2019 (2) TMI 1327 - AT - Income Tax

Non-prosecution of appeal - AR submitted that the assessee could not appear for various reasons and submissions are without any supporting evidence and reasons for non-prosecution of case before the CIT(A) - HELD THAT - CIT(A) has granted sufficient opportunities. When a query was raised to the learned AR being the Reasonable cause and Reasons for non-appearance, the explanations of learned AR are not satisfactory and are not supported with any evidence. We, considering the principles of natural justice and the reasons envisaged by learned AR are not supportive to the case, consider it appropriate to restore the entire disputed issue to the file of the CIT(A) but considering the facts on record with respect to non-appearance of the assessee or learned AR in spite of issuing notices on various dates in appellate proceedings and the assessee chose not to appear which cannot be overlooked. Therefore, we are of the substantive opinion that the assessee should be provided an opportunity of hearing but with payment of cost of ₹ 10,000/- to the Income-tax Department within a period of one month from the date of receipt of this order.

Summary

Issues:
- Appeal against ex-parte order of CIT(A)
- Disallowance of exemption u/s 54 of the Income-tax Act
- Estimation of rental income
- Estimation of income from vacant land
- Estimation of agricultural income
- Disallowance of rebate on agricultural income
- Addition on account of unexplained cash deposit
- Addition on account of unexplained investments

Issue 1: Appeal against ex-parte order of CIT(A)
The assessee filed an appeal against the ex-parte order of the CIT(A)-V, Bengaluru, challenging the Assessment Order dated 26/02/2015 passed by the Income Tax Officer, Ward 5(3)(3), Bengaluru for the assessment year 2012-13. The grounds of appeal included lack of sufficient time for a personal hearing, incorrect estimation of rental income, income from property, and agricultural income, disallowance of rebate on agricultural income, and addition of unexplained cash deposit and investments. The AO denied exemption u/s 54 of the Act, leading to a dispute over the total income determination.

Issue 2: Disallowance of exemption u/s 54 of the Income-tax Act
The AO disallowed the exemption u/s 54 of the Act claimed by the assessee in the Revised return of income, stating that the assessee owned more than one house at the time of the capital asset sale, making them ineligible for the exemption. Consequently, the long-term capital gains were taxed at &8377; 1,19,68,897/-. This decision was a key point of contention in the appeal process.

Issue 3: Estimation of rental income, income from property, and agricultural income
The AO made various estimations regarding rental income, income from property, and agricultural income, leading to additions in the total income. The assessee disputed these estimations, arguing that the calculations were incorrect and not supported by proper records. The discrepancies in the estimations formed a significant part of the appeal against the assessment order.

Issue 4: Disallowance of rebate on agricultural income
The AO disallowed the rebate on agricultural income while calculating the tax liability, which was contested by the assessee. The disagreement over the allowance of rebate added complexity to the assessment process and contributed to the overall dispute regarding the total income determination.

Issue 5: Addition on account of unexplained cash deposit and investments
The AO made additions on account of unexplained cash deposits and investments, which the assessee claimed were explained during the assessment proceedings. The dispute centered around the adequacy of explanations provided by the assessee and the justification for the additions made by the AO. These additions were crucial aspects of the appeal against the assessment order.

The Tribunal, after considering the arguments presented by both parties, found that the CIT(A) had provided sufficient opportunities for the assessee to be heard. However, due to unsatisfactory explanations and lack of evidence for non-appearance, the Tribunal decided to restore the disputed issues to the file of the CIT(A) for fresh consideration. The assessee was directed to pay a cost of &8377; 10,000 to the Income-tax Department within one month. The Tribunal emphasized the principles of natural justice and ordered the CIT(A) to provide reasonable opportunities for the assessee to present evidence and cooperate for the early disposal of the appeal. The appeal was allowed for statistical purposes, and the decision was pronounced in open court on 21st February 2019.