TaxTMI 
TaxTMI 
2025 (9) TMI 1559
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.... the same kindly be deleted. 2. The very action taken u/s 147 is bad in law without jurisdiction and being void ab-initio, the same kindly be quashed. Consequently, the impugned assessment framed u/s 144 dated 31.03.2023 also kindly be quashed. 3. The impugned notice u/s 148 dt. 29.03.2022 and order u/s 148A(d) dated 29.03.2022 are bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same may kindly be quashed. 4. Rs. 1,71,87,500/-: The Id. AO erred in law as well as on the facts of the case in considering the facts of the present case as a case of introduction of the immovable assets by the appellant partner in the firm M/s Royal Park Developers as its capital contribution and therefore, erred in holding that provision of s.45(3) were applicable and inconsequently erred in, taxing the entire Fair Market Value (FMV) of this subjected asset at Rs. 1,71,87,500/- (12.50% of 13.75 Crores) as Long-Term Capital Gain (in short LTCG). The taxing of the income as LTCG by applying 8.45(3) of the Act, is completely contrary to the provisions of law and the facts available on record and hence additions were made deserv....
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....ng the assessee an opportunity of being heard and notice u/s 148 dated 26/07/2022 was issued to the assessee. In response to the notice issued, the assessee requested for adjournment which was acceded to and assessee was requested to make his submission on or before 30.01.2023. The assessee vide reply dated 30.01.2023 submitted that he derives his income from Rent from House property, Income from Business and profession i.e. proprietor of M/s Shakti Steel and Partner in Firm Taj Petroleum and Income from other sources like Interest from Saving bank account. The assessee furnished the details such as computation of income, bank account details etc., with regard to issue of capital asset transferred to M/s Royal park Developers at point no 3 of notice u/s 142(1) dated 17/01/2023, the assessee submitted that the point will be replied in due course. Thereafter a notice u/s 142(1) was issued to assessee on 27/02/2023 requesting to produce the details as mentioned at point no 3 of notice u/s 142(1) dated 17/01/2023 on or before 03/03/2023. The assessee through his reply dated 02.03.2023 submitted that No Property has been transferred by assessee to firm i.e. M/s Royal Park Developers dur....
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....nto stock in trade as per provisions of section 45(2) of the Income tax Act, 1961, on that it was submitted that as discussed in para above that the provisions of section 45(2) are applicable to where the capital asset is treated as stock in trade into the business run by the owner, whereas in the present case assessee is not the owner but the partner in a firm. 3.3 Hence, ld. AO noted that the provisions of section 45(3) are squarely applicable to the partner of who has introduced capital in the form of capital asset or otherwise. Ld. AO further noted that the partnership firm i.e. M/s Royal park Developers came into existence during F.Y. 2014-15 relevant to A.Y. 2015-16 and on perusal of the Balance Sheet of the Royal Park Developers for F.Y. 2014-15, it is seen, that capital has been shown in the form land ownership in the name of partners, hence, it was abundantly clear that the assessee has transferred capital asset to the firm in which he is a partner in the form of capital introduction. Therefore, provisions of section 45(3) are applicable in this case and assessee is liable to liable to pay tax on long term capital gain of Rs. 1,71,87,500 (12.50% of 13,75,00,000/-) as pe....
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....e ITAT had dismissed the appeal for nonattendance at hearings. 5.4 In this regard, the decision of the Hon'ble High Court of Mumbai in the case of Mis Chemipol Vs Union of India (Central Excise Appeal No.62 of 2009] clearly states that every court, judicial body or authority, inherently possesses the power to dismiss the case in default. For the sake of reference, the relevant extract of the judicial pronouncement rendered by the Hon'ble High Court of Mumbai quoting decision of Hon'ble Supreme Court in the case of Nandramdas Dwarkadas, AIR 1958 MP 260, is reproduced below: "Now the Act does not give any power of dismissal. But it is axiomatic that no court or tribunal is supposed to continue a proceeding before it when the party who has moved it has not appeared nor cared to remain present. The dismissal, therefore, is an inherent power which every tribunal possesses" 5.5 In a decision in the case of CIT v. Gold Leaf Capital Corporation Ltd. On 02.09.2011 (ITA No.798 of 2009), the Hon'ble High Court of Delhi had held that a negligent assessee should not be given too many opportunities just because that quantum of amount involved is high. T....
