SHAKIL AHMED HAFIZUDDIN,MUMBAI V. ASSESSING OFFICER CIRCLE 42(3)(1), MUMBAI

ITA 1250/MUM/2025

AI Insights

The case involves Shakil Ahmed Hafizuddin, a non-resident Indian and former employee of Commercial Bank International, Dubai, who appealed against the order of the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre, which upheld the AO's addition of Rs. 36,00,000 as unexplained investment under section 69 of the Income Tax Act, 1961, for the purchase of immovable property. The assessee argued that the funds used for the property purchase were from his accumulated salary earned abroad and transferred to his NRE account. The Tribunal found procedural lapses in the earlier hearings, including the denial of adequate opportunity to be heard, and thus remitted the matter back to the AO for a thorough examination of the facts and documents presented by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 706142 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2010-2011
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATYAPAL KUMAR
• Assessee Lawyers: VIMAL PUNMIYA
• Keywords: Opportunity of being heard; Reassessment proceedings; Unexplained investment; Salary income; Principle of natural justice; Source of fund
• Section: 147; 144; 69

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE MS PADMAVATHY S, AM & SHRI RAJ KUMAR CHAUHAN, JM I.T.A. No. 1250/Mum/2025 (Assessment Year: 2010-11) Shakil Ahmed Hafizuddin, 118, Zarina Society, S V Road, Lucky Hotel, Bandra West, Mumbai-400051. PAN: ADQPH9064G Vs. AO, Circle-42(3)(1), Kautilya Bhavan, Bandra, Mumbai-400051. Appellant) : Respondent) Appellant /Assessee by : Shri Vimal Punmiya, CA Revenue / Respondent by : Shri Satya Pal Kumar, Sr. DR Date of Hearing : 25.06.2025 Date of Pronouncement : 30.06.2025 O R D E R Per Padmavathy S, AM: This appeal by the assessee is against the order of Commission of Income Tax (Appeals) / National Faceless Appeal Centre (NFAC), Delhi [In short 'CIT(A)'] passed under section 250 of the Income Tax Act, 1961 (the Act) dated 30.12.2025 for Assessment Year (AY) 2010-11. The assessee raised the following grounds of appeal: 2 ITA No. 1250/Mum/2025 Shakil Ahmed Hafizuddin “1. Having regard to the facts and circumstances of the case, Ld. CIT(Appeals) has erred in law and on facts in passing an order without giving an adequate opportunity of being heard and by not observing the principles of natural justice 2. The Ld. AO erred in making an addition of Rs. 36,00,000 for purchase of immovable property as Unexplained Investments under section 69 of the Income Tax Act, 1961 without considering the facts & circumstances of the case. 3. The Ld. AO has simply made the addition of Rs. 36,00,000/- without considering the facts as assessee a non resident Indian purchased the Immovable House Property from the accumulated salary income earned during his employment out of India and transfer such fund to his NRE account to make payment for the purchase of immovable property. 4. On the facts and circumstances of case and in law, Ld Assessing officer erred in initiating penalty u/s 271F, 271(1)(b) and 271(1)(c). 5. On the facts and circumstances of case and in law, Ld. Assessing officer erred in levying interest u/s 234A, 234B, 234C and 234D of the Income Tax Act, 1961” 2. The assessee is an individual and non-resident Indian till AY 2010-11. The assessee was a salaried employee with Commercial Bank International, Dubai. During the year under consideration the assessee has entered into an agreement towards purchase of a property for a consideration of Rs. 36,00,000/- and the stamp duty and the registration charges amounted to Rs. 1,93,000/-. Since the assessee did not file the return of income for the year under consideration the Assessing Officer (AO) initiated proceedings under section 147 of the Act. Since the assessee did not respond to the notices the AO passed the order under section 144 r.w.s 147 of the Act wherein he treated the entire purchase consideration as unexplained investment under section 69 of the Act. Aggrieved the assessee filed further appeal before the CIT(A). There was a delay in filing the appeal before the CIT(A). The assessee prayed before the CIT(A) that the delay may be condoned stating that the assessee was not residing at the place where notices were served due to work commitment and his mother being old was not aware of the income tax proceedings, however, the 3 ITA No. 1250/Mum/2025 Shakil Ahmed Hafizuddin CIT(A) did not condone the delay and upheld the addition made by the AO. The assessee is in appeal before us against the order of the CIT(A). 3. We heard the parties and perused the material on record. Before us the ld. AR filed an affidavit mentioning the reason for non-appearance before the AO and the reasons for delay in filing the appeal before the CIT(A). The relevant part of the affidavit are extracted herein under: “6. REASONS FOR NON-APPEARANCE BEFORE THE Ld. A.O. i. That, I most respectfully submit that the non-compliance before the Ld. AO was neither intentional nor deliberate, but purely due to genuine and unavoidable reasons beyond my control. ii. During the reassessment proceedings, the Ld. AO issued notice(s). At that time, I was exhaustively engaged in my professional commitments. Unfortunately, during this period, the notice(s) were delivered to my family home in Mumbai, where a relative received them on my behalf. (Mother) iii. Regrettably, I was not made aware of the receipt of these important documents. The envelopes were kept aside unopened. Also, I was not made aware about the said correspondence. This led to a delay in my understanding of the situation. It was only upon my return to Mumbai that I came to know of the notices. Once I recognized the importance of the matter, I promptly took steps to seek advice and to appoint an Authorized representative (AR)who would look into the matter. The AR in turn initiated the process of filing an appeal with the Ld. Commissioner of Income Tax (Appeals) [Ld. CIT(A)]. iv. That being aggrieved by the assessment order, I filed an appeal before the Ld. CIT(A) on 18/04/2018. 7. REASONS FOR DELAY IN FILING OF APPEAL BEFORE THE LD. CIT(A) i. Due to the above mentioned reasons I was unable to file my appeal in time. However, coping with gravity of the situation, I wasted no time in seeking advice to understand the implication of the Assessment Order and swiftly acted to file an appeal before the Ld. CIT(A) throughhanAR. 4 ITA No. 1250/Mum/2025 Shakil Ahmed Hafizuddin ii. That the impugned order was passed by the Ld. AO on 26/12/2017. The appeal was filed on 18/04/2018 with a delay of 83 days from the time limit prescribed by the Income Tax Act, 1961 (IT Act). 8. REASONS FOR NON-COMPLIANCE BEFORE THE LD. CIT(A) i. During the appellate proceedings before the Ld. CIT(A), a notice was issued on 09/04/2024under section 250 of the IT Act. The AR applied to seek an adjournment stating that he was not in town and by extension needed time to prepare. Due to chronic health issues, the AR had travelled to his native village to rest. ii. The AR was suffering from serious health complications during the relevant period. This adversely impacted his ability to prepare for and attend the hearings. Due to my longstanding trust in him and the sensitive nature of the matter, I could not make alternate representation arrangements in time. iii. Consequently, due to the lack of proper representation and the limited opportunity to present my case, the Ld. CIT(A) rendered an order dated 30/12/2024, which upheld the additions made by the Ld. AO without considering my side of the argument. iv. This outcome underscores the need for a fair opportunity to present evidence and defend my position in the matter.” 4. After perusing the above affidavit and the facts peculiar to the assessee's case and in the interest of natural justice and fair play, we are inclined to give one more opportunity to the assessee to represent the case properly on merits. Further the ld. AR during the course of hearing made detailed written submissions explaining the source for purchase of the property and the same needs factual verification. Accordingly, we remit the issue back to the AO with a direction to call for relevant documents as may be required in this regard and decide the case on merits in accordance with law. The assessee is directed to file all the necessary evidences explaining the source of funds towards purchase of property and co-operate with assessment proceedings without seeking unnecessary adjournments. It is ordered accordingly. 5 ITA No. 1250/Mum/2025 Shakil Ahmed Hafizuddin 5. In result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 30 -06-2025. Sd/- Sd/- (RAJ KUMAR CHAUHAN) (PADMAVATHY S) Judicial Member Accountant Member *SK, Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai "