2024 (9) TMI 291 - AT - Income Tax

Rejection of objections filled before Draft Resolution Panel - DRP rejected the assessee s application merely on the ground that it was not filed within 30 days - Applicability of provisions of section 56(2)(vii)(b) which came into effect from 01.10.2009 - HELD THAT - As per Section 4 of the Limitation Act, 1963 when the limitation period expires on a holiday, application may be instituted on the next working day. In this case, admittedly, assessee s application was received on 15.04.2024(Monday) which was the next working day. Therefore, as per Section 4 of the Limitation Act, 1963, Assessee s application was within time. Therefore, we are of the considered opinion that DRP has erred in rejecting assessee s application on the ground of limitation. DRP alleges that assessee had not submitted certified copy of the assessment order, Form No.35A was not filed in quadruplicate. These are the defects in appeal application. For this, DRP should have issued a defect memo. DRP has become hyper-technical. Assessee had filed application by post which is sufficient compliance of the Rule 4(1) of the I.T. Rules. The substantial justice is more important. Application of Section 56(2)(vii)(b) - The amendment is applicable to transactions undertaken after 01/10/2010. In this case the AO has admitted that entire payment was made by the assessee as purchaser to seller on or before 12/08/2008. The assessee has also filed copy of Agreement dated 20/08/2008 before us, however it is not clear whether the impugned agreement was filed before the AO or not. AO/DRP needs to analyze section 56(2)(vii)(b) proviso which states that where the date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not same, the stamp duty value on the date of the agreement may be taken for the purpose of this section. In this case, before us, assessee has also filed copy of agreement to purchase dated 20.08.2008(which is in hindi). AO has not discussed about this impugned agreement dated 20.08.2008 which does mention about the payments referred by the AO in the assessment order. Thus, in this case, apparently facts have not been properly analyzed by the AO. We have already mentioned that AO has nowhere mentioned Date of Registration, which is crucial as the Section 56(2)(vii)(b) came into effect from 01/10/2009 and assessee claimed that there is an agreement dated 20.08.2008. As already mentioned about that Dispute Resolution Panel has rejected assessee s application erroneously, though assessee had filed application within the time. Appeal of the assessee is allowed for statistical purpose.

Summary

Issues Involved:
1. Rejection of objections by the Dispute Resolution Panel (DRP) based on procedural grounds.
2. Application of Section 56(2)(vii)(b) of the Income Tax Act, 1961.
3. Jurisdiction under Section 147 of the Income Tax Act, 1961.
4. Natural justice and opportunity of being heard.

Detailed Analysis:

1. Rejection of Objections by DRP Based on Procedural Grounds:
The DRP rejected the assessee's objections primarily on procedural grounds, including:
- The application was received two days late.
- The application was not filed in person.
- Form No. 35A was not filed in quadruplicate.
- The certified Draft Assessment Order was not attached.

Findings & Analysis:
The Tribunal found that the DRP erred in rejecting the application on the ground of limitation. The application was received on the next working day after the prescribed period expired on a holiday, which is permissible under Section 4 of the Limitation Act, 1963. The Tribunal also noted that the DRP should have issued a defect memo for procedural lapses instead of outright rejecting the application. The Tribunal emphasized the importance of substantial justice over hyper-technicalities.

2. Application of Section 56(2)(vii)(b) of the Income Tax Act, 1961:
The AO invoked Section 56(2)(vii)(b) of the Act, which deals with the taxation of immovable property transactions where the consideration is less than the stamp duty value.

Findings & Analysis:
The Tribunal observed that the AO admitted the payments were made in FY 2008-09, and the source of investment was explained. Section 56(2)(vii)(b) applies to transactions undertaken on or after 01.10.2009. The Tribunal noted that the AO did not analyze the proviso to Section 56(2)(vii)(b), which considers the stamp duty value on the date of the agreement if the date of the agreement and registration are not the same. The Tribunal found that the AO did not properly analyze the facts, including the agreement dated 20.08.2008, which was crucial for determining the applicability of Section 56(2)(vii)(b).

3. Jurisdiction under Section 147 of the Income Tax Act, 1961:
The assessee challenged the jurisdiction of the AO under Section 147, arguing that the alleged income escaping assessment was below the threshold of Rs. 50,00,000.

Findings & Analysis:
The Tribunal did not provide a detailed analysis on this issue as the primary focus was on the procedural lapses by the DRP and the incorrect application of Section 56(2)(vii)(b). However, the Tribunal's decision to set aside the DRP's order for de-novo adjudication implies that the jurisdictional challenge will also be reconsidered.

4. Natural Justice and Opportunity of Being Heard:
The assessee argued that the DRP did not provide an opportunity of being heard, violating the principles of natural justice.

Findings & Analysis:
The Tribunal agreed that the DRP failed to provide an opportunity of being heard, which is against the provisions of Section 144C(11) of the Income Tax Act, 1961. The Tribunal emphasized that the DRP should have considered the assessee's application and provided a fair hearing.

Conclusion:
The Tribunal set aside the DRP's order and remanded the case back to the DRP for de-novo adjudication, ensuring that the assessee is given an opportunity of being heard and all necessary documents are considered. The appeal of the assessee was allowed for statistical purposes. The Tribunal's decision underscores the importance of procedural fairness and the proper application of legal provisions.