The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) remanded the case of the assessee to the Assessing Officer ( AO ) for reassessment of the capital gain, highlighting the failure to consider additional evidence.
Maha Gujarat Silk Section,appellant-assessee, was a partnership firm engaged in the business of trading and retailing sarees. For the Assessment Year 2014-15, the firm had failed to file its return of income. The case was reopened by the AO under Section 147 of the Income Tax Act, based on information that the firm had sold an immovable property for Rs.33,50,000/- in March 2014.
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Despite multiple notices issued under Sections 148 and 142(1), the assessee did not respond, leading the AO to complete the assessment ex-parte under Section 144 and treat the entire sale consideration as unexplained income.
The assessee appealed against the AO’s decision, claiming that the entire sale consideration was incorrectly treated as income without considering the indexed cost of acquisition. The firm argued that there was a capital loss on the sale and submitted supporting documents, including the property purchase and sale agreements and a computation of income, to justify the claim. However, the Commissioner of Income Tax (Appeals) [CIT(A)] dismissed the appeal ex-parte, citing the non-compliance of the assessee with the notices and failing to consider the additional evidence.
The assessee then approached the tribunal, contending that the notices issued by the CIT(A) were directed to the email address of the previous tax consultant, who had failed to inform the assessee. Furthermore, the assessee highlighted exceptional circumstances, including the death of one of the partners during the COVID-19 pandemic and health issues faced by another partner, which had hindered their ability to comply with the notices.
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The tribunal found that the CIT(A) had erred by not considering the additional documentary evidence provided by the assessee and by not giving adequate opportunity for the assessee to present its case.
The two member bench comprising Suchitra Kamble ( Judicial Member ) and Makarand V. Mahadeokar ( Accountant Member ) remanded the matter back to the AO for fresh adjudication, directing the AO to evaluate the evidence and re-assess the capital gain, considering the indexed cost of acquisition.
In conclusion, the appeal was allowed for statistical purposes.
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