Case Law Details
Subba Raju Chekuri Vs ITO (ITAT Hyderabad)
Introduction: In a recent tax dispute, Subba Raju Chekuri contested against the Income Tax Officer (ITO) before the Income Tax Appellate Tribunal (ITAT) in Hyderabad. The case arose from the assessment year 2012-13 and was centered around the failure of the assessee to provide evidence in support of their claim for deduction under Section 54F of the Income Tax Act.
Detailed Analysis: The matter originated from an order issued by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) in Delhi, dated 15th June 2023. The proceedings were initiated under Section 147 of the Income Tax Act, 1961, with reference to Section 144 of the same Act.
The grounds raised by the assessee covered a range of issues, including the validity of the assessment order, allegations of procedural violations, and challenges to the application of Section 50C and Section 54F. However, the core of the dispute revolved around the inability of the assessee to furnish supporting documents for the deduction claimed under Section 54F.
The Assessing Officer noticed that the assessee had not filed their income tax return for the assessment year 2012-13, despite having realized capital gains from the sale of an immovable property during the financial year 2011-12. The sale consideration was declared as Rs. 34,83,000, whereas the market value was significantly higher at Rs. 77,50,000. In the absence of PAN details and an explanation for the difference in value, the Assessing Officer issued a notice under Section 148 in March 2019.
The subsequent proceedings highlighted the lack of documentation supporting the deduction claimed under Section 54F. Despite multiple opportunities, the appellant failed to furnish the necessary evidence, which ultimately led to the completion of an ex-parte assessment by the Assessing Officer.
The case was escalated to the Commissioner of Income Tax (Appeals), who noted that the appellant did not participate in the appellate proceedings or provide any substantive documentation or arguments. Consequently, the appeal was dismissed.
Conclusion: In light of the facts, the Income Tax Appellate Tribunal (ITAT) Hyderabad decided to remand the case back to the Assessing Officer for re-adjudication. The Assessing Officer will reassess the claim for a deduction under Section 54F, considering the provisions of Section 50C, and determine the eligibility for the deduction. The appellant is directed to actively engage in the proceedings and provide the requested documentation. Failure to do so may result in the Assessing Officer proceeding with the case based on the available facts.
This case underscores the significance of providing supporting evidence when making tax claims and emphasizes the importance of participating in tax proceedings to avoid unfavorable outcomes.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
The appeal of the assessee for A.Y. 2012-13 arises from the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) – Delhi dt.15.06.2023 invoking proceedings under section 147 r.w.s. 144 of the Income Tax Act, 1961 (in short, “the Act”).
2. The grounds raised by the assessee reads as under :
“1. The assessment order dated 31.12.2019 determining the Capital Gain of Rs.46,74,945 by invoking section 50C is bad in law.
2. Ld A.O erred in passing the assessment order dated 30.12.2019 U/s 144 in gross violation of principles of natural justice and it is bad in Law.
3. Ld CIT(A), NFAC, erred in upholding the exparte order of Ld A.O by passing an exparte order. The appellant is not well versed in operation of e-portal of Income Tax Department and not aware about the notices issued by the Ld CIT(A).
4. Ld A.O erred in reopening the assessment U/s 147 or reasons for reopening of the assessment were neither furnished nor enclosed to the notice U/s 148 dated 27.03.2019. Thus, the proceedings U/s 147 are void. Ld A.O failed to follow the procedure laid down by the apex court in GKN driveshaft 259 1TR1(sc)
5. Ld A.O erred in not giving adequate time to produce the proof in support of purchase of a flat for claiming deduction U/s 54F of the Act.
6. Ld A.O erred in computing the capital Gains on transfer of rights on immovable property at a sum of Rs. 46,74,945. The appellant is not the legal owner of the property.
7. Ld A.O failed to appreciate that the appellant was only an agreement holder cum GPA and the provisions of section 50C are not applicable.
8. Ld A.O erred and Ld CIT(A) failed to appreciate that the assessee gave the valid reasons for accepting the sale consideration below the stamp duty value and such reasons were not verified.
9. Ld A.O/CIT(A) failed to appreciate that land is going to be acquired by the local authority in Road widening and the appellant cannot legally transfer the entire land at market price or stamp duty value U/s 50C.
10. Ld. A.O erred is not allowing deduction U/s 54F of the Act as the appellant invested a sum of Rs. 46,80,250 and on 21.11.2011 a sale deed was executed by the seller in favour of the appellant for a residential flat admeasuring 1440 SIFT in ‘My Home Jewel’ situated at Madeenaguda, Serilingapally, Hyderabad. (Flat No: 1412 on 14th Floor, Emerald Block).
11. Ld. A.O failed in not invoking the provisions of section 50C(2) of the Income Tax Act, 1961.
12. Ld A.O erred is not furnishing the approvals accorded by the competent authority for reopening of the assessment U/s 147. 13.1-d A.O failed to appreciate that there was no escapement of Income after deduction U/s 54F.”
