ROYAL FINCOMM PRIVATE LIMITED,MUMBAI, MAHARASHTRA V. WARD 4(1), KOLKATA, KOLKATA

ITA 648/KOL/2025

AI Insights

Royal Fincomm Private Limited appealed against the order of the Ld. Commissioner of Income Tax (Appeals), which had dismissed their earlier appeal due to non-compliance with notices. The original assessment was reopened based on information from SEBI regarding artificial trading volumes in stock options, leading to a reassessment order that included substantial additions to the assessee's income. The Tribunal found that the assessee had not been adequately represented at earlier stages due to communication issues and thus remitted the case back to the Ld. AO for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 779079 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2015-2016
• Appeal Filed On: 27-03-2025
• Other Referred Cases: Collector, Land Acquisition, Anantnag v. Katiji, Voltas Ltd. v DCIT, CIT v. Gold Leaf Capital Corporation Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Principle of natural justice; Transactions in derivatives; Non compliance; Bogus
• Section: 147; 148; 144; 142(1); 271(1)(c)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘D’ BENCH, KOLKATA Before SHRI GEORGE MATHAN, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. Nos.: 648/KOL/2025 Assessment Year: 2015-16 Royal Fincomm Private Limited Vs. ITO, Ward 4(1), Kolkata (Appellant) (Respondent) PAN: AABCC0002C Appearances: Assessee represented by : Yashvardhan Baid, FCA. Department represented by : Smt. Madhumita Das, Addl. CIT Date of concluding the hearing : 06 August, 2025 Date of pronouncing the order : 13 October, 2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [“the Ld. CIT(A)”] dated 12.10.2023 which has been passed against the assessment order passed u/s 147 r.w.s. 144 of the Act r.w.s. 144B of the Income Tax Act, 1961 (‘the Act’) dated 26.03.2022. 1.1 Although the Registry has not informed that the appeal is delayed but along with the memo of appeal, the assessee has also filed an application along with and affidavit seeking condonation of delay of 472 days as under and has requested that the delay may be condoned: “Dear Sir(s)/Ma'am(s), In connection with the above subject, it is most respectfully submitted- Printed from counselvise.com Page | 2 I.T.A. Nos.: 648KOL/2025 Assessment Year: 2015-16 Royal Fincomm Private Limited 1. That I, Ajay N Shah, son of Sri Navinchandra Shah, residing at 601/602 Adarsh Harmony, Adarsh Vihar Complex, Malad West, Mumbai 400064, am having DIN 02012088. 2. That I am one of the directors of M/s. Royal Fincomm Private Limited. 3. That the present Appeal is against the CIT(A) order u/s 250 of the Income Tax Act, 1961 dated 12th October, 2023. 4. That the registered office of the company M/s. Royal Fincomm Private Limited was shifted from the State of West Bengal to the State of Maharashtra on 22, February, 2017 vide the order of the Regional Director, Ministry of Corporate Affairs, Kolkata. 5. That the changes in the Memorandum of Association with respect to the place of Registered Office by changing it from the state of West Bengal to the state of Maharashtra was registered with the office of the Registrar of Companies, Mumbai on 6th of April, 2017. 6. That the Income Tax department was also informed of this change in registered address and as such was requested to make necessary changes in the PAN Card. 7. That the Income Tax Department, taking note of such changes and request for change in PAN data, issued a new PAN with updated address of the Registered Office in June 2017. 8. That, even after making such changes in MOA and PAN data, the notices for the A.Y. 2015-16 dated 30.03.2021 onwards, were issued to the old address of the company in the state of West Bengal and hence were not delivered to the assessee. 9. That the aforesaid order, sent only to the e-mail id, went to the spam and remained un-noticed and only on receipt of order u/s 271(1)(c) of the Income Tax Act, 1961, dated 28/02/2025 was 1 made aware of such order u/s 250 of the Income Tax Act, 1961 being passed. 10. That the company had earlier received a notice u/s 271(1)(c) dated 06/05/2024 to which it had replied stating that no order u/s 250 of the Act, has been received by us. There was no response to this by the Ld. A.O., and thereafter an order u/s 271(1)(c) was passed on 28/02/2025. 11. That the appeal before the ITAT for Asst Year 2015-16 could not be filed within the due date as the order was addressed to the old address of the assessee in the state of West Bengal and the e-mail remained unnoticed as was sent to spam and I was occupied due to unavoidable circumstances, tending to my aged father. 12. That there is 472 days delay from the date of order in filing appeal before the ITAT. The delay in filing appeal is due to unavoidable circumstances as stated above, without any intention otherwise. 