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Facts
The assessee's appeal is against an ex-parte order by the CIT(A). The re-assessment proceedings were initiated based on information about non-genuine profit/loss on illiquid derivatives, drawing support from the Ashish Agarwal judgment.
Held
The Tribunal held that the re-assessment notice and resultant order should be set aside and quashed, following the Supreme Court's decisions in the cases of Rajeev Bansal and Ashish Agarwal, where concessions were made regarding the assessment year.
Key Issues
Whether the re-assessment proceedings initiated under section 147 were valid, considering the principles of natural justice and relevant Supreme Court pronouncements. Whether the disallowances and additions made by the AO and confirmed by the CIT(A) were justified.
Sections Cited
147, 148, 143(2), 250, 68, 69C, 234A, 148A
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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, HON’BLE & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE
Assessee by : Shri Suchek Anchaliya, A/R Revenue by : Shri Leyaqat Ali Aafaqui, Sr. D/R सुनवाई की तारीख/Date of Hearing : 18/09/2025 घोषणा की तारीख /Date of Pronouncement: 22/09/2025 आदेश/O R D E R
PER NARENDRA KUMAR BILLAIYA, AM:
This appeal by the assessee is preferred against the order of the ld. dated 03/06/2025 by NFAC, Delhi [hereinafter the ‘ld. CIT(A)’] pertaining to AY 2015-16.
The grievance of the assessee reads as under:- “1. The learned Commissioner of Income Tax (Appeals) [hereinafter referred to as Ld. CIT(A)] erred in law and on facts in passing the appellate order under section 250 of the Act in an ex-parte manner, without affording a proper and effective opportunity of being heard to the Appellant. 2. The Ld. CIT(A) erred in law and on facts in treating the Appellant's specific legal grounds (i) challenging the assumption of jurisdiction under section 147 for non-compliance with the mandatory procure under section 148A of the Act, and (ii) failure to issue notice under section 143(2) of the Act after return filing, as general in nature and failing to adjudicate them on merits, thereby violating the principles of natural justice and causing grave prejudice to the Appellant. 3. The learned CIT(A) erred in law and on facts in confirming the disallowance of loss amounting to Rs, 1,33,02,100/- incurred Rs. 2972662/- on transactions executed 2 through M/s. Goodluck Securities Pvt. Ltd., by alleging them to be non-genuine reversal trades.
4. The learned CIT(A) grossly erred in confirming the addition of Rs.33.10,850/- under section 68 of the Act on account of alleged unexplained cash credits, even though the said profit was Rs. 1125358/- part of the net result of disclosed trading activity conducted through registered brokers via banking channels.
5. The learned CIT(A) erred in law and on facts in confirming the addition of Rs. 10,91,979/- under section 69C of the Act as Rs. 371164/- alleged unexplained expenditure on account of commission.
The learned CIT(A) erred in upholding the assessment without addressing the fundamental violation of principles of natural justice, as no opportunity, of cross- examination was provided to the Appellant in respect of third-party statements (including those of Ms. Mousumi Deb Roy and Mr. Subhendu Saha) relied upon in the assessment order.
The learned CIT(A) erred in not granting appropriate relief in respect of incorrect computation of interest under section 234A.
The Appellant craves leave to add, amend, alter, DLEETE, OR withdraw any of the above grounds of appeal.”
3. Briefly stated the facts of the case are that on the basis of information available with the AO, the AO came to know that the assessee has generated non-genuine profit/loss on illiquid derivatives on BSE by trading of Rs. 1,03,25,650/- in derivative of Good Luck Securities of Rs. 46,90,000/- being traded in derivatives with SPS Share Brokers Pvt. Ltd. Drawing support from the decision of the Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal (2022 SCC Online SC 543), notice u/s 148 of the Act was issued and served upon the assessee and the assessment was completed at a figure of Rs. 1,37,31,860/-. 3.1. The assessee challenged the addition before the ld. CIT(A) questioning the validity of the re-assessment proceedings but without any success.
Having heard the rival contentions, we have carefully perused the orders of the authorities below. The impugned notice u/s 148 of the Act is dated 28/07/2022, which clearly mentions that the proceedings have been initiated in consequence of the judgment of the Hon’ble Supreme Court in the case of Ashish Agarwal (supra).
The quarrel pursuant to such notice following the decision of the Hon’ble Supreme Court in the case of Ashish Agarwal (supra), has been settled by the decision of the Hon’ble Supreme Court in the case of Rajeev Bansal, Civil Appeal No.8629 of 2024 on 03.10.2024 (2024 SCC ONLINE 754), in which the ld. Additional Solicitor General of India, has made concession insofar as, the assessment year 2015-16 is concerned. The same view was followed by the Hon’ble Supreme Court. Subsequently, in the case of ACIT vs. Nehal Ashit Shah, in which the Hon’ble Supreme Court in a Special Leave Petition arising out of the final judgment and order passed by the High Court of Judicature at Bombay, in W.P. No. 1201/2023 has been dismissed. The relevant findings read as under:- “3. It has been submitted at the bar that this Special Leave Petition could be disposed of by following the order dated 17.01.2025 passed in the case of the Income Tax Officer Ward 1(2) Jaipur vs. R.K.Build Creations Private Limited (Special Leave Petition (Civil) Diary No(s). 59625 of 2024). For ease of reference the aforesaid order reads as under: "Delay condoned. Having regard to the concession made by the petitioner-Department in the case of Union of India vs. Rajeev Bansal, Civil Appeal No.8629 of 2024 on 03.10.2024 (2024 SCC ONLINE 754), this Special Leave Petition would not survive for further consideration. Hence, the Special Leave Petition is dismissed. Pending application(s), if any, shall stand disposed of." 4. Consequently, following the aforesaid order, this Special Leave Petition is dismissed as it does not survive for further consideration.