SALAHUDDIN NIHALUDDIN SHAIKH,MUMBAI vs. ITO , MUMBAI

PDF · subscribers
ITA 5601/MUM/2025Status: DisposedITAT Mumbai21 November 2025AY 2015-166 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the CIT(A) erred in dismissing the appeal solely on the ground of delay without adjudicating the issues on merits. This was considered contrary to the principles of natural justice. The Tribunal acknowledged the assessee's failure to diligently pursue the appeal and comply with notices, describing it as gross negligence and indifference. However, it also noted the duty of the appellate authority to dispose of appeals on merits even if the appellant fails to appear. Balancing these aspects, the Tribunal set aside the CIT(A)'s order and restored the matter to the Assessing Officer (AO) for a de novo assessment, providing the assessee a reasonable opportunity to be heard and directing the assessee to ensure due compliance. The Tribunal also imposed a cost of Rs. 15,000/- on the assessee for lack of diligence, to be deposited in the Prime Minister's Relief Fund.

What were the facts?

The assessee, Salahuddin Nihaluddin Shaikh, is an individual who did not file a return of income for Assessment Year 2015-16. The case was reopened under Section 147 of the Income-tax Act, 1961, due to the sale of an immovable property for Rs. 1,84,51,000/- which remained unexplained. A notice under Section 148 was issued, but no return was filed. During reassessment proceedings, notices and questionnaires were issued, which were not complied with, leading to an ex-parte assessment order under Section 144, making an addition of Rs. 1,84,51,000/- as short-term capital gains. The assessee appealed to the CIT(A), but did not respond to appeal notices, resulting in the appeal being dismissed for non-prosecution.

What were the issues?

1. Whether the CIT(A) erred in confirming the addition of Rs. 1,84,51,000/-, being advance received by the appellant, considering it as income of the appellant? (Question of law and fact, turning on Section 147 and Section 144 of the Act). 2. Whether the CIT(A) erred in confirming the addition of Rs. 1,84,51,000/-, being advance received by the appellant, considering it as Short Term Capital Gains? (Question of law and fact, turning on Section 147 and Section 144 of the Act). Assessee's contention: The assessee's authorized representative requested the Tribunal to condone the non-prosecution and remand the matter back to the lower authorities. Revenue's contention: The Senior Departmental Representative objected to the remand, stating that the assessee was a habitual defaulter, as evidenced by the ex-parte assessment order due to non-compliance.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 148,Section 144B

AI-generated summary — verify with the full judgment below

Before: JUSTICE (RETD.) C. V. BHADANG & SHRI PRABHASH SHANKAR

For Appellant: Shri Jigar Mehta, CA
For Respondent: Shri Swapnil Choudhary (Sr. AR)
Hearing: 10.11.2025Pronounced: 21.11.2025

PER PRABHASH SHANKAR [A.M.] :- The present appeal arising from the appellate order dated 10.07.2025 is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)"] pertaining to assessment order passed u/s.147 r.w.s.144 r.w.s.144B of the Income- tax Act, 1961 [hereinafter referred to as “Act”] dated 20.02.2023 for the Assessment Year [A.Y.] 2015-16. Page 2 Salahuddin Nihaluddin Shaikh

2.

The grounds of appeal are as under:

1.

On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) erred in confirming the entire addition of Rs.1,84,51,000/- made by the Ld.AO, being advance received by the appellant, considering the same as income of the appellant.

2.

On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) erred in confirming the entire addition of Rs.1,84,51,000/- made by the Ld. AO, being advance received by the appellant, considering the same as Short Term Capital Gains.

3.

Briefly stated facts of the case are that the assessee is an individual and the return of income for the year under consideration was not filed by him. The case was re-opened u/s 147 of the Act due to the fact that he sold an immovable property for a consideration of Rs.1,84,51,000/- during the year which remained unexplained and ought to have been charged to tax. Accordingly, notice u/s 148 of the Act was issued by the Assessing Officer vide dated 31.03.2022. In response to the same, no return of income was filed by him.

4.

During reassessment proceedings, various notices along with questionnaire and show-cause were issued to him on various dates which remained to be complied leading to completion of assessment u/s 144 of the Act by making an addition of Rs.1,84,51,000/- under the head 'short-term capital gain' to the total income. Aggrieved, he filed appeal before ld.CIT(A) contesting the impugned assessment and the addition made. However, the assessee did not respond to appeal notices as well. Page 3 Salahuddin Nihaluddin Shaikh Consequently, the appeal filed by him was dismissed on account of non prosecution.

5.

Before us, the ld.AR made a request to condone the same and remand the matter back to the lower authorities. The ld.DR however, objected to this proposition stating that the assessee was a habitual defaulter in this regard as the assessment order was also passed in ex parte manner due to his non compliance.

6.

We observe that the ld.CIT(A) dismissed the appeal solely on the ground of delay. He could not adjudicate the issues raised in the grounds of appeal and did not examine the materials available on record. Such dismissal without deciding the appeal on merits is contrary to the principles of natural justice. It is settled law that it is the duty of the appellate authority to dispose of an appeal on merits after considering the material on record, even if the appellant fails to appear. However, it is equally important that it is a fundamental duty of the assessee to diligently pursue the appeal and comply with the notices and proceedings initiated by the Revenue authorities. The failure of the assessee to take any initiative reflects gross negligence and an indifference which is unacceptable, particularly when the appeal involves significant additions and disallowances. It is pertinent to note Page 4 Salahuddin Nihaluddin Shaikh that the principles of natural justice operate both ways, while the revenue authorities are required to provide a reasonable opportunity of being heard, the taxpayer is equally obligated to co-operate with the authorities and utilize the opportunities extended. In the present case, despite receiving adequate opportunities, the assessee displayed a casual approach and indifference which delayed the assessment and appellate proceedings. Taxpayers are expected to act responsibly, especially when significant sums and complex issues are under dispute.

6.

1 In light of the above, levy of cost would be fully justified. The cost serves as a necessary deterrent to ensure that taxpayers act with due diligence in pursuing the proceedings and adhering to the timelines and processes laid down under the law. It also emphasizes the principle that while justice must be ensured, the system cannot cater to indolence or negligence on the part of the assessee.

7.

In view of the above, following the principles of natural justice and fair play, we set aside the order of the ld.CIT(A) and restore the matter to the AO. He is directed to make de novo assessment after providing a reasonable opportunity of being heard to the assessee who, in turn, would ensure due compliance. Page 5 Salahuddin Nihaluddin Shaikh

7.

1 Considering the assessee's lack of diligence in pursuing the assessment and also appeal and his failure to take timely measures respecting timelines laid down in the Act, we impose a cost of Rs.15,000/- on the assessee. The cost shall be deposited to the credit of the Prime Minister's Relief Fund within 15 days of the receipt of this order and proof of payment shall be submitted before the ld.AO.

8.

In the result, the appeal of the assessee is allowed for statistical purposes, subject to the levy of costs as specified above. Order pronounced in the open court on 21/11/2025. [Justice (Retd. ) C.V.BHADANG] [PRABHASH SHANKAR] PRESIDENT ACCOUNTANT MEMBER Place: मुंबई/Mumbai दिनांक / Date 21.11.2025 Lubhna Shaikh / Steno आदेश की प्रतिलिपि अग्रेषित/

More judgments on Section 147

All 49,210 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →