Provisions under Section 249(4)(b) of the Income Tax Act

This case concerns an appeal regarding capital gains from a property development agreement. The Income Tax Officer reopened the assessment as the assessee had not declared capital gains. The CIT(A) dismissed the assessee's appeal, stating it was inadmissible under Section 249(4)(b) of the Income Tax Act because the assessee had not filed a return or paid advance tax. The assessee argued that no tax was payable, thus Section 249(4)(b) did not apply.

IN THE INCOME TAX APPELLATE TRIBUNAL
 Hyderabad ‘ A ‘ Bench, Hyderabad
(Through Video Conferencing)

Before Smt. P. Madhavi Devi, Judicial Member
AND
Shri A. Mohan Alankamony, Accountant Member

ITA No.159/Hyd/2019
Assessment Year: 2010-11

Late Smt. Rafat Ghani
(Rep.by L/R Smt.Farheen
Ghani,Hyderabad
PAN:ATHPG4766H
(Appellant) 

Vs. 

Asstt. Commissioner of
Income Tax, Circle 7(1)
Hyderabad
(Respondent)

Assessee by: Sri S.Rama Rao
Revenue by: Sri Subramanyam Tota,DR

Date of hearing: 15/06/2021
Date of pronouncement: 18/06/2021

 ORDER

Per Smt. P. Madhavi Devi, J.M.

This is assessee’s appeal for the A.Y 2010-11 against the order of the CIT (A)-3, Hyderabad, dated 19.11.2018. It is noticed that the assessee has expired on 18.01.2020 and her legal heir has been brought on record.

2. Brief facts of the case are that the assessee individual had entered into a development agreement with one Shri Syed Aqil Faiq to develop the property of the assessee situated at Red Hills, Hyderabad for construction of a complex consisting of residential flats. She agreed to relinquish the rights of ownership over 50% of the built-up area in favour of the developer in exchange for developing the property of the assessee at the cost  and expenses of the developer. The agreement was entered into vide registered sale deed No.128/2010 on 29.12.2009 wherein the SRO value of the developed property was determined at Rs.1,15,47,000/- on which stamp duty was paid.

3. Since this information was received by the Assessing Officer and it was found that the assessee has not filed any return of income for the relevant A.Y declaring capital gains on the consideration received towards her share (50%) as per the joint development agreement, the Assessing Officer reopened the assessment and after examining the assessee’s contention about the exemption u/s 54F of the Act, the Assessing Officer held that since the assessee has not filed her return of income for the relevant A.Y and has not claimed the exemption u/s 54F of the Act, the same is not allowable to the assessee. He accordingly computed the long term capital gain of Rs.56,62,800/- and brought it to tax.

4. Aggrieved, the assessee preferred an appeal before the CIT (A). The CIT (A) observed that the assessee has not filed the return of income nor has given any reason as to why the assessee did not file the ROI and has not paid the advance tax payable by the assessee as is required to admit an appeal under the provisions of section 249(4)(b) of the Act. Therefore, he held that the appeal of the assessee is not admissible and dismissed it in limini. Aggrieved, the assessee is in appeal before the Tribunal by raising the following grounds of appeal:

“1. The order of the learned Commissioner of Income-Tax (Appeals) is erroneous both on facts and in law.

2. The learned Commissioner of Income-Tax (Appeals) erred in holding that the appeal filed by the appellant is not maintainable. The learned Commissioner of Income-Ta x (Appeals) ought to have seen that according to the appellant no tax is payable by him and that, therefore, no advance tax liability arises and in view of the same, the provisions contained in Sec.249(4)(b) have no application.

3. The learned Commissioner of Income-Tax (Appeals) erred in holding that the appellant is liable to pay any advance tax and that there was failure as mentioned in Sec.249(4)(b) of the LT. Act. As an alternate the learned Commissioner of Income-Tax (Appeals) ought to have provided property opportunity 

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