2022 (1) TMI 1143 - AT - Income Tax

Validity of appeal before CIT-A u/s 246A - Assessability of capital gains in the hands of Individual or HUF - Assessees have contended that the capital gains, if any, is assessable in the hands of the HUF, they filed appeal memo in form No.35 mentioning the Permanent Account Number (PAN) of HUF - CIT(A) noticed that the assessing officer has passed the assessment order in the status of individual, but the assessees have filed the appeals before him mentioning the PAN of HUF, in whose hands there was no assessment order - HELD THAT - It is an undisputed fact that the assessments have been passed in the individual status of the assessees. However, while filing appeal before Ld. CIT(A), the PAN belonging to HUF status of the assessees has been mentioned. From the grounds of appeal urged before Ld. CIT(A), which is extracted by Ld. CIT(A) in his order, it can be noticed that the assessees have taken a plea that the capital gain, if any, arises only in the hands of HUF. Accordingly, it appears that the PAN of HUF has been mentioned in Form No.35 instead of mentioning the PAN of individual. In our considered view, in the interest of natural justice, the Ld CIT(A) should not have been too technical and should have allowed the assessees to filed revised Form No.35. Accordingly, we are of the view that these assessees should be allowed to file Form No.35 mentioning the PAN of individual. Further, we notice that the Ld. CIT(A) has not adjudicated the grounds urged on merits. Under these set of facts, we are of the view that all the issues urged before us are required to be restored to the file of Ld. CIT(A) for adjudicating them on merits. Accordingly, we set aside the orders passed by Ld. CIT(A) in the hands of the assessees herein and restore all the issues to his file for adjudicating them on merits. All the assessees are also directed to file revised Form No.35 mentioning PAN of individual status, so that the defect pointed out by the Ld. CIT(A) would get rectified. Assessee appeal allowed for statistical purposes.

Summary

Issues:
Challenging orders passed by Ld CIT(A) without deciding issues on merits and assessing capital gains in individual status instead of HUF status.

Analysis:
The appeals were filed against the orders passed by Ld CIT(A) for assessment year 2006-07, where the assessees contended that the capital gains, if any, should be assessed in the hands of the Hindu Undivided Family (HUF) status instead of individual status. The assessing officer had assessed long term capital gains in the individual status of the assessees, leading to the appeals before Ld CIT(A). The assessees argued that the land belonged to the HUF and therefore any capital gains should be assessed in the HUF's hands. However, Ld CIT(A) dismissed the appeals as invalid, stating that the appeals were filed mentioning the PAN of HUF, for which there was no assessment order. The assessees requested to file appeals in individual status as well, but this was not accepted by Ld CIT(A), resulting in the dismissal of the appeals.

The assessees, represented by the Ld A.R., argued that the mentioning of the PAN of HUF in the appeals was a mistake and should have been allowed to rectify. They contended that the capital gains, if any, should be assessed in the HUF's hands, prompting the filing of appeals with the HUF's PAN. The Ld A.R. further requested the opportunity to file revised appeals mentioning the PAN of the individual status to allow adjudication on merits. The ITAT, after hearing both parties, noted that the assessments were passed in the individual status, but the appeals mentioned the PAN of HUF due to the contention that capital gains should be assessed in the HUF's hands. In the interest of natural justice, the ITAT held that the assessees should be allowed to file revised appeals mentioning the PAN of the individual status. The ITAT set aside the orders passed by Ld CIT(A) and directed all issues to be restored for adjudication on merits, with the assessees instructed to file revised appeals with the correct PAN information.

In conclusion, the ITAT allowed the appeals for statistical purposes, emphasizing the need for proper assessment of capital gains in the appropriate status and the importance of allowing rectification of technical errors in appeal filings to ensure fair adjudication on merits.