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....lant failed to furnish any reply/documentary evidences in respect of its appeal filed. However, despite being provided ample opportunities in the appellate proceedings, the appellant could not file any reply/evidences in respect of grounds of appeal as well as statements of facts. Therefore, in the absence of any reply/evidence, I have no option but to confirm the addition of Rs. 1,71,87,500/- under the provision of the IT Act, 1961, made by the A.O. in the assessment order as discussed above. 7. As a result, the appeal of the appellant is not allowed." 5. Feeling dissatisfied with the above finding of the ld. CIT(A) the assessee filed the present appeal before this tribunal on the grounds as reiterated herein above. To support the grounds so raised the ld. AR appearing on behalf of the assessee has placed reliance on the written submission which is extracted herein below:- "Brief General facts: In the present case, the assessee filed his return of income for the Assessment Year (A.Y.) 2015-16 on 30.11.2015, declaring a total income of Rs. 24,18,000/-. During the review of the assessment records the AO observed that a Joint Development Agreement with one Tirupa....
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....e and reasonable opportunity of being heard. The impugned order having been framed in gross breach of natural justice, kindly be quashed or alternatively be restored to the file of the ld. CIT(A), as would appear from the following date chart: Chart Showing Different notices and compliances: S. No. Date of issuance of notice Due date of hearing Response date Compliance by assessee Remark 1. 13.05.2024 20.05.204 7 Days 2. 11.06.2024 18.06.2024 18.08.2024 Requested for Adjournment 7 Days 3. 19.07.2024 25.07.2024 6 Days A bare perusal of the above chart shows that the so-called many opportunities granted by the CIT(A) to the appellant, is illusionary and shall reveal an interesting fact that the first notice was given in 13.05.2024 then on 11.06.2024, 19.07.2024 providing a short period of 7 days only. Immediately thereafter on 14.08.2024 he passed the ex-parte order. The question is that when the authority sends the notice after such a long gap from filing of appeal, it may be difficult for the recipient to check his e-mail/portal every next day throughout th....
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....e cases of CIT vs. Rai Bahadur Hardutroy Motilal Chamaria 66 ITR 443 (SC) and CIT vs. B.N. Bhattachargee 118 ITR 461 (SC) for the proposition that an assessee having once filed an appeal, cannot withdraw it and even if the assessee refuses to appear at the hearing, the first appellate authority can proceed with the enquiry and if he finds that there has been an underassessment, he can enhance the assessment. Just as, once the assessment proceedings are set in motion, it is not open to the Assessing Officer to not complete the Assessment Proceedings by allowing the Assessee to withdraw Return of Income; it is similarly, not open for Ld. CIT(A) to not pass order on merits by dismissing the appeal in limine, whether on account of nonprosecution of appeal by the Assessee or due to the Assessee seeking to withdraw the appeal or if the assessee does not press the appeal. When the Commissioner (Appeals) dismisses the appeal of assessee in limine for non-prosecution of appeal by the assessee; in effect, indirectly it leads to same results as withdrawal of appeal by assessee. When the assessee is not permitted to withdraw the appeal filed before the first appellate authority, the first appe....
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....ecide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact, the CIT(A) is obliged to dispose of the appeal on merits. In fact, with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CTT(A) is co-terminus with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore, just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CTT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply dear from the Section 251(l)(a) and (b) and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the i....
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....n local knowledge and repute in regard to the assessee's circumstances, and his own knowledge of previous returns by and assessments of the assessee and all other matters which he thinks will assist him in arriving at a fair and proper estimate; and though there must necessarily be guess-work in the matter, it must be honest guess-work [CIT Vs. Laxmi Narain Badridas, (1937) 5 ITR 170, 180 (PC), reversing (1934) 2 ITR 246 (Nag); CIT Vs. S. Sen, (1949) 17 ITR 355 (Orissa); Singh Engineering Works Vs. CIT, (1953) 24 ITR 93 (All); M.A. Rauf Vs. CIT, (1958) 33 ITR 843 (Pat); Mohanlal Mahribal Vs. CIT, (1982) 133 ITR 683 (MP) ; Ganga Prasad Sharma Vs. CIT, (1981) 132 ITR 87 (MP) & (1981) 127 ITR 27 (MO); Balchand Udairam Vs. State of Sikkim, (1989) 180 ITR 530, 553 (Sikkim); K.T. Thomas Vs. Ag ITO, (1990) 184 ITR 561, 565 (Ker.)]. In making a best judgment assessment the Assessing Officer does not possess absolutely arbitrary authority to assessee at any figure he likes and that although he is not bound by strict judicial principles he should be guided by rules of justice, equity and good conscience [Abdul Qayum & Co., Vs. CIT, (1933) 1 ITR 375, 378 (Oudh)]. A best judgment asse....