Afsha Shamim Ahmed Khan Vs ITO (ITAT Pune)
ITAT Pune Restores Ex-Parte LTCG Assessment: Entire Sale Consideration Cannot Be Taxed Without Ownership, Cost & Exemption Analysis
The Pune SMC Bench of the ITAT set aside an ex-parte assessment under sections 144 r.w.s. 147 for AY 2010-11, where the Assessing Officer had taxed the entire sale consideration of ₹40 lakh as long-term capital gains, without allowing cost of acquisition, indexation, or section 54 exemption, and without examining co-ownership of the property.
The Tribunal noted that the assessee had consistently contended that the property was jointly owned by three persons (50% + 25% + 25%) and that the sale proceeds were reinvested in a new residential house, prima facie entitling the assessee to section 54 relief. Despite this, both the AO and the CIT(A) passed orders without considering merits, merely due to non-compliance, resulting in violation of principles of natural justice.
Holding that the AO was already aware of multiple owners from the sale deed, the ITAT ruled that entire consideration cannot be assessed in one co-owner’s hands and that capital gains must be recomputed after examining ownership share, cost of acquisition, and exemption claims. The matter was remanded for de-novo adjudication with a direction to provide proper opportunity and also to supply reasons recorded, sanction, and underlying information for reopening, in line with Bombay HC in Sahebrao Deshmukh Co-op Bank Ltd.
Accordingly, the appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT PUNE
