INDERPAL SINGH CHADHA,MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX 22(1), MUMBAI

ITA 21/MUM/2025

AI Insights

The case involves an appeal by Inderpal Singh Chadha against the order of the ld. CIT(A), Mumbai, which confirmed the addition of Rs. 1,26,50,251 to the assessee's income under the head Capital Gains for the A.Y. 2012-13. The addition was based on the difference between the sale value of immovable property and the long-term capital gain (LTCG) reported, without considering the cost of acquisition and exemptions claimed under Section 54 of the Income Tax Act, 1961. The assessee argued that the CIT(A) erred in confirming the addition without considering the bank certificate justifying the deposit of Rs. 1,00,00,000 in the capital gain scheme. The Tribunal noted the failure of the CIT(A) to adjudicate the issues on merits and dismissed the appeal on grounds of non-prosecution, which was found to be contrary to the principles of natural justice. The Tribunal decided to remand the matter back to the CIT(A) for a fresh examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 24119 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHESH PAMNANI
• Assessee Lawyers: KARISHMA AGARWAL
• Keywords: Opportunity of being heard; Cost of acquisition; Reopening of assessment; Capital Gains; Principle of natural justice
• Section: 148; 250; 54; 48

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “C” BENCH, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JM AND SHRI PRABHASH SHANKAR, AM आयकर अपील सं./ITA No.21/MUM/2025 (\u0001नधा\u0005रण वष\u0005 / Assessment Year :2012-2013) Inderpal Singh Chadha Flat No.1201, Ekta Heights, 16th Road, Khar West, Mumbai Vs. ACIT-22(1), Mumbai \u0001थायी लेखा सं./PAN No. : AADPC 2530 L (अपीलाथ\r /Appellant) .. (\u000e\u000fयथ\r / Respondent) िनधा\u000e\u000fरती की ओर से /Assessee by : Ms. Karishma Agarwal, AR राज\u0011व क\u000b ओर से /Revenue by : Shri Mahesh Pamnani, Sr.DR सुनवाई क\u0016 तार\u0018ख / Date of Hearing : 12/02/2025 घोषणा क\u0016 तार\u0018ख/Date of Pronouncement : 18/02/2025 आदेश / O R D E R Per Prabhash Shankar, AM: This appeal preferred by the assessee emanates from the order of the ld. CIT(A), Mumbai, dated 27.02.2024 for A.Y.2012-13 as per the following grounds of appeal :- 1. Addition amounting to Rs, 1,26,50,251/- u/s.45 of the Income Tax Act, 1961: a. The CIT(A) has erred in confirming the addition of Rs. 1,26,50,251/- on sale of immovable property by the appellant where addition is determined as difference of Sale value of consideration of Rs. 1,57,60,901/- and LTCG paid on such sale of Rs. 31,10,650/- without considering the cost of acquisition and exemption claimed by the appellant. The Ld. CIT(A) has erred in confirming the addition of Rs. 26,50,261/- against the cost of acquisition reduced by the appellant from sales consideration white calculating the Capital Gain without taking into consideration provision of Sec 48 of the Income Tax Act ITA No.21/Mum/2025 2 c. The Ld. CIT(A) has erred in confirming the addition of Rs. 1,26,50,251/- without considering the bank certificate submitted duly justifying the amount of Rs. 1,00,00,000/- has been deposited in the capital gain scheme within the due date to file return of Income. 2. a. The Ld. AO failed to provide the reasons recorded for reopening the assessment, as required under Section 148 of the Income Tax Act, 1961. This denial of information violates the principles of natural Justice and renders the reopening of assessment bad in law, b. The Ld. AO failed to provide a copy of the mandatory approval obtained from the Principal Commissioner of Income Tax (PCIT) for reopening the assessment under Section 151 of the Act. This omission makes the reopening invalid and unsustainable in law. c. The Ld. AO issued various notices with response deadlines of less than 7 days, which provided insufficient time for the Appellant to adequately respond and present their case. Such short timelines are in clear violation of the principles of natural justice, thereby vitiating the entire assessment proceedings. 3. The Ld. AO has erred in confirming the addition of Rs. 1,00,00,000/- claimed as exemption u/s 54 without taking into consideration the requisite documents duly submitted by the appellant 2. At the outset, it may be stated here that in this case, appellate order was passed u/s 250 of the Act on 27.02.2024.However,the appeal before this Bench was filed on 2.1.2025,after a delay of almost 11 months. The assessee has filed an affidavit citing his ill-health from the year 2023,lack of familiarity with technology, unawareness of the order received on e-mail of the CA and indisposition of the Chartered Accountant for the said delay with a request to condone the same. After considering the submissions made, delay in filing of the present appeal is condoned. 3. As per the assessment order, it was noted that during the year, assessee had sold immovable property for Rs. 3,25,00,000/-. In the ITA No.21/Mum/2025 3 original return the assessee had offered 31,10,650/- as long term capital gain after deducting the cost of Acquisition Rs. 26,50,251/- and deduction u/s 54/54B/54D/54EC/54F/54G/54GA Rs. 1,00,00,000/-. However, the assessee had not submitted any documents regarding the purchase of said property. Hence, cost of acquisition could not be ascertained in absence of any valid document. The assessee asked to file the documentary evidence vide show cause dated 13.12.2019. The assessee replied the show cause notice but did not file any documentary evidences regarding the cost of acquisition of the property. In the absence of any details furnished by assessee, the sources of acquisition of the property sold also remained unexplained. Therefore, full value of consideration in hands of assessee was Rs. 1,57,60,901/- as the assessee had offered LTCG of Rs. 31,10,650/- in the original return. Hence, difference between the full value of consideration and LTCG paid Rs. 1,26,50,251/- was added to the total income of the assessee under the head Capital Gains u/s 144 of the Income Tax Act,1961. 