3. Facts of the case, in brief, assesses has not filed his return of income for the A.Y.2012-13 disclosing the capital gains on sale of immovable property during the financial year 2011-12 for a sale consideration of Rs.34,83,000/- whereas the market value of the said property was of Rs. 77,50,000/-. As per the data available, in the absence of PAN details, Assessing Officer noticed that there was an escapement of income and hence, he issued notice u/s. 148 dated 27.03.2019 to the assessee. Thereafter, notice u/s 142(1) dated 03.07.2019 was also issued calling for certain information for which the assessee submitted that during the financial year 2011-12, he had sold two immovable properties in the status of HUF. On verification of the sale deed document, it was observed that the assesses has mentioned PAN: AEMPCI025M which was in his individual status. Hence, a show-cause notice was issued on 02.12.2019 to the assessee giving a final opportunity to furnish the information. Information submitted by the assessee was not accepted by the Assessing Officer as he has not submitted supporting documents to claim deduction u/s 54F of the Act till date and as there was no other option except to complete the assessment ex-parte u/s 144 of the I.T. Act, Assessing Officer completed the assessment.
4. During the course of scrutiny proceedings, it was noticed that assessee sold the land admeasuring 774.5 Sq yards situated at Kakinada for a sale consideration of Rs. 34,83,000/- whereas the market value of the property for the purpose of payment of stamp duty was Rs. 77,50,000/-. Further, page No.5 of the sale deed document shows that the entire sale consideration was paid by the buyer to the assessee. As per the sale turn GPA, the assessee along with other person Shri Bhupathiraju Ravi Kumar acquired the entire plot of land admeasuring 1524.5 Sq. yards for a consideration of Rs.40,01,813/-. Thus, the capital gain of the property was worked out to Rs 46,74,945/-. In the absence of any other information, the same was considered as his total income for the assessment year under consideration.
5. Feeling aggrieved with the order of Assessing Officer, assessee filed an appeal, which was subsequently, migrated to the ld.CIT(A), NFAC, Delhi, who dismissed the appeal of assessee.
6. Feeling aggrieved with the order of ld.CIT(A), assessee is now in appeal before me.
7. Before me, Ld.AR submitted that the major issue in the present case is with respect to the application of section 50C of the Act in respect of capital gains and alternatively, claiming deduction u/s 54F of the Act. Ld. AR further submitted that the order passed by the ld.CIT(A) is an exparte order, as the assessee has failed to provide necessary information and appear during the course of appellate proceedings. Hence, the ld. AR requested the Bench to remand the matter back to the file of Assessing Officer.
8. On the other hand, ld. DR relied on the orders of lower authorities.
9. I have heard the rival submissions and perused the material on record. The main issue in the present case is with respect to the application of Section 50C of the Income Tax Act, in relation to capital gains, as well as the alternative claim for deduction under Section 54F of the Act, which arises from the sale of an immovable property during the year under consideration. I have perused the order of ld. CIT(A), wherein the ld. CIT(A) mentioned at para 5.6 that inspite of numerous opportunities granted to the assessee none appeared on behalf of the assessee in the appellate proceedings. I find that the ld.CIT(A) was forced to decide the appeal on the basis of material available on record, as there was no representation on behalf of the assessee. The finding of the ld. CIT(A) mentioned at Para 5.6 and 5.7 of his order, reads as under :
“5.6 On merits also, the appellant has no case. The appellant has challenged the addition of Rs.46,74,945/- as long term capital gains on immovable property made by the Ld. AO without submitting any evidence or counterarguments in support of its claims during the appellate proceedings. During the appellate proceeding, the appellant did not comply with the hearing notices issued to him requiring to explain the issue. In response, neither the appellant nor the authorized representative filed any submissions. In spite of numerous opportunities given to the appellant, the appellant did not make use of these opportunities giving the concrete impression to the undersigned that the appellant had nothing to say or no explanation whatsoever. I find no reason in altering the addition of Rs.46,74,945/- as long term capital gains on immovable property made by the ld. AO. In view of this, the ground raised by the appellant is dismissed. Since there is no other specific ground but all are general in nature, therefore, no separate adjudication is made.
5.7. Considering the facts and circumstances of the case, I find no infirmity in the order passed by the Ld. AO and the same is upheld accordingly.”
10. From the above, it is abundantly clear that the assessee was not present before the ld.CIT(A) in the appellate proceedings and has not filed any document to substantiate his case. The assessee has not even furnished any evidence in support of his claim of deduction u/s 54F of the Act before the Assessing Officer also. Considering the totality of the facts and circumstances, one more opportunity is granted to the assessee to appear and contest the case before the Assessing Officer. Hence, I remand back the matter to the file of Assessing Officer with a direction to review the claim of deduction u/s 54F made by the assessee specifically with respect to the application of Section 50C of the Act and the eligibility for deduction under Section 54F of the Income Tax Act and thereafter, decide the issue in accordance with law, after affording opportunities of hearing to the assessee. The assessee is also directed to participate in the proceedings and furnish the documents as called for. In case, the assessee failed to file any documents in support of his case, the Assessing Officer shall decide the matter in accordance with the law. With these observations, the appeal of the assessee is allowed for statistical purposes.
11. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Open Court on 12th September, 2023.
