SANJAY CHAWLA,KAROL BAGH, DELHI vs. ITO, WARD-51(3), CIVIC CENTRE, DELHI

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ITA 2690/DEL/2026Status: DisposedITAT Delhi04 August 2026AY 2017-20185 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT(A)'s actions violated the principles of natural justice. The case was remanded back to the CIT(A) for fresh adjudication after providing the assessee with adequate opportunity to be heard.

What were the facts?

The assessee appealed against the CIT(A)'s order. The CIT(A) passed the order without granting a proper opportunity of hearing, failed to adjudicate additional grounds, and relied on a remand report without providing it to the assessee.

What were the issues?

Whether the CIT(A) violated principles of natural justice by not providing an adequate opportunity of hearing and by failing to adjudicate all grounds of appeal. Whether additions under Section 68 were justified without proper adjudication.

Which sections of the Income-tax Act were involved?

Section 250(5),Section 250(6),Section 68,Section 133(6),Section 271AAC

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI

Before: SH. MAHAVIR SINGH & SH. KRINWANT SAHAY

Hearing: 04.08.2026Pronounced: 04.08.2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘E’ NEW DELHI BEFORE SH. MAHAVIR SINGH, VICE PRESIDENT AND SH. KRINWANT SAHAY, ACCOUNTANT MEMBER

I.T A. No.2690/Del/2026 (A.Y 2017-18) Sanjay Chawla ITO Ward – 51 (3) 5638/78, Regar Pura, Karol Vs. Civic Centre, Delhi Bagh, Delhi PAN No.ADQPC6564L

Appellant by: None Adjournment application (rejected) Respondent by : Sh. Tarun Sharda, Sr. DR

Date of Hearing 04.08.2026 Date of Pronouncement 04.08.2026

ORDER PER KRINWANT SAHAY AM

Appeal in this case has been filed by the assessee against the order dated 20.01.2026 passed by the CIT(A)/NFAC, Delhi for the A.Y. 2017-18. Grounds of appeal are as under :-

The Appellant respectfully submits the following Grounds of Appeal against the impugned order passed by the learned

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Commissioner of Income-tax (Appeals), which are independent and without prejudice to one another. “I. GROUNDS RELATING TO PROCEDURAL ILLEGALITY AND VIOLATION OF NATURAL JUSTICE

1.

That the learned CIT(A) erred in law and on facts in passing the impugned order dated 20.01.2026 without granting reasonable and effective opportunity of hearing, despite the appellant having specifically requested time to file detailed submissions till 30.01.2026, thereby violating the principles of natural justice. 2. That the learned CIT(A) erred in failing to record, admit, or adjudicate the Additional Grounds of Appeal filed by the appellant under section 250(5) of the Income-tax Act, 1961, thereby failing to exercise jurisdiction vested in him and passing the impugned order in violation of section 250(6) of the Act. 3. That the learned CIT(A) erred in passing the impugned order without adjudicating the jurisdictional issues raised by the appellant in the Additional Grounds of Appeal, including: i. defective show cause notice issued by the Assessing Officer, iii. reliance on alleged notices issued under section 133(6) without prior confrontation to the appellant. The impugned order is completely silent on these issues and therefore suffers from non-application of mind. 4. That the learned CIT(A) erred in relying upon the remand report of the Assessing Officer without furnishing a copy thereof to the appellant and without granting opportunity to file rebuttal, thereby violating principles of natural justice. 5. That the assessment itself stood vitiated as the Assessing Officer issued the final show cause notice dated 23.12.2019 at 3:36 PM fixing compliance on 25.12.2019 at 11:00 AM, when the assessment was getting barred by limitation on 31.12.2019, thereby granting only an illusory and ineffective opportunity. 6. The appellant came to know for the first time through the said show cause notice that notices under section 133(6) had allegedly been issued to certain creditors, leaving no reasonable opportunity to verify or respond. 2 | P a g e

II. GROUNDS ON MERITS - SECTION 68 ADDITIONS 1. That the learned authorities below erred in confirming the addition of ₹4642374/- under section 68 in respect of cash deposits made during the demonetisation period, without rejecting the books of account under section 145 and without disproving the recorded cash sales duly reflected in the books and subjected to VAT. 2. That the learned authorities below erred in confirming the addition of ₹23749996/- in respect of three trade creditors, despite accepting the corresponding purchases and ignoring the confirmations, PAN details, Sales Tax/VAT particulars & returns, and ledger accounts furnished by the appellant. 3. That the learned authorities below erred in drawing adverse inference solely on the basis of alleged non-response to notices under section 133(6), despite the appellant having discharged the primary onus by furnishing identity and transaction details of the creditors. Non-response by third parties cannot constitute a valid basis for addition under section 68. 4. That the learned authorities below erred in making arbitrary and selective additions in respect of only three creditors aggregating to 223749996/- out of seven creditors to whom notices under section 133(6) were allegedly issued, without recording any reason for excluding the remaining creditors. 5. That the learned authorities below erred in making addition of 2477265/- on account of alleged difference in creditor balance, ignoring the explanation and reconciliation submitted by the appellant, as routine reconciliation differences do not constitute unexplained income under section 68. 6. That the initiation of penalty proceedings under section 271AAC is purely consequential and unsustainable once the additions under section 68 are legally untenable, 7. That having regard to the facts and circumstances of the case, Ld. AO has erred in law and facts in charging interest u/s 234A/B/C of the Income Tax Act, 1961. 8. That the appellant craves leaves to add, modify, amend or delete any of the grounds of appeal at the time of hearing.”

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2.

At the very outset the it was brought to the notice of the bench that the additional grounds of appeal taken by the assessee was not adjudicated by the Ld. CIT(A). It was also pointed out by the Ld. DR that the Ld. CIT(A) relied upon the remand report furnished by the AO without furnishing a copy of the same to the assessee and without granting opportunity to file rebuttal. So, we find such action of the Ld. CIT(A) against the concept of natural justice.

3.

The ld. DR relied on the order of the Ld. CIT(A).

4.

We have considered the order passed by the Ld. CIT(A) and we find that although the Ld. CIT(A) has relied on the findings given by the AO in the remand but he did not get the rebuttal of the assessee on it and it is also a matter of record that copy of the remand report was never furnished to the assessee.

5.

The Ld. CIT(A) has also not adjudicated the jurisdictional issues raised by the assessee. Keeping in view these facts we are of this considered view that the assessee deserves one more opportunity to be heard in detail. Accordingly, we remand this case back to the file of the ld. CIT(A) for fresh adjudication after giving due and adequate opportunity of being heard to the assessee. The assessee is also 4 | P a g e

directed to file all details / papers that it thinks fit for explaining various issues before the ld. CIT(A).

6.

In the result, the appeal filed by the assessee is allowed for statistical purpose.

Order pronounced in the open Court on 04.08.2026.

Sd/- Sd/-

(MAHAVIR SINGH) (KRINWANT SAHAY) VICE PRESIDENT ACCOUNTANT MEMBR Dated : 04/08/2026 *Neha Sr. PS* Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT (Appeals) 5. DR: ITAT

ASSISTANT REGISTRAR ITAT NEW DELHI

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