2021 (11) TMI 627 - AT - Income Tax

Appellate Tribunal directs reassessment due to errors in Tax Appeals Commissioner's order

Mr Satish Padmanabh Bhat Versus ACIT-12 (1) (1) Mumbai

Mr Satish Padmanabh Bhat Versus ACIT-12 (1) (1) Mumbai - TMI Issues:1. Validity of the order passed by the Commissioner of Income Tax (Appeals)2. Assessment of income from sale of property as Short Term Capital Gains3. Treatment of long term capital loss on extinguishment of sharesIssue 1: Validity of the order passed by the Commissioner of Income Tax (Appeals)The appellant challenged the order of the Commissioner of Income Tax (Appeals) on the grounds of being invalid and unsustainable in law. The appellant contended that the order was passed in violation of Principles of Natural Justice as the Commissioner did not accept submissions, refused to take attendance, and ignored requests for adjournment. Additionally, the appellant argued that the Commissioner erred in not considering the submissions filed along with Form No. 35 on the e-portal of the department.Issue 2: Assessment of income from sale of property as Short Term Capital GainsThe Commissioner of Income Tax (Appeals) assessed the income from the sale of property as Short Term Capital Gains, contrary to the appellant's claim that it should be treated as Long Term Capital Gains. The appellant argued that the Commissioner failed to properly compute the Capital Gains and did not allow deductions for the cost of acquisition/indexed cost of acquisition of the property. The appellant highlighted the need for proper computation of chargeable Capital Gains by incorporating the long term capital loss arising from the extinguishment of shares in a company.Issue 3: Treatment of long term capital loss on extinguishment of sharesThe appellant experienced a long term capital loss due to the extinguishment of shares in a company following a High Court order. The appellant asserted that if given an opportunity to be heard, they would have provided explanations, evidence, and computations to demonstrate the long term capital loss. The appellant emphasized the importance of considering this loss in the overall assessment of capital gains.In the judgment, the Appellate Tribunal acknowledged the appellant's lack of cooperation but found merit in the appellant's claims regarding the inadequacies in the Commissioner's order. The Tribunal directed the Assessing Officer to re-adjudicate the issue after affording the appellant an opportunity to be heard. The Tribunal emphasized the importance of allowing the appellant to substantiate their claims with supporting documentary evidence. As a result, the appeal filed by the appellant was allowed for statistical purposes.