Shri.Poovaiah C K , Bangalore V. The Income Tax Officer Ward-5(3)(3), Bangalore

ITA 1407/BANG/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3412 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 02-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR K R SUBHASH J
• Assessee Lawyers: T V SUBRAMANYA BHAT
• Keywords: Unexplained investment; Capital asset; Salary income; Principle of natural justice; Reasonable cause; Corroborative evidences; Revised return
• Section: 143(3); 142(1); 143(1); 250; 68; 69; 54; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, BENGALURU BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO.1407/BANG/2018 (ASSESSMENT YEAR: 2012-13) SHRI C.K. POOVAIAH NO.1671, 27 TH MAIN, 2 ND SECTOR, HSR LAYOUT, BENGALURU-560 102. PAN:AAXPK 8742 L VS. APPELLANT INCOME-TAX OFFICER, WARD 5(3)(3), BENGALURU. RESPONDENT APPELLANT BY : SHRI T.V.SUBRAMANYA BHAT, CA. RESPONDENT BY : DR. K.R.SUBHASH, JCIT(DR) DATE OF HEARING: 18/02/2019 DATE OF PRONOUNCEMENT: 21/02/2019 O R D E R PER PAVAN KUMAR GADALE, JM : THE ASSESSEE HAS FILED APPEAL AGAINST THE EX-PARTE ORDER OF THE CIT(A)-V, BENGALURU, PASSED U/S 143(3) AND 250 OF THE INCOME-TAX ACT,1961 ['THE ACT' FOR SHORT] DATED 27/2/2018. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: ITA NO.1407/BANG/2018 PAGE 2 OF 7 1. THE APPEAL ORDER DATED 27/02/2018 MADE BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 5, BENGALURU UPHOLDING THE ASSESSMENT ORDER DATED 26/02/2015 PASSED BY THE LEARNED INCOME TAX OFFICER, WARD 5 (3) (3), BENGALURU FOR THE ASSESSMENT YEAR 2012-13 WITHOUT GIVING SUFFICIENT TIME TO APPEAR BEFORE HIM FOR A PERSONAL HEARING TO THE APPELLANT OR TO THE AUTHORISED REPRESENTATIVE EVEN THOUGH AN ADJOURNMENT LETTER WAS SUBMITTED TO THE OFFICE OF THE COMMISSIONER OF INCOME TAX (APPEALS) 5, BENGALURU ON 27/02/2018 AND AN ACKNOWLEDGMENT WAS OBTAINED REQUESTING AN ADJOURNMENT FOR THE PERSONAL HEARING TO 28/02/2018. THE CASE WAS NOT A TIME BARRING ONE AND THERE WAS NO URGENCY OR HASTE TO COMPLETE THE ORDER QUOTING THE CASE OF HONOURABLE DELHI HIGH COURT IN CIT VS. MULTIPLAN INDIA LIMITED REPORTED IN 38 ITD 320 IS AGAINST THE LAW, EQUITY AND NATURAL JUSTICE AND AS A RESULT BAD IN LAW. 2. THE LEARNED INCOME TAX OFFICER, WARD 5(3)(3), BENGALURU HAS WRONGLY ESTIMATED THE NET RENTAL INCOME OF RS. 5,25,000/- FOR HOUSE NO. 1671, 2ND SECTOR, 27TH MAIN, HSR LAYOUT, BENGALURU 560102 EVEN THOUGH THE HOUSE IN QUESTION WAS BEING CONSTRUCTED DURING THE FINANCIAL YEAR 2011-12 RELEVANT TO THE ASST. YEAR 2012-13. 3. THE LEARNED INCOME TAX OFFICER, WARD 5(3)(3), BENGALURU HAS ERRED IN ESTIMATING A NET INCOME OF RS. 210000/- FOR PROPERTY NO. 10, SHUB ENCLAVE, HARALUR ROAD, KASAVANA HALLI, BENGALURU CONSIDERING IT AS A HOUSE THOUGH THE SAID PROPERTY WAS VACANT LAND AND THE APPELLANT HAD DECLARED A NET INCOME OF RS. 96,000/- 4. THE LEARNED INCOME TAX OFFICER, WARD 5(3)(3), BENGALURU HAS ERRED IN ESTIMATING A NET AGRICULTURAL INCOME OF RS. 12,78,201/- WITHOUT ALLOWING THE APPELLANT SUFFICIENT OPPORTUNITY TO GIVE DETAILS. 5. THE INCOME TAX OFFICER, WARD 5(3) (3), BENGALURU HAS ERRED IN NOT ALLOWING REBATE ON THE AGRICULTURAL INCOME INCLUDED BY HIM WHILE CALCULATING THE TAX LIABILITY. 