JIGNESHKUMAR BALUBHAI PATEL,TAPI V. INCOME TAX OFFICER, WARD 2, BARDOLI, BARDOLI

ITA 845/SRT/2023

AI Insights

The case involves Jigneshkumar Balubhai Patel, the appellant, who contested the orders passed by the Assessing Officer and confirmed by the Commissioner of Income Tax (Appeals), which included unexplained cash credits and adjustments under section 50C of the Income Tax Act, 1961. The appellant argued that the orders were passed without adequate opportunity for a fair hearing, particularly due to the death of his Chartered Accountant during the COVID-19 pandemic, which left him without legal representation or advice. The Tribunal found merit in the appellant's arguments regarding the lack of opportunity to present his case and thus allowed the appeal for statistical purposes, setting aside the previous orders and remanding the case back to the Assessing Officer.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 473276 (ITAT-SURAT)
• Duration Of Justice: 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Next Hearing Date: 12-11-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 05-12-2023
• Other Referred Cases: CIT vs. Carlton Hotel (P.) ltd., (2017) 88 taxmann.com 257
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVISH BHATT
• Assessee Lawyers: SAPNESH SHETH
• Keywords: Condonation of delay; Set aside; Capital asset; Opportunity of being heard; Unexplained cash credit; Sale consideration of property below Jantri Value; Fair market value; Principle of natural justice
• Section: 144; 250; 133(6); 50C

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.845/SRT/2023 Assessment Year: (2017-18) (Physical Hearing) Jigneshkumar Balubhai Patel, Varudavan Society, Kumbharwad, Kanpura, Vyara, Tapi - 394650 Vs. The ITO, Ward – 2, Bardoli èथायीलेखासं./जीआइआरसं./PAN/GIR No: APGPP7426Q (Appellant) (Respondent) Appellant by Shri Sapnesh Sheth, CA Respondent by Shri Ravish Bhatt, Sr. DR Date of Hearing 12/11/2024 Date of Pronouncement 21/11/2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 16.03.2023 by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’] for the assessment year (AY) 2017-18. 2. The grounds of appeal raised by the assessee are as under: “1. On the facts and in the circumstances of the case as well as law on the subject, the learned CIT(A), NFAC has erred in confirming the action of assessing officer in passing e-parte order without providing reasonable opportunity of hearing to assessee. 2. On the facts and circumstances of the case as well as law on the subject, the Id. CIT(A), NFAC has erred in confirming the action of assessing officer in making addition of Rs.71,47,000/- by treating cash deposit as unexplained cash credit u/s 68 of the I.T. Act, 1961. 2 ITA No.845/SRT/2023/AY.2017-18 Jigneshkumar Balubhai Patel 3. On the facts and circumstances of the case as well as law on the subject, the Iearned Commissioner of Income Tax (Appeals), NFAC has erred in confirming the action of assessing officer in invoking provisions of section 115BBE of the Act and in thereby taxing the addition at 60% & levying surcharge at 25% which is not applicable on above amount. 4. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income-tax (Appeals), NFAC has erred in confirming the action of assessing officer in making addition of Rs.86,02,561/- u/s 50C of the I.T. Act, 1961, ignoring the fact that the said transaction is not in respect of land introduced by the appellant in his partnership firm, as his capital contribution which is duly covered u/s 45(3) of the Act and for which the provisions of section 50C of the Act are not applicable. 5. It is therefore prayed that above addition made by assessing officer and confirmed by Commissioner of Income-tax (Appeals) may please be deleted. 6. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of appeal.” 3. The appeal filed by the assessee is barred by limitation by 204 days in terms of provisions of section 253(3) of the Act. The assessee has filed an affidavit giving reasons for delay in filing the appeal of appeal before the Tribunal. In the affidavit, the assessee stated that CIT(A) has passed order u/s 250 of the Act on 16.03.2023. The appeal before this Tribunal was required to be filed within 60 days, i.e. on or before 15.05.2023. However, the assessee filed the appeal on 05.12.2023. Therefore, there is a delay of 204 days. The assessee submitted that the order passed on 16.03.2023 but he came to know about the order in the month of July, 2023. The assessee had not received any notices on his e-mail. His earlier counsel expired during the Covid-19 period. Thereafter, he received the physical copy of recovery notice and could not file immediately due to reasons beyond his control. Thereafter, he consulted with 3 ITA No.845/SRT/2023/AY.2017-18 Jigneshkumar Balubhai Patel Shri Sapnesh Sheth, Chartered Accountant who advised to file before the Tribunal. 