2021 (3) TMI 1341 - AT - Income Tax

ITAT emphasizes fair assessment process, restores case for fresh assessment.

Late Shri Ram Swaroop Through Legal Heir Shri Sukhbiri Versus Income Tax Officer, Ward – 1 (5), Faridabad, Haryana.

The ITAT allowed the appeal for statistical purposes, emphasizing the need for a fair assessment process, proper representation, and compliance with ... Gain on sale of land - nature of land - AO was of the opinion that since the land in question was situated within Municipal Limits of Faridabad, thus a capital asset chargeable to tax u/s. 45 (5) - HELD THAT:- The fact is that the assessment order was framed exparte. The documents filed before us show that the assessee has entrusted his counsel to furnish evidence before the first appellate authority but a perusal of the order of the first appellate authority show that the appellate proceedings were not properly attended. We have also given through the application for the admission of additional evidences. We are of the considered view that these documents go to the root of the matter. Therefore, in the interest of justice and fair play we deem it fit to restore the entire quarrel to the files of the AO. The assessee is directed to furnish all those documents before the AO and the AO is directed to decide the issue fresh after considering the documents and after giving a reasonable opportunity of being heard to the assessee. Appeal filed by the assessee is treated as allowed for statistical purposes. Issues:1. Assessment of capital gains on sale of agricultural land and old house.2. Non-compliance with procedural requirements by the Assessing Officer.3. Lack of proper representation and opportunity for the appellant during assessment proceedings.Analysis:Issue 1: Assessment of capital gains on sale of agricultural land and old houseThe appellant, a small farmer, contested the assessment of capital gains on the sale of agricultural land and an old house. The Assessing Officer determined the income from the sale consideration of the land, considering it as a capital asset. The appellant disputed the calculation of taxable income and indexed cost, arguing for exemptions under the head of Capital Gain. The Commissioner of Income Tax (Appeals) upheld the AO's order, noting the appellant's failure to file returns or pay capital gain tax. However, the ITAT found that the appellant was not properly represented during the proceedings and decided to restore the case to the AO for a fresh assessment, emphasizing the need for a fair opportunity for the appellant to present evidence.Issue 2: Non-compliance with procedural requirements by the Assessing OfficerThe appellant raised concerns regarding the procedural compliance by the Assessing Officer, alleging errors in serving notices under Sections 144, 142(1), 147, and 148 of the Income Tax Act. The appellant contended that mandatory notices were not served, impacting the validity of the assessment. The ITAT acknowledged these procedural lapses and directed the AO to re-examine the case after ensuring compliance with the statutory provisions, including proper notice issuance.Issue 3: Lack of proper representation and opportunity for the appellant during assessment proceedingsThe appellant highlighted the lack of proper representation and opportunity during the assessment proceedings, claiming that the counsel failed to submit necessary documents and provide adequate defense. The ITAT recognized the appellant's reliance on the counsel and the subsequent betrayal, leading to a decision to grant the appellant another opportunity to present the case effectively. The ITAT emphasized the importance of fair play and justice, directing the AO to reconsider the matter after the appellant submits all relevant documents and receives a reasonable opportunity to be heard.In conclusion, the ITAT allowed the appeal for statistical purposes, emphasizing the need for a fair assessment process, proper representation, and compliance with procedural requirements to ensure justice and uphold the principles of natural justice in tax matters.