CHANDA ARORA,NEW DELHI V. ITO WARD 35(5), DELHI

ITA 5123/DEL/2025

AI Insights

The case involves Chandan Arora, the appellant, who appealed against the penalty imposed by the Income Tax Officer, which was confirmed by the CIT(A). The penalty was based on the appellant's failure to respond to notices regarding discrepancies in reported income and unaccounted transactions. The Tribunal found that the CIT(A) had not provided an effective hearing as required by law, leading to the decision to set aside the penalty and remand the case for a fresh hearing.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 847976 (ITAT-NEW DELHI)
• Duration Of Justice: 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Delhi
• Assessment Year: 2018-2019
• Appeal Filed On: 22-08-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANKUSH KALRA
• Keywords: Set aside; Reasonable cause; Bogus purchase; Principle of natural justice; Bogus
• Section: 147; 148; 69C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHIBENCH ‘E’, NEW DELHI Before Sh. Raj Kumar Chauhan, Judicial Member & Sh. Brajesh Kumar Singh, Accountant Member ITA No. 5123/Del/2025 :Asstt. Year: 2018-19 Chandan Arora, 1/778, Nicholsan Road, Kashmiri Gate, New Delhi-110001 Vs Income Tax Officer, Ward-35(5), New Delhi-110002 (APPELLANT) (RESPONDENT) PAN No. ACSPA9256A Assessee by: None Revenue by: Ms. Ankush Kalra, Sr. DR Date of Hearing: 24.03.2026 Date of Pronouncement: 24.03.2026 ORDER Per Raj Kumar Chauhan, Judicial Member: The appeal is directed against the order dated 19.06.2025 of Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Chennai [hereinafter referred to as the “CIT(A)/NFAC”], passed u/s 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] wherein the penalty imposed vide order dated 23.09.2024 was confirmed on the ground that the assessee/appellant has failed to file any response to the notice issued by the ld. CIT(A). 2. Facts in brief are that the assessee filed the return of income for A.Y. 2018-19 on 12.09.2018 declaring total income of Rs.54,82,410/-. As per information with the department, the Printed from counselvise.com ITA No. 5123/Del/2025 Chanda Arora 2 assessee during the financial year 2017-18 relevant to A.Y. 2018-19 has entered into following transaction as below: Sr. No Information Description Amount (in Rs.) 1. Amount reflected in the remittance data (bill IDs) obtained from J&K Bank, is not tallied with bank statement. 4,52,67,946/- 2. Cash deposit 17,62,828/- 3. Bogus purchases from Gagandeep Sing Prop, of M/s. D M Trade Impex 1,08,34,800/- 4. Unaccounted cash purchases 38,52,788/- Total 6,17,18,362/- 3. Accordingly, the provisions of section 147 of the Act were invoked and the case was reopened u/s 147 of the Act by issuing a notice u/s 148 of the Act dated 04.07.2022 after taking necessary approval. The assessment was completed vide order dated 13.03.2024 u/s 147 r.w.s. 114B wherein various additions u/s 69A r.w.s. 115BBE of the Act and u/s 69C r.w.s. 115BBE of the Act were made and total assessed income was arrived at Rs.2,19,32,826/-. Thereafter the penalty proceedings were initiated and various opportunities were given to the assessee/appellant who has failed to make any representation/file any documents and accordingly the penalty proceedings u/s 270AAC(1) of the Act was passed imposing the penalty @10% of the addition made. 4. Aggrieved by the penalty order, the assessee has filed appeal before the ld. CIT(A) who has dismissed the same ex- parte by observing in para 5.1 and 5.6 as under: Printed from counselvise.com ITA No. 5123/Del/2025 Chanda Arora 3 “5.1 During the appellate proceedings, the appellant submitted a request seeking to keep the penalty proceedings in abeyance citing pendency of the quantum appeal. However, the record reveals that the earlier quantum appeal was dismissed by the CIT(A) due to delay. Hence no detailed reply on the merits of the penalty has been furnished. However, in the interest of justice support is taken from the statement of facts and grounds of appeal. .................... .................... 5.6 In the present case, the assessee neither declared such income in the ITR, nor substantiated the source during assessment or penalty proceedings. The assessee failed to respond to the penalty SCNs, and has not offered any reasonable cause for non-compliance, either during assessment or appeal. The repeated non-response reflects indifference and fails the threshold for invoking judicial leniency. Hence, the penalty of Rs. 9,87,025/- levied under Section 271AAC(1) is legally and factually justified. Ground No. 1 to 4 are dismissed.” 5. Aggrieved by the impugned appellate ex-parte order, the assesse is in appeal before us. 6. None appeared on behalf of the assessee. We have heard the learned DR who had supported the judgment of the ld. CIT(A) stating that the assessee has miserably failed to file response before the ld. CIT(A) in pursuance to the notice issued hence prayed for dismissal of the appeal. 7. We have considered the rival submissions and examined the record. It is evident from the above extracts of the impugned order that the effective opportunities of hearing has not been given by the ld. CIT(A) before confirming the penalty order. Section 250(2)(a) lays down as under: “250(2) The following shall have the right to be heard at the hearing of the appeal- Printed from counselvise.com ITA No. 5123/Del/2025 Chanda Arora 4 (a) the appellant, either in person or by an authorized representative;” 8. Thus, the hearing mandated by Section 250(2)(a) of the Act is not a mere formality but a mandatory statutory requirement for following the principle of natural justice by the quasi-judicial authority. 9. In view of the above facts and circumstances, it is evident that the impugned order has been passed without effective hearing and principle of natural justice has not been followed. For these reasons, the impugned order is not maintainable and accordingly set aside. The end of justice shall be met in case the matter is restored to the file of the Ld. CIT(A) for deciding the issue afresh by affording an effective opportunity of hearing and considering the submissions to be made by the appellant/assessee. The assessee/appellant is also directed to make the necessary submissions/ detailed material before the Ld. CIT(A) within the period of 60 days of this order. 10. In the result, the appeal of the assessee is allowed for statistical purposes. Order Pronounced in the Open Court on 24/03/2026. Sd/- Sd/- (Brajesh Kumar Singh) (Raj Kumar Chauhan) Accountant Member Judicial Member Dated: 30/03/2026 *Subodh Kumar, Sr. PS* Printed from counselvise.com "