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Issues:
1. Dismissal of appeal for non-compliance with hearing notices by Dy. CIT(A). 2. Addition made under 'short-term capital gains' for the sale of a car. Issue 1: Dismissal of Appeal for Non-Compliance: The appeal was filed against the Dy. CIT(A)'s order dismissing the appeal due to non-compliance with hearing notices. The assessee argued that the dismissal was erroneous, but no arguments were presented on this aspect. The Tribunal rejected the assessee's grounds related to this issue, upholding the dismissal. Issue 2: Addition Under 'Short-term Capital Gains' - Sale of Car: The Assessing Officer computed capital gains under 'short-term capital gains' for the sale of a car by the assessee, who was running a kirana shop and plying a car on hire. The AO observed that the car was purchased in April 1990 for Rs. 20,000, and since the assessee had been returning income on an estimate basis without separately showing income from the car, depreciation was deemed to have been claimed and allowed. The AO calculated capital gains at Rs. 42,800, considering the car as a depreciable business asset. The assessee contended that depreciation was not claimed or allowed in earlier years, citing the insertion of Explanation 5 to section 32 effective from 1-4-2002. Referring to a Board Circular, the assessee argued that if no particulars regarding depreciation were furnished, the ITO should estimate income without allowing depreciation. The assessee also cited a decision of the Allahabad High Court to support the claim that not specifically claiming depreciation meant it was not granted. The Tribunal found in favor of the assessee, noting that the return did not specify whether depreciation on the car was claimed or not. It emphasized the assessee's option to claim or postpone depreciation, as established by the Supreme Court. Since there was no evidence of specific allowance of depreciation by the AO, the Tribunal held that the short-term capital gains should be determined at Rs. 30,000, setting aside the orders of the Revenue authorities on this issue and directing the AO to modify the assessment. In conclusion, the Tribunal allowed the assessee's appeal, ruling in favor of the assessee on both issues raised in the appeal.
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