6. THE INCOME TAX OFFICER, WARD 5(3)(3), BENGALURU IS NOT JUSTIFIED IN ADDING RS. 25,20,000/- ON ACCOUNT OF UNEXPLAINED CASH DEPOSIT AS ALL THE DEPOSITS WERE EXPLAINED BY PREPARING CASH ACCOUNT BY THE APPELLANT TO THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS AND AS A RESULT THERE WAS NO UNEXPLAINED CASH DEPOSITED TO BANK ACCOUNTS. 7. THE INCOME TAX OFFICER, WARD 5 (3)(3), BENGALURU HAS ADDED RS. 30 LAKHS ON ACCOUNT OF UNEXPLAINED INVESTMENTS RELATING TO THE HOUSE BUILDING AT 10, SHUB ENCLAVE, HARALUR ROAD, ITA NO.1407/BANG/2018 PAGE 3 OF 7 KASAVANA HALLI, BANGALORE IN WHICH THE BUILDING WAS CONSTRUCTED DURING THE FOLLOWING FINANCIAL YEAR 2013-14. FOR THE ABOVE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING THE APPELLANT PRAYS THAT THE APPEAL BE ALLOWED AND JUSTICE RENDERED. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS HAVING INCOME FROM SALARY, HOUSE PROPERTY, CAPITAL GAINS AND INCOME FROM OTHER SOURCES AND FILED THE RETURN OF INCOME ON 28/7/2012 AND SUBSEQUENTLY FILED THE REVISED RETURN ON 14/3/2013 WITH TOTAL INCOME OF RS.15,64,990/-. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE ACT AND THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. IN VIEW OF SCRUTINY PROCEEDINGS, NOTICE U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED TO THE ASSESSEE. IN COMPLIANCE, LEARNED AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FURNISHED THE DETAILS. THE ASSESSING OFFICER (AO) ON PERUSAL OF THE DOCUMENTS FILED SUPPORTING THE RETURN OF INCOME FOUND THAT THE ASSESSEE HAS CLAIMED EXEMPTION U/S 54 OF THE ACT IN THE REVISED RETURN OF ICOME. AO DEALT ON THE PROVISIONS OF CAPITAL GAINS AND DENIED EXEMPTION U/S 54 OF THE ACT AS THE ASSESSEE HAS OWNED MORE THAN ONE HOUSE AT THE TIME OF SALE OF THE CAPITAL ASSET AND HENCE NOT ENTITLED FOR EXEMPTION AND TAXED THE LONG-TERM CAPITAL GAINS OF RS.1,19,68,897/-. SIMILARLY, AO MADE ADDITION ON RENTAL INCOME OF RS.73,500/- AND INCOME FROM OTHER SOURCES FROM VACANT LAND OF RS.1,06,883/- AND AGRICULTURAL INCOME DEPOSITED ITA NO.1407/BANG/2018 PAGE 4 OF 7 IN BANK AS NO PROPER RECORDS WERE MADE AVAILABLE. HENCE, ADDITION OF RS.12,78,201/- AND UNEXPLAINED CASH DEPOSIT DEFICIT IN THE BANK ACCOUNT U/S 68 OF RS.25,20,000/- AND UNEXPLAINED INVESTMENT UNDER THE PROVISIONS OF SECTION 69 IN THE HOUSE PROPERTY AND FINALLY DETERMINED THE TOTAL INCOME AT RS.2,11,73,971/- AND PASSED ORDER U/S 143(3) DATED 267/2/2015. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE FILED AN APPEAL WITH THE CIT(A). IN THE APPELLATE PROCEEDINGS, THE CIT(A) HAS ISSUED NOTICE TO THE ASSESSEE ON VARIOUS DATES REFERRED AT PAGE 4 OF THE ORDER AND CAME TO CONCLUSION THAT THE ASSESSEE IS NOT INTERESTED IN PROSECUTING THE APPEAL AS THERE ARE NO APPEARANCE ON SAID DATES AND DISMISSED THE APPEAL IN LIMINE BY APPLYING THE DECISION OF THE TRIBUNAL IN THE CASE OF CIT VS. MULTIPLAN INDIA LTD. (37 ITD 320). 