the rectum of income in response to a notice issued under Section 148 of the Income tax Act. but it was submitted beyond the time limit specified in the notice and thus it is not a valid return of income. The impugned order was passed u/s 147 r.w.s. 144B of the Act, creating demand of Rs.1,10,59,228/- and the appellant was asked by notice u/s 156 of the Act to deposit the demand but it is noticed that the appellant has not deposited the demand before filing of this appeal The appellant, at sl no. 16 of Form-35, has stated to have made payment of appeal tee of Rs.1,000/- only. At sl. No. 9 of Form- 35, the appellant has offered 'Not applicable comments. This sl. No. 9 is reproduced below Printed from counselvise.com 3 ITA No.101/PUN/2025, A.Y. 2014-15 9 Where no return has been filed by the appellant for the assessment year, whether an amount equal to the amount of advance tax as per section 249(4)(b) of the Income-tax Act, 1961 has been paid Not applicable 3.2 As per provisions of section 249(4)(b) of the Act, where no return has been filed by the assessee, the assessee has to pay an amount equal to the amount of advance tax which was payable by him otherwise appeal shall not be admitted. The provisions of section 249 (4) of the Act are reproduced as under- Section 249(4) \"No appeal under this Chapter shall be admitted unless at the time of filing of the appeal- (a) where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him: or \"(b) where no return has been filed by the assessee, the assessee has paid an amount equal to the amount of advance tax which was payable by him: Provided that, 2 in a case falling under clause (b) and on an application made by the appellant in this behalf, the Deputy Commissioner (Appeals)] or, as the case may be, the Commissioner (Appeals)) may, for any good and sufficient reason to be recorded in writing, exempt him from the operation of the provisions of that clause]] 3.3 As per provisions of section 234B(1), read with provisions of section 208 of the Act, the liability to pay advance tax, in a case where returned income is less than the assessed income, is calculated on the basis of assessed income. The provisions of section 234B(1) and provisions of section 208 of the Act are reproduced below- Section 234B(1) \"(1) Subject to the other provisions of this section, where, in any financial year, an assessee who is liable to pay advance tax under section 208 has failed to pay such tax or, where the advance tax paid by such assessee under the provisions of section 210 is less than ninety per cent of the assessed tax, the assessee shall be liable to pay simple interest at the rate of two per cent for every month or part of a month comprised in the period from the 1st day of April next following such financial year to the date of determination of total income under sub-section (1) of section 1434 and where a regular assessment is made, to the date of such regular assessment, on an amount]] equal to the assessed tax or, as the case may be. on the amount by which the advance tax paid as aforesaid falls short of the assessed tax. 5 Explanation 1-In this section,\" assessed tax\" means,- (a) for the purposes of computing the interest payable under section 140A, the tax on the total income as declared in the return referred to in that section; (b) in any other case, the tax on the total income determined under sub- section (1) of section 143 or on regular assessment, as reduced by the amount of tax deducted or collected at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income.] Explanation 2.- Where in relation to an assessment year, an assessment is made for the first time under section 147, the assessment so made shall be regarded as a regular assessment for the purposes of this section. 6 Explanation 3.- In Explanation 1 and in sub- section (3).\" tax on the total Printed from counselvise.com 4 ITA No.101/PUN/2025, A.Y. 2014-15 income determined under sub-section (1) of section 143\" shall not include the additional income-tax, if any, payable under section 143. 3.4 Section 208 \"208. Conditions of liability to pay advance tax Advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during that year, as computed in accordance with the provisions of this Chapter, is one thousand five hundred rupees or more.\" 4. In this regard, it would not be out of place to mention here that it is assessed income and not income, claimed to have been earned by the appellant, is the basis for computation of an amount equal to the amount of advance tax which is to be paid at the time of filing of appeal. Provisions of section 249(4)(a) and 249(4)(b) of Income Tax Act, in this regard, are very speaking and compulsory in nature in as much as their compliance is must before admission of appeal. Whereas provisions of section 249(4)(a) of the Act say that tax is to be paid on returned income where ITR has been filed, provisions of section 249(4)(b) are to be construed so as to compute the amount equal to the amount of advance tax on the basis of assessed income as no ITR was filed by the appellants. The non-filers cannot be treated in a more advantageous manner in comparison to ITR-filers so that non-filers can avoid payment of an amount equal to the amount of advance tax, claiming that their income was below taxable limit. 5. The appellant has offered 'Not applicable' comments at sl. No. 9 of Form-35 and the appellant failed to made payment of amount equal to the advance tax which was due on its income. It is, therefore, clear that information, given at sl. no. 9 of Form-35 is not correct and the appellant has not made payment of amount equal to the advance tax which was due on its income. The appellant has also not requested for exemption from operation of the provisions of clause (b) of sub-section (4) of section 249 of the Act. 6. Since the appellant has not filed valid return of income as well as not paid an amount equal to the amount of advance tax which was payable by it on assessed income, present appeal is not liable to be admitted. The appeal is in fructuous and is, therefore, dismissed. 7. The appeal is dismissed.” 4. Dissatisfied, the assessee is in appeal before the Tribunal raising the following grounds of appeal : “On facts and in law, 1] The learned CIT(A) erred in holding that the appeal filed by the assessee was not maintainable and thereby erred in dismissing the appeal filed by the assessee. 2] The learned CIT(A) erred in holding that the return filed by the assessee was not a valid return and thereby erred in treating the assessee as a non filer without appreciating that assessee had duly filed the return in response to the notice u/s 148 and simply because the said return belated does not mean that the return filed was invalid in law. 3] The learned CIT(A) further erred in holding that assessee should have paid advance tax on the basis of the assessed income and since in Printed from counselvise.com 5 ITA No.101/PUN/2025, A.Y. 2014-15 the present case no such advance tax was paid by the assessee on the assessed income, the appeal of the assessee was not maintainable in view of the provisions of section 249(4) of the Act. 4] The learned CIT(A) erred in not appreciating that the assessee was challenging the addition made by the learned A.O. and hence, question of making any payment of advance tax on the assessed income simply did not arise and accordingly, there was no reason to hold that the appeal filed by the assessee was not maintainable as per the provisions of section 249(4). 5] The learned CIT(A) erred in not appreciating that there was no obligation on the assessee to pay advance tax in respect of the addition made by the A.O. which was disputed in appeal and accordingly, there was no reason to hold that the appeal filed by the assessee was not maintainable. 6] The learned CIT(A) erred in not appreciating that the reasst. order passed u/s 147 was invalid in law and accordingly, the same should have been declared null and void. 7] The learned CIT(A) erred in not appreciating that the notice issued u/s 148 was invalid in law and accordingly, the reasst. order should have been declared null and void. 8] The learned CIT(A) erred in not appreciating that the addition made by the A.O. was not correct and therefore, he ought to have deleted the addition made of Rs.2,24,96,100/-. 9] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.” 5. The Ld. AR at the outset submitted that the assessee had duly filed the return in response to the notice u/s 148 and simply because the said return was belated, it does not mean that the return was invalid in law. He further submitted that the provisions of section 249(4) of the Act is not applicable to the assessee‟s case as the question of payment of advance tax does not arise in respect of addition made by the Ld. AO which has been disputed by the assessee. As the assessee is not liable to pay any advance tax, the Ld. CIT(A) grossly erred in dismissing the appeal of the assessee on the ground of non-payment of advance tax under the provisions of section 249(4) of the Act even without admitting the appeal. He therefore prayed that the matter may be restored to the file of the Ld. CIT(A) to decide the appeal of the assessee on merits of the case after affording due opportunity of hearing to the assessee. 6. The Ld. DR supported the order of the Ld. CIT(A), he however had no objection if the matter is remanded to Ld. CIT(A) for fresh adjudication on merits. Printed from counselvise.com 6 ITA No.101/PUN/2025, A.Y. 2014-15 7. We have heard the Ld. Representatives of the parties and perused the material on record. It is an undisputed fact that the assessee filed her return of income though belatedly in response to the notice issued under section 148 of the Act. We find the Ld. AO has rejected the contentions of the assessee on merits of the case for lack of production of the necessary documentary evidence by the assessee in support of her claim. The Ld. CIT(A) has passed the impugned order without admitting the appeal of the assessee and dismissed the appeal for the reason that the assessee failed to file the valid return of income and also not paid the advance tax. It is the contention of the Ld. AR that the assessee is not required to pay the advance tax as the assessee has disputed the addition made by the Ld. AO on account of alleged LTCG arising in the hands of the assessee before the Ld. CIT(A) and had also filed the return of income for the relevant AY under consideration. Therefore, the Ld. CIT(A) was not justified in invoking the provisions of section 249(4) of the Act and dismissing the appeal of the assessee. We find some force in the arguments advanced by the Ld. AR. It is further to noted that the impugned order has been passed by the Ld. CIT(A) without providing any opportunity of hearing to the assessee which, in our view, is against the principle of natural justice. The Ld. CIT(A) dismissed the appeal by merely invoking the provisions of section 249(4) of the Act on account of non-payment of advance tax by the assessee without even considering the merits of the case are concerned. Before us, the Ld. AR submitted that the assessee has a strong case on merits and given an opportunity the assessee is in a position to substantiate her claim in respect of the impugned addition made by the Ld. AO by filing the requisite details/documentary evidence in support thereof. 8. Considering the totality of the facts and in the circumstances of the case enumerated above, it would be judicially fit and proper in the interest of justice and fair play if the matter is restored to the file of the Ld. CIT(A) for denovo adjudication on merits of the case. The order of the Ld. CIT(A) is therefore set aside and the matter is restored back to his file for de-novo adjudication with a direction to decide all the grounds of appeal raised by the assessee before him on merits as per fact and law after affording adequate opportunity of hearing to the assessee. Needless to say, the assessee shall provide the requisite support in terms of submitting the relevant documents/evidence as may be required/ called upon to present Printed from counselvise.com 7 ITA No.101/PUN/2025, A.Y. 2014-15 her case and substantiate her claim before the Ld. CIT(A). We direct and order accordingly. 9. In the result, the appeal of the assessee is treated as allowed for statistical purposes. Order pronounced in the open court on 21st July, 2025. Sd/- Sd/- (Manish Borad) (Astha Chandra) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; दिन ांक / Dated : 21st July, 2025. रदि आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : 1. अपील र्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT concerned. 4. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, “ए” बेंच, पुणे / DR, ITAT, “A” Bench, Pune. 5. ग र्ड फ़ इल / Guard File. //सत्य दपि प्रदि// True Copy// आिेश नुस र / BY ORDER, िररष्ठ दनजी सदचि / Sr. Private Secretary आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune Printed from counselvise.com "