NEW DEEPALI CO-OP HOUSING SOC.LTD.,MUMBAI V. INCOME TAX OFFICER-34(3)(2), MUMBAI

ITA 6669/MUM/2024

AI Insights

The case involves New Deepali Coop Housing Society Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, concerning the assessment year 2018-19. The society challenged the ex-parte assessment order that added Rs. 4,28,77,000 as unexplained money under section 69A of the Income Tax Act, 1961. The society argued that the assessment was completed without proper notice and opportunity to be heard, and that the addition was based merely on the stamp duty valuation of a development agreement for redevelopment, without any actual financial transaction or transfer of property. The ITAT found merit in the society's arguments regarding the lack of proper notice and opportunity, and thus decided to set aside the order and remand the case for fresh adjudication.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470947 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Other Referred Cases: Collector Land Acquisition, Anantnag Vs. MST Katiji and others: 1987 SCR (2) 387
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONIKA PANDE
• Assessee Lawyers: SUBHASH CHHAJED
• Keywords: Condonation of delay; Set aside; Capital asset; Opportunity of being heard; Reassessment proceedings; Period of limitation; Capital Gains; Principle of natural justice; Time period of passing order
• Section: 147; 144; 142(1); 250; 69A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA No. 6669/MUM/2024 Assessment Year : 2018-19 New Deepali Coop Housing Society Ltd., Plot No. 432, TPS-5, Ghanekar Road, Vile Parle East, Mumbai-400057. PAN: AADAN 0471 E ……………. Appellant v/s ITO-34(3)(2), Kautilya Bhavan, C-41 to C-43, G Block, Bandra Kurla Complex, Bandra East, Mumbai-400051. ……………. Respondent Assessee by : Mr. Subhash Chhajed, Ms. Deepika Chhajed Revenue by : Ms. Monika Pande, Sr. DR Date of Hearing – 06/02/2025 Date of Order –11/02/2025 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The assessee has filed the present appeal challenging the impugned order dated 24/09/2024, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learnedCommissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“learned CIT(A)”], for the assessment year 2018-19. New Deepali Co-op. Housing Ltd. ITA No. 6669/M/2024 2 2. The present appeal is delayed by 19 days. Along with the appeal, the assessee has filed an application seeking condonation of delay in filing the appeal duly supported by an affidavit sworn by the Chairman of the assessee society, submitting as follows: - “1. I say that I am the chairman of New Deepali Co-operative Housing Society Ltd. located at Plot No. 432, TPS-5, Ghanekar Road, Vile parle East, Mumbai 400057 consisting of 24 members presently under Redevelopment by the Developer M/s AKME PROPERTIES as per the Development agreement executed and registered with sub registrar Mumbai on 30th July 2016 The resident of the society had vacated their respective flats in the year 2014 for the purpose of redevelopment and the building was demolished in the year 2016 for reconstruction. 2. I say that though the construction of the building belonging to the aforesaid society has already been completed in the year 2024 but the Occupation certificate has not been issued by the Local Authority viz. The Municipal Corporation of Greater Mumbai. However 2-3 Members have been given possession for limited purpose of making furniture etc. Whereas all other members are displaced at different locations. 3. The said society had no Income during the financial year 2017-18 relevant to Assessment year 2018-19 and since the society building had already been demolished, Return of Income was not filed by the said Society under the Income Tax Act. The society therefore had no email id registered on the portal of Income Tax Dept. 4. Society was registered on the portal of the Department only on 09-01- 2024 and prior to that society had no email and therefore none of the notices were served by the department. There was no physical service of notices by AO or CIT Appeal prior to 09-01-2024 as none of the members was available on the site of the Society. 5. As apparent from the Assessment order dt. 08-01-2024, based on the Development Agreement Registered with the Sub Registrar at the stamp duty valuation of the document at Rs. 4,28,77,000/- Society's Income Tax Assessment was completed u/s 144 r.w. section 147 of the IT Act., 1961 adding Rs. 4,28,77,000/- as unexplained money u/s 69A of the IT Act. Being aggrieved the society preferred Appeal before the Hon. CIT Appeals NFAC Delhi. The Hon. CIT (Appeals) while dismissing the said appeal for non attendance and non-prosecution and without examining the merits of the case vide appellate order dt. 24/09/2024 held that AO should have assessed under the head Capital gain and not as unexplained money u/s 69A of the Act. 6. The Appellate order passed by the Hon. CIT Appeals) NFAC Delhi was uploaded on the portal on 24/09/2024 and therefore society was required to file the appeal before the Hon. ITAT Mumbai on or before 23/11/2024 i.e. New Deepali Co-op. Housing Ltd. ITA No. 6669/M/2024 3 within 60 days from the communication thereof in accordance with limitation provided in section 253 of the IT Act. 7. Since majority of the members were placed at different locations, it took substantially longer time of 5 to 6 weeks to assemble all the members at one place and explain them about the Exparte Assessment order by AO, Appellate order by CIT Appeal, consequences and remedy, the process involved for challenging the same before the higher forum Viz. ITAT Mumbai and probable cost of litigation. Ultimately after the concurrence of members present with due deliberations, the society finally decided to prefer appeal before the Hon. ITAT Mumbai by appointing a Tax Professional /CA to handle the same. 8. All the above narrated issues and problems contributed to our non- attendance in the Appeal proceedings before the Hon. CIT Appeals resulting into the dismissal of appeals for non-prosecution and non-attendance in the Appeal Proceedings. 9. Ultimately, We could present the appeal before the Hon. ITAT Mumbai on 19/12/2024 amounting to nominal delay of 24 days from the limitation date of 23-11-2024 being counted from the date of communication of appellate order on 24/09/2024. Delay in filing the appeal is certainly unintentional and without any ulterior motive. if the delay of 24 days in filing the appeal is not condoned by the Hon. ITAT., Mumbai the same is going to cause huge prejudice and undue hardship to the society and its members at large as this is a high demand appeal wherein huge addition is made by the Ld Assessing officer.” 3. We find that the reasons stated by the assessee for seeking condonation of delay fall within the parameters for grant of condonation laid down by the Hon’ble Supreme Court in the case of Collector Land Acquisition, Anantnag Vs. MST Katiji and others: 1987 SCR (2) 387. It is well established that rules of procedure are handmaid of justice. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred. In the present case, the assessee did not stand to benefit from the late filing of the appeal. In view of the above and having perused the affidavit, we are of the considered view that there exists sufficient cause for not filing the present appeal within the limitation period and therefore, we condone the delay in New Deepali Co-op. Housing Ltd. ITA No. 6669/M/2024 4 filing the appeal by the assessee and we proceed to decide the appeals on merits. 4. In this appeal, the assessee has raised the following grounds: - “1. On the facts and circumstances of the case and in law, Ld. CIT(A) has erred in confirming the impugned assessment order u/s 144 r.w.s 147 of the Act completed by Ld. AO without complying with the jurisdictional and mandatory requirements and conditions envisaged in section 147/148/151 of the IT Act, 1961 and therefore the entire Reassessment proceedings u/s 147/148 of the Act are liable to be quashed as null and void And bad in law. 2. On the facts and circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi erred in dismissing the appeal AND confirming the Ex-parte Assessment order passed by the Ld. AO u/s 144 r.w. section 147 without granting the appropriate opportunity of being heard and without serving the Notices u/s 147 and 142(1) of the IT Act On the appellant under the principals of natural justice. The Appellant therefore prays to set aside the impugned Ex-parte Assessment order and remand back the same to the Ld. AO for de novo adjudication on merits. 3. On the facts and circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi erred in dismissing the grounds of appeal for non-prosecution and non- attendance by the appellant without disposing off each ground of appeal on merits, without stating the reasons for determination and the decisions thereon in terms of section 250(6) of the Income Tax Act., 1961. The Appellant therefore request your honour to remand back the matter to the file of Hon. CIT(A) for fresh adjudication on merits with a direction to grant one final opportunity to the assessee to substantiate its case and decide the grounds as per facts and law. 4. On the facts and circumstances of the case and in law the Ld. CIT (Appeals), NFAC, Delhi erred in upholding the addition of Rs. 4,28,77,000/- which is merely a stamp duty valuation determined by the Stamp Duty Adjudication authorities for registration of the Development Agreement for the redevelopment of the cooperative housing society without any financial transaction between the Society and the Developer AND transfer of Immovable property. The Appellant therefore prays to delete the impugned addition of Rs.4,28,77,000/- made by the AO u/s 69A of the ITAc., 1961 5. On the facts and circumstances of the case and in law the Ld. CIT (Appeals), NFAC, Delhi erred in not appreciating the fact that upon execution of the Development Agreement between the Society and Developer for redevelopment of the existing housing society there is no transfer of the immovable property u/s 2(47) of the IT Act., r.w. section 53A of the Transfer of Property Act and therefore there is no question of accruing and arising any capital gains in the hands of the society u/s 45 of the IT Act., 1961.” New Deepali Co-op. Housing Ltd. ITA No. 6669/M/2024 5 5. We have considered the submissions and perused the material available on record. It is evident that the learned CIT(A) has passed the order ex-partedue to the non-appearance of/on behalf of the assessee. From the perusal of the impugned order, it is evident that the learned CIT(A) issued notices of hearing to the assessee, however, the assessee did not comply with any of the notices. Now in appeal before us, the assessee is duly represented by thelearned Authorised Representative (“learned AR”)and wishes to pursue the litigation against the addition made by the AO. During the hearing, the learned AR submitted that since the assessee was registered on the portal of the Department only on 09/01/2024 and prior to that the assessee society had no email address, none of the notices were received by the assessee. 6. In view of the facts and circumstances as noted above, we are of the considered opinion that in the interest of justice and fair play, the assessee be hereby granted one more opportunity to represent its case on merits before the learned CIT(A). Consequently, we deem it fit and proper to set aside the impugned order and restore the matter to the file of the learned CIT(A) for de novo adjudication of the appeal on merits after consideration of all the details/submissions as may be filed by the assessee. Needless to mention no order shall be passed without affording reasonable opportunity of hearing to the parties. During the hearing, the learned AR undertook that the hearing notice issued on the email address as mentioned in Form No.36, i.e. [e-mail], shall be complied with by the assessee. Accordingly, the learned CIT(A) is directed to issue the hearing notice(s) on New Deepali Co-op. Housing Ltd. ITA No. 6669/M/2024 6 the aforesaid email address, unless, at a subsequent stage, the assessee wishes to change its email address for the purpose of communication of hearing notice, for which the assessee is directed to intimate the learned CIT(A) in advance. Thus, the assessee is directed to appear before the learned CIT(A) on all the dates of hearing as may be fixed without any default. As the matter is being restored to the file of the learned CIT(A) for adjudication on merits, the other grievances raised by the assessee in the present appeal do not call for adjudication at this stage. Accordingly, grounds raised by the assessee are allowed for statistical purposes. 7. In the result, the appeal by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 11/02/2025. Sd/- Sd/- AMARJIT SINGH ACCOUNTANT MEMBER Sd/- Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 11/02/2025 Rahul Sharma, Sr. P.S. Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order Assistant Registrar ITAT, Mumbai "