MUSTAFA ASIF MASOOD ,BANGALORE V. INCOME TAX OFFICER, WARD-4(3)(2), BANGALORE

ITA 1116/BANG/2025

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The case involves Shri. Mustafa Asif Masood, the appellant, who appealed against the order of the CIT(A) concerning the assessment year 2018-19. The Income Tax Department had issued notices under section 148 of the Income Tax Act, 1961, due to non-filing of income tax returns despite having taxable income from the sale of immovable property and equity shares. The assessee did not respond to the initial notices, leading to an assessment under section 144, which added the entire sale consideration as long-term capital gain and the difference amount from equity shares as short-term capital gain. The CIT(A) dismissed the appeal due to non-response from the assessee despite multiple notices. The Tribunal found that the CIT(A) had incorrectly sent notices via email despite the assessee's explicit request not to do so, leading to the decision to remit the case back to the CIT(A) for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712836 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SATISH C
• Keywords: Capital asset; Opportunity of being heard; Cost of acquisition; Valuation report
• Section: 147; 148

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER AND SHRI SOUNDARARAJAN K, JUDICIAL MEMBER ITA No.1116/Bang/2025 Assessment Year : 2018-19 Shri. Mustafa Asif Masood, 145, 5th Main, 7th Sector, HSR Layout, Bangalore – 560 034, Karnataka. PAN : AORPM 0736 L Vs. ITO, Ward – 4(3)(2), Bangalore. APPELLANT RESPONDENT Assessee by : Shri. Satish C, CA Revenue by : Shri. Ashwin D Gowda, Addl. CIT(DR)(ITAT), Bangalore. Date of hearing : 29.07.2025 Date of Pronouncement : 31.07.2025 O R D E R Per Laxmi Prasad Sahu, Accountant Member : This is an appeal filed by the assessee against CIT(A)’s order vide DIN &Order No: ITBA/NFAC/S/250/2024-25/1074769649(1) dated 20.03.2025. 2. Briefly stated the facts of the case are that as per the information available in the income tax web portal for Financial Year 2017-18, the assessee has sold immovable property but did not file return of income. Accordingly, noticed was issued to the assessee under section 148 of the Act. From the information it was noticed that assessee along with another person sold immovable property for a consideration of Rs.53,83,000/-. Further, the assessee had sold equities shares amounting to Rs,13,26,390/- but there is no capital gain offered. Therefore, it was observed that the assessee had escaped income within the meaning of the provision of section 147 of the Act. Accordingly, various notices were issued to the assessee Printed from counselvise.com ITA No.1116/Bang/2025 Page 2 of 5 but assessee did not respond to any of the notices. Thereafter, a show cause notice dated 27.02.2023 was issued to the assessee and assessee submitted reply and it was observed that the said property was purchased by the assessee in the Financial Year 1998-99 and sold during the Financial Year 2017-18 but it was noted that the assessee had not furnished purchase cost of the said property. Therefore, cost of acquisition was not granted to the assessee. Accordingly, the entire sale consideration was added as long term capital gain. Further, in respect of purchase / sale of equity shares for Rs.13,17,172/-, assessee did not offer capital gain. Therefore, the difference amount of Rs.11,99,887/- was also added as short term capital gain and assessment was completed under section 147 r.w.s 144 of the Act. 3. Aggrieved from the above Order, assessee filed appeal before the CIT(A).During the appellate proceedings, the learned CIT(A) issued various notices of hearing the case on different dates which is tabulated in para 5.1 of his Order but there was no response from the assessee’s side. Accordingly, the appeal was decided on the basis of the documents available and dismissed the appeal of the assessee. 4. Aggrieved from the above Order, assessee filed appeal before the Tribunal. The learned AR submitted that in Form No.35 it was specifically mentioned by the assessee for “whether notices / communications may be sent on email” as “No” and email was sent to the assessee and he submitted that in Form No.35 it was clearly mentioned that notices are not to be send through email, however, the learned CIT(A) communicated the notices of hearing through email. Therefore, it is not the mistake of the assessee for not responding to the notices and requested that further chance may be given to the assessee and undertook that assessee shall comply with the notices. Printed from counselvise.com ITA No.1116/Bang/2025 Page 3 of 5 5. On the other hand, learned DR relied on the Order of authorities and submitted that assessee is non-filer inspite of having taxable income. Accordingly, it was assumed that there is escapement of income as per provisions of section 147 of the Act and notice was issued to the assessee. The assessee did not file return of income in response to notice issued. He did not reply to the various notices issued by both the lower authorities. Even the cost of acquisition of the sale of property was not established by the assessee. Therefore, AO completed the assessment under section 144 of the Act and before the learned CIT(A), after providing several opportunities to represent his case, assessee did not respond to the notices and hence objected to any further chance to the assessee. It was submitted that there is no system to send any physical notice by NFAC. Therefore, it was sent on the email provided by the assessee. 6. In the rejoinder, the learned Counsel submitted that why in From No.36 the option has been provided if the notices are to be send only on the emails. So, this column may be removed in Form 35. Assessee opted not to send notices through email. Inspite of that, the Department has sent notices through email. It is a mistake on the part of learned CIT(A); why the assessee should suffer the mistake of the Revenue. Therefore, assessee must be given opportunity to represent his case. 7. Considering the rival submissions and on perusal of the entire material available on record and Orders of authorities below, we noted that assessee is a non-filer. Therefore, notice under section 148 of the Act was issued to the assessee and during the assessment proceedings, it was observed that the assessee had sold the capital asset but purchase cost of the said property could not be established by the assessee as well as there was no response with regard to the purchase / sale of equity shares and during the appellate proceedings, various notices were issued to substantiate the case of the assessee but there was no response to any of the notices. Printed from counselvise.com ITA No.1116/Bang/2025 Page 4 of 5 On going through From No.35, it was observed that in the column regarding notice communication, the assessee has mentioned as “No”. Inspite of that notice was sent on the email provided by the assessee. Considering the submissions of both the parties, we found substance on the submission of the learned AR. Before us, the learned Counsel has filed Paper Book Page Nos.1 to 55 which is placed on record in which assessee has placed From 26AS, copy of sale deed and purchase deed, valuation report, copy of transaction statement showing purchase and sale of listed equity shares and copy of notice. We noted that the assessee had denied to send notice through emails inspite of that the learned CIT(A) has send notices through emails which is not correct. Considering the arguments of the learned DR that the physical notice is not sent as per new scheme only soft copy of the notices can be sent through email, therefore it is noted that the column provided in Form No.35 is not relevant since the asessee could not represent his case for want of communication / notices. Therefore, considering the facts of the case and in the interest of justice, we are remitting this issue back to the file of the learned CIT(A) and decide the issue as per law after giving reasonable opportunity of being heard to the assessee and assessee is directed to substantiate his case with documentary evidence and not seek unnecessary adjudication for early disposal of the case. In case of failure, no second leniency shall be granted to the assessee. 8. In the result, appeal filed by the assessee is allowed for statistical purposes. Pronounced in the open court on the date mentioned on the caption page. Sd/ Sd/- Sd/- (SOUNDARARAJAN K) (LAXMI PRASAD SAHU) Judicial Member Accountant Member- Bangalore. Dated: 31.07.2025. /NS/* Printed from counselvise.com ITA No.1116/Bang/2025 Page 5 of 5 Copy to: 1. Appellants 2. Respondent 3. DRP 4. CIT 5. CIT(A) 6. DR,ITAT, Bangalore. 7. Guard file By order Assistant Registrar, ITAT, Bangalore. Printed from counselvise.com "