Jagannath Sajan Jote, Ahmednagar V. Income-tax Officer,

ITA 2085/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4307 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-07-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 09-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR VIVEK AGGARWAL
• Keywords: Opportunity of being heard; Principle of natural justice; Cost of acquisition; Reasonable cause; Valuation report
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E . , , , ' BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NOS. 2085 AND 2086/PUN/2016 $ $ / ASSESSMENT YEAR : 2011-12 MR. JAGANNATH SAJAN KOTE, C/O. DARSHAN MEDICAL, NEAR NAGAR PANCHAYAT, A/P. SHIRDI, TALUKA RAHATA, DIST. AHMEDNAGAR - 423109 ....... / APPELLANT / V/S. ITO, WARD-1, AHMEDNAGAR / RESPONDENT APPELLANT BY : SHRI KISHOR PHADKE RESPONDENT BY : DR. VIVEK AGGARWAL / DATE OF HEARING : 25.07.2018 / DATE OF PRONOUNCEMENT : 03.08.2018 / ORDER PER D. KARUNAKARA RAO, AM THERE ARE TWO APPEALS FILED BY THE ASSESSEE UNDER CONSID ERATION INVOLVING A.Y. 2011-12. ITA NO.2085/PUN/2016 IS FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE CIT(A)-2, PUNE, DATED 2 5-05-2016 U/S.144 OF THE ACT; WHEREAS THE ITA NO.2086/PUN/2016 FILE D BY THE ASSESSEE IS AGAINST THE ORDER PASSED BY CIT(A)-2, PUNE, DATED 11-05-2016 U/S.271(1)(B) OF THE ACT. 2 ITA NOS.2085 & 2086/PUN/2016 JAGANNATH SAJAN KOTE WE SHALL FIRST TAKE UP THE APPEAL ITA NO.2085/PUN/2016 OF THE ASSESSEE ITA NO.2085/PUN/2016 ORDER U/S.143(3) OF THE ACT. A.Y. 2011-12 2. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS A N INDIVIDUAL AND FILED THE RETURN OF INCOME ON 31-02-2012 DECLARING LOSS OF RS.33,920/-. AO ISSUED VARIOUS NOTICE U/S.143(2) OF THE ACT ON VARIOUS DATES FOR WHICH THERE WAS NO RESPONSE. BASED ON THE INFORMATION PROVIDE D BY THE ASSESSEE, BANK STATEMENT FROM AXIS BANK AND THE INFORMAT ION OBTAINED FROM THE OFFICE OF SUB-REGISTRAR, RAHATA, THE AO OBSERVED T HAT THE ASSESSEE SOLD THE PROPERTY SITUATED AT S.NO.137/5, SHIRDI, ADMEASURING 1 HECTOR AND 6R FOR A CONSIDERATION OF RS.90,10,000/-. IT WA S ALSO NOTED THAT ASSESSEE WAS HOLDING 1 HECTOR AND 34R OF AGRICULTUR AL LAND AND DID NOT REPORT ANY INCOME FROM THE SAME. ON GETTING THE INFO RMATION ON A SALE INSTANCE OF AN AGRICULTURAL LAND AT SHIRDI FOR THE YEAR 1981/1982, THE AO ARRIVED AT THE COST OF ACQUISITION OF RS.1,20,000/- PER HECTOR OF THE ASSESSEE FOR COMPUTATION OF CAPITAL GAINS. ACCORDINGLY, THE AO WORKED OUT THE CAPITAL GAIN AT RS.62,38,108/-. FURTHER, THE AO LEVIED THE PENALTY U/S.271(1)(B) OF THE ACT A T RS.60,000/- FOR 6 INSTANCES, I.E. @10,000/- FOR EACH OF THE IN STANCE. EVENTUALLY, THE AO PASSED AN EXPARTE ASSESSMENT U/S.14 4 OF THE ACT ON 14-03-2014 AND MADE ADDITION OF RS.62,38,108/-. 3. DURING THE FIRST APPELLATE PROCEEDINGS ALSO, THE ASSESS EE REMAINED ABSENT DESPITE ISSUE OF NOTICE U/S.250 OF THE ACT. HENCE THE CIT(A) ALSO PASSED AN EXPARTE ORDER ON 25-05-2016 CONFIRMING THE A DDITION MADE BY THE AO. CIT(A) ALSO CONFIRMED THE SAID PENALTY LEVIED U/S.271 (1)(B) OF THE ACT BY THE AO TOO. 3 ITA NOS.2085 & 2086/PUN/2016 JAGANNATH SAJAN KOTE 4. AGGRIEVED WITH THE ORDERS OF CIT(A) THE ASSESSEE FILED TH E PRESENT APPEALS BEFORE THE TRIBUNAL WITH THE FOLLOWING GROUNDS : GROUNDS IN RESPECT OF QUANTUM ADDITION : 1. THE LD.CIT(A)-2, PUNE ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION MADE BY THE LD. ITO, WARD-1, AHMEDNAGAR (H EREINAFTER REFERRED TO AS THE LD.AO) AMOUNTING TO RS.62,38,110/- ON ACCOUN T OF LONG TERM CAPITAL GAIN. 2. THE LD.CIT(A)-2, PUNE AND THE LD. AO ERRED IN LA W AND ON FACTS IN CONSIDERING THE COST OF ACQUISITION AS ON 01-04-198 1 AS RS.1,27,200/- INSTEAD OF RS.12,72,000/- AS DETERMINED BY THE GOVE RNMENT APPROVED VALUER. 3. ALTERNATIVELY AND WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE LD.CIT(A)-2, PUNE AND THE LD. AO ERRED IN LAW AND O N FACTS IN NOT REFERRING TO THE MATTER TO THE VALUATION OFFICER. 4. THE APPELLANT CRAVES, LEAVE TO ADD/MODIFY/DELETE ALL OR ANY OF THE GROUNDS OF APPEAL. GROUNDS IN RESPECT OF PENALTY U/S.271(1)(B) OF THE ACT : 1. THE LD.CIT(A)-2, PUNE ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY LEVIED U/S.271(1)(B) OF THE ITA, 1961 BY TH E LD. ITO, WARD-1, AHMEDNAGAR (HEREINAFTER REFERRED TO AS THE LD. AO) AMOUNTING TO RS.60,000/-. APPELLANT COULD NOT MAKE EFFECTIVE CO MPLIANCE BEFORE THE LD. AO DUE TO REASONABLE CAUSE. 2. ALTERNATIVELY AND WITHOUT PREJUDICE TO ABOVE GRO UNDS, THE LD.CIT(A)- 2, PUNE AND THE LD. AO ERRED IN LAW AND ON FACTS IN NOT RESTRICTING THE PENALTY IMPOSED U/S.271(1)(B) OF THE ITA, 1961 TO T HE FIRST DEFAULT ONLY, I.E. UPTO RS.10,000/-. 3. THE APPELLANT CRAVES, LEAVE TO ADD/MODIFY/DELETE ALL OR ANY OF THE GROUNDS OF APPEAL. 5. BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TAX CONSULTANT OF THE ASSESSEE WHO WAS LOOKIN G AFTER THE TAX MATTERS OF THE ASSESSEE WAS SICK AND EVENTUALLY EXPIRED ON 27-06-2017. LD. COUNSEL FILED THE DEATH CERTIFICATE ISSUED BY THE MUNICIP AL CORPORATION, AHMEDNAGAR ON 11-07-2017. FURTHER, LD. COU NSEL SUBMITTED THAT THERE IS IRREGULAR ATTENDANCE OF THE TAX CONSULTANT TO THE ASSESSEES TAX MATTERS OVER THE PERIOD OF TIME, WHICH LE D TO NON- ATTENDANCE BEFORE THE ASSESSMENT AS WELL AS APPELLATE PR OCEEDINGS. 4 ITA NOS.2085 & 2086/PUN/2016 JAGANNATH SAJAN KOTE FURTHER, ON MERITS, HE SUBMITTED THAT THE COST OF ACQUISIT ION ADOPTED BY THE AO IS UNFAIR AS THE VALUATION REPORT OF THE ASSESSEE WAS NOT PROPERLY APPRECIATED BY THE AUTHORITIES. ASKING FOR ONE MORE OPPO RTUNITY, LD. COUNSEL MADE A STATEMENT AT BAR THAT HE SHALL APPEAR B EFORE THE AUTHORITIES WITHOUT FAIL WITH DOCUMENTS NECESSARY FOR PASSIN G OF THE PROPER ASSESSMENT. 6. ON THE ISSUE OF LEVY OF PENALTY U/S.271(1)(B) OF THE ACT, LD . COUNSEL FOR THE ASSESSEE SUBMITTED THAT NON-ATTENDANCE BEFORE THE AUTHORITIES IS NOT WILLFUL AND THE SAME IS ATTRIBUTABLE TO THE BONAFIDE REA SONS. THEREFORE, LD. COUNSEL REQUESTED FOR CANCELLING THE PENALTY CONSIDERING THE REASONABLE CAUSE OF THE ILL-HEALTH OF THE THEN TAX CONSULTANT. 7. LD. DR FOR THE REVENUE SUBMITTED THAT THE ASSESSEE D ID NOT ATTEND TO THE STATUTORY NOTICES ISSUED BY THE DEPARTMENT EIT HER BEFORE THE AO OR BEFORE THE CIT(A) AND DID NOT COOPERATE AT ALL. CONSIDERING THE ASSESSEES CONDUCT AND THE DETAILS AVAILABLE ON RECORD, LD. DR PRAYED FOR CONFIRMING THE ORDERS OF AO/CIT(A) ON BOTH THE QUANTUM ADDITION AS WELL AS ON THE PENALTY ISSUE. 