NITESH MANDHYAN LR HIRANAND MANDHYAN,BHUBANESWAR V. INCOME TAX OFFICER, MANICKTALA

ITA 2056/KOL/2024

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) concerning the assessment year 2012-13. The original assessment was reopened under section 147 of the Income Tax Act, 1961, following which an addition of Rs. 17,84,896 was made as long-term capital gain from the sale of penny stocks, claimed exempt under section 10(38). The assessee, represented by his legal heir due to his death, contested the validity of the assessment and the addition. The Tribunal found procedural lapses in the representation and the handling of the case post the assessee's death, leading to the decision to set aside the CIT(A)'s order and remand the case for a fresh hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 469559 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Other Referred Cases: Rupa Shyam Sunder Dhumatkar vs ACIT (2020) 420 ITR 256 (Bom.), Alamelu Veerappan vs. ITO (2018) 257 taxmann.com 72 (Mad.), Neelam Dhingra vs. DCIT (Trib- Delhi-Bench -E), Gajendra Singh Vs DCIT (ITAT Delhi)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay; Set aside; Reassessment proceedings; Reason to believe
• Section: 147; 148; 250; 72

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'एसएमसी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘SMC’ BENCH, KOLKATA श्री संजय शमाा, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SHRI SONJOY SARMA, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 2056/KOL/2024 Assessment Year: 2012-13 Nitesh Mandhyan LR Hiranand Mandhyan Vs. ITO, Manicktala (Appellant) (Respondent) PAN: AFMPK8907R Appearances: Assessee represented by : None. Department represented by : Archana Gupta, Addl. CIT, Sr. DR. Date of concluding the hearing : February 13th, 2025 Date of pronouncing the order : February 19th, 2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the Revenue is against the order of the Ld. Commissioner of Income Tax (Appeals)- NFAC, Delhi [hereinafter referred to as “the Ld. CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2012-13 dated 28.06.2024, which has been passed against the assessment order u/s 143(3)/147 of the Act, dated 06.12.2019. Page | 2 I.T.A. No.: 2056/KOL/2024 Assessment Year: 2012-13 Nitesh Mandhyan LR Hiranand Mandhyan. 1.1. The Registry has informed that the appeal is barred by limitation of time by 37 days and no application seeking condonation of delay has been filed. However, we find that since the assessee had expired and proper representation was not made before the Ld. CIT(A) and the legal representative mentioned as Sri Nitesh Mandhyan is different from the legal representative mentioned in the assessment order as Sri Manish Mandhyan, therefore, on account of death of the assessee, we condone the delay and admit the appeal for adjudication on merits. None appeared on behalf of the assessee and the case was heard with the assistance of the Ld. Sr. DR. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: “1. Because, the assessee had died on 05/11/2016. The information of his death was supplied to the AO and the assessing officer has also acknowledged the receipt of the information in the assessment order. Despite the knowledge of the same, the assessment order as well as the first appeal order has been passed in the name of the dead person Shri Hiranand Mandhyan. Hence, the reopening of the assessment and continuation of the reassessment proceedings is bad in law and in direct contradiction to the judgment in Rupa Shyam Sunder Dhumatkar vs ACIT (2020) 420 ITR 256 (Bom.), Alamelu Veerappan vs. ITO (2018) 257 taxmann.com 72 (Mad.). The order passed in the name of the death person shall be quashed in toto. 2. Because, it is a trite law that notice for re-opening of the assessment under section 148 against the dead person is invalid. Same is held in the case of Neelam Dhingra vs. DCIT (Trib- Delhi-Bench -E). 3. That, the assessment order has been passed without DIN. In the case of Gajendra Singh Vs DCIT (ITAT Delhi) ITAT Delhi held that simultaneous issue of the DIN number is insignificant and superfluous exercise, in the absence of mentioning the DIN number on the body of AO's order. Thus, Assessment order without DIN is void ab initio. Page | 3 I.T.A. No.: 2056/KOL/2024 Assessment Year: 2012-13 Nitesh Mandhyan LR Hiranand Mandhyan. 4. Because, that the proceedings under section 147 of the Act was reopened only on the basis of information received from office of DDIT (Investigation), as evident from the assessment order. This information was only the information and this information cannot become the reason to believe that income has escaped assessment. 