The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) directed the assessing officer (AO) to reassess the appellant’s case, a dispute on capital gains taxation for the assessment year(AY) 2016-17.
The appellant, Badri Narayanan, had filed his income tax return for the AY 2016-17 in March of 2018, declaring a total income of ₹4.3 Lakhs. This return was processed under Section 143(1) of the Income Tax Act. It was noted by the authority that the assessee had sold a property for an amount of ₹5.52 Crore, which led to the reassessment of the assessee’s account under Section 148.
As a reply to the reassessment notice under Section 148, the assessee filed a revised return, declaring a lower income of ₹80,99,0 and claiming deductions on the Indexed cost of improvement, index cost of acquisitions, and deductions under Section 54 of the Income Tax Act. The AO rejected his claims and taxed the entire sale consideration under capital gains, increasing the assessee’s income to ₹1.8 Cr.
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Aggrieved by the said order, the assessee appealed before the Commissioner of Income Tax (Appeals) [CIT(A)], submitting fresh evidence to support his claims. The CIT(A) called for a remand report from AO, and no reply was submitted to that remand report. On this ground, the CIT(A) dismissed the appeal raised by the assessee and upheld the AO’s order.
Aggrieved by the CIT(A)’s order, the assessee filed an appeal to the tribunal, where the An authorised representative of the assessee submitted that the hearing notices during the assessment proceedings were sent to the e-mail ID of the tax practitioner and that they were not brought to the assessee’s notice. The AR asserted that e-mail communication was ineffective and was in the interest of justice. The departmental representative, however, claimed the orders pronounced by the AO and CIT(A)
ITAT observed that the assessee failed to respond to multiple notices sent by the AO and the CIT(A), to which the assessee contended that he had not received proper communication from his tax professional regarding the notices. The ITAT asserted that the nonchalant attitude of the assessee in not responding to various notices issued from the office of tax authorities is not to be appreciated. The tribunal observed that as the gross sale price has been brought to tax as capital gains, the assessee is to be given a last opportunity where the matter is to be reassessed by the AO.
The ITAT bench consisting of Jagdish (Accountant Member) and George George K (Vice President) set aside the CIT(A)’s order. It remanded the case back to the AO for a fresh examination. As a result, the appeal filed by the assessee was allowed.
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