8. WE HEARD BOTH THE SIDES AND PERUSED THE EXPARTE OR DERS OF THE REVENUE, I.E. AO AND THE CIT(A) AS WELL AS THE PAPERS FILED BE FORE US. WE ALSO NOTICED THE REVISED FORM NO.36 FILED BY THE ASSESSEE AFTER REMOVAL OF THE DEFECTS. ASSESSEE ALSO FILED COPIES OF THE VALUATION REP ORT WHICH WAS SUBMITTED ALREADY BEFORE THE CIT(A). REGARDING THE QUANTUM ADDITION OF RS.62,38,108/-, WE ARE OF THE OPINION THAT THIS APPEAL SHOULD BE REMANDED TO THE FILE OF AO FOR FRESH ADJUDICATION. REASONS INCLUDE (1) THERE IS NO REPRESENTATI ON BEFORE THE AO AS WELL AS CIT(A) AND THE AUTHORITIES HAD TO COMPLETE T HE PROCEEDINGS 5 ITA NOS.2085 & 2086/PUN/2016 JAGANNATH SAJAN KOTE IN TIME AS THEY ARE TIME BARRING; (2) WHEN EXPARTE ORDERS ARE MADE, IT IS POSSIBLE THAT THE DOCUMENTS FURNISHED BY THE ASSESSEE C OULD NOT BE PROPERLY DEFENDED BEFORE THE AO/CIT(A); AND (3) THERE IS P OSSIBILITY OF WRONG APPRECIATION OF FACTS GENERALLY IN ANY CASE, WHEN T HERE IS NO REPRESENTATION BY THE ASSESSEE OR HIS REPRESENTATIVE. THEREFORE, THE ENTIRE APPEAL ALONG WITH THE ISSUES RAISED THEREIN STANDS NOW RE MANDED TO THE FILE OF AO FRESH ADJUDICATION. IT GOES WITHOUT SAYING THAT A O SHALL GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH THE SET PRINCIPLES OF NATURAL JUSTICE. ASSESSEE IS ALSO DIRE CTED TO PRESENT BEFORE THE AO AND FILE THE REQUISITE DOCUMENTS RELATING TO THE SAID CAPITAL GAINS. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.2086/PUN/2016 PENALTY U/S.271(1)(B) OF THE ACT . A.Y. 2011-12 10. THIS APPEAL RELATES TO THE PENALTY LEVIED BY THE AO U/ S.271(1)(B) OF THE ACT ON THE QUANTUM ADDITION MADE BY THE AO. THE FA CTS OF THE QUANTUM ADDITION ARE ALREADY IN THE PRECEDING PARAGRAPHS. 11. AFTER HEARING BOTH THE SIDES, WE FIND IT IS UNDISPUTED FA CT THAT THE TAX CONSULTANT WHO WAS HANDLING THE MATTERS WAS SUFFERING FROM ILLNESS OVER THE PERIOD OF TIME AND HE ULTIMATELY PASSED AWAY IN THE YEAR 2017. CONSIDERING THE SAME, WE ARE OF THE OPINION THAT ASSESSEE HAS A REASONABLE CAUSE, IN PRINCIPLE. HOWEVER, IT IS THE DUTY OF T HE ASSESSEE TO MAKE AN ALTERNATE ARRANGEMENT WHEN THE TIME BARRING MA TTERS ARE INVOLVED. THE DUTY IS CAST ON THE ASSESSEE TO DISCHARGE THE SAME. ON CONSIDERING THE FAILURE OF THE ASSESSEE ON ONE SIDE AND AT THE SAME TIME, 6 ITA NOS.2085 & 2086/PUN/2016 JAGANNATH SAJAN KOTE THE AOS DUTY OF MAKING ASSESSMENT ON THE OTHER SIDE, W E FIND THIS IS A FIT CASE FOR LEVY OF AN EXEMPLARY PENALTY FOR DEFAULT OF NON-AT TENDANCE BEFORE THE AO. THEREFORE, WE ARE OF THE OPINION THAT THE PENA LTY SHOULD BE RESTRICTED TO ONE INSTANCE OR DEFAULT AND GRANT RELIEF IN R ESPECT OF THE OTHER FIVE INSTANCES. THUS, THE AO IS DIRECTED TO RESTRICT THE P ENALTY TO RS.10,000/- FOR ONE INSTANCE ONLY. THE ASSESSEE GETS PA RT RELIEF ON THIS PENALTY ISSUE. ACCORDINGLY, THE GROUNDS RAISED BY THE AS SESSEE ARE PARTLY ALLOWED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 13. TO SUM UP, ITA NO.2085/PUN/2016 FILED BY THE ASSESSE E IS ALLOWED FOR STATISTICAL PURPOSES AND ITA NO.2086/PUN/2016 FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 03 RD DAY OF AUGUST, 2018. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER / PUNE; / DATED : 03 RD AUGUST, 2018. SATISH ' ) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-2, PUNE 4. THE PR.CIT-1, PUNE , , ' , / DR, ITAT, B BENCH, PUNE. 6. % / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE