IQBAL,HARDOI V. ITO-3(2), HARDOI, HARDOI

ITA 64/LKW/2025

AI Insights

The case involves an appeal by the assessee, Iqbal, against the order of the National Faceless Appeal Centre (NFAC), which had dismissed his appeal due to a delay in filing. The Income Tax Department had previously made additions to the assessee's income based on unreported cash deposits and undervalued property transactions. The Tribunal found merit in the assessee's request for a de novo hearing, considering the procedural lapses and the need for a fair opportunity to present his case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471108 (ITAT-LUCKNOW)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUNIL KUMAR RAJWANSHI; SUNIL KUMAR RAJWANSHI
• Assessee Lawyers: SANJAY SAXENA; SANJAY SAXENA
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 147

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, LUCKNOW BEFORE SHRI. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA No.64/LKW/2025 Assessment Year: 2015-16 Iqbal C/o Sanjay Saxena 12, Pratap Enclave Bisrat G.T. Road Shahjahanpur v. ITO-3(2) Hardoi TAN/PAN:AEFPI2064H (Appellant) (Respondent) Appellant by: Shri Sanjay Saxena, C.A. Respondent by: Shri Sunil Kumar Rajwanshi, D.R. Date of hearing: 05 03 2025 Date of pronouncement: 11 03 2025 O R D E R This appeal has been preferred by the assessee against order dated 19.11.2024, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2015-16. 2. The brief facts of the case are that the assessee had not filed his return of income for the year under consideration. The Income Tax Department was in possession of information that the assessee had made cash deposits, amounting to Rs.17,00,000/- and cash withdrawals, amounting to Rs.7,80,000/- from his Bank Account No.3342118616 maintained with Central Bank of India, Hardoi during the year under consideration. In response to the statutory notice issued ITA No.64/LKW/2025 Page 2 of 6 by the Assessing Officer (AO), the reply of the assessee was that the cash deposit of Rs.17,00,000/- was out of sale proceeds of property owned by his father, Shri Awasan. However, on examination of the sale deed, it was noticed by the Assessing Officer (AO) that the entire sale proceeds were received by the father of the assessee through banking channel. 3. The Income Tax Department was also in possession of information that the assessee had purchased following immovable properties jointly with his brother at a value lower than the Circle Rate in violation of section 56(2)(vii) of the Income Tax Act, 1961 (hereinafter called “the Act’): S. No. Date of transaction Property description Sale consideration Circle rate Difference Share of the assessee 1 23.08.2014 2239a/2239b vill-Bahar, Gopamau, Distt. Hardoi 3,00,000/- 8,15,000/- 5,15,000/- 2,57,000/- (5,15,000/2) 2 01.08.2014 Vill-Nanak ganj Grant, Hardoi 2,60,000/- 11,21,000/- 8,61,000/- 8,61,000/- 3 17.10.2014 Vill-Nanak ganj Grant, Hardoi 3,50,000/- 10,86,000/- 7,36,000/- 2,45,000/- (7,36,000/3) Total 13,63,000/- 4. The AO estimated the share of the assessee in the aforementioned properties by calculating the difference between the sale consideration and the circle rate, which came to Rs.13,63,000/-. The AO accordingly made addition of Rs.13,63,000/- to the income of the assessee under section ITA No.64/LKW/2025 Page 3 of 6 56(2)(vii) of the Act and completed the assessment under section 144 read with section 147 of the Act at a total income of Rs.13,63,000/-. 4.1 The AO also initiated penalty proceedings under section 271F of the Act, separately. 5. Aggrieved, the assessee preferred an appeal before the Ld. First Appellate Authority. Subsequently, the case of the assessee was migrated to NFAC, which dismissed the appeal of the assessee for the reason of delay in filing of the appeal before the Ld. First Appellate Authority. 6. Now, the assessee has approached this Tribunal challenging the dismissal of its appeal by the NFAC by raising the following grounds of appeal: 1. That the Id. CIT(A) erred on facts and in law in dismissing the appeal in limine without considering the grounds of appeal which is against the principle of natural justice. 2. That the ld. A.O. erred on facts and in law in passing ex- parte order because of facts assessee was not aware with the Income Tax matters and could not be able give any explanation before the Id. A.O. and the matter may kindly be remanded to the ld. Α.Ο. 3. That the basis of initiation of re-assessment proceeding by issue of notice u/s148 of the Income Tax Act, 1961, its continuation and culmination vide order u/s 147/144B of ITA No.64/LKW/2025 Page 4 of 6 the Income Tax Act, 1961 dated 15-10-2021 is bad in law and liable to be cancelled. 4. That the CIT (Appeals) erred on facts and in law in confirming the addition of Rs.13,63,000/- u/s 56(2)(vii) of the Income Tax Act, 1961, which is contrary to the facts and circumstances of the case. 5. The appellant reserves a right to add/alter/amend any ground of appeal at the time of its hearing. 7. The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that there is a delay of 8 days in filing the appeal before the Tribunal. The Ld. A.R. further submitted that due to an oversight by the assessee’s staff, the receipt of impugned order of the NFAC could not be brought to the notice of the assessee on time, which has caused delay in filing of appeal by 8 days. The prayer of the Ld. A.R. was that the nominal delay 8 days in filing the appeal be condoned and the appeal be heard on merits. 8. The Ld. Sr. D.R. had no objection to the delay being condoned. 9. In view of the prayer made by the Ld. A.R. and no objection by the Ld. Sr. D.R., I condone the delay in filing of the appeal and admit the appeal for hearing. ITA No.64/LKW/2025 Page 5 of 6 10. During the course of hearing before me, the Ld. A.R. submitted that no proper compliance could be made before the lower authorities. He further submitted that certain details and documents relating to the transactions entered into by the assessee during the year under consideration could not be filed before the AO. The Ld. A.R. also submitted that the approval under section 151 of the Act by the Office of the Joint Commissioner of Income Tax, Sitapur Range was not proper. The Ld. A.R. prayed that an opportunity may be given to the assessee to present his case before the AO. 11. The Ld. Senior D.R. had no objection to the restoration of appeal to the file of the Assessing Officer as requested by the Ld. A.R. 12. I have heard both the parties and have also perused the material on record. Looking into the facts of this case, I am of the considered view that the assessee deserves one last opportunity to present his case and, therefore, in the interest of substantial justice, I restore this file to the Office of the Assessing Officer with the direction to decide the appeal of the assessee afresh after providing reasonable opportunity of being heard to the assessee. During the course of hearing, the Ld. A.R. had also argued that the approval under section 151 of the Act by the ITA No.64/LKW/2025 Page 6 of 6 Office of the Joint Commissioner of Income Tax, Sitapur Range was not proper. I direct that the AO shall also look into the issue of approval under section 151 of the Act while passing a de novo assessment order. I also caution the assessee to fully comply with the directions of the Assessing Officer in the set-aside proceedings when called upon to do so, failing which, the Assessing Officer shall be at complete liberty to pass the order in accordance with law, based on the material available on record even if it is ex-parte qua the assessee. 13. In the result, the appeal of the assessee stands allowed for statistical purposes. Order pronounced in the open Court on 11/03/2025. Sd/- [SUDHANSHU SRIVASTAVA] JUDICIAL MEMBER DATED:11/03/2025 JJ: Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR By order Assistant Registrar IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, LUCKNOW BEFORE SHRI. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA No.64/LKW/2025 Assessment Year: 2015-16 Iqbal C/o Sanjay Saxena 12, Pratap Enclave Bisrat G.T. Road Shahjahanpur v. ITO-3(2) Hardoi TAN/PAN:AEFPI2064H (Appellant) (Respondent) Appellant by: Shri Sanjay Saxena, C.A. Respondent by: Shri Sunil Kumar Rajwanshi, D.R. Date of hearing: 05 03 2025 Date of pronouncement: 11 03 2025 O R D E R This appeal has been preferred by the assessee against order dated 19.11.2024, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2015-16. 2. The brief facts of the case are that the assessee had not filed his return of income for the year under consideration. The Income Tax Department was in possession of information that the assessee had made cash deposits, amounting to Rs.17,00,000/- and cash withdrawals, amounting to Rs.7,80,000/- from his Bank Account No.3342118616 maintained with Central Bank of India, Hardoi during the year under consideration. In response to the statutory notice issued ITA No.64/LKW/2025 Page 2 of 6 by the Assessing Officer (AO), the reply of the assessee was that the cash deposit of Rs.17,00,000/- was out of sale proceeds of property owned by his father, Shri Awasan. However, on examination of the sale deed, it was noticed by the Assessing Officer (AO) that the entire sale proceeds were received by the father of the assessee through banking channel. 3. The Income Tax Department was also in possession of information that the assessee had purchased following immovable properties jointly with his brother at a value lower than the Circle Rate in violation of section 56(2)(vii) of the Income Tax Act, 1961 (hereinafter called “the Act’): S. No. Date of transaction Property description Sale consideration Circle rate Difference Share of the assessee 1 23.08.2014 2239a/2239b vill-Bahar, Gopamau, Distt. Hardoi 3,00,000/- 8,15,000/- 5,15,000/- 2,57,000/- (5,15,000/2) 2 01.08.2014 Vill-Nanak ganj Grant, Hardoi 2,60,000/- 11,21,000/- 8,61,000/- 8,61,000/- 3 17.10.2014 Vill-Nanak ganj Grant, Hardoi 3,50,000/- 10,86,000/- 7,36,000/- 2,45,000/- (7,36,000/3) Total 13,63,000/- 4. The AO estimated the share of the assessee in the aforementioned properties by calculating the difference between the sale consideration and the circle rate, which came to Rs.13,63,000/-. The AO accordingly made addition of Rs.13,63,000/- to the income of the assessee under section ITA No.64/LKW/2025 Page 3 of 6 56(2)(vii) of the Act and completed the assessment under section 144 read with section 147 of the Act at a total income of Rs.13,63,000/-. 4.1 The AO also initiated penalty proceedings under section 271F of the Act, separately. 5. Aggrieved, the assessee preferred an appeal before the Ld. First Appellate Authority. Subsequently, the case of the assessee was migrated to NFAC, which dismissed the appeal of the assessee for the reason of delay in filing of the appeal before the Ld. First Appellate Authority. 6. Now, the assessee has approached this Tribunal challenging the dismissal of its appeal by the NFAC by raising the following grounds of appeal: 1. That the Id. CIT(A) erred on facts and in law in dismissing the appeal in limine without considering the grounds of appeal which is against the principle of natural justice. 2. That the ld. A.O. erred on facts and in law in passing ex- parte order because of facts assessee was not aware with the Income Tax matters and could not be able give any explanation before the Id. A.O. and the matter may kindly be remanded to the ld. Α.Ο. 3. That the basis of initiation of re-assessment proceeding by issue of notice u/s148 of the Income Tax Act, 1961, its continuation and culmination vide order u/s 147/144B of ITA No.64/LKW/2025 Page 4 of 6 the Income Tax Act, 1961 dated 15-10-2021 is bad in law and liable to be cancelled. 4. That the CIT (Appeals) erred on facts and in law in confirming the addition of Rs.13,63,000/- u/s 56(2)(vii) of the Income Tax Act, 1961, which is contrary to the facts and circumstances of the case. 5. The appellant reserves a right to add/alter/amend any ground of appeal at the time of its hearing. 7. The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that there is a delay of 8 days in filing the appeal before the Tribunal. The Ld. A.R. further submitted that due to an oversight by the assessee’s staff, the receipt of impugned order of the NFAC could not be brought to the notice of the assessee on time, which has caused delay in filing of appeal by 8 days. The prayer of the Ld. A.R. was that the nominal delay 8 days in filing the appeal be condoned and the appeal be heard on merits. 8. The Ld. Sr. D.R. had no objection to the delay being condoned. 9. In view of the prayer made by the Ld. A.R. and no objection by the Ld. Sr. D.R., I condone the delay in filing of the appeal and admit the appeal for hearing. ITA No.64/LKW/2025 Page 5 of 6 10. During the course of hearing before me, the Ld. A.R. submitted that no proper compliance could be made before the lower authorities. He further submitted that certain details and documents relating to the transactions entered into by the assessee during the year under consideration could not be filed before the AO. The Ld. A.R. also submitted that the approval under section 151 of the Act by the Office of the Joint Commissioner of Income Tax, Sitapur Range was not proper. The Ld. A.R. prayed that an opportunity may be given to the assessee to present his case before the AO. 11. The Ld. Senior D.R. had no objection to the restoration of appeal to the file of the Assessing Officer as requested by the Ld. A.R. 12. I have heard both the parties and have also perused the material on record. Looking into the facts of this case, I am of the considered view that the assessee deserves one last opportunity to present his case and, therefore, in the interest of substantial justice, I restore this file to the Office of the Assessing Officer with the direction to decide the appeal of the assessee afresh after providing reasonable opportunity of being heard to the assessee. During the course of hearing, the Ld. A.R. had also argued that the approval under section 151 of the Act by the ITA No.64/LKW/2025 Page 6 of 6 Office of the Joint Commissioner of Income Tax, Sitapur Range was not proper. I direct that the AO shall also look into the issue of approval under section 151 of the Act while passing a de novo assessment order. I also caution the assessee to fully comply with the directions of the Assessing Officer in the set-aside proceedings when called upon to do so, failing which, the Assessing Officer shall be at complete liberty to pass the order in accordance with law, based on the material available on record even if it is ex-parte qua the assessee. 13. In the result, the appeal of the assessee stands allowed for statistical purposes. Order pronounced in the open Court on 11/03/2025. Sd/- [SUDHANSHU SRIVASTAVA] JUDICIAL MEMBER DATED:11/03/2025 JJ: Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR By order Assistant Registrar "