2024 (9) TMI 81 - AT - Income Tax

Non maintainability of appeal before the CIT(A) - Non-compliance of Section 249(4)(b) alleging the non-payment of advances tax liability - as contended on behalf of assessee that there will be no advance tax liability on the salary income and therefore, there is no breach of provisions of section 249(4)(b) and remaining income assessed towards sale of property in the hands of the assessee is on account of gross misconception of facts by the AO wrongly treating purchase of the property as sale thereof - HELD THAT - The plea of the assessee for non workability of impediment u/s 249(4)(b) of the Act appears quite convincing in the facts of the case. In this circumstances, narrated on behalf of the assessee appeal of the assessee is found to be maintainable before the CIT(A). Revenue has wrongly proceeded on misappreciation of facts of substantive nature. The purchase of property has been construed as sale of property leading to such exorbitant additions and protracted litigation. The verification was put in motion by the AO on such footing. However, in the absence of any reply from the assessee before the AO or before the CIT(A), the correct facts did not surface for consideration of Revenue. Hence in the fitness of things, the matter needs to be remanded back to the file of the AO for determination of the issue involved afresh in accordance with law. It shall be open to the assessee to adduce all evidences and furnish explanations on the correct state of affairs before the AO without any demur. The AO shall pass a speaking order after taking into account the evidences as may be placed and explanation thereon - Appeal of assessee is allowed for statistical purposes.

Issues:
1. Interpretation of Section 249(4)(b) of the Income Tax Act, 1961.
2. Validity of reopening assessment under Section 147 without proper notice.
3. Alleged sale of immovable property and capital gains assessment.
4. Compliance with procedural requirements by the assessee.
5. Justification of additions made in the assessment.

Analysis:

1. The appeal was filed against the first appellate order concerning the interpretation of Section 249(4)(b) of the Income Tax Act. The assessee contended that the appeal was wrongly dismissed for alleged non-compliance with advance tax liability, arguing that no such liability existed on the salary income. The Tribunal found the plea convincing, holding that the appeal was maintainable before the CIT(A) based on the facts presented.

2. The assessee challenged the validity of the assessment reopening under Section 147, alleging that proper notices were not served as required by law. The affidavit submitted by the assessee detailed the factual inaccuracies in the Revenue's assertions, emphasizing that no sale of property occurred and the assessment was based on flawed information. The Tribunal observed that the Revenue's misinterpretation necessitated a remand to the Assessing Officer for a fresh determination.

3. The Revenue's assessment included an addition of capital gains due to the alleged sale of immovable property by the assessee. However, the affidavit clarified that the property was purchased jointly with the spouse and no sale took place. The Tribunal noted that the Revenue's misconceptions led to unjustified additions, requiring a reevaluation by the Assessing Officer with proper consideration of the facts.

4. Procedural compliance by the assessee was also a point of contention, with the Revenue claiming that opportunities were provided for disclosure. However, the affidavit highlighted personal circumstances that hindered timely responses to letters seeking clarification. The Tribunal acknowledged the reasons beyond the assessee's control and emphasized the need for a fair opportunity to present evidence before the Assessing Officer.

5. The Tribunal concluded that the Revenue's actions were based on a misappreciation of facts, leading to erroneous additions in the assessment. The matter was remanded to the Assessing Officer for a fresh determination, allowing the assessee to provide evidence and explanations. The decision to allow the appeal for statistical purposes was based on the need for a proper assessment in accordance with the law, ensuring a fair opportunity for the assessee.

This detailed analysis of the judgment highlights the key issues raised, the arguments presented by both parties, and the Tribunal's decision to remand the matter for a fresh assessment based on the correct interpretation of facts and compliance with procedural requirements.

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