2018 (2) TMI 2080 - AT - Income Tax

Ex-parte order passed by CIT-A - Addition applying provisions u/s 50C - HELD THAT - It is an admitted fact that despite issue of notice the assessee did not appear before the ld. CIT(A) for which he passed the exparte order sustaining the addition made by the AO. Considering the totality of the facts of the case and in the interest of justice we deem it proper to restore the issue to the file of the CIT(A) with a direction to give one final opportunity to the assessee to substantiate his case. CIT(A) shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. The assessee is also hereby directed to appear before the ld. CIT(A) and not to seek any adjournment failing which ld. CIT(A) is at liberty to pass appropriate order as per law. Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues:
1. Natural justice - Order passed without hearing the assessee.
2. Ex-parte order due to reasonable cause for non-appearance.
3. Dismissal of appeal by CIT(A) on non-prosecution and merits.
4. Taxation on exempted asset - agricultural land.
5. Application of section 50C of IT Act in determining sale price.
6. Tax liability on difference between sale price and cost price of land.

Analysis:

Issue 1 - Natural Justice:
The appeal challenged the order of the CIT(A) dated 24-05-2017, contending that it was passed without hearing the assessee, raising concerns regarding natural justice.

Issue 2 - Ex-parte Order:
The appeal argued that the order was made ex-parte due to the assessee being prevented by reasonable cause from appearing before the CIT(A), seeking to set aside the order on these grounds.

Issue 3 - Dismissal of Appeal:
The CIT(A) dismissed the appeal for non-prosecution and on merits, prompting the assessee to request setting aside of the order based on the facts and circumstances of the case.

Issue 4 - Taxation on Exempted Asset:
The assessee contended that the asset in question, being agricultural land, was exempt from taxation as per law, thus challenging any addition to income based on the sale of this land.

Issue 5 - Application of Section 50C:
The Assessing Officer applied section 50C of the IT Act to determine the value of the property sold by the assessee, leading to an addition to income. The appeal challenged this application and the adoption of the circle rate in valuation.

Issue 6 - Tax Liability on Land Sale:
The appeal further argued that no tax liability existed on the difference between the sale price and the cost price of the land, despite any errors in the return filed by the assessee.

In the judgment, the Tribunal noted the assessee's non-appearance before the CIT(A) despite notice and decided to restore the issue to the CIT(A) for a final opportunity to be heard. The CIT(A) was directed to consider the case on its merits and in accordance with the law, emphasizing the importance of the assessee's presence during proceedings. The appeal was allowed for statistical purposes, indicating a procedural victory for the assessee in obtaining another chance to present their case effectively.