2012 (7) TMI 265 - AT - Income Tax

Best judgement assessment passed u/s 144 - sale of property - proceedings initiated u/s 147 against assessee on ground of information obtained from assessment of assessee s brother that assessee is co-owner of property and capital gains accrued to it - non-filing of return by assessee and no response to notice issued u/s 142 - consequent denial of exemption u/s 54F - Held that - It is found that assessee, a lady, who was not previously assessed to tax clearly establishes that her failure to suitably respond to notices issued by the AO was due to her ignorance of the provisions of the Act. Also, assessee s claim for deduction u/s 54F was also denied by the AO, by holding that the assessee had violated the conditions mentioned in the proviso to section 54F(1). However, whether or not the proviso to section 54F(1) was applicable in her case has not been examined. In these circumstances, in the interest of justice, Assessing Officer is directed to consider the entire matter de novo - Decided in favor of assessee for statistical purposes.

Summary

Issues:
Assessment based on non-filing of return for Assessment Year 2005-06, validity of assessment under sections 147 and 148 of the Income Tax Act, 1961, denial of exemption under section 54F of the Act, adequacy of opportunity to the assessee, applicability of proviso to section 54F(1) of the Act.

Analysis:
The appeal before the Appellate Tribunal ITAT, Bangalore was against the order of the Commissioner of Income Tax (Appeals) for the Assessment Year 2005-06. The assessee, a lady, did not file her return of income for the said year. She was one of the co-owners of a property involved in a Joint Development Agreement. The Assessing Officer initiated proceedings under sections 147 and 148 of the Act due to non-filing of the return. The assessment was completed under section 144 r.w.s. 147 of the Act, determining Long Term Capital Gains at Rs. 1,04,40,000. The assessee appealed against this assessment, claiming various grounds including lack of jurisdiction under section 148, denial of exemption under section 54F, and errors in the assessment process.

The Tribunal found merit in the contention that the assessee, being a lady not previously assessed to tax, failed to respond adequately due to ignorance of tax provisions. The denial of exemption under section 54F was also noted, with the proviso to section 54F(1) not being examined. The Tribunal observed that the case of the assessee's brother had been remitted back for fresh assessment, indicating a similar approach for fairness. Therefore, the Tribunal set aside the orders of the Assessing Officer and CIT(A), directing a fresh assessment with proper opportunity for the assessee to present her case and cooperate with the Assessing Officer.

The Tribunal allowed the assessee's appeal for statistical purposes, emphasizing the need for a fair and thorough assessment process. The decision aimed at ensuring justice and proper consideration of the assessee's circumstances, including her lack of familiarity with tax procedures. The order was pronounced on 30th May, 2012, concluding the appellate process at the ITAT, Bangalore.

This detailed analysis of the judgment highlights the issues involved, the arguments presented by both parties, and the Tribunal's decision based on legal principles and procedural fairness.