2024 (8) TMI 168 - AT - Income Tax

Validity of ex-parte order passed by CIT (A)-NFAC - non providing proper opportunity to the assessee of being heard - DR argued that several opportunities had been provided to the assessee however, on the given dates of hearing, neither the assessee nor her Representative has responded to the notices - HELD THAT - CIT (A)-NFAC had posted the case on several occasions. However, there was no response on behalf of the assessee before the CIT(A)-NFAC on the dates of hearing with regard to the details / submissions as called for by the Ld. CIT(A)-NFAC. Therefore, the Ld. CIT (A)-NAFC was left with no other option except to adjudicate the appeal ex-parte and dismissed the appeal. In this situation, considering the issues involved in the appeal, CIT(A)-NFAC ought to have decided the case on merits instead of dismissing the appeal ex-parte. However, considering the prayer of the Ld. AR, and in the interest of justice, we hereby remit the matter back to the file of Ld. CIT (A)-NFAC in order to consider the appeal afresh and decide the case on merits by providing one more opportunity to the assessee of being heard in accordance with the principles of natural justice.

Issues Involved:
1. Condonation of delay in filing the appeals.
2. Assessment of capital gains on a development agreement.
3. Ex-parte order passed by the CIT(A)-NFAC without providing an opportunity to the assessee.
4. Rectification application under Section 154 of the Income Tax Act.

Detailed Analysis:

1. Condonation of Delay in Filing the Appeals:
The appeals were delayed by 77 days. The assessee explained the delay through affidavits, citing an injury that required bed rest and caused the delay in signing and filing the appeal papers. The Tribunal found the reasons to be reasonable and sufficient, thus condoning the delay of 77 days and proceeding to adjudicate the appeals on merits.

2. Assessment of Capital Gains on a Development Agreement:
For AY 2016-17, the assessee, deriving income from financial consultancy and rental income, filed a return declaring a total income of Rs. 2,99,100/-. The case was selected for limited scrutiny due to a large investment in property. The AO observed that the assessee had not paid any capital gains tax on a development agreement worth Rs. 3,06,18,000/- with Bhavya Builders. The AO treated the indexed cost of acquisition as NIL due to the absence of purchase documents and added Rs. 44,12,340/- to the assessee's total income under capital gains. The CIT(A)-NFAC upheld this decision.

3. Ex-Parte Order Passed by the CIT(A)-NFAC:
The CIT(A)-NFAC passed an ex-parte order due to the assessee's non-response to notices. The assessee argued that this deprived her of a reasonable opportunity to present her case, violating natural justice principles. The Tribunal agreed that the CIT(A)-NFAC should have decided the case on merits rather than dismissing it ex-parte. Consequently, the Tribunal remitted the matter back to the CIT(A)-NFAC to decide the case on merits, providing one more opportunity to the assessee.

4. Rectification Application Under Section 154 of the Income Tax Act:
The assessee filed a rectification application under Section 154, pointing out errors such as non-deduction of the joint owner's share, non-consideration of indexed cost, and deduction under Section 54F. The AO rejected the application, and the CIT(A)-NFAC upheld this rejection in an ex-parte order. The Tribunal found that the CIT(A)-NFAC should have addressed the substantive issues on merits. Therefore, the Tribunal remitted this matter back to the CIT(A)-NFAC for fresh consideration, ensuring the assessee is given an opportunity to be heard.

Conclusion:
Both appeals were allowed for statistical purposes. The Tribunal directed the CIT(A)-NFAC to reconsider the appeals on merits, providing the assessee with a fair opportunity to present her case in accordance with the principles of natural justice. The Tribunal also cautioned the assessee to cooperate promptly in the proceedings.

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