4. On the other hand, Learned Senior Departmental Representative (ld. Sr. DR) for the Revenue submitted that assessee has failed to explain reasonable and sufficient reason for the delay; hence, delay should not be condoned. 5. We have heard both the parties on this preliminary issue and note that because of the expiry of the Chartered Accountant/tax consultant, who has not informed the assessee, the delay of 204 days has occurred in filing appeal before this Tribunal. We note that assessee was not negligent but due to absence of legal advice of Chartered Accountant/tax consultant, the delay has occurred in filing the present appeal. As the tax consultant of the assessee expired during Covid-19 period, there was no one to assist the assessee with respect to the procedure and formalities of filing appeal before the Tribunal. Hence, the reasons given in the affidavit for condonation of delay are convincing and the same would constitute sufficient cause for the delay in filing this appeal. We, therefore, condone the delay and admit the appeal for hearing. 6. Brief facts of the case are that the assessee filed his return of income for AY.2017-18 on 26.03.2018, declaring total income of Rs.12,59,695/-. The case of the assessee was selected for complete scrutiny. Subsequently, the Assessing Officer (in short, ‘AO’) issued various statutory notices through speed post and e-mail id of the assessee, but assessee did not comply with any of the notices. Subsequently, the AO called for details on 05.09.2019. The assessee had failed to furnish any details relating to business activities, nature of income earned, 4 ITA No.845/SRT/2023/AY.2017-18 Jigneshkumar Balubhai Patel details of bank accounts, details of cash deposits made in his bank accounts, source of cash deposits, details of property sold by him. During the assessment proceedings, the assessee deposited cash in the following bank accounts, i.e., (i) Rs.42,52,000/- in Bank of Baroda, (ii) Rs.19,15,500/- in HDFC Bank, (ii) Rs.9,09,000/- in HDFC Bank and (iv) Rs.2,70,500/- in Axis Bank, totalling amount to Rs.71,47,000/-. The AO asked the assessee as to why cash deposited in the bank accounts should not be treated as unexplained cash credits and income should not be determined for AY.2017-18. The AO reproduced the relevant show cause notice at page nos. 4 to 5 of the assessment order. The AO noticed that assessee had made cash deposits amount to Rs.71,47,000/- during the year under consideration, relevant to AY.2017-18 which remained unexplained. The assessee failed to give any explanation about the nature and source of cash deposits made in the bank account to tune of Rs.71,47,000/-, which were treated as unexplained cash credits u/s 68 of the Act and added to the total income of the assessee. The total assessed income was taxed @ 60% u/s 115BBE of the Act. 6.1 During the assessment proceedings, the AO also noticed that the assessee had sold a non-agricultural land and introduced the said land as capital in partnership firm namely M/s River Palaces. The assessee has purchased land on 21.02.2013 at Block No.435, Plot No.1 to 159, Moje: Kanpura, Tal – Vyara, Dist – Tapi. The AO noticed that assessee had shown indexed cost of property at Rs.79,22,535/- but not submitted any documents in support of claim. Further, AO noticed that the said property was purchased by the assessee for 5 ITA No.845/SRT/2023/AY.2017-18 Jigneshkumar Balubhai Patel consideration of Rs.60,00,000/- on 21.02.2013 and it got registered with SRO, Vyara. The AO issued noticed u/s 133(6) to SRO, Vyara and called for copy of slae deed and fair market value/jantri value of property sold by the assessee. After getting information from Sub Registrar Office, Vyara, AO noticed that assessee has sold non-agricultural land below the fair market value as determined by Stamp Valuation Authority (SVA). The AO discussed the fair market value (FMV) / jantri value adopted by the Stamp Valuation Authority (SVA) in a tabular form (Table: 3) at page no.7 of the assessment order. There is difference of Rs.86,02,561/- between the fair market value/jantri value and the indexed cost of property which falls u/s 50C(1) of the Act. As per section 50C(1) of the Act, the stamp duty value/jantri value determined by the SVA will be considered as full value of consideration for the purpose of computation of capital gain. In case of assessee, indexed cost of non-agricultural land is at Rs.79,22,535/- and stamp valuation authorities had adopted Rs.1,65,25,096/- as fair market value. Therefore, AO made addition of differential value of Rs.86,02,561/- to the total income of the assessee u/s 50C of the Act. The AO determined the total income of Rs.1,70,09,256/-. Penalty proceedings u/s 271AAC and 270A were also initiated by AO. 7. Aggrieved by the order of AO, the assessee filed this appeal before the CIT(A). The CIT(A) issued 5 notices of hearing through email address i.e., “[e-mail]”, but the assessee did not comply with any of the notices. The CIT(A) observed that during the appellate proceedings, the appellant had only submitted submission in the form of ‘statement of facts’. 