Tribunal grants appeal, emphasizes fair assessment process and accountability

The Tribunal allowed both appeals for statistical purposes. The assessees were granted condonation of delay in filing appeals attributed to their former Chartered Accountant's oversight. They were directed to pay a cost to the Income Tax Department for inactivity. Regarding the assessment of long-term capital gains on the sale of shares, the Tribunal set aside the decisions, instructing the Assessing Officer to reconsider after providing the assessees a fair chance to present their case and cross-examine witnesses. The importance of ensuring assessees have a fair opportunity to contest assessments was emphasized.

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Issues:
1. Delay in filing appeals by the assessees.
2. Assessment of long-term capital gains on sale of shares.

Issue 1: Delay in filing appeals by the assessees

The assessees, in this case, filed appeals against orders passed by Ld. CIT(A)-5, Bengaluru, relating to the assessment year 2014-15. The appeals were barred by 998 days and 1013 days, respectively. The assessees attributed the delay to their former Chartered Accountant, who failed to file the appeals as requested. The assessees, upon realizing the lapse, sought condonation of delay. The Ld. A.R. argued that the assessees were under a bonafide belief that the appeals were filed in time. The Ld. D.R. opposed the condonation, stating that the assessees did not provide sufficient evidence to support their claims. The Tribunal, after considering the submissions, held that there was a reasonable cause for the delay. However, the assessees were directed to pay a cost of &8377; 10,000 each to the Income Tax Department for their inactivity in following up with the former Chartered Accountant.

Issue 2: Assessment of long-term capital gains on sale of shares

The appeals contested the assessment of long-term capital gains arising from the sale of shares. The assessees claimed exemption on the gains realized from the sale of shares in two different companies. The Assessing Officer (A.O.) categorized the companies as penny stocks and alleged that the assessees used a colorable device to declare long-term capital gains. The A.O. rejected the claim of long-term capital gains and assessed the profits as taxable income. The Ld. CIT(A) upheld the A.O.'s decision. The assessees argued that they were not given the opportunity to rebut the evidence relied upon by the A.O. and cross-examine relevant individuals. The Tribunal found merit in the assessees' contentions and set aside the orders passed by Ld. CIT(A), directing the issues to be reconsidered by the A.O. after affording the assessees a fair opportunity to present their case and cross-examine witnesses.

In conclusion, the Tribunal allowed both appeals for statistical purposes, emphasizing the importance of providing assessees with a fair opportunity to contest assessments and present their case effectively.

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