M/S BABA BUILDERS,JAIPUR V. ITO, WARD-6(2), JAIPUR, JAIPUR

ITA 1394/JPR/2024

AI Insights

M/s. Baba Builders filed two appeals against the orders of the CIT(A), National Faceless Appeal Centre, Delhi, concerning the assessment year 2018-19. The first appeal contested the addition of Rs. 74,00,000 as long-term capital gain, arguing that the income should be assessed under the head 'business' with deductions for the cost of acquisition and improvement. The second appeal challenged a penalty of Rs. 7,62,200 under Section 270A of the Income Tax Act, 1961, for underreporting income. The Tribunal noted the assessee's absence during previous hearings due to the ill health of a partner, leading to a decision to restore both matters to the AO for a fresh assessment and hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472757 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAFIN NIL PARIHAR
• Assessee Lawyers: P.C. PARWAL; OBSERVING AT
• Keywords: Set aside; Opportunity of being heard; Cost of acquisition
• Section: 144; 250

Judgement Text

" vk;djvihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,’’B” JAIPUR Mk0 ,l- lhrky{eh]U;kf;dlnL; ,oaJhjkBksMdeys'kt;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;djvihyla-@ITA No.1394 & 1404/JP/2024 fu/kZkj.ko\"kZ@AssessmentYear : 2018-19 M/s. Baba Builders Flat No. 104, White House, Sector-2 Jawahar Nagar, Jaipur 302 004 cuke Vs. The ITO Ward 6 (2) Jaipur LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: ALFB 1232 E vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby : Shri P.C.Parwal, CA jktLo dh vksjls@Revenue by: Shri Safin Nil Parihar, JCIT-DR lquokbZ dh rkjh[k@Date of Hearing : 17/02/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: : 17 /02/2025 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM These two appeals filed by the assessee are directed against two different orders of the ld. CIT(A) dated 17.10.2024 & 18.10.2024, National Faceless Appeal Centre, Delhi [forshort (NFAC)/CIT(A) ] for the assessment year 2018-19 in the matter of Section 147/144 and 270A of the Act respectively. 2 ITA NO. 1394/JP/2024 M/S. BABA BUILDERS VS ITO, WARD 6(2), JAIPUR 2.1 In ITA No. 1394/JP/2024, the assessee has marched this appeal on the following grounds:- ‘’1. The Ld. CIT(A), NFAC has erred on facts and in law in confirming the addition of Rs.74,00,000/- made by AO under the head long term capital gain ignoring that from the sale deed it is evident that the assessee acquired the land on 19.11.2015 on which two storied villa is constructed, assessee is engaged in the business of real estate and thus has erred in not allowing the deduction towards cost of acquisition & improvement and not assessing the income under the head business. 2. The Ld. CIT(A), NFAC has erred on facts and in law in holding that assessee has not pursued the appeal despite granting several opportunities whereas due to ill health of the partner of the firm, these notices never came to his knowledge and thus remained unresponded. 2.2 In ITA No. 1404/JP/2024, the assessee has marched this appeal on the following grounds:- 1. The Ld. CIT(A), NFAC has erred on facts and in law in confirming the levy of penalty of Rs.7,62,200/- u/s 270A of IT Act, 1961. 2. The Ld. CIT(A), NFAC has erred on facts and in law in holding that assessee has not pursued the appeal despite granting several opportunities whereas due to ill health of the partner of the firm, these notices never came to his knowledge and thus remained unresponded. 2.3 Apropos ground of appeal in ITA No. 1394/JP/2024, it is noticed that the ld.CIT(A) has dismissed the appeal of the assessee by observing at para 8 of his order as under:- ‘’8.3 On perusal of assessment order, it is seen that the appellant had not filed the return of income whereas it had sold immovable property. Accordingly, notice u/s 148 of the IT Act, 1961 was issued for AY 2018-19 on 26.03.2022. The AO has issued notices from time to time giving opportunity to the appellant to file his reply However, the appellant failed to file any explanation, reply or evidence during the course of assessment proceedings. The AO added the amount in respect of sale of immovable property amounting to Rs. 74,00,000/- during the year under 3 ITA NO. 1394/JP/2024 M/S. BABA BUILDERS VS ITO, WARD 6(2), JAIPUR consideration as the amount remained unexplained and unverified. Even during the appellate proceedings, the appellant has not made any submissions to substantiate his grounds of appeal that how the impugned order is bad in law. No corroborative proof has been filed inspite of being given so many opportunities Keeping in view the above facts, there is no reason to interfere with the assessment order on this account, therefore, these grounds of appeal are dismissed.’’ 2.4 During the course of hearing, the ld .AR of the assessee prayed that the assessee may be given one more chance to contest the case before the AO as the assessee was ex-parte before the lower authorities for which the assessee has filed the following written submission. 1. The assessee is engaged in the real estate business. It has not filed any return of income for the year under consideration. The AO on the basis of information that there is sale of two double storied villas for Rs.74 lacs made addition for the same as long term capital gain as there was no representation from the assessee. In doing so no deduction towards cost of purchase of plot made on 19.11.2015 for Rs.17,75,000/- and the cost of construction of villa was considered by the AO. 2. Against the assessment order assessee filed appeal before Ld. CIT(A), NFAC. The Ld. CIT(A), NFAC tabulated the hearing date at Pg 3 of the order. The notice dt. 28.05.2024, 11.06.2024 and 24.07.2024 were deficiency letter issued (PB 2) and not the notice of hearing. The notice dt. 06.08.2024, 20.08.2024, 13.09.2024 & 23.09.2024 (PB 1-2) were hearing notices which could not be attended as partner of firm Sh. Pravesh Baweja was suffering from back pain radiating to both lower limbs associated with numbness since March, 2024 that exacerbated in the month of July & August, 2024 which developed into walking difficulty. He was also hospitalized and was discharged on 12.09.2024. Copy of his discharge summary is at PB 4-7. For this reason the hearing notices issued by Ld. CIT(A), NFAC did not came to the notice and could not be responded. In the absence of representation by assessee, the Ld. CIT(A), NFAC confirmed the order passed by AO. In view of above peculiar facts of the case, it is prayed that in the interest of substantial justice, the case of assessee be set aside to the AO for denovo assessment.’’ 4 ITA NO. 1394/JP/2024 M/S. BABA BUILDERS VS ITO, WARD 6(2), JAIPUR 2.5 On the other hand, the ld. DR supported the order of the ld. CIT(A) and submitted that the assessee was lethargic in pursuing his case in spite of granting various opportunities to the assessee. 2.6 We have heard both the parties and perused the materials available on record. In this case, it is noticed that the AO made an addition of Rs.74,00,000/- in the hands of the assessee by observing as under:- ‘’In this case the information in respect of sale of immovable propertywas uploaded by the SRO Jaipur-1 for Rs.74,00,000/- and the same information having same value has also been uploaded by the Inspector General Registrar and Stamp. The gross value of the property sold by the assessee is being taken as Rs.74,00,000/- assuming that both the information pertains to the same property. The assessee has neither filed ITR nor submitted any reponse of sale of immovable property amounting to Rs.74,00,000/- during the year under consideration, hence the capital gain on such properties sold by the assessee remains unexplained and unverifiable. Therefore, in view of the above facts, I have no option but to complete the case as per material available on record as per the provisions of Section 144 of the I.T. Act, 1961. Therefore, sale consideration amounting to Rs.74,00,000/- is treated as capital gain by the assesse and the same is assessed as long term capital gain of the assessee,’’ 2.7 In first appeal, the ld. CIT(A) has confirmed the action of the AO by holding as under:- ‘’8.3…..No corroborative proof has been filed in spite of being given so many opportunities. Keeping in view the above facts, there is no reason to interfere with the assessment order on this account, therefore, these grounds of appeal are dismissed .’’ 5 ITA NO. 1394/JP/2024 M/S. BABA BUILDERS VS ITO, WARD 6(2), JAIPUR 2.8 It is an admitted fact that the assessee is ex-parte before the AO and before the ld. CIT(A). Therefore, he could not put forth his defense so as to charge the correct income in their hand. It was the bounded duty of the assessee to appear before the statutory authorities as and when called for. It is noticed that various opportunities were provided to the assessee for settling the issue and since the assessee has not given the details ld. AO added the whole consideration as income. However, we are of the view that lis between the parties has to be decided on merits so that nobody’s rights could be scuttled down without providing opportunity of being heard to the assessee. Hence, the matter is required to be restored to the file of the AO to decide it afresh by providing one more opportunity of hearing, however, the assessee will not seek any adjournment on frivolous ground and remain cooperative during the course of remand proceedings. Thus, the appeal of the assessee is allowed for statistical purposes. 2.9 Before parting, we may make it clear that our decision to restore the matter back to the file of the AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by AO independently in accordance with law. 2.10 Apropos ground of appeal of penalty u/s 270A, it is noticed that the ld. CIT(A) dismissed this appeal of the assessee by observing as under:- 6 ITA NO. 1394/JP/2024 M/S. BABA BUILDERS VS ITO, WARD 6(2), JAIPUR ‘’8.5 The appellant in the grounds of appeal has submitted that there was loss on sale and purchase of property so there was no under reporting of income. The contentions of the appellant have been considered, however, the same pertain to merits of assessment order and therefore, are not relevant to the present proceedings. Moreover, the appellant's appeal against assessment order challenging the additions made therein has been dismissed vide order u/s 250 dated 17.10.2024 up-holding the income assessed. Also, the appellant has not filed any reply or further evidence to support it's arguments. In the case of the appellant, no return of income has been filed and the income assessed is greater than the maximum amount not chargeable to tax. Thus, the appellant has under reported the income in terms of provisions of section 270A(2)(b) as mentioned above. 8.6 Thus, in view of the facts of the case, I find no infirmity in the order of the A.O. passed u/s 270A of the Act. The levy of penalty of Rs.7,62,200/- u/s 270A is, accordingly, confirmed. Accordingly, these grounds of appeal are dismissed.’’ 2.11 During the course of hearing, the ld. AR of the assessee prayed to set aside the appeal to the AO with the following submissions ‘’The Ld. CIT(A), NFAC in case of penalty proceedings has stated that assessee sought adjournment with reference to notice issued on 20.08.2024, 13.09.2024 & 23.09.2024 whereas no such adjournment was sought in as much as these notices did not come to the knowledge of assessee. Copy of the screenshot of these notices is enclosed. Hence it is prayed that in the interest of substantial justice, the penalty proceedings be also set aside to AO’’ 2.12 On the other hand, the ld. DR supported the order of the ld. CIT(A) 2.13 The Bench has heard both the parties and perused the materials available on record.As regards the penalty appeal of the assessee relating to Section 270A of the Act, the Bench feels that since the quantum appeal of the assessee has been restored to the file of the AO for afresh adjudication, therefore the fate of penalty appeal will be in accordance with 7 ITA NO. 1394/JP/2024 M/S. BABA BUILDERS VS ITO, WARD 6(2), JAIPUR the decision of quantum appeal. Hence, the same is restored to the file of AO to act in accordance with law. 3.0 In the result, both the appeals of the assessee are allowed for statistical purposes as indicated hereinabove. Order pronounced on 17-02-2025 Sd/- Sd/- ¼Mk0 ,l- lhrky{eh ½ ¼jkBksMdeys'kt;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;dlnL;@Judicial Member ys[kklnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 17/02/2025 *Mishra vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. The Appellant- M/s. Baba Builders, Jaipur 2. izR;FkhZ@ The Respondent- ITO, Ward 6 (2), Jaipur 3. vk;djvk;qDr@ The ld CIT 4. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 5. xkMZQkbZy@ Guard File (ITA No.1394 &1404 /JP/2024) vkns'kkuqlkj@ By order, lgk;diathdkj@Asstt. Registrar "