Facts of the Case

The assessee’s case was selected for limited scrutiny under the e-Assessment Scheme, 2019 regarding investment in immovable property purchased below stamp duty value. The assessee had acquired three agricultural land properties during FY 2017-18 and submitted purchase deeds stating that the consideration reflected arm’s-length value supported by a registered valuer.

The Assessing Officer observed a difference of ₹82,07,980 between the purchase consideration and stamp duty value. As the valuer’s report was not furnished despite notices, the amount was added under section 56(2)(x).

The CIT(A), NFAC dismissed the appeal in limine for non-prosecution without adjudicating the grounds on merits.

Issues Involved

  1. Whether appeal can be dismissed for non-prosecution without deciding legal grounds raised by the assessee.
  2. Whether agricultural land situated beyond municipal limits constitutes a “capital asset” for purposes of taxation.
  3. Whether addition under section 56(2)(x) is valid without reference to the Departmental Valuation Officer (DVO) when stamp value is disputed.
  4. Whether non-service of statutory notices affects validity of assessment.

Petitioner’s Arguments

The assessee submitted that he was 85 years old, minimally educated, and had entrusted the appeal proceedings to his counsel, who unfortunately died during the pendency of the appeal. Due to this unforeseen circumstance and inability to access electronic communications, the case could not be represented before the CIT(A).

It was further argued that the land purchased was agricultural land located 28 kilometers from municipal limits and therefore not a capital asset under section 2(14). Consequently, provisions of section 56(2)(x) were inapplicable.

The assessee also contended that objections to stamp duty valuation required reference to the DVO under statutory provisions and that notice under section 143(2) had not been served.

 Respondent’s Arguments

The Revenue acknowledged that the assessee’s counsel had died during appellate proceedings and did not object to restoration of the matter, subject to directions for proper compliance by the assessee in future proceedings.

Court Order / Findings (ITAT Allahabad)

The Tribunal observed that the assessee was genuinely handicapped in prosecuting the appeal due to the demise of his counsel and his advanced age. It further noted that several legal issues had been raised which could have been decided on the basis of available records even in the absence of representation.

The summary dismissal of the appeal without adjudicating these issues was held to be contrary to the principles of natural justice. Accordingly, the Tribunal restored the matter to the file of the CIT(A) for fresh decision on merits after providing adequate opportunity to the assessee.

 Important Clarification

The Tribunal emphasized that appellate authorities are obligated to decide appeals on merits, especially when legal grounds are raised. Procedural defaults or absence of representation cannot justify dismissal without examination of issues affecting tax liability.

Link to download the order -  https://www.mytaxexpert.co.in/uploads/1771064959_RAJMANAMBEDKARNAGARVS.ITOWARD3AMBEDKARNAGARAMBEDKARNAGAR.pdf

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