VAKIL CHAND JAIN,MEERUT V. ITO, WARD -2(4), MEERUT

ITA 6038/DEL/2024

AI Insights

The case involves Mr. Vakil Chand Jain, who appealed against the order of the CIT(A) which had dismissed his appeal ex-parte without deciding on the merits. The original dispute arose from an assessment order where the assessee's claim of a large deduction under Section 57 was disallowed, leading to the addition of Rs. 7,59,43,343 as income. The CIT(A) dismissed the appeal due to non-compliance by the assessee with the notices issued. The Tribunal found that the CIT(A) had not adjudicated the issues on merits and thus set aside the order, remanding the case for a fresh decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 295067 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2022-2023
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Business income; Additional evidence; Transactions in derivatives
• Section: 142(1); 143(2); 250

Judgement Text

"1 ITA No. 6038/Del/2024 Vakil Chand Jain v. ITO,Merrut A.Y. 2022-23 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘H’ AT NEW DELHI BEFORE SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA No. 6038/Del/2024 Assessment Year : 2022-23 Mr. Vakil Chand Jain, 187/8, K.B.L. Market, Khair Nagar, Meerut-250003 Uttar Pradesh. v. Income Tax Officer, Ward-2(4), Aayakar Bhawan, Meerut-250002 \u0001थायीलेखासं./जीआइआरसं./PAN/GIR No: AFJPJ 1313 H Appellant .. Respondent Assessee represented by : Shri Rohit Agarwal, CA Department represented by: Sh. Jitender Singh, Sr. DR Date of Hearing 23.04.2025 Date of Pronouncement 23.04.2025 O R D E R PER RAMIT KOCHAR, AM: This appeal in ITA No. 6038/Del/2024, filed by the assessee for A.Y. 2022- 23 has arisen from the appellate order dated 26.11.2024 [DIN & Order No. ITBA/NFAC/S/250/2024-25/1070646686(1)] passed by the learned CIT(A)/National Faceless Appeal Centre (NFAC), Delhi u/s 250 of the Income-tax 2 ITA No. 6038/Del/2024 Vakil Chand Jain v. ITO,Merrut A.Y. 2022-23 Act, 1961 (“the Act”), which in turn had arisen from the assessment order dated 06.03.2024 passed by the Assessment Unit, Income Tax Department u/s 143 (3) read with Section 144B of the Act (DIN:ITBA/AST/S/143(3)/2023- 24/1062071703(1). 2. The grounds of appeal raised by the assessee in Memorandum of Appeal filed with Income Tax Appellate Tribunal, New Delhi, reads as under: “1. That the Ld. CIT(A) has erred in law and the facts of the case by dismissing the appeal of the appellant ex parte, without deciding the same on the merits of the case. 2. That the Id. CIT(A) be directed to decide the appeal of the appellant on merits. 3. That the appellant respectfully craves leave to add alter omit or substitute any or all of the above grounds of appeal at any time before or at the time of hearing of appeal to enable your good self to decide the appeal in accordance with law.” 3. Brief facts of the case are that the assessee filed his return of income declaring total income of Rs. 3,17,950/-. The case of the assessee was selected by Revenue for framing scrutiny assessment under the category “Complete Scrutiny” in CASS for the reason “Large deduction claimed u/s 57(Business ITR)”. The AO issued statutory notice u/s 143(2) ,as well notices u/s 142(1) to the assessee during the course of assessment proceedings, but there was no response by the assessee. Show cause notice was issued to the assessee by the AO on the ground that 3 ITA No. 6038/Del/2024 Vakil Chand Jain v. ITO,Merrut A.Y. 2022-23 assessee had claimed large deduction u/s 57 of the Act. The assessee was asked to explain the same along with documentary evidences as to why claim of deduction of expenditure to the tune of Rs. 7,59,43,343/- . The assessee did not file any reply which led to the disallowance of deduction of expenditure u/s 57 of the Act to the tune of Rs. 7,59,43,343/- by the AO as an income of the assessee for the year under consideration under the head “Income from other sources”. 4.The assessee filed first appeal with the Ld. CIT(A). The Ld. CIT(A) issued three notices to the assessee fixing the dates of hearing on 24.05.2024, 29.10.2024 and 20.11.2024. Despite the notices being issued by the AO, there was no compliance by the assessee. The Ld. CIT(A) dismissed the appeal of the assessee ex-parte on the ground that the assessee is not interested in pursuing the appeal. 5. Aggrieved ,the assessee has now filed appeal with the Tribunal. At the outset Ld. Counsel appearing for the assessee submitted that the assessee has filed affidavit stating that the assessee has studied up to 12th standard only and have very little knowledge of income-tax . The assessee was carrying on the business of trading of medicine under the name of M/s Paras Medical Store. The assessee had undertaken transactions in derivatives in F&O of total sales value of Rs. 7,58,19,411/- and total buy value of all the transactions in F&O was Rs. 7,59,43,345/-. The assessee has shown the sales and purchases separately. The 4 ITA No. 6038/Del/2024 Vakil Chand Jain v. ITO,Merrut A.Y. 2022-23 assessee has also submitted that since he was not well versed with e-mails and hence he could not comply with the e-mails sent by the Ld. CIT(A) ,and hence there was no compliances during first appellate proceedings. It is prayed by the Ld. Counsel for the assessee that an ex-parte order has been passed by the Ld. CIT(A) and prayer were made to restore the matter for de novo adjudication by ld. CIT(A). The assessee has also filed client basic information of the transactions from 1.4.2021 to 31.3.2022 of the derivatives F&O transactions carried on by the assessee ,which is by way of additional evidence filed for the first time before the Tribunal which and the assessee has stated that it is mentioned in the data that the assessee had purchases of F&O to the tune of Rs. 7,59,43,345/-(inclusive of charges) and the sale price was to the tune of Rs. 7,58,19,410/-(net of charges). The purchases in derivatives F&O were totally disallowed which were claimed u/s 57 and brought to tax .It was submitted that the matter can be restored back to the file of Ld. CIT(A) ,so that the issue may be decided on merit in accordance with law. 5.2. The ld. Sr. DR fairly submitted that the matter can go back to the file of ld. CIT(A) for denovo adjudication of the appeal of the assessee 6. After hearing both the parties and perusing the material available on record, it is observed that Ld. CIT(A) passed an ex-parte order without deciding the issues 5 ITA No. 6038/Del/2024 Vakil Chand Jain v. ITO,Merrut A.Y. 2022-23 arising in the appeal on merits. We draw reference to provision of Section 250(6) wherein the ld. CIT(A) is required to specify point of determination,decision therein and the reasoning thereof . The learned CIT(A) has not dealt with the issue on merit and simply dismissed the appeal of the assessee on the ground that no compliance was made by the assessee. The claims and contentions of the assessee need verification and investigations of facts. Proceedings before ld. CIT(A) are extension of assessment. The powers of ld. CIT(A) are co-terminus with powers of the AO, which includes power of enhancement also. In the instant case, the learned CIT(Appeals) has not made any enquiry, nor any remand report was called by ld. CIT(A) from the AO, and the appeal of the assessee was dismissed by ld. CIT(A) ex-parte and without deciding the issues arising in the appeal on merits. The ld. CIT(A) is required and obligated to pass order in compliance with the provisions of section 250(6), as ld CIT(A) is required to pass reasoned and speaking order on merits in accordance with law. The ld. CIT(A) has to state points for determination, his decision and reasoning for the said decision, in the appellate order which is to be passed in writing by ld. CIT(A). The appellate order passed by ld. CIT(A) is subject to further appeal with ITAT u/s 253. The appellate order passed by ITAT is subject to further appeal before Hon’ble High Court u/s 260A. The judgment and order passed by Hon’ble High Court is also subject to challenge 6 ITA No. 6038/Del/2024 Vakil Chand Jain v. ITO,Merrut A.Y. 2022-23 before Hon’ble Supreme Court. Thus, the appellate order passed by ld. CIT(A) is not a final order, as it is subject to challenge before higher appellate authority. Thus, Reasons which weighed in the minds of the adjudicating authority while adjudicating appeal on merits of the issues are cardinal as the higher appellate authority can then adjudicate appeal on the issues arising in appeal before them, based on decision and reasoning of ld. CIT(A) in deciding the issues. If the ld. CIT(A) simply dismiss the appeal merely because the assessee did not comply with the notices issued by ld. CIT(A) in limine without adjudicating issues arising in the appeal on merits, such order is not sustainable in the eyes of law keeping in view provisions of Section 250(6), and also higher appellate authorities will be deprived to see what weighed in the mind of the ld. CIT(A) while adjudicating appeal as it will be an order passed without reasoning on the issues on merits. The appellate order of the CIT(A) is clearly in violation of section 250(6) of the Act and liable to be set aside. Merely stating that the assessment order passed by AO is upheld, and that the assessee has not submitted details/documents is not sufficient. The ld. CIT(A) is not toothless as his powers are co-terminus with the powers of the AO., which even includes power of enhancement. It is equally true that the assessee also did not complied with the notices issued by ld. CIT(A) , and did not file the requisite details/documents to support his contentions. Thus, the assessee is equally 7 ITA No. 6038/Del/2024 Vakil Chand Jain v. ITO,Merrut A.Y. 2022-23 responsible for its woes. Under these circumstances and fairness to both the parties, in the interest of justice, the appellate order of CIT(A) is set aside and the matter can go back to the file of ld. CIT(A) for fresh adjudication of the appeal of the assessee on merit in accordance with law after giving opportunities to both the parties. We direct the assessee to comply with the notices issues by ld. CIT(A) , otherwise ld. CIT(A) shall be free to pass the appellate order on merits in accordance with provisions of Section 250(6). We clarify that we have not commented on the merits of the issues in the appeal. Accordingly, this appeal of the assessee in ITA No. 6038/Del/2024 for assessment year 2022-23, stands allowed for statistical purposes. We order accordingly. Order pronounced in the open court on 23.04.2025 in the presence of both the parties. Sd/- Sd. - (SUDHEER PAREEK) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 25 .04.2025 PS: *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 8 ITA No. 6038/Del/2024 Vakil Chand Jain v. ITO,Merrut A.Y. 2022-23 4. CIT(Appeals) 5. DR: ITAT 6. Guard File ASSISTANT REGISTRAR ITAT DELHI BENCHES "