VIJAYA DURGA PENUMALA, RAJAHMUNDRY V. INCOME TAX OFFICER, WARD-2(1), RAJAHMUNDRY

ITA 249/VIZ/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 0569 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 28-07-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 02-06-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA VILLURI
• Keywords: Sale consideration of property below Jantri Value; Principle of natural justice; Fair market value; Condonation of delay; Capital Gains
• Section: 271(1)(c); 50C; 142(1); 250; 274

Judgement Text

आयकर अपीलीयअिधकरण, िवशाखापटणम पीठ, िवशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM ᮰ी दु᭪वूᱧ आर एल रे᲻ी, ᭠याियक सद᭭य एवं ᮰ी एस बालाकृ᭬णन, लेखा सद᭭य के समᭃ BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./ I.T.A. No.249/Viz/2024 (िनधाᭅरण वषᭅ / Assessment Year : 2016-17) Vijaya Durga Penumala, 74-8-20, Siri Apartments-2, Prakash Nagar, Rajahmundry, Andhra Pradesh – 533103. PAN: CXDPP1606F Vs. The Income Tax Officer, Ward-2(1), Rajahmundry. (अपीलाथᱮ/ Appellant) (ᮧ᭜यथᱮ/ Respondent) अपीलाथᱮ कᳱ ओर से/ Appellant by : Sri C. Subrahmanyam, AR ᮧ᭜याथᱮ कᳱ ओर से / Respondent by : Dr. Aparna Villuri, Sr. AR सुनवाई कᳱ तारीख / Date of Hearing : 29/07/2024 घोषणा कᳱ तारीख/Date of Pronouncement : 31/07/2024 O R D E R PER DUVVURU RL REDDY, Judicial Member : This appeal filed by the assessee is against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“Ld. CIT(A)-NFAC”] vide DIN & Order No. ITBA/NFAC/S/250/2023-24/1059602715(1), dated 11/01/2024 arising out of the order passed U/s. 271(1)(c) of the Income Tax Act, 1961 [“the Act”] for the AY 2016-17. 2 2. At the outset, it is noticed from the appeal record that there is a delay of 84 days in filing the appeal before the Tribunal. Explaining the reasons for belated filing of the appeal, the Ld. AR drew our attention to the affidavit filed by the assessee along with a petition seeking for condonation of delay and read out the contents of the affidavit which is as under: “........... 2. Assessee was while going to her Counsel’s office to sign the appeal papers on 08/03/2024 but on the previous day while travelling on a two-wheeler, slipped and fell down sustained injury of right ankle. Immediately got the medical treatment and was advised for bed rest. In this process going to Counsel’s office for signing the appeal papers slipped out of the mind. Whereas on 20/05/2024, received a phone call from the income tax office for payment of taxes and then realized that appeal was not filed. Accordingly, approached the Counsel requesting to prepare the documents which was done on 26/05/2024 and the appeal was filed on 03/06/2024 causing a delay of 88 days. 3. In the light of the above, it is respectfully submitted that this delay in filing the appeal belatedly was not as a result any negligence or lack of diligence, but solely due to the unfortunate and unforeseen circumstances surrounding my health. Doctor’s certificate in support of petition is attached herewith. 4. ..... 5. .....” 3. 3. On perusal of the contents of the affidavit filed by the assessee as well as the submission of the Ld. AR, we find that the assessee is prevented by a reasonable and sufficient cause in filing the appeal beyond the prescribed time limit with a delay of 3 84 days. Therefore, we hereby condone the delay of 84 days in filing the appeal before the Tribunal and proceed to adjudicate the appeal on merits in the following paragraphs. 4. Briefly stated the facts of the case are that the assessee is an individual deriving income from financial consultancy and rental income. Assessee filed her return of income for the AY 2016-17 on 09/05/2016 declaring a total income of Rs. 2,99,100/-. Subsequently, the case was selected for limited scrutiny under CASS for the reason ‘large investment in property as compared to total income’. Thereafter, statutory notices U/s. 143(2) and 142(1) of the Act were issued and called for certain information. In response, the assessee submitted that she along with her husband purchased a residential house worth Rs. 25,56,000/- vide Document No. 6224/2015 registered at SRO, Rajanagaram. The source of investment is the advance amount received on the development agreement entered with Bhavya Builders vides Doc. No. 12772/2015 registered at SRO, Rajahmundry by the assessee and her husband. The Ld. AO on verification of the assessee’s return of income observed that the assessee has not paid any capital gains tax on the development agreement entered with Bhavya Builders and therefore, the 4 assessee was issued a show cause notice and required to furnish the valid explanation along with documentary evidences as to why the capital gains were not paid on the development agreement worth Rs. 3,06,18,000/-. In this regard, the Ld. AO calculated the capital gains on the development agreement to be Rs. 54,03,020/-. The Ld. AO also observed that the assessee and her husband have transferred 490.26 sq yds to M/s. Bhavya Builders and the fair market value of the land is at Rs. 18,000/- per sq yd and therefore the value of the land transferred worked out at Rs. 88,24,680/-. The Ld. AO also observed that the consideration received by the assessee and her husband is less than the value of the land transferred. Therefore, the Ld. AO was of the opinion that the provisions of section 50C of the Act are attracted in the case of the assessee and hence the share of the assessee and her husband is treated at Rs. 88,24,680/- which includes 3 flats received by the assessee. Thereby, the Ld. AO has considered the assessee’s share to be half of the total share ie., 44,12,340/- [Rs. 88,24,680 ÷ 2]. The Ld. AO also initiated the penalty proceedings U/s. 271(1)(c) of the Act for concealment of particulars of income vide notice U/s. 274 r.w.s 271(1)(c) of the Act dated 29/12/2018 and