Karnataka High Court
Sri Natarajan V vs The Commissioner Of Income Tax on 14 December, 2021
Bench: S.Sujatha, S Vishwajith Shetty
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 14TH DAY OF DECEMBER, 2021
PRESENT
THE HON'BLE MRS.JUSTICE S.SUJATHA
AND
THE HON'BLE MR. JUSTICE S.VISHWAJITH SHETTY
I.T.A.No.511/2018
BETWEEN :
SRI NATARAJAN V.,
S.VENKATARAMAN
AGED ABOUT 65 YEARS,
R/AT OLD NO.7, NEW NO.15,
AYODHYA, LAKSHMI STREET
WEST MAMBALAM, CHENNAI-600033 ...APPELLANT
(BY SMT.JINITA CHATTERJEE, ADV. A/W SRI HEMANT, ADV.
FOR SRI MALLAHA RAO, ADV.)
AND :
1. THE COMMISSIONER OF INCOME TAX
C.R.BUILDINGS, QUEENS ROAD,
BENGALURU
2. THE INCOME TAX OFFICER
ITO-WARD 15(2)
BENGALURU ...RESPONDENTS
(BY SRI DILIP M., ADV. FOR SRI K.V.ARAVIND, ADV.)
THIS INCOME TAX APPEAL IS FILED UNDER SECTION
260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER
DATED 08.09.2017 PASSED IN ITA NO.837/BANG/2017, FOR
THE ASSESSMENT YEAR 2009-2010 PRAYING TO 1.
-2-
FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED
ABOVE; 2. ALLOW THE APPEAL AND SET ASIDE THE ORDER OF
THE INCOME TAX APPELLATE TRIBUNAL DATED 08.09.2017
PASSED IN ITA NO.837/BANG/2017 FOR THE ASSESSMENT
YEAR 2009-2010 VIDE ANNEXURE-A.
THIS APPEAL COMING ON FOR HEARING, THIS DAY,
S. SUJATHA, J., DELIVERED THE FOLLOWING:
JUDGMENT
This appeal is filed by the assessee under Section
260A of the Income Tax Act, 1961 ('Act' for short)
challenging the order dated 08.09.2017 passed in ITA
No.837/Bang/2017 by the Income Tax Appellate
Tribunal, "SMC-A" Bench, Bangalore ('Tribunal' for
short) relating to the assessment year 2009-10.
2. The assesssee is an individual. For the
assessment year under consideration, return of income
was filed on 03.07.2009 by the assessee declaring the
total income of Rs.2,43,190/-. The return was selected
for scrutiny by the respondent N.2 and notice under
Section 143(2) of the Act was issued. The order under
Section 143(3) was passed by the Assessing Officer
considering the objections filed by the assessee by
making addition of Rs.28,59,942/- as long term capital
gains. Being aggrieved, the assessee preferred an
appeal before the CIT (Appeals). The said appeal came
to be dismissed ex-parte. Being aggrieved by the same,
the assessee has preferred an appeal before the
Tribunal unsuccessfully. Hence, this appeal.
3. The appeal was admitted by this Court to
consider the following substantial questions of law:-
(a) Whether on the facts and circumstances of
the case, can the Tribunal ignore the
documents furnished by the appellant in
support of his claim with regard to the
agreement to sell?
(b) Whether the Tribunal was right in
dismissing the appeal of the appellant only
by considering and upholding the orders
passed by the Authorities Below and
without appreciating the documents
furnished by the appellant?
(c) Whether on the facts and circumstances of
the case, the Tribunal was right in
dismissing the appeal of the appellant by
upholding the order in respect of the
capital gain issue?
4. Learned counsel for the appellant - assessee
vehemently argued that the Assessing Officer proceeded
to determine the cost of construction during the year
1984 at Rs.125/- per sq.ft. and Rs.175/- per sq.ft in the
year 1991 without any basis. Inviting the attention of
the Court to paragraph No.6 of the assessment order, it
was submitted that though Assessing Officer has
rendered that the information was collected, but no
such information was made available to the assessee to
rebut the same. The cost of construction made by the
Assessing Officer was confirmed by the First Appellate
Authority - CIT (Appeals) without providing reasonable
opportunity to the assessee. The Tribunal without
appreciating the vital aspects of the matter has
confirmed the orders passed by the CIT (Appeals) and
the Assessing Officer, which adversely affects the rights
of the appellant - assessee, who has purchased the
property on 09.07.2009 after selling the old property on
13.03.2009 for Rs.80,00,000/-. Learned counsel
further submits that the cost of acquisition of new
house property at Rs.40,00,000/- is not in conformity
with the factual aspects. The authorities as well as the
Tribunal have also not considered the commission
amount paid with regard to the said transaction.
Learned counsel submits that an opportunity, if
provided to demonstrate by furnishing the correct
valuation report, the same would be made available
before the Assessing Officer along with other relevant
documents/records.
5. Learned counsel for the Revenue justifying
the impugned order submitted that the two points
involved in this matter i.e., the cost of construction and
the cost of acquisition of the properties involved have
been mixed up by the assessee in order to evade the
payment of tax under the capital gains. The authorities
having rightly considered the value of the construction
based on the available material, no purpose would be
served in remanding the matter back to the Assessing
Officer, as contended by the learned counsel for the
assessee. It was further submitted that the Tribunal
has analysed the material aspects in arriving at a
conclusion in regard to the facts and circumstances of
the case, as such the appeal deserves to be dismissed
as no substantial question of law arises for
consideration.
6. We have bestowed our anxious consideration
to the arguments advanced by the learned counsel
appearing for the parties and perused the material on
record.
7. It is evident that the Assessing Officer has
determined the cost of construction said to have been
incurred based on the information collected but the
same is not disclosed in the order. Even assuming the
said cost of construction and the cost of acquisition
determined is on the basis of the material available on
record, the same ought to have been reflected in the
assessment order, to clarify that the authority has
applied the mind in the right perspective. It is
discernable that the CIT (Appeals) though has issued
notice, the same having been returned without due
service of summons, as there was no other option,
proceeded to pass ex-parte order. In such
circumstances, in the interest of justice and equity,
keeping in mind the principles of natural justice and in
view of the CIT (Appeals) dismissing the appeal merely
recording the observations made in paragraph No.6 of
the assessment order sans independent application of
mind, we are of the considered opinion that the said
order calls for interference by this Court. Further, the
finding of the Tribunal based on ex-parte order of the
CIT (Appeals) also warrants interference.
8. Hence, we deem it appropriate to set aside
the orders passed by the Tribunal as well as the CIT
(Appeals) in order to provide one more opportunity to
the assessee to putforth the material evidence inasmuch
as the cost of construction and the valuation report as
well as the additional expenses said to have been
incurred towards new house, before the CIT (Appeals).
9. Accordingly, without answering the
substantial questions of law raised by the assessee, we
pass the following
ORDER
i) The order dated 08.09.2017 passed in
ITA No.837/Bang/2017 by the Income
Tax Appellate Tribunal, "SMC-A"
Bench, Bangalore as well as the order
dated 28.02.2017 passed by the CIT
(Appeals) in ITA No.218/CIT(A)/BNG-
3/2014-15 are set aside.
ii) The matter is restored to the file of the
CIT (Appeals).
iii) The CIT (Appeals) shall consider the
matter afresh in accordance with law
by issuing notice to the assessee and
after providing reasonable opportunity
of hearing to the parties.
iv) All the rights and contentions of the
parties are left open.
v) The appeal stands disposed of
accordingly.
Sd/-
JUDGE
Sd/-
JUDGE
PMR
