MANVENDU BHARADWAJ,CALIFORNIA, USA V. DCIT/ACIT-INT-TAX, GURGAON

ITA 1661/DEL/2025

AI Insights

The case involves Manvendu Bharadwaj, an individual residing in the USA, who appealed against the assessment order passed by the Deputy Commissioner of Income-tax, International Taxation, Gurgaon, for the Assessment Year 2018-19. The assessment was based on information that Bharadwaj had sold Bitcoin worth Rs. 1,40,96,785 during the financial year 2017-18 but had not filed an income tax return for the same. The assessee contested the addition of Rs. 49,12,362 as short-term capital gains, arguing that the data from the Bitcoin exchange, which was compromised during a hacking incident, was unreliable. However, both the assessing officer and the Dispute Resolution Panel found the assessee's explanations insufficient and upheld the addition to his taxable income.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 839188 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2026
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2018-2019
• Appeal Filed On: 19-03-2025
• Other Referred Cases: M/s Skysharp IT Solutions Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SINGH SHARMA
• Keywords: Reopening of assessment; Capital Gains; Competent authority
• Section: 147; 148; 142(1); 139

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : D : NEW DELHI BEFORE MS. MADHUMITA ROY, JUDICIAL MEMBER AND SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER ITA No.1661/Del/2025 Assessment Year : 2018-19 Manvendu Bharadwaj, 1548, Prosperity Ct. San Jose, California, USA. PAN: AOUPB2916C Vs. DCIT, International Taxation, Gurgaon. (Appellant) (Respondent) Assessee by : None Revenue by : Shri Vikram Singh Sharma, Sr. DR Date of Hearing : 18.02.2026 Date of Pronouncement : 18.02.2026 ORDER PER SANJAY AWASTHI, AM: The instant appeal filed by the assessee is directed against the assessment order dated 21.01.2025 passed by the ld. Dy. Commissioner of Income-tax, International Taxation, Gurgaon [hereinafter referred to as the Ld. AO] under Section 147 r.w.s. 144C(13) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), for Assessment Year 2018-19. 2. None appeared on behalf of the assessee at the time of hearing. It appears from the record that previously whenever the matter was called, no one appeared Printed from counselvise.com ITA No.1661/Del/2025 2 on behalf of the assessee nor any adjournment has been sought for. Hence, this Bench is proceeding to deal with the matter ex parte. 3. The assessee has challenged the order passed by the Ld. AO which reads as under:- “1. The assessee had not filed his return of income u/s 139 of the Income Tax Act,1961 (the Act for brevity) for Financial Year 2017-18, relevant to the Assessment Year 2018-19. Information in this case was uploaded by DDIT (Inv.), Unit-3(2), Delhi on the Portal on the basis of investigation done in the case of M/s Skysharp IT Solutions Pvt. Ltd. (PAN: AAUCS7695A). As per the information, there were a large number of non- filers who had sold bitcoin. Similarly, the assessee had also sold Bitcoin amounting to Rs. 1,40,96,785/- during the FY 2017-18 but did not file ITR for the relevant period. In absence of ITR and any supporting documentary evidence, it was clear that the assessee had not disclosed the Capital gains arising from Bitcoin sale of 1,40,96,785/- for taxation purpose. Accordingly, assessment proceedings u/s 147/148 of the Income-tax Act, 1961 were initiated by issuing a notice u/s 148 of the Act on 05.04.2022 after obtaining necessary approval of the Competent Authority u/s 151 of the Act. 2. In response to the notice u/s 148 of the Act, the assessee filed his return of income on 10.05.2022 and Notice u/s 143(2) of the Act was issued on 20.04.2023. 3. During the assessment proceedings, notices u/s 142(1) of the Act was issued on 05.01.2024 & 23.01.2024, vide which the assessee was requested to furnish his response on above mentioned issues/transactions. In response to notice u/s 142(1) of the Act, assessee submitted his reply stating that during the F.Y 2017-18, he had purchased bitcoin amounting to Rs. 76,79,651/- and the same was sold for Rs. 76,93,373/- and duly reported in ITR. However, as per information available with this office, it was noted that assessee had purchased Bitcoin of Rs. 91,84,422/-and sold the same for Rs. 1,40,96,785/- during the F.Y. 2017-18 relevant to A.Y. 2018-19. Hence, the contention of the assessee was not found tenable. 4. In view of the above, show cause notice was issued to the assessee on 20.02.2024,the relevant part of the show cause notice is reproduced as under:- ……………. 5. In response to the aforementioned show cause notice, a reply from the assessee was received on 04.03.2024. The relevant part of the reply is reproduced as below :- “(ii) The summary statement from Skysharp IT Solutions Pvt Ltd was generated after a major hacking incident at Coinsecure Bitcoin exchange. As a result of this hacking incident a significant amount of Bitcoin was lost and their trading and accounting systems were compromised. Hence the summary generated from such systems is not reliable. As mentioned in my responses to earlier notices the bitcoin exchange in question (Coinsecure owned by M/S skysharp IT solutions pvt ltd) suffered a massive hacking incident at some time between 30/03/2018 to 08/04/2018. (Emails about the occurrence of hacking have already been provided as evidence in response to previous notices). The summary statement from M/S Skysharp IT solutions Pvt Ltd was generated after the Printed from counselvise.com ITA No.1661/Del/2025 3 hacking incident and as per the company’s own official statements significant amount of Bitcoin was unaccounted for in their accounting/reporting systems. Given the gaps in accounting because of the hacking incident and given that no transaction reports have been provided by the company to support the one line summary statement, the statement cannot be considered reliable. (iii) The statement from M/S skysharp IT solutions is evidently incorrect. In spite of that if it is still taken at it’s face value, even then any reasonable estimate based on that statement indicates a loss in bitcoin transactions under consideration.” 6. In view of above, the reply of the assessee was considered but not found tenable, since the onus was on the assessee to prove the veracity of the transaction. However, the assessee failed to prove his claim in respect of the transaction done by him. Assessee’s claim that M/s skysharp IT solutions had been attacked by some malware and the data from M/S skysharp IT solutions could not be relied upon. Consequently, the assessee was unable to provide any plausible justification for the short-term capital gain of 49,12,362/- . As a result, this amount remained unexplained. 7. From the perusal of the above, it was found that the assessee had earned a short-term capital gain of 49,12,362/-. As no explanation was provided by the assessee, the same was proposed to be added back to the taxable income of the assessee under the head short-term capital gains. (Addition:- Rs. 49,12,362/-) 8. The income of the assessee was proposed to be assessed at Rs. 49,12,452/- as discussed above and a penalty notice u/s 270A of the Act was also proposed to be issued concurrently along with the final assessment order: Returned Income Rs. 90/- Addition:- on account of Short Term Capital Gain Rs. 49,12,362/-. Assessed income Rs. 49,12,452/- 9. Accordingly, a draft assessment order was passed on 08.03.2024 and duly served upon the assessee through the portal. Thereafter, the assessee communicated that he had opted for filing objections to the Hon’ble Dispute Resolution Panel in the stipulated time. 10. Objections before DRP/Observation of Hon’ble DRP: The assessee filed his objections against the draft assessment order passed on the above discussed lines before the Hon’ble Dispute Resolution Panel-1, New Delhi. The Hon’ble DRP passed its order u/s 144C(5) of the Income Tax Act, 1961 dated 04.12.2024 wherein the Hon’ble Panel has given the following directions :- 10.1 Issue of addition of Rs. 49,12,362/- on account of unexplained short term capital gain: - Vide para No. 5, the Hon’ble DRP has given the following directions:- “(i) On perusal of the DAO passed by the AO, it is observed that the case of the assessee was reopened and notice u/s 148 of the IT Act, 1961 was issued on the basis of information received from DDIT, Investigation, Unit - 3(2), New Delhi that on the basis of investigation done in the case of M/s Skysharp IT solutions, PAN AAUCS9695A, it was found out that large number of non-filers of ITR have sold Bitcoins during the year. The Printed from counselvise.com ITA No.1661/Del/2025 4 assessee has sold bitcoins amounting to Rs. 1,40,96,785/- during the AY 2018-19. The relevant portion of the DAO is as under: \"Since, the onus is on the assessee to prove the veracity of the transaction. However, the assessee has failed to prove his claim in respect of the transaction done by him. Assessee playing blame game that M/s Skysharp IT solutions has been attacked by some malware and the data form M/s Skysharp IT Solutions cannot be relied. Hence, the assessee not provide any justification regarding short terms capital gain of Rs. 49,12,362/-. The same is remained unexplained. From the perusal of the above, it is found that assessee has earned short term capital gain of Rs. 49,12,362/-. As no explanation was provided by the assessee, hence the same is added to the income of the assessee under the head of short term capital gain.\" (ii) The AO was not convinced with the written submissions and supporting documents filed by the assessee during the course of proceedings as a result he made an addition of Rs. 49,12,362/- as short-term capital gain with respect to the bitcoin transaction entered into by the assessee during the year under consideration. During the course of proceedings before the DRP, the assessee has submitted identical documents as submitted before the AO. Among other documents the assessee has submitted a copy of FIR filed before the Cyber Cell on 10/04/2018 by M/s Secure Bitcoin Traders Pvt Ltd having the brand name COINSECURE which alleges theft of the bitcoins traded by the said company, by one of its employees. On careful perusal of the submissions made the assessee and the DAO, it is observed by the panel that the assessee is not able to prove his contention in absence of adequate supporting documents in favor of his contentions, therefore, the panel find any infirmity in the draft order passed by the AO. The AO is directed to pass a speaking order in this regard. Ground of objection 1(a) is disposed off. (iii) Further, the assessee has challenged the issuance of notice u/s 148 of the IT Act, 1961 and the basis of the reopening of assessment in his case, in his grounds of objection number 1(b), (c), (d). On perusal of the DAO, it is observed that the AO had sufficient information with him and on the basis of that he has initiated reopening proceedings. Further, the AO has followed prescribed procedure with respect to the issuance of notice u/s 148 of the IT Act, 1961. Moreover, the assessee has not put forth any specific arguments in support of the above grounds of objection. Therefore, based on the above discussion, the grounds of objection as mentioned in this para are disposed off .” Pursuant to the directions issued by the Hon'ble Dispute Resolution Panel (DRP), no modification is being made in respect of the addition of Rs. 49,12,362/-. …………………. 12. As directed by the Hon'ble DRP, addition proposed in draft assessment order in respect of the unexplained short term capital gain of Rs. 49,12,362/- is being added back to the taxable income of the assessee and the income of the assessee is being assessed as under: Returned Income Rs. 90/- Addition:- on account of Short Term Capital Gain Rs. 49,12,362/-. Assessed income Rs. 49,12,452/- ………….. Printed from counselvise.com ITA No.1661/Del/2025 5 14. Assessed at Rs. 49,12,452/-. Charge education cess and surcharge as applicable. Credit for prepaid taxes to be allowed after verification. Charge interest under sections 234A, 234B, 234C & 234D as applicable. Issue Demand Notice u/s 156 and penalty notice along with the final assessment order. Directions of DRP received vide order dated 04.12.2024 are enclosed with this order and the same form part of the order.” 4. We have considered the entire set of records, including the order passed by each and every authority during the assessment proceedings till the finalization of the assessment as impugned before us. After a careful consideration of the issue involved in the matter, it is felt that the income has been correctly assessed by the Ld. AO u/s 147 r.w.s. 144C(13) of the Act dated 21.01.2025. Furthermore, also in the absence of any assistance rendered by the assessee, the order passed by the Ld. AO is found to be just and proper warranting no interference. The assessee’s appeal is, therefore, found to be devoid of any merit. 5. In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on 18.02.2026. Sd/- Sd/- (MADHUMITA ROY) (SANJAY AWASTHI) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 18th February, 2026. dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi Printed from counselvise.com "