Sonali Harshal Gavandalkar, Thane V. ITO, Ward-2(4), KALYAN

ITA 814/MUM/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6332 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 29-05-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 22-02-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Principle of natural justice; Competent authority; Capital Gains
• Section: 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “E”, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI RATNESH NANDAN SAHAY, ACCOUNTANT MEMBER ITA No. 814/M/2024 Assessment Year: 2011-12 Sonali Harshal Gavandalkar 44, Sitai Sadan, Suryodaya C.H.S., Ambernath, Thane- 421501. PAN: AKDPP7480J Vs. Income Tax Officer, Ward 2(4), 2 nd Floor, Mohan Plaza, Wayle Nagar, Khadakpada, Kalyan West- 421301. (Appellant) (Respondent) Present for: Assessee by : Shri Devendra Jain, A.R. Revenue by : Shri P. D. Chougule (Addl. CIT) SR. D.R. Date of Hearing : 30 . 05 . 2024 Date of Pronouncement : 25 . 06 . 2024 O R D E R Per: Ratnesh Nandan Sahay, Accountant Member: 1. This appeal has been filed against the Order of the Ld. CIT (Appeals) passed u/s. 250 of the Income Tax Act [the ‘Act’ in short] vide DIN & Order No. ITBA/NFAC/S/250/2023-24/1059077819(1) dated 26/12/2023 for the assessment year 2011-12. ITA No.814/M/2024 Sonali Harshal Gavandalkar 2 2. Following grounds of appeal have been raised: “1.In the facts and circumstances of the case and in law, the Ld. National Faceless Appeal Centre (NFAC), CIT (Appeals), has erred in confirming the action of the Ld. Assessing Officer to consider the year of transfer of the property as F.Y. 2010- 11 being the year in which the agreement for development was entered into and ignoring the factual position that the possession of the property for development was handed over in the F.Y. 2015-16. 2. In the facts and circumstances of the case and in law, the Ld. National Faceless Appeal Centre (NFAC), CIT (Appeals), has erred in completing the appeal proceedings without waiting for the Remand Report under section 250(4) as called for from the Ld. Assessing Officer. 3. In the facts and circumstances of the case and in law, the Ld. National Faceless Appeal Centre (NFAC), CIT (Appeals), has erred in confirming the valuation of Rs.4,42,63,830/- [being 15.60 per cent of Rs.28,37,42,500/-] ignoring the valuation of Rs.1,93,19,626/- as determined by the District Valuation Officer in case of one of the co-owner of the property. 4. In the facts and circumstances of the case and in law, the Ld. National Faceless Appeal Centre (NFAC), CIT (Appeals), has erred in passing an order under section 250 dated 26.12.2023 ex-parte without considering the submission dated 22.04.2019 filed by the appellant manually thereby violating the principle of Natural Justice. 5. In the facts and circumstances of the case and in law, the Ld. National Faceless Appeal Centre (NFAC), CIT (Appeals), has erred in confirming the addition of Rs.1,32,79,149/- on account of Long Term Capital Gain; merely on surmises and conjectures; without ITA No.814/M/2024 Sonali Harshal Gavandalkar 3 allowing the deduction of the cost of acquisition of the property. 6. The appellant craves leave to add, alter, delete or modify all or any of the above grounds of appeal. All the above grounds are without prejudice to each other.” 3. The facts of the case, in brief, are that the appellant filed her return of income on 29/10/2018 declaring total income of Rs.1,28,930/-. As per the information available with the department, the appellant along with 24 other family members of Panvelkar family has executed an agreement for development-cum-sale on 31/12/2010 with one M/s. Tharwani Reality, Properitor of Shri Anil Tharwani. All the land owners, who had undivided rights, shares and interest in their respective pieces of land admeasuring 43,500 Sq. meter, entered into an agreement on 31/12/2010 for consideration to be received by them which was equivalent to 45% of constructed area to be sanctioned by the Town Planning authorities, be it residential or commercial. Accordingly, they have collectively granted the power of attorney in favour of the Developer on 31.12.2010 and handed over the possession of property to M/s. Tharwani realty jointly and collectively. The developer has also paid an amount of Rs.11.50 Crores as refundable security deposit to all the five brothers who received the said money on behalf of all family members. However, the Assessing officer noticed that the assessee has not offered this ITA No.814/M/2024 Sonali Harshal Gavandalkar 4 money in her returns of income as capital gains. Hence, the case was reopened u/s.147 of the Act after recording reasons and taking prior approval of the competent authority. Accordingly, Notice u/s.148 was issued to the appellant. In response to that the appellant filed her return of income on 29/10/2018. Further, notices u/s.143 (2) and notices u/s.142 (1) were issued from time to time and the appellant did file her response on that. 4. The Assessing Officer, thereafter, completed the assessment by making an addition of Rs.1,32,79,149/- under the head ‘Long term capital gains’ (LTCG) being appellant’s share of sales consideration received as per the aforesaid agreement for development-cum-sale executed on 31/12/2010. 