4. Even in the appellate proceedings, there was no compliance. The assessee did not come forward with any explanation to the impugned addition despite adequate opportunity of hearing. During appellate proceedings, numerous notices under section 250 of the Act were issued to the assessee, which has also been tabulated by the ld. CIT(A) as under:- Date of Notice issued u/s.250 Date of hearing on or before Mode of Notice Reply/Remarks 23/01/2021 08/02/2021 Online/ITBA No reply. 25/08/2021 31/08/2021 Online/ITBA No reply. 07/02/2024 19/02/2024 Online/ITBA No reply. ITA No.21/Mum/2025 4 5. In the appellate proceedings, the initial burden lies on the assessee to prove that the facts and the findings of the Assessing Officer are incorrect with the help of verifiable documents. In this case, the assessee did not choose to avail the opportunities in the appellate proceedings which has led to the only conclusion that he had no evidence or explanation against the order of the Assessing Officer. Accordingly, the ld.CIT(A) dismissed the appeal on account of non-prosecution. 6. Before us, ld. AR submitted that the principle of natural justice had not been followed in its case. The ld. CIT(A) has passed the impugned order without providing sufficient opportunity of hearing to it. The ld AR submitted that another opportunity may be provided to the assessee so that it could be able to represent its case before the ld. CIT(A).On the other hand, ld. Sr. DR relied on the assessment and appellate orders. 7. We have heard the rival parties and perused the material available on records. It is observed that the ld.CIT(A) dismissed the appeal solely on the ground of non-prosecution. He failed to adjudicate the issues raised in the grounds of appeal and did not examine the material available on record. Such dismissal without deciding the appeal on merits is contrary to the principles of natural justice. It is settled law that it is the duty of the appellate authority to dispose of an appeal on merits after considering the material on record, even if the appellant fails to appear. ITA No.21/Mum/2025 5 8. However, it is equally true that it is the fundamental duty of the assessee to diligently pursue the appeal and comply with the notices and proceedings initiated by the Revenue authorities. The framework of the Act and the e-proceedings system rely heavily on the co-operation and active participation of the taxpayer. Despite the notices under section 250 of the Act by the CIT(A), no substantive explanation was submitted. The failure of the assessee to make any response reflects gross negligence and an indifference that is unacceptable. The principles of natural justice operate both ways, while the Revenue authorities are required to provide a reasonable opportunity of being heard, the taxpayer is equally obligated to co-operate with the authorities and utilize the opportunities extended. In the present case, despite receiving adequate opportunities, the assessee displayed a casual approach and indifference, which not only delayed the appellate proceedings but also burdened the judicial system. Such conduct cannot be condoned. 9. In light of the non-compliant attitude of the assessee, levy of cost needs to be evaluated in this case as cost serves as a necessary deterrent to ensure that taxpayers act with due diligence in pursuing their appeals and respecting the timelines and processes laid down under the law. It also emphasizes the principle that while justice must be ensured, the system cannot cater to indolence or negligence on the part of the assessee. 10. As the ld. AR has requested before us that the assessee shall be given one more opportunity and this request which was not objected ITA No.21/Mum/2025 6 by the ld. DR, in such a scenario, we are of the opinion that the scales of justice demands that the matter should be verified and revisited at the level of ld. CIT(A) and accordingly, we are of the considered view that the matter should be remanded back to the file of ld. CIT(A) for de novo adjudication by him while applying the principles of natural justice after affording sufficient opportunity of being heard to the assessee. 11. Moreover, considering assessee’s non-compliant and non-co- operative attitude and lack of diligence in pursuing the appeal, we impose a cost of Rs.11,000/- on it. The cost shall be deposited to the credit of the Income Tax Department within 15 days of the receipt of this order and proof of payment shall be submitted before the ld.CIT(A). Thus, the grounds of appeal of the assessee stand allowed for statistical purposes. 12. In the result, the appeal of the assessee stands allowed for statistical purposes. Order pronounced in the open court on 18/02/2025. Sd/- (NARENDER KUMAR CHOUDHRY) Sd/- (PRABHASH SHANKAR) \u0007ाियक सद\f / JUDICIAL MEMBER लेखा सद\f / ACCOUNTANT MEMBER मुंबई/Mumbai; \u001eदनांक Dated 18/02/2025 Prakash Kumar Mishra, Sr.P.S. ITA No.21/Mum/2025 7 आदेश क\u000b \u0012\u0001त\u0014ल\u0016प अ\u0019े\u0016षत/Copy of the Order forwarded to : आदेशानुसार/ BY ORDER, (Assistant Registrar) आयकर अपील\u001eय अ\u001fधकरण, मुंबई/ ITAT, Mumbai 1. अपीलाथ\r / The Appellant- . Inderpal Singh Chadha Flat No.1201, Ekta Heights, 16th Road, Khar West, Mumbai 2. \u000e\u000fयथ\r / The Respondent- ACIT-22(1), Mumbai 3. आयकर आयु\u0016(अपील) / The CIT(A), 4. आयकर आयु त / CIT 5. िवभागीय \u001cितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai 6. गाड# फाईल / Guard file. स\u000fया%पत \u000e&त //True Copy// "