The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has recently, in an appeal filed before it, held that consideration from sale of jointly owned property cannot be treated as long term capital gain of a co- owner alone.
The aforesaid observation was made by the Ahmedabad ITAT, when an appeal was preferred before it by the Assessee, as against the order passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2011-12.
The ground of the assessee’s appeal being that the CIT(A) has failed to consider the fact that the house sold by assessee is in joint name, the brief facts of the case were that the assessee had not filed any return of income for the year under consideration under Section 139(1) of the Income Tax Act, 1961. And, as per the information, it was observed by the Assessing Officer that the assessee had sold immovable properties of Rs.16,00,000/-.
Subsequently, notice under Section 148 of the Income Tax Act was issued, after obtaining necessary approval, and was duly served to the assessee. However, the assessee did not respond and, therefore, no return was filed.
The Assessing Officer passed Assessment Order under Section 144 read with Section 147, and made addition on Long Term Capital Gain. Subsequently, he proposed an addition of Rs.16,00,000/- treating the same as undisclosed income for A.Y. 2011-12.
Being aggrieved by the Assessment Order, the assessee filed an appeal before the CIT(A). However, the CIT(A) dismissed the appeal of the assessee, thus leaving the assessee aggrieved to prefer the instant appeal before the Ahmedabad ITAT.
In the proceedings before the Tribunal, it was submitted by Shri Sureshchandra A. Patel & Vipulkumar C. Patel, on behalf of the assessee, that notices issued by the CIT(A) was never received and further that, in between the assessee died and, therefore that, being the legal heir, the notices were not duly received by the assessee.
However, on the other hand, Shri N.J. Vyas, the Sr. DR, relied upon the Assessment Order and the order of the CIT(A).
Hearing the opposing contentions of both sides and thereby perusing the materials available on record, the Ahmedabad ITAT observed, “It is pertinent to note that the fact remains that the property sold in question was jointly owned by the assessee and his son. Thus, the entire value of consideration of Rs.16,00,000/- cannot be treated as Long Term Capital Gain of the Assessee.”
Finally, the Coram of Suchitra Kamble, thus concluded:
“As the Assessing Officer also passed ex-parte order, it will be appropriate to remand back the issues contested by the assessee in the appeal filed before the CIT(A) to the file of the CIT(A) for adjudicating the same on merit. The assessee be given opportunity of hearing by following the principles of natural justice and the CIT(A) should take all the cognisance of the evidences filed by the assessee.”
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