NITIN,KARNAL vs. ITO WARD 1, KARNAL

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘C’, NEW DELHI Before Sh. S. Rifaur Rahman, Accountant Member & Sh. Raj Kumar Chauhan, Judicial Member ITA No. 2300/Del/2026 :Asstt. Year: 2022-23 Nitin Vs Income Tax Officer, 184, Katju Nagar, Ward-1, Taraori, Ward-1, Karnal, Haryana-132116 Karnal, Haryana-132001 (APPELLANT) (RESPONDENT) PAN No. BCRPN2317K Assessee by: Sh. Samyak Jain, Adv. & Sh. Mukesh Jain, CA Revenue by: Sh. Vikram Singh Sharma, CIT-DR Date of Hearing: 23.06.2026 Date of Pronouncement: 03.07.2026 ORDER Per Raj Kumar Chauhan, Judicial Member: The appeal by the assessee is directed against the order of ld. CIT(A)/NFAC, Delhi dated 12.03.2025 u/s 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) wherein the appeal has been dismissed ex-parte and assessment order has been upheld and the addition made by way of variation through intimation u/s 143(1) of the Act has been confirmed.

2 ITA No. 2300/Del/2026 Nitin PAPERS issued from the Government department on behalf of the actual users of these STAMP PAPERS for various purposes such as AFFIDAVITS, REGISTRATION OF PROPERTIES etc. Small commissions earned on a daily basis cumulated in a Gross Income of about a few lakhs from this business. But to earn this, payment has to be made to the Haryana Government department to get the Stamp Papers released in the name of the actual user. For example, If STAMP PAPERS worth Rs 1,00,000/- are needed by Mr. A for a property he his purchasing, Mr. A will give the assessee cash of Rs 1,00,000/- which the assessee will deposit in his bank account and simultaneously he will remit the payment to the HARYANA GOVERNMENT Department which will thereafter release the Stamp Papers in the name of Mr. A. Thus, although the assessee would have actually earned say Rs 100 only as Commission but the bank account of the assessee was credited by Rs 1,00,000/- as cash deposited for payment to the Government on behalf of Mr. A. Together, these payments can go into crores of rupees for a full year. Payments are made by Stamp purchasers through the assessee in cash, UPI, Bank transfer, RTGS etc but all payments to the Government are made through bank transfer only. The assessee maintains books for this business and files his ITR taking the Gross Commission as his Gross Income. For the AY 2022-23, The assessee's case was taken up for scrutiny for verification of the cash deposits in three accounts maintained by the assessee for this purpose, two Current accounts, with YES BANK & ICICI BANK and one savings a/c with CANARA BANK. The assessee had deposited cash received from end users in the Current a/cs only and not in the Savings a/c with CANARA BANK. The SFT information referred to by the A.O that cash of Rs 56,49,483/- was deposited in this account is totally false. The Notices for the scrutiny all were sent to the email id cakrishankhurana@gmail.com which is the email id of the then engaged CA Sh. Krishan Khurana as mentioned in the ITR filled by him. The assessee was not aware that the said CA was not responding to the notices from the department. It was only when the order came that the said CA informed the assessee about the same. Due to this unprofessional behavior on the part of the engaged CA, the assessee was put under a lot of mental stress and a huge demand of crore of rupees which he cannot even dream of earning was thrust on him giving him sleepless nights since then. The Ld. AO did not communicate on the e-mail id of the assessee which was available to the department.

3 ITA No. 2300/Del/2026 Nitin Since then, the assessee has changed his Counsel, engaged a senior professional personally known to him, to take up the matter for a justice and fair driven proceedings. The Ld. A.O framed an assessment order adding all the cash deposits in the bank accounts as income of the assessee ignoring some vital essentials such as non- seeking of the bank statements from the respective banks so as to see the actual position, non appreciation of the assessee's declared business, non appreciation of the fact that the assessee had furnished balance sheet in the ITR, non rejection of assessee's books of accounts and many other acts which if done would not have resulted in such an arbitrary and high pitched assessment order invoking the provisions of section 69A and 115BBE of the Act. In sum & substance therefore, a high pitched Assessment order was framed by the Ld. A.O assessing Income at Rs 20,29,02,273/- as against the Returned income of 4,59,290/- raising a Huge Demand for Rs. 19,42,42,130/- on the Assessee. Hence, this Appeal disputing the action of the Ld. A.O as the assessee is possessed with all the relevant documents which will substantiate the fact that the bank deposits are not the income of the assessee.” 3. It is alleged in the assessment order that detailed opportunities were given by issuing notice u/s 143(2) dated 01.06.2023 followed by notice u/s 142(1) dated 19.06.2023, 10.08.2023 and thereafter two show-cause notice dated 25.01.2024 and 07.02.2024 but the assessee did not file any response. It was observed that assessee has deposited cash amount of Rs.20,24,42,983/- in his account maintained with ICICI Bank Ltd. as well as Canara Bank Ltd. and requested to file submissions/response to the show-cause notice but no compliance was made and the Assessing Officer was left no option but has treated the said unexplained cash deposits u/s

4 ITA No. 2300/Del/2026 Nitin 69A r.w.s. 115BBE of the Act and made the addition of Rs.20,24,42,983/-.

“1. That on the facts and circumstances of the case, the Ld. A.O has erred in framing a High-Pitched Assessment order (442 times the Returned Income) u/s 144 of the Act in an arbitrary manner, ignoring the settled principle that the A.O must frame a best judgment Assessment in an unbiased, rational and logical Manner and therefore the Assessed Income of Rs. 20,29,02,273/- as against the Returned income of 4,59,290/- is liable to be quashed. 2. That having regards to the facts and circumstances of the case, the Ld. CIT(A) erred in passing ex-parte order without serving any notice over the registered email ID of the appellant and providing opportunity to the appellant to sustain the claim. 3. That on the facts and circumstances of the case, the Ld. AO erred in making the addition without first rejecting the Books and Accounts of Assessee u/s 145(3) of the Act, the framing of an Assessment order u/s 144 of the Act is wholly illegal, invalid and bad in law, rendering the said Assessment order liable to be quashed. 4. That having regards to the facts and circumstances of the case, the Ld. CIT(A) erred in upholding the addition made by the Ld. AO of Rs. 20,24,42,983/- by invoking the provision of section 69 A of the Act which is wholly arbitrary, uncalled, illogical, without any basis and deserved to be deleted.“ 5. We have heard the ld. AR and the ld. DR. The ld. AR at the very outset stated that the notice allegedly sent on 6 dates from 14.10.2024 to 11.02.2025 by the ld. CIT(A) were never received or served upon the assessee. As a result, the

5 ITA No. 2300/Del/2026 Nitin impugned ex-parte order has been passed. Hence, the impugned order being ex-parte has resulted into miscarriage of justice. It is submitted that since both the orders are ex-parte and the assessee has a valid and legal justification for the cash deposited because of nature of his business activity as a stamp vendor and therefore the ends of justice requires that a fresh assessment order be passed after giving effective opportunity of hearing and considering the submission made by the assessee.

“250(2) The following shall have the right to be heard at the hearing of the appeal- (a) the appellant, either in person or by an authorized representative;” 8. Thus, the hearing mandated by Section 250(2)(a) of the Act is not a mere formality but a mandatory statutory

6 ITA No. 2300/Del/2026 Nitin requirement for following the principle of natural justice by the quasi-judicial authority.