13. That the delay was neither intentional nor wilful, but was bona-fide and it was because of the reasons mentioned hereinabove. In these circumstances, Printed from counselvise.com Page | 3 I.T.A. Nos.: 648KOL/2025 Assessment Year: 2015-16 Royal Fincomm Private Limited there is sufficient cause as contemplated in law and in the facts and circumstances, for allowing the condonation of the above mentioned delay. 14. That the Hon'ble Apex Court through its judgement in Collector, Land Acqusition, Anantnag v. Katiji, [AIR 1987 SC 1353] has observed, \"refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the partled.\" Further, It held that it must be grasped that judiciary is respected not on account of its power to legalize injustice on technical ground but because it is capable of removing injustice and is expected to do so. 15. That it is further submitted that the power of condonation is expected to be exercised liberally so as to advance the cause of justice. [Voltas Ltd. v DCIT (2000) ITR 471(AP)]. This decision is in line with the view taken by Hon'ble Supreme Court in Collector, Land Acquisition, Anantnag v. Katiji, [AIR 1987 SC 1353). 16. That in the aforementioned facts and circumstances, the applicant assessee, herein respectfully prays for condonation of delay in filing the present Appeal. PRAYER It is, therefore, most respectfully prayed that this Hon'ble Tribunal may please condone the delay in filing of the Appeal and the same may kindly be admitted.” 1.2 Considering the application seeking condonation of delay which is also accompanied by an affidavit and the reasons stated therein, we are satisfied that the assessee had a reasonable and sufficient cause and was prevented from filing the instant appeal within the statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication on merit. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: “1. The proceedings u/s 147 having been conducted without jurisdiction are bad in law as the registered address for transferred in the year 2018 and as such the AO had no jurisdiction over the assessee. It is prayed that the assessment order be held to be bad in law and directed to be set aside 2. The failure to serve the notice u/s 148 of the act renders the proceedings u/s 147 of the act invalid, illegal and void ab initio. It is prayed that the Printed from counselvise.com Page | 4 I.T.A. Nos.: 648KOL/2025 Assessment Year: 2015-16 Royal Fincomm Private Limited order u/s 147 rws 144 be held to be bad in law and be directed to be set aside 3. The assessment has been completed without giving a reasonable opportunity of being heard and in violation of the principles of natural justice. It is prayed that the order u/s 147 rws 144 be held to be bad in law and be directed to be set aside. 4. The appeal has been disposed without giving a reasonable opportunity of being heard and in violation of the principle of natural justice seeking adjournments due to real hardships and by responding to compliance dates shows that the assessee was interested but the ld CIT(A) erred in concluding that assessee was not interested and passed an order, it is prayed that the order u/s 250 be held to be bad in law as in violation of principles of natural justice and be directed to be set aside 5. The AO erred in disallowing loss in f& o trading at rs 1,59,76,960. It is prayed that the said disallowance be directed to be deleted. 6. It is prayed that the AO be directed to delete the disallowance of the business loss at 1,59,76,960. 7. The appellant craves to amend alter of modify any of the grounds of appeal or to add fresh grounds of appeal if found necessary.” 3. Brief facts of the case are that the assessee is a company and had filed its return of income for the AY 2015-16 on 28.09.2015 declaring total income at Rs.31,57,573/-. The Assessing Officer (“the Ld. AO”) received information from the SEBI as per which SEBI had observed large scale reversal of trades in stock options segment of Bombay stock exchange leading to creation of artificial volume. Accordingly, SEBI conducted an investigation into the trading activities of certain entities in illiquid Stock Options at BSE for the period 01.04.2014 to 30.09.2015 and observed that no genuine trades resulted into creation of artificial volume to the tune of 826.21 crores units or 54.68% of the total market volume in stock options segment of BSE during the investigation period. It was also observed that M/s Royal Fincomm Pvt Ltd. had indulged in execution of reversal trades in stock Options with same entities on the same day, thereby creating artificial volume, leading to false and misleading appearance of trading in the illiquid Printed from counselvise.com Page | 5 I.T.A. Nos.: 648KOL/2025 Assessment Year: 2015-16 Royal Fincomm Private Limited stock options at BSE. Accordingly, SEBI passed an order by levying penalty of Rs.5,00,000/- vide order no Order/KS/AA/2019-20/3416 dated 14.06.2019. Accordingly, the assessment was reopened and notice u/s 148 of the I.T. Act was issued on 30.03.2021. However, the assessee did not comply with the notices and accordingly, the Ld. AO passed the order u/s 144 r.w.s. 147 r.w.s. 144B of the I.T. Act determining total income at Rs1,92,14,420/- after making an addition of Rs.1,59,76,960/- u/s 68 on account of bogus F&O loss claim and Rs.79,884/- (being 0.5% of 1,59,76,960/-) on account of commission paid in cash. Aggrieved with the reassessment order, the assessee preferred an appeal before the Ld. CIT(A), who vide the impugned order dismissed the appeal as the assessee had failed to respond to the notices issued. The findings of the Ld. CIT(A) are as under: “5.4 In its decision in the case of CIT v. Gold Leaf Capital Corporation Ltd. on 02.09.2011 (ITA No.798 of 2009), the Hon'ble High Court of Delhi had held that a negligent assessee should not be given many opportunities just because that quantum of amount involved is high. Necessary course of action is to draw adverse inference; otherwise it would amount to give premium to the assessee for his negligence. When the assessee is noncooperative, it can naturally be safely concluded that the assessee did not want to adduce evidence as it would expose falsity and non-genuineness. In view of the above, as the appellant has been granted sufficient opportunities to file its submission, but he has failed to do so. Accordingly, appeal of the appellant is liable to be dismissed. 6 Without any prejudice to the above, I am discussing the case on merits. 6.1 Since appellant has not submitted any ground wise submission, all the grounds of appeal are dealt together. In grounds of appeal, appellant has challenged that proceedings u/s 147 have been conducted without jurisdiction. Failure to serve the notice u/s 148 of the act at the correct address renders the proceedings u/s 147 of the Act invalid. Assessment has been completed without providing sufficient opportunity. 6.2 Form the material available on records, it is seen that Appellant filed its return of income for AY 2015-16 on 28.09.2015 declaring total income at Rs.31,57,573/-. AO received information from the SEBI. As per the information, SEBI had observed that large scale reversal of trades in stock options segment Printed from counselvise.com Page | 6 I.T.A. Nos.: 648KOL/2025 Assessment Year: 2015-16 Royal Fincomm Private Limited of Bombay stock exchange leading to creation of artificial volume. Accordingly SEBI conducted an investigation into the trading activities of certain entities in illiquid Stock Options at BSE for the period 01.04.2014 to 30.09.2015 and observed that no genuine trades resulted into creation of artificial volume to the tune of 826.21 crores units or 54.68% of the total market volume in stock options segment of BSE during the investigation period. It is also observed that M/s Royal Fincom Pvt Ltd was indulged in execution of reversal trades in stock Options with same entities on the same day, thereby creating artificial volume, leading to false and misleading appearance of trading in the illiquid stock options at BSE. Accordingly SEBI passed order by levied penalty of Rs 5,00,000/- vide order no Order/KS/AA/2019-20/3416 dated 14.06.2019. Accordingly, case was reopened and notice u/s 148 of the I.T. Act was issued on 30.03.2021. However, appellant did not comply the notices. AO collected the data of appellants transaction form the BSE. As appellant was non compliant, notice u/s 148 along with 142(1) were sent to Verification unit which was served on the appellant on 12.03.2022 via speed post (EW950375535IN). However, appellant did not comply. Accordingly AO passed the order. 6.3 Now the appellant is contending that it has been shifted from the state of West Bengal to the state of Maharashtra in the Year 2018, and the same has been duly communicated to the I.T. Department as well as the details of PAN of the assessee has been duly updated and changed. Hence, ITO ward 4(1) Kolkata no longer has jurisdiction over the assessee. 6.4 It is to be noted that the current address of the appellant as per PAN data base is found to be “Royal Fincomm Private Ltd, 404, PALM Spring Centre, Malad Link Road, Above Croma, Malad West, Mumbai, Maharashtra, India”. However, on perusal of the notice u/s 148 of the I.T. Act it is seen that the address mentioned is “3 Room No. F93/EM, Bentinck Street Lal Bazar, Kolkata, 700001, West Bengal, India”. Appellant is claiming that it has changed the address in FY 2018, however, no documentary evidence regarding the same has been submitted. Appellant has also not submitted any evidence as to when the address in the PAN was changed. Further, appellant has not submitted anything with regard to any request for transfer of PAN form Kolkata to Mumbai. As the notice u/s 148 of the I.T. Act is system generated. Had the applicant got the address changed before the issue of notice, then the notice would have been issued on New address. Moreover, the notice sent by the verification unit was also served. Hence in absence of any documentary evidence regarding the change of address and its intimation to the AO, contention of the appellant cannot be accepted. 6.3 Appellant is further contending that it has not received any notice at the registered address, in the state of Maharashtra. However, on perusal of the ITBA system, it is seen that the AO has issued and served the notices on email Printed from counselvise.com Page | 7 I.T.A. Nos.: 648KOL/2025 Assessment Year: 2015-16 Royal Fincomm Private Limited idaccounts@ royalsynthetics.in which was as per the latest ITR filed for AY 2020- 21. Since AO has served the notices through electronic medium, hence the delivery of hard copy of notices at residential address of the appellant is not essential. Further it is seen that various letter, notice u/s 142(1), show cause notice etc have been issued and served on the above email id. Hence the contention of the appellant regarding service of notice and AO not providing sufficient opportunities is found to be incorrect. As the appellant has not submitted anything in support of its ground of appeal regarding the additions made by the AO, I am left with no other option than to confirm the additions made by the AO. Hence ground no 1 to 6 of appeal are hereby dismissed. 7. In result appeal is dismissed.” 4. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal. 5. The assessee sought adjournment but as the reasons were not justified on the basis of the facts of the case, therefore, the request for adjournment was rejected and the appeal was heard. Rival contentions were heard and the submissions made have been examined. The Ld. AR submitted that the notices were sent at the old address and requested that the matter may be remanded to the Ld. AO as both before the Ld. AO as well as before the Ld. CIT(Appeals), proper representation was not made and the orders were decided ex parte. The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same may be upheld. 6. We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). We find that at both the stages of assessment order before the Ld. AO as well as before the Ld. CIT(A) in the appeal, proper representation was not made on behalf of the assessee on account of lack of communication. The Ld. AR requested that the matter may be remitted to the Ld. AO while the Ld. DR supported the order of the Ld. CIT(A). Printed from counselvise.com Page | 8 I.T.A. Nos.: 648KOL/2025 Assessment Year: 2015-16 Royal Fincomm Private Limited After considering the facts of the case, we deem it appropriate in the interest of justice and fair play that another opportunity needs to be provided to the assessee to represent his case properly before the Ld. AO as the assessee claims to have sufficient evidence in support of the relief claimed. We, therefore, set aside the order of the Ld. CIT(A) as well as of the Ld. AO and remit the matter to the Ld. AO to frame the assessment afresh, after affording an opportunity of being heard to the assessee and thereafter pass an order in accordance with law. Since the transactions were carried out by the assessee and the persons with whom the transactions were carried out were known to the assessee, the assessee shall produce the persons who had traded with the assessee for cross-examination before the Ld. AO as the SEBI had given adverse findings in respect of these transactions and shall also furnish all evidence in support of the genuineness of the transactions. The assessee shall not seek unnecessary adjournment and shall be at liberty to file all evidence in possession for the relief claimed. For statistical purposes, the appeal of the assessee is partly allowed. 7. In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 13th October, 2025. Sd/- Sd/- [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 13.10.2025 Printed from counselvise.com Page | 9 I.T.A. Nos.: 648KOL/2025 Assessment Year: 2015-16 Royal Fincomm Private Limited Copy of the order forwarded to: 1. Royal Fincomm Private Limited, 404 Palm Spring, Malad Link Road, Malad West, Mumbai, Maharashtra, 400064 2. ITO, WARD 4(1), Aayakar Bhavan, Chowringhee Square, Kolkata, West Bengal, 700069. 3. CIT(A)- 4. CIT- 5. CIT(DR), Patna Bench, Patna. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata Printed from counselvise.com "