DURGA PRASADA RAO VATTEM,HYDERABAD V. INCOME TAX OFFICER, WARD-13(3), HYDERABAD

ITA 1412/HYD/2024

AI Insights

The case involves Durga Prasada Rao Vattem, the appellant, who contested an order from the Commissioner of Income Tax (Appeals) regarding the assessment year 2016-17. The Income Tax Officer had re-opened the case under section 147 of the Income Tax Act, alleging that the assessee had booked fictitious profits from transactions in a penny stock, Stampede Capital Ltd, and assessed additional income. The CIT(A) dismissed the appeal ex-parte, stating the assessee was not interested in prosecuting the appeal. The Tribunal found that the CIT(A) had not addressed the merits of the case and had dismissed the appeal without proper consideration of the facts or legal points, thus setting aside the CIT(A)'s order and remanding the case for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 36097 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SM-A
• Assessment Year: 2016-2017
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V. KOTESWARAMMA
• Keywords: Set aside; Opportunity of being heard; Income from undisclosed sources
• Section: 147; 250

Judgement Text

"आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ मɅ IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “SMC-A”, HYDERABAD BEFORE SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER & SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER आ.अपी.सं / ITA No. 1412/Hyd/2024 (Ǔनधा[रण वष[ / Assessment Year:2016-17) Durga Prasada Rao Vattem, Hyderabad. [PAN : ABEPV4295P] Vs. Income Tax Officer, Ward-13(3), Hyderabad. अपीलाथȸ / Appellant Ĥ× यथȸ / Respondent Ǔनधा[ǐरती ɮवारा/Assessee by: None राजè व ɮवारा/Revenue by: Ms. V. Koteswaramma, Sr. AR सुनवाई कȧ तारȣख/Date of hearing: 27/01/2025 घोषणा कȧ तारȣख/Pronouncement on: 03/02/2025 आदेश / ORDER PER K. NARASIMHA CHARY, J.M: Aggrieved by the order dated 23/10/2024 passed by the learned Commissioner of Income Tax (Appeals), NaƟonal Faceless Appeal Centre, Delhi (“learned CIT(A)”), in the case of Durga Prasada Rao VaƩem (“the assessee”), assessee preferred this appeal for the Assessment Year 2016- 17. ITA No. 1412/Hyd/2024 Durga Prasada Rao VaƩem vs. ITO Page 2 of 5 2. Brief facts of the case are that assessee has filed the return of income for the AY 2016-17 on 06/07/2016 admiƫng a total income of Rs. 3,98,110/- which includes the income from ‘salary’ and ‘income from other sources’. As per the informaƟon available with the Department, the learned Assessing Officer observed that during the Assessment Year under consideraƟon, the assessee made certain transacƟons in a scrip namely Stampede Capital Ltd, which was idenƟfied as penny scrip and has booked ficƟƟous profit of Rs. 28,87,708/-. 3. ThereaŌer, the case was re-opened U/s. 147 of the Act and the in reply to the statutory noƟces, the assessee furnished the informaƟon as called for by the learned Assessing Officer from Ɵme to Ɵme. AŌer considering the submissions of the assessee, the learned Assessing Officer observed that though the assessee states that he has purchased the share through demat account, the assessee has not provided proof of purchase of the share and assessee claimed exempƟon on Long Term Capital Gain (“LTCG”) U/s. 10(38) of the Act on which Security TransacƟon Tax (“STT”) was paid. 4. Thus, the learned Assessing Officer was of the opinion that the whole scheme is just a set up to bring unaccounted income in the books by taking the share of tax free LTCG on shares which is not admiƩed in the return of income. Thus, learned Assessing Officer assessed the income of the assessee at Rs. 35,85,818/- and passed the assessment order U/s. 147 read with secƟon 144B of the Act, dated 30/03/2022. While passing the assessment order, the learned AO also iniƟated the penalty proceedings. Aggrieved, assessee preferred an appeal before the learned CIT(A). 5. In appeal, learned CIT(A) passed ex-parte order and dismissed the appeal of the assessee by holding that the assessee is not interested to ITA No. 1412/Hyd/2024 Durga Prasada Rao VaƩem vs. ITO Page 3 of 5 prosecuƟng the appeal. Aggrieved by the order of the learned CIT(A), the assessee is in appeal before the Tribunal. 6. When the maƩer is called, neither the assessee nor any authorised representaƟve entered appearance. It could be seen from the record that the noƟces were issued to the address given in Form No. 36. If the assessee is available in such address, such noƟce should have been served on the assessee. If for any reason, the assessee is not available there, it is for the assessee to make arrangements for service of such noƟce by furnishing the address where the assessee would be available, or to deliver it to some authorised person, or by making request to the postal department to detain the mail Ɵll the assessee claims the same. Non-service of noƟce in this case is solely aƩributable to the conduct of the assessee and except the address given in the Form 36, we do not find any other orders to serve the noƟce. There is no point in issuing noƟce aŌer noƟce to the same address. In these circumstances, we find no opƟon but to proceed to hear the counsel for Revenue and decide the maƩer on merits basing on the material available on record. 7. At the outset, Learned DR brought it to our noƟce that the assessee failed to appear before the learned CIT(A) to get the maƩer disposed of on merits and therefore, the learned CIT(A) had to proceed exparte and dispose of the appeal. 8. On a perusal of record, we find that the learned CIT(A), looking at the absence of the assessee dismissed the appeal in limine without adverƟng to the facts of the case or the points for consideraƟon nor the reasons for reaching the conclusion to dismiss the appeal. 9. Requirement of law under secƟon 250 (6) of the Act is that the order of the Commissioner (Appeals) disposing of the appeal shall be in wriƟng and shall state the points for determinaƟon, the decision thereon and the reason for the decision. Even in the absence of the assessee, it is always open for the learned CIT(A) to deal with the maƩer on merits instead of dismissing the same in limine. In the instant case also, the ITA No. 1412/Hyd/2024 Durga Prasada Rao VaƩem vs. ITO Page 4 of 5 learned CIT(A) could have adverted to the points for determinaƟon and decided the same by assigning cogent reasons. Impugned order is conspicuous for its absence. 10. Having regard to the facts and circumstances of the case, we are of the considered opinion that the impugned orders do not comply with the requirement of SecƟon 250(6) of the Act and cannot be sustained. 11. With this view of the maƩer, we set aside the impugned order and restore the issue to the file of the learned CIT(A) to decide the issue afresh. We direct the assessee to co-operate with the learned CIT(A) in geƫng the maƩer disposed of on merits, without seeking any adjournments and the learned CIT(A) to take a fresh look at the maƩer, aŌer affording a reasonable opportunity of being heard to the assessee. Grounds are accordingly treated as allowed for staƟsƟcal purposes. 12. In the result, appeal of the assessee is treated as allowed for staƟsƟcal purposes. Order pronounced in the open court on this the 03rd February, 2025. Sd/- Sd/- (MADHUSUDAN SAWDIA) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated: 03/02/2025 OKK ITA No. 1412/Hyd/2024 Durga Prasada Rao VaƩem vs. ITO Page 5 of 5 Copy forwarded to: 1. Durga Prasada Rao VaƩem, 11-1-433/2, Padma Apartments, Mylaragadda, Hyderabad, Telangana-500061. 2. Income Tax Officer, Ward-13(3), Aayakar Bhavan, Hyderabad. 3. Pr.CIT, Hyderabad. 4. DR, ITAT, Hyderabad. 5. GUARD FILE. TRUE COPY ASSISTANT REGISTRAR ITAT, HYDERABAD "