SHYAM BERIWAL ,BANGALORE V. DCIT, CIRCLE-3(3)(1), BANGALORE

ITA 2331/BANG/2025

AI Insights

The case involves Shyam Beriwal, who appealed against the reassessment order passed by the Deputy Commissioner of Income Tax, which reclassified an amount of 3,974,477 from capital gains to salary income. The reassessment was based on the finding that the assessee had not fully disclosed his salary income from Flipkart Internet Private Limited in his tax return. The assessee argued that the income was from the buyback of vested stock options and should be taxed as capital gains, referencing a favorable decision from the Karnataka High Court. The initial appeal was dismissed due to a 74-day delay, which the Tribunal later found to be unjustly not condoned by the CIT  A, leading to the restoration of the appeal for reconsideration on its merits.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 846293 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Bangalore
• Assessment Year: 2020-2021
• Appeal Filed On: 17-10-2025
• Other Referred Cases: Mr. R Krishnan v. Assistant Commissioner of Income Tax, Manjit Singh Chawla versus Deputy Commissioner of Income Tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBRAMANIAN
• Assessee Lawyers: ABDUL MUSHQEET PASHA
• Keywords: Condonation of delay; Salary income; Capital Gains; Ignorance of law
• Section: 147; 142(1); 133(6)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH : BANGALORE BEFORE SHRI PRASHANT MAHARISHI, VICE – PRESIDENT AND SHRI SOUNDARARAJAN K., JUDICIAL MEMBER ITA No. 2331/Bang/2025 Assessment Year : 2020-21 Shyam Beriwal, Villa No. 812, Adharsh Palm Retreat, Bellandur, Outer Ring Road, Bangalore – 560 103. PAN: AKVPB2772P Vs. The Deputy Commissioner of Income tax Circle – 3(3)(1), Bangalore. APPELLANT RESPONDENT Assessee by : Shri Abdul Mushqeet Pasha, AR Revenue by : Shri Subramanian – JCIT DR Date of Hearing : 12-02-2026 Date of Pronouncement : 25-03-2026 ORDER PER PRASHANT MAHARISHI, VICE – PRESIDENT 1. This appeal is submitted against the appellate order issued by the National Faceless Appeal Centre, Delhi (the learned CIT – A) for the assessment year 2020–21, dated 26 August 2025. The appeal pertains to the dismissal of the assessee's challenge to the reassessment order passed under Section 147 read with Section 144B of the Income Tax Act, 1961, on 26 March 2025 by the Assessment Unit, Income Tax Department (the learned AO). 2. The assessee has raised several substantive grounds; however, the primary contention is that an amount of ₹3,974,477 has been Printed from counselvise.com ITA No. 2331/Bang/2025 Page 2 of 6 assessed under the head \"salary,\" whereas the assessee has reported it as \"capital gains\" arising from the buyback of vested stock options received from the employer, Flipkart Internet Private Limited. 3. The facts of the case indicate that the assessee submitted his income tax return on 2 February 2020, declaring a total income of ₹ 12,794,640. Information obtained under section 135A of the Act revealed a tax deduction at source under section 192 in the name of the assessee for salary received from Flipkart Internet Private Limited, which was not fully disclosed in the return. Consequently, the Assessing Officer issued notices under section 133(6) of the Act. Upon verifying the income tax return, it was observed that the assessee reported gross salary of ₹ 9,225,231 as opposed to the actual salary income of ₹ 13,199,708, resulting in an unreported salary amounting to ₹ 3,974,477. Following due procedure, the Assessing Officer issued a notice for reopening the case and subsequently, further notices were served under section 142(1) of the Act. 4. Upon inquiry, the assessee clarified that shares of Flipkart Group were allotted prior to its acquisition by Walmart. These shares were subsequently bought back by Flipkart before the acquisition took place. Based on the respective dates of allotment and buyback, the assessee reported long-term and short-term capital gains according to the holding period. The assessee referenced the decision in Mr. R Krishnan v. Assistant Commissioner of Income Tax (ITA No. 590/Bangalore/2017), asserting that the profit earned from the buyback of shares does not constitute a perquisite under Section 192 of the Income Tax Act; rather, it is taxable under the head \"Capital Gains.\" Printed from counselvise.com ITA No. 2331/Bang/2025 Page 3 of 6 5. Upon review of the assessee's response, the learned assessing officer determined that a perquisite amounting to ₹3,974,477 was received by the assessee for shares acquired under the employee stock option scheme. This amount is duly disclosed in both Form No. 16 and Form No. 26AS, with the employer recording it under salary income. Consequently, the assessing officer subtracted ₹3,974,477 from the returned income—previously reported as short-term capital gain of ₹8,024,317 and long-term capital gain of ₹2,150,160—and reclassified it as undisclosed salary income. Both the total assessed income and the total returned income were same as documented in the assessment order dated 26 March 2025. 6. The assessee, being aggrieved by the decision, filed an appeal before the learned CIT(A); however, the appeal was delayed by 74 days. The learned CIT(A) did not condone the delay and consequently dismissed the assessee's appeal. 