ITAT: AO Must Properly Examine Before Confirming Capital Gains Addition

ITAT ruled in favour of the assessee after observing that CIT(A) failed to properly examine the actual sale consideration of an immovable property. While condoning the delay in appeal, the tribunal set aside the addition.

The present appeal has been filed by Shri Mukesh Kumar (Appellant) against the I.T.O. (Respondent) in the Income Tax Appellate Tribunal (ITAT) “E” Bench, Delhi, before Shri Challa Nagendra (Judicial Member) and Shri Naveen Chandra (Accountant Member). The case is related to the assessment year 2015-16 and was decided on December 12, 2025. The appeal is filed against the order dated March 21, 2025, passed by the CIT(A).

The assessee filed an appeal before the CIT(A), which did not examine the facts and confirmed the addition of Rs 1,24,00,000 as a short-term capital gain on the sale of immovable property along with interest of Rs 19,828.

The assessee further added that the CIT(A) dismissed his appeal without giving him a proper opportunity to present his case. So, he approached the tribunal.

However, during the hearing, no one appeared on behalf of the assessee. The tribunal then decided to proceed with the assistance of the DR.

The DR pointed out that the CIT(A) rejected the assessee’s appeal because it was filed late. The tribunal said the assessee had explained the reasons for the delay in an application, and those reasons appear to be reasonable and believable. So, it condoned the delay.

The Tribunal heard the DR and observed one issue that related to the sale of an immovable property. However, the assessee claimed that the property was sold for only Rs 62 lakh. According to the assessee, this was the actual amount received, and no additional money was paid or received in the transaction.

The Tribunal observed that the aspect of whether the assessee actually received Rs 62 lakh or Rs 1,24,00,000 was not properly examined by either the Assessing Officer or the CIT(A).

Considering the overall case, the tribunal set aside the issue of the determination of capital gains arising to the assessee and directed the AO to examine the facts of the case. The tribunal also directed the assessee to report all documents as required by the AO.