5. Aggrieved by the order of the Ld. assessing officer, the assessee preferred an appeal before the Ld. CIT (A). The Ld. CIT (A) issued several notices to the appellant on 26/02/2016, 28/12/2020, 03/02/2021, 03/11/2023, 16/11/2023 and 01/12/2023 through ITBA Portal. An enablement communication email was also sent on 02/11/2022 by NFAC. The notices were sent after verifying the email ID from Form 35. However, the appellant did not respond to any of the notices, the Ld. CIT(A), therefore, dismissed the appeal as under: “The appellant did not make any specific submission apart from submitting the grounds of appeal. ITA No.814/M/2024 Sonali Harshal Gavandalkar 5 Appellant is non-responsive during the appellate proceedings. During the assessment proceeding, appellant stated that though the Development agreement was executed on 31/12/2010, the possession was handed over to the developer in the A.Y. 2015-16 due to some pending survey and boundaries and other relevant issues. Hence, appellant requested to recognize the capital gain in the A.Y. 2015-16 in respect of the appellant's case. Ld. assessing officer stated that as per the development cum sale dated 31/12/2010 that the appellant and other co-owners had transferred their respective pieces of land to the developer immediately after the execution of the agreement as such sec 53A of the Transfer of Property Act and consequently sec 2(47) of the IT Act would apply. Thus, the transfer of capital assets is recognized and the capital gains calculations under provisions of section 45 arise. The appellant while contesting the same did not provide any details of documents supporting her claim that the said property was handed over only in A.Y. 2015-16. Further, the case laws relied upon by the appellant in the course of assessment proceedings, also relied upon the principle of possession of property in determining the capital gains. In case of the Skyline Great Hills (ITA No. 2299 of 2013), the jurisdictional Mumbai High Court has held that the date of entering into the appellant's lands by the developer will be determining the date for calculation of the ITA No.814/M/2024 Sonali Harshal Gavandalkar 6 capital gains. As per the registered sale deed, as noted by the assessing officer, the possession was handed over in the year concerned. With no evidence to back the appellant's claim of possession being handed over later, the AO's stand is held correct. Further, if there are any mistakes in the determination of the consideration value, the appellant has not brought forth the same. Following the decision of the jurisdictional Mumbai High Court in respect of Chaturbhuj Dwarkadas Kapadia (2003) 260 ITR 491, the transfer of property in the development agreement is subject to capital gains. Thus, the addition of the assessing officer is upheld.” 6. During the course of appellant proceedings before us, the appellant stated as under: “1. Appeal filed before Jurisdictional CIT (A)-3, Thane on 23/01/2019. 2. Notices issued by the Jurisdictional CIT (A) and Assessee filed paper book comprising 149 pages. [Enclosed as Annexure A] 3. Vide letter dated 11/03/2019 the said jurisdictional CIT(A) directed the Ld. assessing officer to verify certain aspect of the matter and asked him to submit the remand report on the same. [Copy of the said letter is enclosed as Annexure-B] 4. During the course of remand proceedings before the Assessing Officer, Assessee had filed a detailed submission vide letter dated ITA No.814/M/2024 Sonali Harshal Gavandalkar 7 22/04/2019. [Copy of the said submission is enclosed as Annexure-C] 5. In From-35; against the question 'Whether notices/communication may be sent on email?' Assessee had expressly stated 'No' i.e. Assessee had stated that notices shouldn't be sent on the e-mail ID. Despite of this, notices are claimed to have been issued on emails. 6. The Commissioner Of Income Tax (Appeals) [NFAC] states that Assessee had not complied to the notices issued; however, Assessee had duly furnished a detailed paperbook before the jurisdictional Commissioner of Income Tax (Appeals) during the course of appeal proceedings; the said Commissioner of Income Tax (Appeals) had also called for remand report and Assessee had also made submission during the remand proceedings; however, all these aspects were not considered by the Commissioner of Income Tax (Appeals) [NFAC] while passing the impugned order dated 26/12/2023.” The D.R., on the other hand, relied on the order of the Assessing Officer and the Ld. CIT (A). 7. We have heard the rival submissions and found that the Ld. CIT (A) has not considered the remand report submitted by the assessee while passing the impugned order dated 26/12/2023. The case is, therefore, ITA No.814/M/2024 Sonali Harshal Gavandalkar 8 set aside and remanded to the file of the Ld. CIT (A) to pass a fresh order after considering the remand report submitted by the Ld. Assessing Officer and also the submissions made by the appellant. The appellant is also directed to submit all relevant documents before the Ld. CIT (A) as and when asked for. 8. In the result, the appeal is allowed in aforesaid terms. Order pronounced in the open court on 25.06.2024. Sd/- Sd/- (AMIT SHUKLA) (RATNESH NANDAN SAHAY) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 25.06.2024. Snehal C. Ayare, Stenographer Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai.