VALIBEN RAMDEBHAI MODHAVADIYA,JAMNAGAR V. INCOMETAX OFFICER, JAMNAGAR

ITA 231/RJT/2024

AI Insights

The case involves an appeal by Valiben Ramdebhai Modhavadiya against the order of the Commissioner of Income Tax (Appeals), which had dismissed her appeal on the grounds of delay without considering the merits. The primary issue in the case was the addition of Rs. 91,82,250 as income by the ITO, which was based on the assumption of deemed capital gain from the relinquishment of property rights without any consideration. The property, originally belonging to her late father, was transferred to her brothers, and she along with her sisters did not receive any consideration for their relinquished rights. The ITAT found that the lower authorities had not adequately addressed the merits of the case and thus decided to remit the matter back for a fresh assessment.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 28854 (ITAT-RAJKOT)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-10-2024
• Assessment Year: 2010-2011
• Appeal Filed On: 16-04-2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIMANYU SINGH YADAV
• Assessee Lawyers: NILESH D. PADIA
• Keywords: Capital asset; Opportunity of being heard; Gift; Principle of natural justice
• Section: 147; 144; 154; 234B

Judgement Text

" आयकर अपीलȣय अͬधकरण,राजकोट Ûयायपीठ, राजकोट। IN THE INCOMETAXAPPELLATE TRIBUNAL, RAJKOT BENCH: RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER And SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकर अपील सं./ITA No. 231/RJT/2024 (Ǔनधा[रण वष[/Assessment Year: (2010-11) Valiben Ramdebhai Modhavadiya, At: Lakhabaval, Jamnagar, Jamnagar-361006 Vs. Income Tax Officer, Ward-3(5), Jamnagar èथायी लेखा सं./जीआइआरसं./PAN/GIR No.: BSFPM3672L (अपीलाथȸ/Appellant) (Ĥ×यथȸ/Respondent) Ǔनधा[ǐरती कȧ ओर से/Appellant by : Shri Nilesh D. Padia, A.R. राजèव कȧ ओर से/Respondent by : Shri Abhimanyu Singh Yadav, Sr. D.R. सुनवाई कȧ तारȣख/ Date of Hearing : 01/10/2024 घोषणा कȧ तारȣख/Date of Pronouncement : 15/10/2024 आदेश / O R D E R PER SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order of Learned Commissioner of Income Tax (Appeals) [in short, “the Ld. CIT(A)”], National Faceless Appeal Centre (in short “NFAC”), Delhi order dated 08.02.2024 for assessment year 2010-11. 2. The assessee has raised the following grounds of appeal: “All the below mentioned grounds of appeal are independent and without prejudice to each other. 1. The assessment order u/s. 144 r.ws. 147 of the IT Act is bad in law. 2. The learned assessing officer has erred in law as well as on facts in making addition of Rs. 91,82,250/- by wrongly holding the relinquishment of right without consideration as chargeable to tax. 3. The assessing officer has also erred fact as well as in law by overlooking the waiver of right that too without any consideration termed as gift Page | 2 ITA No. 231/RJT/2024 A Y:2010-11 under a release deed in favor of brother Shri RajabhaI within the purview exempt transactions between the definition of relative. 4. The assessing officer has also erred in law as well as in facts in rejecting the rectification applications dated 02.12.2021, 07.10.2022 and again on 19.10.2022 made under section 154 of the IT Act. 5. The learned assessing officer has erred in law as well as on facts in charging interest u/s. 234A, 234B and 234C. 6. The learned Commissioner (Appeal) has erred in law as well as in fact in dismissing the appeal merely on account of delay by refusing to allow delay condemnation along with affidavit stating reasons and circumstances behind the delay occurred. 7. The learned Commissioner has also erred in law as well as in fact in completely disregarding the delay condemnation on account of time limit in filing appeal and refusing proper opportunity of being heard in view of merits of the case in line of principles of natural justice. The Appellant craves leave to add, amend, alter or withdraw any ground of appeal.” 3 The appellant belongs to a traditional Gujarati family of Mer Caste and also not much literate. The father of the appellant, Late Shri Maldebhai Savabhai Mer passed away on 04.10.2008 leaving behind agriculture land at Survey No. 1341 in absence of any will, vashiyat or family arrangement deed. The name of appellant as well as her sisters namely Tamuben and Jivtiben were removed and the names of brothers Shri Lilabhal, Kandhabhai, Nathabhai and Rajabhai Malde Keshwala (Mer) were entered as the legal heirs of Late Shri Maldebhai by an application to the Mamlatdar (known as the Tehsildar or the Talukdar), Office of the Land Revenue Records, Jamnagar City (one of the Offices of the State Government) based on an Affidavit of Relinquishment of Right dated 05.12.2009 Le. in AY 2010-11. Thus, names of the sisters were removed from the Property Card in Land Revenue Records Office, rendering the all sisters unrecognized as legal heirs of Late Shri Maldebhai Keshwala. Subsequent to the entry of brothers name into the Property Card, brothers Shri Rajabhai Keshwala sold the land on 11.12.2012 i.e. in FY 2012-13. The names of the seller appearing in the Sale Deed are Rajabhai Maldebhai Keshwala (submitted Form No. 60) while names of sons and daughters of Shri Rajabhai Page | 3 