AHMED LAKADIA,AHMEDABAD V. THE ITO, WARD-5(3)(1), AHMEDABAD

ITA 498/AHD/2025

AI Insights

The case involves Ahmed Lakadia, the appellant, who appealed against the order of the Commissioner of Income Tax (Appeals), which confirmed the addition of Rs. 2,88,35,888 as bogus long-term capital gains (LTCG) claimed exempt under Section 10(38) of the Income Tax Act, 1961. The Income Tax Officer (ITO) had initially disallowed this exemption, treating it as bogus LTCG from investments in penny stocks, and added the amount under Section 68 of the Act. The CIT(A) dismissed the appeal due to non-compliance and non-appearance of the appellant, despite multiple notices. The appellant's counsel argued that the non-appearance was due to the deaths of three close relatives, supported by death certificates. Both parties agreed to a de-novo consideration of the case by the Assessing Officer.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772249 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2016-2017
• Other Referred Cases: M/s. Kanchan Singh Bhuli Devi Shiksha vs CIT-1, M/s Shamsher Jang Banadur vs ACIT, CC-1, Jalandhar
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT
• Assessee Lawyers: VARIS ISANI; ADOVCATE
• Keywords: Set aside; Opportunity of being heard; Capital Gains; Principle of natural justice; Earning of tax free income; Bogus
• Section: 147; 144; 142(1); 271(1)(c); 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER I.T.A. No.498/Ahd/2025 (Assessment Year: 2016-17) Ahmed Lakadia, 2, Chitrakut Society, Opp. Anand Ashram, Nr. Rajnagar Society, Paldi, Ahmedabad-380007 Vs. Income Tax Officer, Ward-5(3)(1), Ahmedabad [PAN No.ABAPL6446N] (Appellant) .. (Respondent) Appellant by : Shri Varis Isani, Adovcate Respondent by: Shri Abhijit, Sr. DR Date of Hearing 26.08.2025 Date of Pronouncement 27.08.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 07.02.2024 passed for A.Y. 2016-17. 2. The assessee has taken the following grounds of appeal: “1. The Lrd. Commissioner of Income Tax (E-Appeals) (for short \"Appellate Authority\") has erred in law in passing the appeal order whereby he has confirmed order passed by the Income Tax Officer, NFAC(Assessment)-Delhi. The appellate authority has dismissed the appeal without giving proper opportunity of being heard to the appellant. Hence the same being against the principle of natural justice and law required to be quashed. 2. The Lrd. Commissioner of Income Tax (E-Appeals) has erred in law in passing the appeal order confirming the action of Income Tax Officer, NFAC (Assessment)-Delhi, whereby confirmed the addition of Rs. 2,88,35,888/- as bogus LTCG claimed exempt u/s.10(38) and is accordingly added u/s. 68 of the Income Tax Act, 1961. Printed from counselvise.com ITA No. 498/Ahd/2025 Ahmed Lakadia vs. ITO Asst. Year –2016-17 - 2– 3. The Lrd. Commissioner of Income Tax (E-Appeals) (Hereinafter referred to as \"Assessing Officer\") has confirmed the action of Income Tax Officer, NFAC(Assessment)- Delhi who has passed the assessment order u/s. 147 r.w.s.144r.w.s.144(B) of the Income Tax Act for A.Y. 2016-17 on 28/09/2022. In the assessment order the Lrd. Assessing Officer has raised huge demand of Rs.2,88,35,888/-. The entire assessment order passed by the assessing officer is hi-pitch assessment order deserves to be quashed and set aside. 4. The Lrd. Appellant Authority has erred in law is confirming addition made u/s. 68 of the IT Act without having any material facts, documents and evidences to substantiate finding of the Appellant Authority that transactions are not genuine. The Lrd. Appellant Authority has erred in law in considering the transactions of LTCG as non-genuine where all the documents and evidences where submitted. Hence, order passed by the Lrd. First Appellant Authority deserves to be quashed and set-aside. 5. The Lrd. Appellant Authority has erred in law in confirming the addition made u/s. 68 of the IT Act considerate unexplained money. The action of the appellant authority is highly unjustifiable and unlawful. 6. The Lrd. Appellant Authority has erred in law in confirming re-opening of the assessment u/s. 147 r.w.s. 144B of the Income Tax Act. 7. The Lrd. A.O has erred in reopening the Assessment u/s.147 r.w.s. 144 of the Income Tax Act. 8. The Lrd. Assessing Authority (NFAC) has on facts and on law grievously erred in making addition of Rs. 2,88,35,888/- u/s. 68 of the Income Tax Act by applying provision of section 115BBE of the Income Tax Act. 9. The Lrd. Assessing Authority (NFAC)Assessment has grievously erred in law and on facts in making addition in the case of the appellant taking recourse of section 68 of the Income Tax Act whereas addition was made u/s. 68 of the Income Tax Act. The Lrd. Assessing Authority has totally overlooked the reply submitted in compliance of notice u/s. 142(1) of the Income Tax Act. Therefore, addition made is highly unjustifiable and unlawful. 10. The Lrd. Appellant Authority has erred in charging interest on consequential demand raised in the assessment order. 11. The Lrd. Assessing Authority has grievously erred in law in initiating penalty proceedings u/s. 271(1)(C) and 271(1)(b) of the Income Tax Act without there being any element of concealment of income. 12. The Lrd. Assessing Authority has grievously erred in law while passing the order without providing proper and statutory time period to submit the documents reply and proper opportunity of being heard. Hence, the entire proceedings may please be considered as in gross violation of principle of natural justice. 13. The Lrd. Assessing Authority has grievously erred in law while issuing notice for reopening of the assessment as there is no income escaping assessment therefore, notice issued u/s. 142(1) of the Income Tax Act is unwarranted and unjustifiable. Printed from counselvise.com ITA No. 498/Ahd/2025 Ahmed Lakadia vs. ITO Asst. Year –2016-17 - 3– 14. The appellant craves leave to add, alter or amend any of the grounds of appeal either before or at the time of hearing of the appeal.” 3. At the outset, we observe that there is a delay of 309 days in filing of the present appeal. The Counsel for the assessee had filed an Affidavit before us and submitted that during the last three years the assessee had lost his mother, his younger brother (who was operated for cancer) and also his paternal Uncle. It was for these reasons that there was a delay of approximately 13 months in filing of the present appeal before ITAT. Accordingly, in light of the circumstances highlighted by the assessee, we are hereby inclined to condone the delay in filing of the present appeal before us and admit the case for hearing on merits. On Merits: 4. The assessee had filed return of income for the impugned assessment year declaring total income of Rs. 13,01,460/- and claiming exempt income of Rs. 2,87,06,255/-. On verification of information, the Assessing Officer observed that the assessee is a beneficiary of bogus long term gain on which the assessee had claimed exemption under Section 10(38) of the Act. Accordingly, the re- assessment proceedings under Section 147 of the Act were conducted upon the assessee. During the course of re-assessment proceedings, various notices of hearing were issued to the assessee, but there was no compliance on the part of the assessee. Accordingly, the Assessing Officer passed assessment order on ex-parte basis and disallowed the exemption claimed under Section 10(38) of the Act, by treating the same as bogus Long Term Capital Gains from investment in penny stock. Accordingly, a sum of Rs. 2,88,35,888/- was disallowed and added to the income of the assessee under Section 68 of the Act. Printed from counselvise.com ITA No. 498/Ahd/2025 Ahmed Lakadia vs. ITO Asst. Year –2016-17 - 4– 5. In appeal, Ld. CIT(A) observed that despite issuance of several notices of hearing, there was no compliance on the part of the assessee. Accordingly, Ld. CIT(A) dismissed the appeal of the assessee on account of non-appearance with the following observations: “6. During the appellate proceedings, the appellant has only submitted 'Statement of Facts'. After that neither he has replied to hearing notices nor submitted any documentary evidence/information to prove his side. Sufficient and adequate opportunities were afforded to the appellant as indicated in table at page no 3. No reply whatsoever has been submitted by the appellant. 6.1 From the above sequence of event, it can be seen that assesse has not replied to any of the notices issued on various occasion although notices have been duly served on the E Mail id provided. As the appellant has not availed any of the opportunities allowed to him to represent the case, I am of the opinion that the appellant is not interested in pursuing his appeal matter and has to say nothing in the matter in addition to grounds of appeal taken by him. So, the appeal filed by the appellant is being disposed of ex-parte on the basis of the material available on records without allowing any further opportunity of being heard to the appellant. The maxim 'vigilantibus non-dermientibus jura subvenunt\" i.e. \"the law assist those who are vigilant and not those who sleep over their rights\" is applicable in this case. ….. 6.8 A similar view has been expressed by the Hon'ble ITAT \"B\" Bench, Lucknow in the case of M/s. Kanchan Singh Bhuli Devi Shiksha vs CIT-1 in ITA No. 706 & 707 (LKW)/2010 in its order dated 12-01-2012 and by the Hon'ble ITAT, Amritsar in its order dated 21-06-2011 in ITA No. 488(Asr)/2010 in the case of M/s Shamsher Jang Banadur vs ACIT, CC-1, Jalandhar that the appeal is to be dismissed for want of prosecution. It can be safely presumed that the appellant is not interested in pursuing his appeal. Therefore, the undersigned sees no reason to interfere with the orders of the Assessing Officer. Thus, the appeal raised by the appellant is dismissed.” 6. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A) dismissing the appeal of the assessee. The Counsel for the assessee submitted that the assessee could not appear before Ld. CIT(A) on account of death of three of his close family members, being her mother, his brother and also paternal uncle. The copy of death certificates of the relatives have also been placed on record before us. Accordingly, the Counsel for the assessee submitted that the assessee was prevented by genuine reasons for not being able to appear Printed from counselvise.com ITA No. 498/Ahd/2025 Ahmed Lakadia vs. ITO Asst. Year –2016-17 - 5– before the Tax Authorities at the relevant time. The Counsel for the assessee submitted that in view of the substantial additions amounting to Rs. 2.80 crores in the hands of the assessee and in view of the circumstances which prevented the assessee to cause appearance and furnish necessary documentation in support of his case, the matter may be restored to the file of Ld. Assessing Officer for de-novo consideration, in the interest of justice. 7. In response, Ld. DR also did not object to the matter being restored to the file of Assessing Officer for de-novo consideration, in the interest of justice. 8. In view of the quantum of additions made in the hands of the assessee amounting to Rs. 2.88 crores approximately and the circumstances highlighted by the Counsel for the assessee, which prevented the assessee to cause appearance before Tax Authorities, we are hereby inclined to restore the matter to the file of Assessing Officer for de-novo consideration, in the interest of justice. 9. In the result the appeal of the assessee is allowed for statistical purposes. This Order is pronounced in the Open Court on 27/08/2025 Sd/- Sd/- (NARENDRA P. SINHA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 27/08/2025 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad Printed from counselvise.com "