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. AT THE TIME OF HEARING, THE LEARNED AR SUBMITTED THAT THE CIT(A) HAS ERRED IN DISMISSING THE APPEAL FOR NON-PROSECUTION AS THE ASSESSEE HAS FILED ADJOURNMENT PETITION AND COULD NOT ATTEND THE CASE FOR VARIOUS REASONS AND FURTHER THERE IS NO ADJUDICATION OF CASE ON MERITS AND PRAYED FOR ONE MORE OPPORTUNITY BE PROVIDED BEFORE THE CIT(A) TO REPRESENT THE CASE. ITA NO.1407/BANG/2018 PAGE 5 OF 7 CONTRA, THE LEARNED DR OBJECTED TO THE SUBMISSIONS OF THE LEARNED AR AS THE ASSESSEE WAS PROVIDED SUFFICIENT OPPORTUNITIES FOR HEARING BEFORE THE APPELLATE AUTHORITY AND REFERRED TO THE CIT(A) ORDER DATED 27/02/2018 AND PRAYED THAT THE ASSESSEES APPEAL BE DISMISSED. 6. WE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. BEFORE GONG INTO MERITS, WE CONSIDER IT APPROPRIATE TO DEAL ON THE DISMISSAL BY THE CIT(A) FOR NON-PROSECUTION OF APPEAL. THE LEARNED AR SUBMITTED THAT THE ASSESSEE COULD NOT APPEAR FOR VARIOUS REASONS AND SUBMISSIONS ARE WITHOUT ANY SUPPORTING EVIDENCE AND REASONS FOR NON-PROSECUTION OF CASE BEFORE THE CIT(A). WHEREAS THE LEARNED DR HAS VEHEMENTLY OBJECTED MENTIONING THAT THE ASSESSEE WAS PROVIDED WITH SUFFICIENT OPPORTUNITIES. WE FIND THAT THE ASSESSEE WAS PROVIDED SUFFICIENT OPPORTUNITIES OF HEARING BY THE APPELLATE AUTHORITY THROUGH NOTICES ON 21/07/2016, 08/07/2016, 01/02/2017, 17/07/2017, 14/08/2017, 11/10/2017, 10/11/2017 AND FINAL OPPORTUNITY NOTICE ON 08/01/2018. 7. WE FOUND STRENGTH IN THE SUBMISSIONS OF THE LEARNED DR. THE CIT(A) HAS GRANTED SUFFICIENT OPPORTUNITIES. WHEN A QUERY WAS RAISED TO THE LEARNED AR BEING THE REASONABLE CAUSE AND REASONS FOR NON-APPEARANCE, THE EXPLANATIONS OF LEARNED AR ARE NOT SATISFACTORY AND ARE NOT SUPPORTED WITH ANY EVIDENCE. ITA NO.1407/BANG/2018 PAGE 6 OF 7 WE, CONSIDERING THE PRINCIPLES OF NATURAL JUSTICE AND THE REASONS ENVISAGED BY LEARNED AR ARE NOT SUPPORTIVE TO THE CASE, CONSIDER IT APPROPRIATE TO RESTORE THE ENTIRE DISPUTED ISSUE TO THE FILE OF THE CIT(A) BUT CONSIDERING THE FACTS ON RECORD WITH RESPECT TO NON-APPEARANCE OF THE ASSESSEE OR LEARNED AR IN SPITE OF ISSUING NOTICES ON VARIOUS DATES IN APPELLATE PROCEEDINGS AND THE ASSESSEE CHOSE NOT TO APPEAR WHICH CANNOT BE OVERLOOKED. THEREFORE, WE ARE OF THE SUBSTANTIVE OPINION THAT THE ASSESSEE SHOULD BE PROVIDED AN OPPORTUNITY OF HEARING BUT WITH PAYMENT OF COST OF RS.10,000/- TO THE INCOME-TAX DEPARTMENT WITHIN A PERIOD OF ONE MONTH FROM THE DATE OF RECEIPT OF THIS ORDER. SUBJECT TO THE PAYMENT OF ABOVE COST, WE RESTORE THE ENTIRE DISPUTED ISSUE TO THE FILE OF THE CIT(A) TO CONSIDER THE MATTER AFRESH AND ADJUDICATE ON MERITS. FURTHER, THE ASSESSEE SHALL SUBMIT PROOF OF PAYMENT OF COST THROUGH CHALLAN COPY WITH TRIBUNAL AND APPELLATE AUTHORITY. IT IS NEVERTHELESS TO MENTION THAT THE CIT(A) SHOULD PROVIDE REASONABLE OPPORTUNITY TO THE ASSESSEE TO FILE EVIDENCES AND DOCUMENTS IN SUPPORT OF CASE AND ASSESSEE SHALL ALSO CO- OPERATE IN SUBMITTING THE INFORMATION AS EXPEDITIOUSLY FOR EARLY DISPOSAL OF THE APPEAL AND WE ORDER ACCORDINGLY. ITA NO.1407/BANG/2018 PAGE 7 OF 7 8. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST FEBRUARY, 2019. SD/- SD/- (B.R. BASKARAN) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : BENGALURU D A T E : 21/02/2019 SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)- 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL BANGALORE