the same was served on 30/12/2018. Since there is no response from the assessee even after providing 5 multiple opportunities, the Ld. AO concluded that it is a fit case for levy of penalty U/s. 271(1)(c) of the Act and accordingly levied a penalty of Rs. 9,08,942/- and passed the order dated 28/06/2019. Aggrieved by the penalty order issued by the Ld. AO U/s. 271(1)(c) of the Act, the assessee preferred an appeal before the Ld. CIT(A)-NFAC. 5. On appeal, the Ld. CIT(A)-NFAC, passed ex-parte order as there is no response from the assessee with respect to the notices issued and dismissed the appeal of the assessee by observing as under: “7.4. I have perused the grounds of appeal, statement of facts and the penalty order. The assessee has not produced any material to controvert the findings of the Ld. AO. In the event, I have no reason to interfere with the findings of the AO. In such circumstances, I dismissed the claim of the appellant.” Aggrieved by the order of the Ld. CIT(A)-NFAC, the assessee is in appeal before the Tribunal by raising the following grounds of appeal: “1. The orders passed U/s. 271(1)(c) of the Act dated 28/06/2019 upheld by the Ld.CIT(A)-NFAC through the order passed U/s. 250 of the act dated 11/01/2024, are in direct contravention to both the provisions of the law and the facts of the case. 2. The disposal of the case by the Ld. CIT(A) ex-parte, without providing the assessee with reasonable and sufficient 6 opportunity to present her case, constitutes a clear violation of the fundamental principles of natural justice, rendering the impugned order unjust and prejudicial. 3. Furthermore, the failure of the Ld. CIT(A) to provide a finding on the merits of the case violates the provisions of sec. 250(6) of the Act. This omission to address the substantive issues at hand renders the impugned order legally flawed and void. 4. The Ld. CIT(A) failed to take note that the subject development agreement, upon which the assessing officer based the determination of capital gains, did not materialize as it is currently under dispute and subject to litigation in a court of law. Consequently, the liability of assessed capital gains does not arise, thereby nullifying the basis for the imposition of penalties for alleged concealment. 5. In the light of the above ground and other reasons the appellant earnestly prays for the impugned order to be set aside in the interest of justice.” 6. At the outset, the Ld. Authorized Representative [“Ld. AR”] submitted before us that the Ld. CIT (A)-NFAC has passed ex-parte order without providing proper opportunity to the assessee of being heard. It was therefore pleaded that the matter may be remitted back to the file of the Ld CIT (A)-NFAC in order to provide one more opportunity to the assessee of being heard. Ld. Departmental Representative [“Ld. DR”], on the other hand, vehemently opposed to the submissions of the Ld. AR and argued that several opportunities had been provided to the assessee however, on the given dates of hearing, neither the assessee nor her Representative has responded to the notices issued nor filed any details / submissions as 7 called for by the Ld. CIT (A)-NFAC. It was further submitted that, under these circumstances, the Ld. CIT (A)-NFAC had no other option but to pass ex-parte order based on the materials available on record. Hence, it was pleaded that the order passed by the Ld. CIT(A)-NFAC does not call for any interference. 7. We have heard the both the sides and carefully perused the materials on record. On examining the facts of the case, we find that the Ld. CIT (A)-NFAC had posted the case on several occasions. However, there was no response on behalf of the assessee before the Ld. CIT(A)- NFAC on the dates of hearing with regard to the details / submissions as called for by the Ld. CIT(A)-NFAC. Therefore, the Ld. CIT (A)-NAFC was left with no other option except to adjudicate the appeal ex-parte and dismissed appeal in-limine. In this situation, considering the issues involved in the appeal, we are of the considered view that the Ld. CIT(A)- NFAC ought to have decided the case on merits instead of dismissing the appeal ex-parte. However, considering the prayer of the Ld. AR, and in the interest of justice as well as strictly following the principles of natural justice, we hereby remit the matter back to the file of Ld. CIT (A)-NFAC in order to consider the appeal afresh and decide the case on merits by providing one more opportunity to the assessee of being heard in accordance with the principles of natural justice. At the same breath, we 8 also hereby caution the assessee to promptly co-operate before the Ld. CIT (A)-NFAC in the proceedings failing which the Ld. CIT (A)-NFAC shall be at liberty to pass appropriate order in accordance with law and merits based on the materials on the record. It is ordered accordingly. 8. In the result, appeal filed by the assessee is allowed for statistical purposes as indicated hereinabove. Pronounced in the open Court on 31 st July, 2024. Sd/- Sd/- (एस बालाकृ᭬णन) (दु᭪वूᱧ आर.एल रे᲻ी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सद᭭य/ACCOUNTANT MEMBER ᭠याियकसद᭭य/JUDICIAL MEMBER Dated : 31/07/2024 OKK - SPS आदेश की Ůितिलिप अŤेिषत /Copy of the order forwarded to:- 1. िनधाᭅᳯरती/ The Assessee – Vijaya Durga Penumala, 74-8-20, Siri Apartments-2, Prakash Nagar, Rajahmundry, Andhra Pradesh – 533103. 2. राज᭭व/The Revenue – Income Tax Officer, Ward-2(1), Aayakar Bhawan, Veerabhadrapuram, Rajahmundry, Andhra Pradesh – 533105. 3. The Principal Commissioner of Income Tax, 4.आयकर आयुᲦ (अपील)/ The Commissioner of Income Tax (Appeals), 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, िवशाखापटणम/ DR, ITAT, Visakhapatnam 6.गाडᭅ फ़ाईल / Guard file आदेशानुसार / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam