YAKUB BAIG TRUST, PANVEL V. INCOME TAX OFFICER, NEC, DELHI

ITA 2961/MUM/2022

AI Insights

The case involves the Yakub Baig Trust, which appealed against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2018-19. The trust, registered under section 12A of the Income Tax Act, 1961, was assessed on the sale of immovable property valued at Rs.54,38,000, which was not utilized for purchasing capital assets, thus not exempt under Section 11 of the Act. The Assessing Officer had added this amount to the trust's income as it did not receive a response to the show cause notice. The trust argued that the managing trustee's sudden death due to COVID-19 led to the non-submission of necessary documents. The Tribunal, referencing the Supreme Court's decision in Tin Box Company vs. CIT, found that the trust was not given a proper opportunity to be heard and thus remanded the case for a fresh assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299332 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 15-01-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 20-11-2022
• Other Referred Cases: Tin Box Company Vs. CIT (249 ITR 216) (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Opportunity of being heard; Reasonable cause
• Section: 11; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI ABY T. VARKEY, JM AND SHRI OM PRAKASH KANT, AM आयकर अपील सं/ I.T.A. No. 2961/Mum/2022 (निर्धारण वर्ा / Assessment Year: 2018-19) Yakub Baig Trust 853, Mominpada, Mahatma Gandhi Road, Pavel, Maharashhtra-410206. बिधम/ Vs. ITO, NEC Delhi. स्थधयी लेखध सं./जीआइआर सं./PAN/GIR No. : AAATM6810A (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) सुनवाई की तारीख / Date of Hearing: 16/01/2023 घोषणा की तारीख /Date of Pronouncement: 31/01/2023 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee trust against the order of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi dated 21.09.2022 for the assessment year 2018-19. 2. None appeared for the assessee trust. However, on perusal of the ground no. 1, which is against the action of the Ld. CIT(A) in not granting enough opportunity to the assessee and having passed the ex- parte order qua assessee. 3. Brief facts are that the assessee is a trust which enjoys registration u/s 12A of the Income Tax Act, 1961 (hereinafter “the Act”) and the case of the assessee was selected for complete security through CASS to examine “Sale of high value property as per information received in SFT-012 by an entity registered u/s 12AA of the”. According to the AO, the assessee had sold immovable property worth Rs.54,38,000/- on 29.05.2017 and have not utilized this funds Assessee by: None Revenue by: Shri Aditya M. Rai (Sr. AR) ITA No.2961/Mum/2022 A.Y. 2018-19 Yakub Baig Trust 2 for the purchase of any capital assets. Therefore, according to the AO, the consideration it received is not exempt under Section 11 of the Act. According to the AO, even though the show cause notice was issued to the assessee as to why the sale consideration received to the tune of Rs.54,38,000/- should not be brought to tax, the assessee did not bother to file even the copy of the registration certificate u/s 12A of the Act before him, therefore, he was pleased to make an addition of Rs.54,38,000/-. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) wherein the assessee filed statement of fact and brought to the notice of Ld. CIT(A) that non-filing of relevant documents before the AO was due to sudden demise of the Managing Trustee on 10.09.2020 (due to Covid-19) who was managing the affairs of the assessee trust. And therefore, prayed that relevant documents may be allowed to be filed (Annexure-1, 1, 7, 8, 9 & 10) and be admitted under Rule 46A of the Income Tax Rules, 1962 (hereinafter “the Rules”) and then only the taxability of income may be determined. It was also pointed out in the statement of fact that immovable property which was sold was an agriculture land and only after obtaining prior permission from the Charity Commissioner of Maharashtra State (dated 04.02.2009), the land was transferred at Rs.1,39,650/- (but valued at Rs.54,38,000/- for the purpose of stamp duty valuation on the date of registration of the document i.e. on 29.05.2017) which was consequent to the agreement for sale dated 05.09.2007. And it was pointed out that even though the entire sale consideration was received by the trust in the year 2009 itself, (as per order of the Charity ITA No.2961/Mum/2022 A.Y. 2018-19 Yakub Baig Trust 3 Commissioner dated 04.02.2009), the registration of the agreement for sale took place only on 29.05.2017. For supporting the aforesaid averments, the assessee filed relevant documents before Ld CIT(A). In this context, we note that the Ld. CIT(A) though had accepted at para no. 2 of the impugned order certain documents/details viz (i) Trust deed (ii) purchase and sale of the capital asset (iii) Use of the asset for the purpose of the trust (iv) date of sale of the asset (v) Details of the party to whom the sale has been made and relation to the party thereto (vi) Amount of consideration for the sale of the asset (vii) Mode of payment along with details as to whether the purchase of the asset was treated as application of money in any year and depreciation claimed on the asset etc. However, since there was no response from the assessee, the Ld. CIT(A) decided the appeal against the assessee without hearing it. We note the reason for non-appearance of assessee before AO was due to the sudden demise of the managing trustee due to the Covid-19 on 10.09.2020, and therefore the assessee could not participate before the AO and could not file the relevant documents before him in respect of registration of immovable property dated 29.05.2017 (AY. 2018-19), the registration certificate u/s 12A of the Act, etc. Since, there was a reasonable cause for the assessee trust not filing relevant documents before the AO to substantiate its contention as noted (supra), we are of the opinion that assessee may be given an opportunity before the AO to file the relevant documents/details so that it can explain about its claim. For that we rely on the decision of the Hon’ble Supreme Court in the case of Tin Box Company Vs. CIT ITA No.2961/Mum/2022 A.Y. 2018-19 Yakub Baig Trust 4 (249 ITR 216) (SC), wherein it was held that if an assessee did not get proper opportunity before the AO, then the proper course is that assessment should be restored back to the file of AO for de-novo assessment. The Hon’ble Supreme Court in the case of Tin Box Company (supra) reversing the orders of Hon’ble High Court, ITAT and Ld CIT(A) has held as under:- “ It is unnecessary to go into great detail in these matters for there is a statement in the order of the Tribunal, the fact-finding authority, that reads thus : "We will straightway agree with the assessee's submission that the ITO had not given to the assessee proper opportunity of being heard." That the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is the assessment order that counts. That order must be made after the assessee has been given a reasonable opportunity of setting out his case. We, therefore, do not agree with the Tribunal and the High Court that it was not necessary to set aside the order of assessment and remand the matter to the assessing authority for fresh assessment after giving to the assessee a proper opportunity of being heard. 2. Two questions were placed before the High Court, of which the second question is not pressed. The first question reads thus : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not setting aside the assessment order in spite of a finding arrived at by it that the Income-tax Officer had not given a proper opportunity of hearing to the assessee ?" In our opinion, there can only be one answer to this question which is inherent in the question itself: in the negative and in favour of the assessee. 3. The appeals are allowed. The order under challenge is set aside. The assessment orders, that of the Commissioner (Appeals) and of the Tribunal are also set aside. The matter shall now be remanded to the assessing authority for fresh consideration, as afore stated. No order as to costs.” 4. Since we have found in the present case that no proper opportunity the assessee trust got before the AO, we relying on the ITA No.2961/Mum/2022 A.Y. 2018-19 Yakub Baig Trust 5 aforesaid decision of the Hon’ble Supreme Court in the case of Tin Box Company (supra) set aside the impugned order of the Ld. CIT(A) and remand the same back to the file of the AO and direct him to frame the assessment de-novo after hearing the assessee in accordance to law. The assessee is at liberty to file documents/material/written submission before the AO to substantiate its return of income. And we also direct the assessee to be diligent before the AO during the assessment proceedings. 5. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on this 31/01/2023. Sd/- Sd/- (OM PRAKASH KANT) (ABY T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER मुंबई Mumbai; दिनांक Dated : 31/01/2023. Vijay Pal Singh, (Sr. PS) ITA No.2961/Mum/2022 A.Y. 2018-19 Yakub Baig Trust 6 आदेश की प्रनिनलनि अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त(अपील) / The CIT(A)- 4. आयकर आयुक्त / CIT 5. दवभागीय प्रदतदनदि, आयकर अपीलीय अदिकरण, मुंबई / DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file. आदेशधिुसधर/ BY ORDER, सत्यादपत प्रदत //True Copy// उि/सहधयक िंजीकधर /(Dy./Asstt. Registrar) आयकर अिीलीय अनर्करण, मुंबई / ITAT, Mumbai