CIT(A) Merely Upholding AO's Action Without Considering Merits Of Case, Amounts To Non-Compliance Of Sec 250(6): Mumbai ITAT

In the interest of natural justice, the Mumbai ITAT restored the appeal of assessee back to the CIT with a direction to the assessee that as soon as the window is available for submission of details by the CIT(A), assessee must submit the detail within the prescribed time which is to be decided on merits of addition under section 56 (2) (x) (b) of the Income tax Act, 1961.

The Bench of Rahul Chaudhary (Judicial Member) and Prashant Maharishi (Accountant Member) observed that, “it is also the fact that the CIT(A) should have given a detailed reason on the ground of appeal raised by the assessee in terms of provisions of section 250(6). The CIT(A) without considering the merits of the case has merely upheld the action of the assessing officer. Therefore, the order of the CIT – A is not in accordance with the provisions of section 250 (6) of the act as in the ground of appeal there was a specific ground raised about the addition.” (Para 9)

As per the brief facts of the case, the Assessee's return was selected for limited scrutiny for verification of investment in a property by issuing notice u/s 143(2). The issue was purchase of immovable property where the purchase value is less than the stamp value determined by authority. The necessary notice was issued to the assessee. The AO noted that in the allotment letter the property was not identified as well as full value of the consideration was not stated therein and therefore same cannot be taken for the purpose of date of acquisition of the property as it does not satisfy the conditions of the first proviso to this section. According to him, the agreement for sale wherein the amount of consideration for the transfer of immovable property is mentioned and therefore stamp duty value is required to be taken as on that date. Accordingly, being the difference between the registration deed value and the stamp duty value as was added to the total income of the assessee as income from other sources u/s 56 (2) (x) (b). Hence, assessment order u/s 143 (3) read with section 144B was passed.

The CIT(A) noted that assessee does not want to effectively pursue the appeal filed before CIT(A) as he missed the final opportunity to file his submission. Accordingly, he upheld the assessment order of the AO.

The Bench noted that the only dispute in this appeal is whether the date of acquisition of the property should be considered by the letter wherein the assessee has demonstrated that he has paid a certain amount for booking of the commercial property.

The Bench also noted that the AO has disregarded the argument for the reason that the letter did not identify the property as well as did not mention the actual consideration agreed between the parties and therefore such allotment letter cannot be considered as the date of acquisition of the property.

The Bench found that the first appellate authority issued three notices, which were not responded by the assessee, and therefore he noted that appellate remedy does not mean merely filing of the appeal but effectively pursuing it.

The Bench further found that the email address and the mobile number provided by the assessee in form number 35 and 36 are same. Hence, non-receipt of the notice cannot be believed.

Therefore, on finding that the order of CIT(A) is not in accordance with the provisions of section 250(6) as in the ground of appeal there was a specific ground raised about the addition of Rs. 14,098,500, the ITAT restored the matter.

Counsel for Appellant/ Taxpayer: Arati Vissanji

Counsel for Respondent/ Department: Mahita Nair

Case Title: Rajkumar Anandchand Jain verses Dy. Commissioner of Income Tax

Case Number: ITA No. 3092/Mum/2023

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