ITA No. 231/RJT/2024 A Y:2010-11 namely Bhimabhai Rajabhai Keshwala (PAN BTNPK0749M), Mayurbhai Rajabhai Keshwala (PAN BTUPK1118D), Sarlaben Rajabhai Keshwala (submitted Form No. 60) and Nitaben Rajabhai Keshwala (submitted Form No. 60) as the Confirming Party. As such, said land was actually owned by Shri Rajabhai and his family and was in their possession. Thus, the appellant and her sisters names are neither mentioned as seller nor as a confirming party. There is no mention of appellant's name or any of the sister in the Sale Deed. The appellant has neither received any consideration at the time of relinquishment nor at the time of executing sale deed by Shri Rajabhai. Therefore, the relinquishment of right was done without consideration and is not chargeable to tax as per the provisions of IT act. The entire proceedings under reassessment revolves around Notional Income by charging tax on Deemed Capital Gain. The necessary element for charging tax on capital gain is sales consideration, which is not observed under the present case under appeal. As per section 2(47) of the IT Act, the relinquishment of right amounts to transfer only when any consideration (which includes any sum of money in cash or recoverable in cash or kind) has been transferred to any of the parties to such relinquishment of right. The charging sections 45, 46(2) and 47A also do not provide for charging tax on Deemed Capital Gain in case of relinquishment of right without any consideration. Charging tax on value of relinquishment that too in case where a person waived her right without receiving any consideration/money is against the law and principles of natural justice also. The appellant shall not be held responsible for such sale of land by her brother when she has not received a single penny for relinquishment of right. Nowhere in the statute, any provisions suggest charging tax on deemed capital gain. The relinquishment i.e. waiver of right without mention of consideration made in the present case shall be termed as documentation executed as per law and a nomenclature of 'gift', which is not regarded as transfer as per sub-section (iii) of Section 47 of the IT Act. However, the assessing officer made high pitched addition of Rs. 91,82,250/- based on assumption as to receipt consideration on relinquishment alleging the Deemed Capital Gain despite the fact that the appellant has neither received any Page | 4 ITA No. 231/RJT/2024 A Y:2010-11 consideration in cash or in kind from his brother on relinquishment or at the time of executing sale deed. 4. Aggrieved by the order making addition resulting into huge tax demand, the appellant preferred an appeal before the Commissioner(appeal). The ld. CIT(A) has disposed of the appeal with the remark that the appeal has not been presented within the period prescribed u/s. 249(2) of the Act. Further, observed that the appellant has not been able to show sufficient cause for not presenting the appeal within the said prescribed period within the meaning of section 249(3) of the Act r.w.s. 5 of Limitation Act. The application for condonation of delay presented by the appellant is rejected. Accordingly, the appeal is not admitted for adjudication on merit. 5. Feeling aggrieved by the impugned order dated 08-02-2024 of the ld. CIT(A), the assessee preferred appeal before this ITAT. 6. During the course of hearing, the AR submitted that there is delay of 675 days. It is because of that the appellant is an illiterate lady living in a village and she is old enough and no knowledge about this and having no income. In the family property, she has relinquished her right over the property and the property was transferred accordingly. No consideration has been received. So no capital gain arises and the appellant has made a request for one more opportunity to present his case before the lower authorities. 7. On the contrary, ld. DR has not objected to the request of the appellant, however relied on the order of the lower authorities. 8. We have heard the matter and perused the records of the proceedings. It is noted that the ld. AO has framed an assessment u/s. 144 r.w.s 147 of the Act that the ld. ITO has not disposed of the matter on merit to consider the documents available on record. The ld. CIT(A) has dismissed the appeal on Page | 5 ITA No. 231/RJT/2024 A Y:2010-11 the ground of delay. We further noted that the ld. CIT(A) has not disposed of the appeal on merit and only decided on the basis of delay in filling the appeal. In the interest of justice and considering the facts and circumstances of the case we hereby condone the delay of 675 days and remit the matter back to the file of ld. ITO for deciding the case afresh. We, further direct the ld. AR of the assessee to file all relevant documents and comply with the notices of the ld. AO. 9. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order is pronounced on 15/10/2024 in the Open Court. Sd/- Sd/-S (DR. ARJUN LAL SAINI) (DINESH MOHAN SINHA) ACCOUNTANT MEMBER JUDICIAL MEMBER Rajkot TRUE COPY Ǒदनांक/ Date: 15/10/2024 Copy of the Order forwarded to 1. The Assessee 2.The Respondent 3.The CIT(A) 4.Pr. CIT 5.DR/AR, ITAT, Rajkot 6. Guard File. By Order, Assistant Registrar/Sr. PS/PS ITAT, Rajkot "