AJAY KUMAR,GHAZIABAD V. ACIT,CIRCLE-1, DELHI

ITA 1400/DEL/2025

AI Insights

The case involves Ajay Kumar, the appellant, who contested the orders of the Assistant Commissioner of Income Tax and the Commissioner of Income Tax (Appeals) regarding the assessment year 2015-16. The primary contention was the violation of natural justice as both the AO and CIT(A) passed ex parte orders without allowing the appellant a fair opportunity to present his case. The appellant argued that his inability to contest was due to the takeover of his financial records by the Insolvency Resolution Professional under the IBC proceedings and his incarceration during the CIT(A)'s proceedings. Additionally, the appellant challenged the AO's addition of liabilities as unexplained under Section 68 of the Income-tax Act, 1961, claiming they were genuine business obligations supported by documentary evidence. The Tribunal found merit in the appellant's contention of not being given a fair hearing and thus allowed the appeal for statistical purposes, remanding the case back to the AO for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775968 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 07-03-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH
• Assessee Lawyers: VICKY KAPOOR
• Keywords: Principle of natural justice; FORM 26AS
• Section: 68

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C”, DELHI BEFORE SH. SUDHIR KUMAR, JUDICIAL MEMBER AND SH. MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.1400/DEL/2025 Assessment Year: 2015-16 Ajay Kumar S/o Shri K.P. Singh R/o A-302 Amarpali Apartment , Sector -3 Vashali Ghaziabad 201001 PAN No.AHNPK3721A Vs. Assistant Commissioner Of Income Tax Circle 1 New Delhi (APPELLANT) (RESPONDENT) Appellant by Sh. Vicky Kapoor, AR Respondent by Sh. Om Prakash, Sr. DR Date of hearing: 21/08/2025 Date of Pronouncement: 10/09/2025 ORDER PER SUDHIR KUMAR, JUDICIAL MEMBER: This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-23 New Delhi [hereinafter referred to as “CIT(A)”] vide order dated 18.05.2022 pertaining to A.Y. 2015-6 arising out the assessment order dated 15.12.2017 u/s.143(3) of the Income-tax Act, 1961, (in short ‘the Act’). Printed from counselvise.com 2 2. The assessee has raised following grounds of appeal :- The appellant disputes the addition made by the AO and sustained by CIT(A) on the following grounds: 1. Violation of Natural Justice - Ex Parte Orders Both the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] passed ex parte orders without affording the appellant a fair opportunity to present his case. The appellant's non-contestation before the AO was solely due to the inability to access to financial records, which had been taken over by the Insolvency Resolution Professional (IRP) as part of the IBC proceedings. Additionally, the financial turmoil of the Amrapali Group. and multiple legal proceedings further hindered his ability to participate in the assessment process. Subsequently, the CIT(A) also passed an ex parte order while the appellant was incarcerated, making it impossible for him to attend the proceedings. The principles of natural justice mandate that the appellant be granted a reasonable opportunity to present the necessary documentary evidence, which he was previously unable to furnish due to circumstances beyond his control. 2. Incorrect Assumption by AO - Addition of Liabilities as Unexplained. The Assessing Officer (AO) wrongly assumed that the increase in liabilities was unexplained and made an addition under Section 68 of the Income-tax Act, 1961, without conducting proper verification. Printed from counselvise.com 3 In reality, the liabilities were genuine business obligations, including service tax payable and loans, duly recorded in the audited balance sheet. These were supported by documentary evidence, including corresponding entries in the books of the creditors. The AO made the addition without conducting any independent inquiry into the nature of liabilities, despite the appellant providing all relevant financial documents, including the ITR, Computation of Income, Audited Balance Sheet, Profit and Loss Account, Tax Audit Report under Section 44AB, and Form 26AS. 3. Non-Consideration of Supreme Court Orders and Forensic Audit Findings i) The order of the Ld. AO treating the liabilities as unexplained and the CIT(A) sustaining the addition is erroneous, as it fails to consider the Supreme Court orders and the findings of the forensic audit. ii) The forensic audit conducted under the directions of the Hon'ble Supreme Court scrutinized all financial transactions of the appellant and the Amrapali Group and confirmed all the liabilities and thus cannot be unexplained u/s 68. The impugned addition is contrary to these critical findings. Therefore, the addition is unjustified and deserves to be deleted. 6. The appellant reserves the right to raise additional grounds and seeks leave to amend or add further grounds of appeal before or during the hearing. Printed from counselvise.com 4 3. The appeal is time barred by 950 days. In the application the assessee stated that the appeal should have filed within 60 days but filed 961 days of delay. He further stated that assessee was judicial custody in Central Jail No.11 Mandoli and certificate in this regard was filed by the ld. AR. He also submitted that the assessee has no knowledge of the impugned order. The assessee has no occasion to appear before the lower authorities. He also submitted that the records were seized by the investigating agency. In the support of the application the assessee has filed an affidavit and other documents. The assessee has shown sufficient cause not to file the appeal within the prescribed time limit and explained the cause of delay. We find merit of the contention of the assessee, and condoned the delay in filing the appeal and admit the appeal for adjudication on merits. 4. The brief facts of the case are that he assessee filed its return of income on 31-03-2016 by declaring income of Rs. 2,02,23,030/-. The case was manually selected for scrutiny and notice u/s 143(2) of the Act dated 15-09-2016 was issued to the assessee. The assessee partly complied the notice and furnished some documents. The Ld. Assessing Officer completed the assessment after making the addition of Rs. 1,25,65,090/-. Aggrieved the order of the ld. AO the assessee preferred the appeal before the Ld. CIT(A) who vide Printed from counselvise.com 5 his order dated 18-05-2022 partly allowed the appeal. Being aggrieved the order of the Ld. CIT(A) the assessee is in appeal before the Tribunal. 5. ld. AR of the assessee submitted that the lower authorities passed the exparte orders. He also submitted that the opportunity of the being heard be provided to the assessee. Learned authorized representative for Department of Revenue submitted that departmental authorities have passed reasoned orders. He also submitted that the assessee has taken part in the assessment proceedings but not submitted his submission before the Ld. CIT(A). 6. We have heard the parties and perused the material available on record. It is an admitted fact that despite opportunities granted by Ld. CIT(A) and the AO the assessee filed his partly submissions before the AO but he did not file the submission before the Ld. CIT(A), for which the AO completed the assessment exparte and the appeal was also partly allowed in non-compliance by the Ld. CIT(A). 7. Since in the instant case both the lower authorities passed the exparte order. The Ld. CIT(A) has dismissed the appeal in non-compliance. Therefore, considering the totality of the facts and circumstances of the case and in the interest of justice, we deem it proper to restore the issue Printed from counselvise.com 6 to the file of the Assessing officer with a direction to grant one final opportunity to the assessee to substantive its claim and decide the issue as per fact and law. The assessee is also directed to appear before the Ld. Assessing Officer and co-operate in the proceedings. The grounds raised by the assessee are accordingly allowed for statistical purposes. 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court 10.09.2025. Sd/- Sd/- (MANISH AGARWAL) ( SUDHIR KUMAR) ACCOUNTANT MEMBER (JUDICIAL MEMBER) Neha, Sr. PS Date: 10.09.2025 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) ` 5. DR: ITAT ASSISTANT REGISTRAR ITAT DELHI Printed from counselvise.com "