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2019 (11) TMI 30 - AT - Income TaxViolation of principles of natural justice - CIT(A) not affording an opportunity of hearing to the assessee and passed ex parte order - Nature of land sold - HELD THAT - CIT(A) issued three notices to the appellant but because of some reason could not appeared before the CIT(A) and in limine CIT(A) without discussing any merit of the case just confirmed the order of the Assessing Officer. We have gone through the relevant record and impugned order. As we can see, without discussing the merit of the case, ld. CIT(A) has confirmed the order of the Assessing Officer. In our considered opinion, same is amounting to miscarriage of justice. CIT(A) has simply concurred with the AO without formulating specific points and taking note of details available before the Id.CIT(A). In a way, the appeals were dismissed in summary manner. This exercise of power at the end of the ld.CIT(A) is not in coherence with the mandate of section 250(6) of the Act, therefore, we set aside all these orders and restore all the issues in these three assessment years to the file of the Id.CIT(A) for deciding them on merit. We further direct the assessee to cooperate with the ld.CIT(A) and refrain himself from seeking unnecessary adjournments. Appeals of the assessee are allowed for statistical purpose.
Issues Involved:
1. Opportunity of hearing and principles of natural justice. 2. Classification of sold land as capital asset under Section 2(14) of the Income Tax Act, 1961. 3. Taxability of capital gains from the sale of agricultural land. Detailed Analysis: 1. Opportunity of Hearing and Principles of Natural Justice: The appellant contended that the Commissioner of Income Tax (Appeals) [CIT(A)] erred by not affording an opportunity of hearing, passing an ex parte order, and violating the principles of natural justice. The tribunal noted that the CIT(A) confirmed the order of the Assessing Officer without discussing the merits of the case, which amounted to a miscarriage of justice. The tribunal referenced a Co-ordinate Bench's decision emphasizing the necessity for CIT(A) to state points in dispute and assign reasons in support of conclusions, as mandated by Section 250(6) of the Income Tax Act, 1961. The tribunal concluded that the CIT(A) should pass a speaking and reasoned order and directed the assessee to cooperate and avoid unnecessary adjournments. 2. Classification of Sold Land as Capital Asset under Section 2(14) of the Income Tax Act, 1961: The primary issue was whether the land sold by the assessee qualified as a capital asset under Section 2(14) of the Income Tax Act, 1961. The assessee argued that the land was rural agricultural land and thus exempt from capital gains tax. The assessee's defense was based on the land's location within the jurisdiction of the Gandhinagar Urban Development Authority (GUDA), with a population of less than 10,000, and its distance from Gandhinagar Municipality limits. The Assessing Officer (AO) and CIT(A) disagreed, asserting that the land fell within the definition of a capital asset due to its proximity to urban areas and population considerations, thus making it taxable under Section 2(14)(iii)(a) and (b) of the Act. 3. Taxability of Capital Gains from the Sale of Agricultural Land: The tribunal examined the facts and submissions, including the AO's reliance on information from the Sr. Town Planner, GUDA, confirming the land's distance from Gandhinagar Municipality limits. The AO concluded that the land was within 6 kilometers of the municipality, making it a capital asset under Section 2(14)(iii)(b). Additionally, the AO verified the land's proximity to Ahmedabad Municipal Corporation limits, further supporting its classification as a capital asset. The AO computed the long-term capital gains arising from the sale, totaling ?63,13,309/-, and brought it to tax under Section 45 of the Act. Conclusion: The tribunal found merit in the appellant's contention regarding the denial of a fair hearing and the need for a reasoned order by CIT(A). The appeal was allowed for statistical purposes, with directions for CIT(A) to pass a detailed and reasoned order on the merits, and for the assessee to cooperate in the proceedings. The tribunal emphasized adherence to the principles of natural justice and statutory requirements under Section 250(6) of the Income Tax Act, 1961.
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