7. The assessee has appealed before us regarding the same matter. The learned Authorized Representative, Mr. Pasha, contended that this issue is clearly resolved in favor of the assessee by the decision of the Honorable Karnataka High Court in Manjit Singh Chawla versus Deputy Commissioner of Income Tax, Writ Petition No. 20,212 of 2023 dated 2 June 2025. In that case, another employee of the same company was found not liable for tax under the head 'Salary' but instead as a 'Capital Gain.' 8. Regarding the delay not condoned by the learned CIT(A), it was submitted that the assessee acknowledged the delay in filing the appeal and also submitted a condonation application, which is detailed in paragraph 5 of the CIT(A) order. The representative reiterated these arguments, asserting that CIT(A) should have Printed from counselvise.com ITA No. 2331/Bang/2025 Page 4 of 6 considered it as the sufficient cause for the delay in filing the appeal. 9. The learned departmental representative, Mr. Subramaniam, respectfully submitted that it is unnecessary to examine the merits of the case at this juncture, as there was a 74-day delay in filing the appeal before the learned CIT (A). This delay was not condoned by the learned CIT (A) due to insufficient justification provided. Therefore, even if the matter falls under the purview of the decision of the Honourable Karnataka High Court, the merits should not be considered. 10. We have carefully considered the rival contention and perused the orders of the learned lower authorities. We find that there is a delay in filing of the appeal before the learned CIT – A. The assessment order was stated to be received on 26th of March 2025 whereas the appeal was instituted on eighth of July 2025. In form No. 35 the assessee has given a reason that the assessee came to know about the assessment order only when he logged into the file leg portal with the help of new consultant who was to file his return of income. Assessee submitted that he is a salaried employee, not conversant with the income tax law. Therefore, he has appointed a consultant to represent during the scrutiny proceedings who did not inform about the assessment order passed. The email on which the connected notices and orders were sent were also not being accessed by the assessee. The new consultant informed him that an assessment order is already passed in his case for the assessment year 2020 – 21 on 26th of March 2025. Thus, the order passed by the learned assessing officer was not in knowledge. The new consultant guided him to file the appeal in this matter but by that time the time limit for filing the appeal has passed. Therefore, it is contended by the assessee that he came to know of the assessment Printed from counselvise.com ITA No. 2331/Bang/2025 Page 5 of 6 order only on 25th of June 2025 and immediately on 8 July 2025 the appeal was filed. No doubt it has caused a delay of 74 days, but it is for reasons beyond the control of the assessee. He submitted that the learned CIT – A has adopted a pedantic approach in not condoning the delay when the issue is squarely covered on its merits in favour of the assessee by the decision of the honourable jurisdictional High Court. He submitted that ignorance of law as stated by the learned CIT – A may not be an excuse pain the issue is to be decided on the merits of the case but for the purpose of condonation of delay it may be an excuse and a sufficient cause. We find that the learned CIT – A has noted that assessee has failed to substantiate the claim with any supporting documentary evidence further the appointment of the new consultant was also not supported by any engagement letter, correspondence, affidavit of the consultant are proof of representation during the scrutiny assessment. As there is no evidence furnished to show engagement of new consultant, and the assessment order was sent on the email ID of the assessee, the delay was not condoned. On careful consideration of the above facts, we find that there is a sufficient cause in failure on part of the assessee to furnish an appeal before the learned CIT – A within specified time limit. In case of an individual assessee, it is highly impractical to ask for the engagement letter, correspondence or affidavit of the consultant. In absence of this it cannot be said that there is no sufficient cause for delay in filing the appeal. It is not denied by the assessee that assessment order was served on his email ID but despite this the assessee is explaining that it has caused delay of 74 days in filing the appeal. Looking at the explanation of the assessee for delay in filing of the appeal we find that the learned CIT – A was not correct in not condoning the delay of 74 days. Accordingly, we hold that the learned CIT – A was not correct in condoning the delay of 74 days, Printed from counselvise.com ITA No. 2331/Bang/2025 Page 6 of 6 the appeal is restored before the learned CIT – A to decide it on its merits. 11. Regarding the merits of the case, the assessee has argued that the issue is supported by the decision of the honourable Karnataka High Court. The learned CIT – A is instructed to review this and reconsider the matter based on its merits. 12. In the result appeal of the assessee is allowed for statistical purposes as indicated above. Order pronounced in the open court on 25th March, 2026. Sd/- (SOUNDARARAJAN K.,) Sd/- (PRASHANT MAHARISHI) JUDICIAL MEMBER VICE-PRESIDENT Bangalore, Dated, the 25th March, 2026. *TNTS* Copy to: 1. Appellant 2. Respondent 3. CIT 4. DR, ITAT, Bangalore 5. CIT(A) By order Assistant Registrar, ITAT, Bangalore Printed from counselvise.com "