2022 (5) TMI 1061 - AT - Income Tax

Validity of assessment order u/s 144 - addition invoking provisions of Section 50C - Assessing officer disallowed the long term capital gain by considering the cost of improvement and acquisition at Zero and thereby made huge addition - CIT(A) also dismissed the appeal of assessee by proceeding ex parte by passing a non-speaking order - As assessee submits that the assessee is an NRI and the notice was not served him - HELD THAT - We find that the ld. CIT(A) instead of considering the case on merit, dismissed the appeal of assessee in limine. In our view, the order passed by the ld. CIT(A) is not as per mandate of Section 250(6) - Section 250(6) of the Act provides that the order of the Commissioner (Appeals) must contain point of determination, decision thereon and reasons for such decision. We instead of going into controversy whether the assessee was informed by his representative to whom the assessee assigned his case or not, in our view, the assessee deserved opportunity of hearing on merit. Therefore, considering all the aspects of the matter, the order of ld. CIT(A) is set aside and all the issues are restored to the file of Assessing Officer for re-determination of issues afresh. Needless to order, before passing the assessment order afresh, the Assessing Officer shall grant fair and proper opportunity of hearing to the assessee. The assessee is also directed to vigilant and to attend the hearing and furnished all requisite details and not to prolong the proceedings. With this observation, the appeal of assessee is allowed for statistical purposes. In the result, the grounds of the appeal is allowed for statistical purpose.

Summary

Issues:
Appeal against order of Commissioner of Income Tax (Appeals)-2, Surat for Assessment year 2012-13. Grounds include invalidity of AO's order, lack of natural justice, non-receipt of hearing notice, addition under Section 50C, denial of exemption under Section 54F, levy of interest under Section 234A/234B/234C, and penalty under Section 271(1)(c).

Analysis:

1. Invalidity of AO's Order and Lack of Natural Justice:
The Assessing Officer (AO) passed the assessment order under Section 144 of the Income Tax Act, 1961, making a substantial addition under Section 50C. The appellant contended that the AO's order was invalid and passed without observing the principles of natural justice. The appellant, a Non-Resident Indian (NRI), claimed non-receipt of notices during assessment and appeal proceedings. The appellant's representative argued that proper steps were not taken to ensure communication due to the appellant being out of India. The Tribunal found that the appellant deserved an opportunity for a hearing on merit, as the order of the Commissioner (Appeals) did not comply with the mandate of Section 250(6) of the Act. Consequently, the order of the Commissioner (Appeals) was set aside, and the issues were remanded to the AO for redetermination with proper hearing opportunities granted to the appellant.

2. Addition under Section 50C and Exemption under Section 54F:
The AO made a significant addition under Section 50C based on stamp duty valuation, leading to the denial of long-term capital gain exemption. The appellant argued that the addition was made without proper evidence and without referring the matter to a valuation officer as required under Section 50C(2) of the Act. Additionally, the appellant claimed exemption under Section 54F for investment in a residential property. The Tribunal noted the lack of discussion on the merit of the case by the Commissioner (Appeals) and directed the AO to reconsider these issues afresh, providing the appellant with a fair hearing opportunity. The Tribunal emphasized the importance of proper compliance and timely submission of necessary details by the appellant.

3. Levy of Interest and Penalty:
The appellant contested the levy of interest under Sections 234A/234B/234C and the initiation of penalty under Section 271(1)(c) as unjustified. The Revenue supported the lower authorities' decisions, citing the appellant's failure to respond to notices and provide evidence for various claims. The Tribunal, while allowing the appeal for statistical purposes, did not delve into the specifics of the interest and penalty issues. The focus was primarily on the procedural aspects and the need for a fair hearing for the appellant.

In conclusion, the Tribunal set aside the Commissioner (Appeals)'s order, remanding the issues to the Assessing Officer for redetermination with proper hearing opportunities granted to the appellant. The decision highlighted the importance of adherence to procedural fairness and the need for thorough consideration of merits in tax assessment matters.