6 ITA No.845/SRT/2023/AY.2017-18 Jigneshkumar Balubhai Patel Thereafter, the appellant neither had replied to hearing notices nor submitted any documentary evidence/information. The CIT(A) had given adequate opportunity to the assessee as stated para no.4.1.1 of his appellate order but there was non-compliance. Finally, the CIT(A) passed the order u/s 250 of the Act and dismissed the appeal based on materials available on record. 8. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The Ld. AR of the assessee submitted that the assessee remained non- compliant before the CIT(A). Due to death of his CA, the Ld. AR contended that assessee could not represent his case before CIT(A) and the order being an ex parte order, stood vitiated on account of violation of principles of natural justice. The assessee could not appear before the CIT(A) due to circumstances beyond his control. Adequate opportunity of hearing was not given to the assessee, therefore, Ld. AR contended that one more opportunity should be given to the assessee to plead his case before the AO since he has also passed on ex parte order u/s 144 of the Act. 9. On the other hand, Learned Senior Departmental Representative (Ld. Sr. DR) for the Revenue submitted that assessee was negligent during the appellate proceedings; hence, appeal of the assessee should be dismissed. He submitted that the assessee is claiming the transfer of land to the partnership firm u/s 45(3) of the Act, which differs from the valuation u/s 50C of the Act. He further stated that the provisions of section 45(3) of the Act would not be applicable in the present case. He further submitted that the full value of consideration for the transfer of the capital asset, section 50C of the Act would apply, as the 7 ITA No.845/SRT/2023/AY.2017-18 Jigneshkumar Balubhai Patel transaction appears to be of a fictitious nature aimed at tax avoidance. The Ld. Sr. DR also submitted that such land as capital was utilized by assessee. In case, it is shifted to get converted as stock-in-trade in subsequent years, then, it is clear that the transaction showing land as capital was merely an eye-wash to run away from rigors of section 50C of the Act with sole purpose of evading tax. He further submitted that fact about cost of this land subsequent sale is also determining factor as to whether the original transaction was sham and fictitious or not. He relied upon the decision of Hon’ble Allahabad High Court in the case of CIT vs. Carlton Hotel (P.) ltd., (2017) 88 taxmann.com 257, dated 31.07.2017. 10. We have heard both the parties and perused the material available on record. It is an undisputed fact that the assessee did not respond to the notices issued to him by the AO as well as CIT(A). Therefore, the CIT(A) has relied upon the order of the AO and dismissed the appeal of assessee without merit. The Ld. AR submitted that the Chartered Accountant of the assessee expired on Covid- 19 period and assessee did not get proper opportunity to present its case. He requested for one more opportunity in the interests of justice and fair play. We find that assessee could not plead his case properly before the CIT(A). We are of the view that one more opportunity should be given to the assessee to plead his case before the revenue It is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore, without delving deeper into the merits of the case, in the interest of justice, we set aside the order of CIT(A) and 8 ITA No.845/SRT/2023/AY.2017-18 Jigneshkumar Balubhai Patel restore the matter back to the file of AO for de novo adjudication and pass a speaking order after affording sufficient opportunity of being heard to the assessee. The AO may also consider the argument of Sr. DR discussed above. The assessee is also directed to furnish explanation and submit the relevant details and documents before the AO. For statistical purposes, the appeal of the assessee is treated as allowed. 11. In the result, the appeal of the assessee allowed for statistical purposes. Order is pronounced in the open court on 21/11/2024. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 21/11/2024 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat "