Non Examination of Documents and Evidences by AO: ITAT holds Violation of Natural Justice Principles [Read Order]

Income Tax Appellate Tribunal (ITAT), Surat bench consisting of Pawan Singh, Judicial Member and A L Saini, Accountant Member held that there is violation of natural justice principles on non-examination of documents and evidences by the Assessing Officer (AO).

The assessee, Sejalbhai G. Patelis an Individual. During the assessment year under consideration, the assessee with other co-owner sold property being agricultural landfor declared consideration of Rs.1,39,50,000/-. Assessee was having 50% share in the said property. The assessee has never challenged this valuation, the value adopted u/s 50C of the Act and the cost of construction while computing the Long-Term Capital Gain before the Assessing Officer.

Thereafter, the Assessing Officer denied the exemption claimed by the assessee u/s 54B of the Act and u/s 54F of the Act. Therefore, aggrieved by the order of the Assessing Officer (being denial of exemption u/s 54B of the Act and u/s 54F of the Act), the assessee carried the mater in appeal before the CIT who has confirmed the action of the Assessing Officer. Aggrieved, the assessee filed an appeal before the Tribunal.

The Counsel for the assessee, Sapneth Sheth contended that the documents and evidences for claim of exemption u/s 54B and 54F has not examined by the AO. The Counsel for the Revenue, J. K. Chandnani primarily reiterated the stand taken by the Assessing Officer.

The Tribunal observed that “The assessee has furnished the relevant documents and evidences to claim exemption under section 54B and 54F of the Act, however, the same have not been examined by the assessing officer, in right perspective, therefore we are of the view that assessee should be given one more opportunity to plead its case before the assessing officer. We note that it is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore, we deem it fit and proper to set aside the order of the CIT(A) and remit the matter back to the file of the assessing officer to adjudicate the issue afresh on merits.”

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