The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) directed the Dispute Resolution Panel ( DRP ) to reconsider an objection to a long-term capital gain assessment, which had been rejected due to a signature irregularity by the Authorized Representative (AR) while the assessee was outside India.
Prabodh Mohanlal Shah,the appellant-assessee, a Non-Resident Indian residing in the United States, reported a Long Term Capital Gain of Rs. 56,95,336 from selling a residential property in India. He claimed a deduction under Section 54 and reported income from other sources, seeking deductions under Chapter VIA.
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On 28.09.2021, the Assessing Officer (AO) issued a draft assessment order, assessing the capital gain at Rs. 1,24,99,095 based on the circle rate as of 01.04.2021. The assessee challenged this draft assessment order before the Dispute Resolution Panel ( DRP ).
The DRP rejected the assessee’s objection because Form 35A was signed by the AR instead of the assessee. The DRP noted that under Section 288, an Authorized Representative could not be considered an agent as defined in Rule 4 of the Income-tax (Dispute Resolution Panel) Rules, 2009.
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It highlighted that the authorization for Ms. Riya Shah, CA, was issued before the draft order dated 28.09.2021, and she was not a signatory in the later authorization. The DRP concluded that the authorization was unacceptable and noted that the AR did not provide a signed copy of the objection as requested.
The assessee appealed before the tribunal.
The tribunal heard rival submissions and examined the available materials. The assessee filed an objection in Form 35A with relevant annexures within the 30-day period, but it was not signed by the assessee, who was not in India at the time. The DRP rejected the objection without allowing the assessee to rectify the oversight, ruling that the form signed by the Authorized Representative was invalid.
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The appellate tribunal determined that this was a curable defect under Section 292B of the Act, noting that the DRP failed to provide an opportunity for correction.
The bench cited Rajendra Kumar Maneklal Sheth (HUF) vs. CIT, highlighting the authority of appellate bodies to rectify signature irregularities. It also referenced Remfry & Sons vs. CIT, which stated that procedural irregularities should be addressed by allowing the appellant to correct them. Furthermore, Rule 16 of the ITAT Rules permits the memorandum of appeal to be signed by an AR with appropriate authorization.
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The two member bench comprising T.R Senthil Kumar (Judicial Member) and Annapurna Gupta (Accountant Member) in light of the principles of natural justice, set aside the DRP’s order and directed it to reconsider the objection filed by the assessee, ensuring a fair opportunity for hearing.
In conclusion the appeal was allowed for statistical purposes.
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