5. Because, the Ld. CIT appeal was not justified in confirming the addition of Rs 17,84,896/- without appreciating that the appellant is regularly investing in shares via. recognised Share broker and recognised stock exchanges and all the details with regards to transaction was through banking channel. 6. Because, the Ld. CIT appeal was not justified in confirming the addition without appreciating that where the documentary evidence furnished by assessee clearly supported the claim of exemption under section 10(38) on account of sale of securities that assessee entered into genuine transaction of sale of shares through recognized exchange upon which STT had also been paid and there was no other evidence available on record against assessee so as to make the impugned addition under section 68, accordingly, addition was to be deleted.” 3. Brief facts of the case as culled out from the records are that the assessee had filed return of income showing total income of Rs.5,82,950/-. The case was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act dated 29.03.2019. In response to the notices issued, the assessee's legal representative i.e. his son Sri Manish Mandhyan appeared mentioning the information about the date of death of his father. The Ld. AO has mentioned that a notice was issued in the hands of the legal heir. Thereafter, a show-cause letter dated 02.12.2019 was issued and served upon the legal representative of the assesee. As there was no reply, Sri Manish Mandhyan was treated as the legal representative of the assessee. The Ld. AO found that there were credits on account of sale of penny stock of Twenty First Century (India) Limited which income was claimed as exempt u/s 10(38) of the Act for Rs. 17,84,896/-. The same was treated as long-term capital Page | 4 I.T.A. No.: 2056/KOL/2024 Assessment Year: 2012-13 Nitesh Mandhyan LR Hiranand Mandhyan. gain and charged to tax. Aggrieved with the assessment order the assessee filed an appeal before the Ld. CIT(A) who has extracted the assessment order and mentioned that aggrieved with the addition, the appellant has raised the grounds of appeal but preferred not to file any submission and as the Ld. AO had given a detailed finding while adding the unexplained suspicious long-term tax-free capital gain against penny stock, therefore, keeping in mind the above stated facts and the appellant’s inability to file any logical justification along with credible documents, the addition of Rs. 17,84,896/- made by the Ld. AO was sustained and both the grounds of appeal were decided accordingly. Aggrieved with the order of the Ld. CIT(A) the assessee has filed the appeal before this Tribunal. 4. With the assistance of the Ld. Sr. DR, the record and facts have been examined. In ground no. 1, the assessee has contended that the assessment order has been passed in the name of a dead person and the same is bad in law. This ground is dismissed as the Ld. AO in the assessment order has mentioned the name of the legal representative being Sri Manish Mandhyan to whom a show cause notice was issued and since he did not file any objection, therefore, he was treated as legal representative. Similarly, ground no. 2 is also dismissed as the name of the legal representative was substituted when it was brought to the notice of the Ld. AO. As regards ground nos. 5 & 6 relating to the addition of Rs. 17,84,896/- sustained by the Ld. CIT(A), since the assessee did not file any documentary evidence before the Ld. CIT(A), therefore, the addition was sustained. However, we are of the view that since the assessee had expired and proper representation was not made before the Ld. CIT(A) therefore, in the interest of justice and fair Page | 5 I.T.A. No.: 2056/KOL/2024 Assessment Year: 2012-13 Nitesh Mandhyan LR Hiranand Mandhyan. play, another opportunity needs to be provided and the appeal order is set aside and the appeal is restored to the Ld. CIT(A) to be decided on the grounds related to the addition sustained. The Ld. CIT(A) shall allow an opportunity to the assessee’s Legal Representative of being heard and also decide the appeal in accordance with Rule 46A of the Income Tax Rules, 1962.Hence, all other grounds of appeal are allowed for statistical purposes. 5. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 19th February, 2025. Sd/- Sd/- [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 19.02.2025 Bidhan (P.S.) Page | 6 I.T.A. No.: 2056/KOL/2024 Assessment Year: 2012-13 Nitesh Mandhyan LR Hiranand Mandhyan. Copy of the order forwarded to: 1. Nitesh Mandhyan, LR Hiranand Mandhyan, Plot -830, Mahavir Nagar, Bhubaneswar, Odisha, 751006. 2. ITO, Manicktala. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "