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Before: JUSTICE (RETD.) C. V. BHADANG & SHRI PRABHASH SHANKAR
Date of Hearing 15.10.2025 Date of Pronouncement 03.11.2025 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal arising from the appellate order dated 25.06.2025 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 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 19.03.2024 for the Assessment Year [A.Y.] 2018-19.
A.Y. 2018-19 Gayatri Ankit Chona, Mumbai 2. The grounds of appeal are as under:
1. On facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals), the National Faceless Appeal Centre [‘the Ld. CIT(A)’] erred in upholding re-assessment proceedings initiated by the Income Tax Officer Ward 23(1)(1), Mumbai (‘the learned JAO’) under Section 148 of the Act and the re-assessment order passed by the Assessment Unit, National Faceless Assessment Centre, Income Tax Department under Section 147 read with Section 144B of the Income-tax Act, 1961 (‘the Act’) (hereinafter referred as ‘the re-assessment order’).
2. On facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in stating that the Appellant neither filed adjournment letter nor furnished submissions during the appeal proceedings.
3. On facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in confirming addition of sum of INR 10,12,89,335, being dividend income of the Appellant, as unexplained money under Section 69A of the Act.
3. Facts in brief are that the assessee disclosed income of Rs 7,07,40,270/-in the return filed in which she inter alia claimed exemption u/s 10(35) of the Act in respect of dividend of Rs 10,12,89,335/-received from a mutual Fund. Later, her case was reopened u/s 148 of the Act on the basis of information received from the Investigation wing of the Department that the exemption claimed was not allowable. A Survey operation u/s 133A of the Act was conducted by the Wing in the case of M/s JM Financial Asset Management Ltd. Consequently, it was discovered and also admitted by the office bearers of the said mutual fund house that records were manipulated in violation of SEBI guideline vide circular No.
3.1 On perusal of the above information, the AO observed that the assessee had made investment in ‘JM Balanced Fund - Annual Dividend Option Regular Plan’ which after diverting a portion of the capital amount into revenue item i.e. distributable surplus paid dividend Rs.10,12,89,335/- to the assessee on which she had claimed full exemption u/s. 10(35) of the Act. It was observed by the AO that the dividend received by the assessee was not on account of appreciation of the investment but actually return of a part of the capital itself which could not be qualified as dividend. In absence of any explanation inthis regard to substantiate the claim,the AO disallowed the claim of the assessee and treated the said payment of Rs. 10,12,89,335/- as Unexplained Money u/s 69A of the Act.
Aggrieved, the assessee preferred appeal before the ld.CIT(A). However, as observed by him despite issuance of at least three notices for hearing, there was no compliance by the assessee during appeal proceedings. Consequently, based on the Statement of Facts filed alongwith the appeal, he upheld the action of the AO in absence of any explanation on part of the assessee, concluding that the genuineness of A.Y. 2018-19 Gayatri Ankit Chona, Mumbai money received as dividend and exemption claimed u/s 10(35) by the assessee could not be established as she grossly failed to discharge her onus.
Before us, at the outset, ld. AR submitted that the principle of natural justice had not been followed in its case. The ld. CIT(A) has passed the impugned order without providing sufficient opportunity of hearing to it. On the other hand, ld. Sr. DR submitted that the assessee failed to substantiate the claim before both the authorities and therefore, the addition was rightly upheld by the ld.CIT(A).
We have heard rival contentions and perused the material available on records. It is observed that the ld.CIT(A) dismissed the appeal mainly on the ground of non-prosecution. He could not adjudicate the issues raised in the grounds of appeal
in absence of any compliance by the assessee. Even before us, the ld.AR has failed to put forth any cogent reason for such attitude before the appellate authority. We are of the considered view that it is the fundamental duty of the assessee to diligently pursue the appeal and comply with the notices and proceedings initiated by the Revenue authorities. The framework of the Act and the procedures laid down rely heavily on the co-operation and active participation of the taxpayer. Despite the notices under section A.Y. 2018
19. Gayatri Ankit Chona, Mumbai 250 of the Act by the CIT(A), neither any compliance was made nor any substantive explanation was submitted.Despite receiving adequate opportunities, the assessee displayed a casual approach.
6.1 However, in the interest of justice and fairplay, we proposed to grant one more opportunity to the assessee which was not objected by the ld.DR also. Accordingly, we deem it appropriate to remand the entire issue back to the file of ld. CIT(A) for de novo adjudication by him, while applying the principles of natural justice and affording sufficient opportunity of being heard to the assessee who is also directed to comply with the notices without fail.
In the result, the appeal stands allowed for statistical purposes.
Order pronounced in the open court on 03/11/2025.