GURUJALA BABU RAO,HYDERABAD V. ITO, WARD-11(1), HYDERABAD

ITA 1379/HYD/2024

AI Insights

The case involves Shri Gurujala Babu Rao, the appellant, contesting an order from the CIT (A) which dismissed his appeal regarding the assessment year 2012-13. The dismissal was based on the non-payment of advance tax as required under section 249(4)(b) of the Income Tax Act, 1961. The primary issue arose from the Assessing Officer's addition of Long-Term Capital Gain on the sale of land, invoking section 50C of the IT Act, 1961, which the assessee contested. The Tribunal noted that the CIT (A) should have considered the appeal on its merits, especially since the assessee had contested the taxability of the income.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473246 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SM-A
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S.RAMA RAO
• Keywords: Set aside; Sale consideration of property below Jantri Value; Fair market value; Valuation report
• Section: 147; 144; 139; 50C

Judgement Text

" ITA No 1379 of 2024 Gurujala Babu Rao Page 1 of 6 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad Before Shri Vijay Pal Rao, Vice-President A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No.1379/Hyd/2024 (िनधाŊरण वषŊ/Assessment Year: 2012-13) Shri Gurujala Babu Rao Hyderabad PAN:BSMPR6925C Vs. Income Tax Officer Ward 11(1) Hyderabad (Appellant) (Respondent) िनधाŊįरती Ȫारा/Assessee by: Shri S.Rama Rao, Advocate राज̾ व Ȫारा/Revenue by:: Shri Y. Srikanth Reddy, DR सुनवाई की तारीख/Date of hearing: 20/01/2025 घोषणा की तारीख/Pronouncement: 22/01/2025 आदेश/ORDER Per Vijay Pal Rao, Vice President This appeal filed by the assessee is directed against the order dated, 6/11/2024 of the learned CIT (A)-NFAC Delhi, for the A.Y.2012-13. 2. The assessee has raised the following grounds: ITA No 1379 of 2024 Gurujala Babu Rao Page 2 of 6 3. At the time of hearing, the learned AR of the assessee has submitted that the learned CIT (A) has dismissed the appeal of the assessee in limine, on the ground that, the assessee has not paid the advance tax while invoking the provisions of section 249(4)(b) of the I.T. Act, 1961. The learned AR has further submitted that, the assessee has not filed any return of income, as there was no taxable income of the assessee for the year under consideration. He has submitted that, the Assessing Officer has made the addition on account of Long-Term Capital Gain on sale ITA No 1379 of 2024 Gurujala Babu Rao Page 3 of 6 of land, in question, by the assessee along with 34 other co- owners and family members as well as by kabjedar (occupants), by invoking the provisions of section 50C of the I.T. Act, 1961. The learned AR has submitted that, there was no capital gain taxable in the hands of the assessee, if the sale consideration as stated in the sale deed is taken into consideration and the addition has been made by the Assessing Officer only on account of deemed full value consideration u/s 50C of the I.T. Act, 1961. He has submitted that the assessee has pointed out before the learned CIT (A) that, the property, in question, was under dispute and there was a suite filed in the Court of Additional Civil Judge, Hyderabad in the year 1998 and therefore, the property was sold at lower rate than the market value. Thus, the learned AR has submitted that, dismissing the appeal, in limine for want of payment of advance tax by the learned CIT (A) without deciding the issue on merits is not justified. He has thus, prayed that, the matter may be remanded to the record of the learned CIT (A) for adjudication of the appeal on merits. 4. On the other hand, the learned DR has relied upon the orders of the authorities below and submitted that the assessee has not filed any return of income u/s 139 of the I.T. Act, 1961 as well as in response to notice u/s 148. 5. We have considered the rival submissions as well as perused the material available on record. The Assessing Officer ITA No 1379 of 2024 Gurujala Babu Rao Page 4 of 6 has framed the assessment u/s 144 r.w.s. 147 of the I.T. Act, 1961 and assessed the income as Long-Term Capital Gain arising from sale of land at Rs.8,23,020/-. The Assessing Officer invoked the provisions of section 50C and obtained the valuation report from the District Valuation Officer (DVO) estimating the fair market value of the property. Thus, the addition made by the Assessing Officer is based on the fair market value determined by the DVO and not on the basis of the admitted sale consideration. The assessee challenged the same before the learned CIT (A). However, the learned CIT (A) without going into the merits of the issue has dismissed the appeal of the assessee in limine on the ground that, the assessee has not paid advance tax payable by him and therefore, the appeal shall not be admitted. It is pertinent to note that once the assessee has disputed the addition made by the Assessing Officer before the learned CIT (A) and claimed no taxable income in the hand of the assessee for the year under consideration, then provisions of section 249(4)(b) cannot be invoked as the taxability of the income itself has been questioned by the assessee before the learned CIT (A). Further, the provisions of section 249(4) prescribes two conditions; first where a return has been filed by the assessee, then before filing the appeal, the assessee is required to pay the due tax on the returned income which means, the self-assessed tax is required to be paid by the assessee before the appeal is admitted by the learned CIT (A). The 2nd condition is in the case where no return of income has been filed by the assessee, then the assessee is required to pay an ITA No 1379 of 2024 Gurujala Babu Rao Page 5 of 6 amount equivalent to the amount of advance tax payable by him. Thus, taking the inference from the first condition that, undisputed tax liability is required to be paid by the assessee before the appeal is admitted by the learned CIT (A) and similarly, in case where no return of income is filed by the assessee, then undisputed advance tax payable by the assessee is required to be paid. When the assessee has disputed the addition made by the Assessing Officer, then the question of advance tax payable by the assessee does not arise. Further, in the case in hand, the payment of advance tax liability would arise only from the date of transaction of sale, as it is not a case of regular income throughout the year, but it depends on the transaction of sale of property. Therefore, the liability of advance tax on Long-Term Capital Gain would depend upon the date of transaction. In the case in hand, the sale of property, in question, was in the month of December, 2011 and therefore, the advance tax liability, if any, is required to be considered from the date of sale. Accordingly, in the facts and circumstances of the case, when the assessee has disputed the taxability of the capital gain arising from the transaction, then the appeal of the assessee ought to have been decided on merit, instead of on technical ground of non-payment of advance tax. Hence, in the interest of justice, the impugned order of the learned CIT (A) is set aside and the matter is remanded to the record of the learned CIT (A) for adjudication of the appeal of the assessee on merits after giving reasonable opportunity of hearing to the assessee. ITA No 1379 of 2024 Gurujala Babu Rao Page 6 of 6 6. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 22nd January, 2025. Sd/- Sd/- (MADHUSUDAN SAWDIA) ACCOUNTANT MEMBER (VIJAY PAL RAO) VICE-PRESIDENT Hyderabad, dated 22nd January, 2025 Vinodan/sps Copy to: S.No Addresses 1 Shri Gurujala Babu Rao, 12-14-180/5/I Janatha Nagar, Moosapet, Kukatapally, Hyderabad 500018, Telangana 2 Income Tax Officer Ward 11(1) Hyderabad 3 Pr. CIT – Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order "