JITENDER KUMAR,NEW DELHI V. ITO WARD-32(4), NEW DELHI

ITA 3317/DEL/2023

AI Insights

The case involves Jitender Kumar, the assessee, appealing against the order of the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre, which had dismissed his appeal in limine. The primary contention was the addition of Rs.62,50,000 as unexplained income under section 56(2) of the Income Tax Act, 1961, following a reassessment under section 148. The reassessment was based on information from a search and seizure operation related to other individuals, which allegedly implicated the assessee in undervalued share transactions. The Tribunal found that the CIT(A) had not decided the issues on merits and had dismissed the appeal due to non-appearance of the assessee, despite multiple opportunities given.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31447 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PARKASH
• Assessee Lawyers: AASHI CHATURVEDI
• Keywords: Condonation of delay; Opportunity of being heard; Reasonable cause; Reassessment proceedings; Fair market value; Salary income; Principle of natural justice; Search and seizure; Deemed to accrue or arise in india
• Section: 147; 148; 142(1); 143(2); 132; 131; 56(2); 153C; 72

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘C’: NEW DELHI BEFORE SHRIS.RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI YOGESH KUMAR US, JUDICIAL MEMBER ITA No.3317/DEL/2023 (Assessment Year : 2011-12) Jitender Kumar, vs. ITO, Ward 32 (4), T-5, IInd Floor, Green Park, New Delhi. New Delhi – 110 016. (PAN : AQDPK5535B) (ASSESSEE) (RESPONDENT) ASSESSEE BY : Ms. Aashi Chaturvedi, Advocate REVENUE BY : Shri Om Parkash, Sr. DR Date of Hearing : 14.10.2024 Date of Order : 03.01.02025 O R D E R PER S.RIFAUR RAHMAN,AM: 1. This appeal has been filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi [“Ld. CIT(A)”, for short] dated 12.09.2023 for Assessment Year 2011-12. 2. At the time of filing of appeal, the Registry has pointed out a defect that appeal is time barred by 72 days. In response thereof, the Assessee has filed an application, 1961 seeking condonation of delay in filing of the appeal on the ground that the assessee was unaware of the fact that the 2 ITA No.3317/Del/2023 impugned order was passed on 12.09.2023 and recently when the assessee went through the e-filing portal of the Income Tax Department, it came to his notice that the order was passed against him. He submitted that thereafter, assessee immediately contacted his tax counsel to take action in this regard. In support of this, he filed an affidavit which is placed on record. Accordingly, he prayed that the delay in filing the appeal be condoned. 3. We have heard both the counsels on the issue of condonation of delay. In our considered opinion, there was a reasonable cause for the delay in filing the appeal. Therefore, we condone the delay in filing the appeal before the Tribunal. 4. Brief facts of the case are, the case of the assessee for the year under consideration was reopened after recording the reasons to believe basis on the information received from ADIT (Inv.), Unit 2/PNJ/2017-18 dated 21.03.2018 where it was mentioned that a search and seizure action under section 132 of the Income-tax Act, 1961 (for short ‘the Act’) was carried out in the cases of Shri Manoj Anand, Smt. Monika Anand, Shri Brijesh Kumar Anand, M/s. Advantage Software Pvt. Ltd. on 24.10.2017. During the course of investigation, it was found that the shares of the company of Advantage Software Pvt. Ltd. were purchased by the assessee for cash transaction on the face value of Rs.10 per share and 3 ITA No.3317/Del/2023 transferred in the record of the company on 18.05.2010. It was observed that the shares were purchased for a consideration which is far less than the fair market value of the shares and corresponding assets of the company valued much higher than the face value of the shares. In response to notice issued u/s 148 of the Act, assessee declared an income of Rs.1,68,640/- under the head income from salary, business or profession and income from other sources. The reasons for reopening were provided to ld. AR of the assessee. Accordingly, notices u/s 143(2) and 142(1) along with questionnaire were issued and served on the assessee. In response, ld. AR of the assessee submitted relevant information. 5. After considering the informations, Assessing Officer relying on the information available on record observed that assessee has not appeared against the notices issued u/s 131 of the Act and kept asking for time extension even though the assessment is time barred by 31.12.2018. Accordingly, he made the addition of Rs.62,50,000/- as unexplained income u/s 56(2) of the Act. 6. Aggrieved with the above order, assessee preferred an appeal before the NFAC, Delhi and raised grounds of appeal. Ld. CIT (A) issued several notices and the list of the notices is listed at page 4 of the appellate order. 4 ITA No.3317/Del/2023 Since the assessee has not effectively pursued the appellate proceedings, ld. CIT (A) dismissed the appeal filed by the assessee in limine. 7. Aggrieved assessee is in appeal before us raising following grounds of appeal :- “1. On the facts and circumstances of the case, the order passed by the learned Commissioner Income Tax (Appeals), Income Tax Department {(CIT(A), ITD}, National Faceless Appeal Centre (NFAC) is bad, both in the eye of law and on the facts. 2. On the facts and circumstances of the case, the learned CIT(A), ITD has erred both on facts and in law in passing the order exparte without providing the reasonable opportunity of being heard to the assessee in clear violation of the principal of natural justice. 3. On the facts and circumstances of the case, the order passed by the learned CIT(A), ITD is bad in the eyes of law and on facts as the same has been passed without giving any finding on the merits of the case. 4. On the facts and circumstances of the case, the Ld. CIT(A), ITD has erred both on facts and in law in confirming the action of the AO despite the fact that the order passed by him under Section 148 of the Income Tax Act is barred by limitation since the same is passed beyond the specified time limit. 5. On the facts and circumstances of the case, the Ld. CIT(A), ITD has erred both on facts and in law in confirming the action of the AO despite the fact that the order passed by the AO under Section 148 of the Income Tax Act is illegal, bad in law and has been passed without assumption of valid jurisdiction. 6. On the facts and circumstances of the case, the Ld. CIT(A), ITD has erred both on facts and in law in confirming the action of the AO in initiating the proceedings under Section 147 read with Section 148, ignoring the fact that the same was bad in the eye of law as the conditions and procedure prescribed under the statute have not been satisfied and complied with. 7. On the facts and circumstances of the case, the Ld. CIT(A), ITD has erred both on facts and in law in confirming the action of the AO in reopening the assessment u/s 148 without obtaining prior valid approval as provided u/s 151 of the Act. 5 ITA No.3317/Del/2023 8. On the facts and circumstances of the case, the Ld. CIT(A), ITO has erred both on facts and in law in confirming the action of the AO in reopening the assessment u/s 148 of the Act without application of mind. 9. (i) On the facts and circumstances of the case, the Ld. CIT(A), ITO has erred both on facts and in law in confirming the action of the AO despite the fact that the reassessment proceedings initiated by the learned AO are bad in the eye of law as the reasons recorded for the issue of notice under Section 148 are bad in the eyes of law and are vague. (ii) On the facts and circumstances of the case, the Ld. CIT(A), ITO has erred both on facts and in law in confirming the action of the AO despite the fact that the reassessment proceedings initiated by the learned AO are bad in the eye of law as there is no live nexus between the reasons recorded and the belief formed by the Assessing officer . 10. Without prejudice to the above, on the facts and circumstances of the case, the learned CIT(A), ITO has erred both on facts and in law in confirming the action of the learned AO in reopening the assessment proceedings ignoring the settled position of the law that if any material found during the course of search, belongs to a person other than the person in whose case search was conducted, then assessment of such person shall be completed under section 153C of the Act & not under section 148 of the Act. 11. (i) On the facts and circumstances of the case, the Ld. CIT(A), ITO has erred both on facts and in law in confirming the addition of Rs.62,50,000/- made by the AO holding that the shares were purchased by the assessee for the consideration which is lesser than the fair market value of the shares and treating the same as deemed income of the assessee under section 56(2)(vii) of the Income Tax Act. (ii) That the abovesaid addition has been confirmed ignoring the fact that shares were purchased by the assessee in F.Y. 2009-10, and hence the addition cannot be made in impugned assessment year. 12. On the facts and circumstances of the case, the Ld. CIT(A), ITO has erred both on facts and in law in confirming the addition made by the AO despite t e fact that the same has been made without bringing any adverse material on record. 13. On the facts and circumstances of the case, the Ld. CIT(A), ITO has erred both on facts and in law in confirming the action of the AO in making the abovesaid addition on the basis of material collected at the back of the assessee without giving it an opportunity to rebut the same in violation of principle of natural justice. 14. On the facts and circumstances of the case, the Ld. CIT(A), ITD has erred both on facts and in law confirming the action of the AO despite 6 ITA No.3317/Del/2023 the fact that the order has been passed by the AO without providing the assessee an adequate opportunity of being heard which is against the principle of natural justice. 15. On the facts and circumstances of the case, the Ld. CIT(A), ITD has erred both on facts and in law in confirming the action of the AO despite the fact that the addition has been made by indulging in gross conjecture and surmises without bringing any adverse material on record.” 8. At the time of hearing, ld. AR for the assessee brought to our notice that the ld. CIT (A) decided the issue against the assessee by observing that assessee has not pursued the appeal despite being granted several opportunities. He submitted that ld. CIT (A) has not decided the issue on merit and prayed that this issue may be remitted back to the ld. CIT(A) with the prayer to give an opportunity of being heard to the assessee. He submitted that there are reasons for assessee for not appearing before the first appellate authority. 9. On the other hand, ld. DR for the Revenue objected to the submissions of the ld. counsel for the assessee and submitted that assessee has not utilised several opportunities granted by ld. CIT (A). 10. Considered the rival submissions and material placed on record. We observed that the addition was sustained by the ld. CIT (A) by observing that no details, documents or submissions have been provided to come to any conclusion other than those arrived at by the Assessing Officer in the assessment order and accordingly, he upheld the order of the Assessing Officer without deciding the issues on merits. In our considered view, 7 ITA No.3317/Del/2023 assessee should be given one more opportunity of being heard on merit. Therefore, we direct ld. CIT (A) to give an opportunity of being heard to the assessee and decide the issue on merit as per law. We also direct assessee to make proper submissions and appear before the ld.CIT (A) on the date of hearing and cooperate with the tax authorities. Accordingly, the appeal filed by the assessee is allowed for statistical purposes. 11. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on this 3rd day of January, 2025. Sd/- sd/- (YOGESH KUMAR U.S.) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 03.01.2025 TS Copy forwarded to: 1. Assessee 2. Respondent 3. CIT 4. CIT(Appeals)/NFAC, Delhi. 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "