SARVESH FAUJDAR,DELHI vs. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -32, NEW DELHI, NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’, NEW DELHI Before Sh. S. Rifaur Rahman, Accountant Member & Sh. Raj Kumar Chauhan, Judicial Member ITA No. 8188/Del/2025 : Asstt. Year: 2023-24 Sarvesh Faujdar, Vs ACIT, G-3, Shop No. 10, Lawrence Road, Central Circle-32, Industrial Area, Keshav Puram, New Delhi-110055 New Delhi-110035 (APPELLANT) (RESPONDENT) PAN No. ACQPF1841A Assessee by: Sh. Pulkit Verma, Adv. & Sh. Saket Jain, Adv. Revenue by: Ms. Chanchal Meena, CIT-DR Date of Hearing: 15.04.2026 Date of Pronouncement: 28.04.2026 ORDER Per Raj Kumar Chauhan, Judicial Member: The appeal of the assessee is directed against the order dated 30.09.2025 of ld. Commissioner of Income Tax (Appeals)-30, New Delhi [hereinafter referred to as the “CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] wherein the best judgment Assessment Order u/s 144 of the Act dated 31.03.2025 was confirmed and the addition made therein were upheld.

2 ITA No. 8188/Del/2025 Sarvesh Faujdar which is a proprietorship of Mr. Pramod Faujdar, husband of assessee and M/s Nikhil Trading Company which is a proprietorship of Mrs. Sarvesh Faujdar, wife of Sh. Pramod Faujdar. As per election-based cash transaction report (CTR) received by the department, it was reported that cash amount to Rs. 298 crores (approximately) had been withdrawn in the third quarter i.e. October to December for the financial year 2023-24 from the bank account of M/s Shree Kanhaiya Ji Trading Company (owned by husband of the assessee). During the course of search proceeding, the statement of Mrs. Sarvesh Faujdar (assessee before us) was recorded u/s 132(4) of the Act wherein she informed that she was not aware about the facts of accounts and financial affairs of the proprietorship concern as the same were maintained by Mr. Pramod Faujdar (her husband) Statement of Mr. Pramod Faujdar was also recorded and on the basis of information received from him was noticed that the assessee has been engaged in providing accommodation entries in lieu of commission @ 2.5%. It is further noticed by the Assessing Officer that the assessee has shown total sales of goods of Rs.37,58,87,444/- in her ITR for A.Y. 2023-24. Therefore, in absence of any satisfactory reply/documentary evidence, 2.5% of above amount of Rs. 37,58,87,444/- remained unexplained income of the assessee. Accordingly addition of Rs.93,97,186/- was made u/s 69A of

3 ITA No. 8188/Del/2025 Sarvesh Faujdar the Act. Similarly, further addition of Rs.11,04,784/- was made on account of bogus sales commission. Further addition of Rs.1,16,880/- was made on account of disallowance of salary & wages and Rs.2,19,367/- on the basis of disallowance of rent along with disallowance of interest of Rs.3,68,528/-. Further the additions were made r.w.s. 115BBE of the Act and penalty proceedings were separately initiated.

4 ITA No. 8188/Del/2025 Sarvesh Faujdar 3. That on facts and in law, the CIT(A) erred in confirming the demand of Rs. 1,21,47,285/- without providing an opportunity of being heard. 3.1. That on facts and in law, the impugned order dated 30th September, 2025 passed by the CIT(A) is violative of natural justice to the extent it ignored the Appellant request to adjourn the appeal sine die since the Appellant’s spouse duly entrusted with the business activities of Appellant was in judicial custody since August 2024 due to which reply could not be filed. 3.2. That on facts and in law, the Ld. CIT(A) has erred in passing the ex-parte order without giving proper and effective opportunity of being heard. 4. That on the facts and in law, CIT(A) erred in upholding the assessment order dated 31st March, 2025 passed by the Ld. AO under Section 144 manually without mentioning the Document Identification Number (DIN) is non est. 5. That on fact and in law the CIT(A) erred in upholding the assessment order dated 31st March, 2025 passed by the Ld. AO under Section 201(1) sans DIN is contrary to CBDT Circular No. 19/2019 dt. Aug 14, 2019. That on facts and in law the CIT(A) erred in upholding the assessment order dated 31st March, 2025 passed by the AO under Section 144 is void ab initio being contrary to jurisdictional HC Judgement in Brandix Mauritius 456 ITR 34 (Delhi). 5.1. That on facts and in law, the C1T(A) has erred in upholding the addition of Rs. 93,97,186/- on account of unexplained commission under Section 69A based on third party statement without affording an opportunity of cross examination to the Appellant. 6. That on facts and in law, the CIT(A) erred in upholding the estimation of income without rejecting books of account of the Appellant under Section 145(3) or pointing out any defect in the books of the Appellant. 7. That on facts and in law, the C1T(A) erred in upholding the addition of Rs. 93,97,186/- under Section 69A being (2.5% of the gross receipts of Rs. 37,58,87,444/-) as commission Income of the Appellant despite the fact that the Appellant has declared the said gross receipts as business income in relation to Agricultural Produce Market Committee (APMC) license owned by the Appellant from the State Government.

5 ITA No. 8188/Del/2025 Sarvesh Faujdar 7.1. That on facts and in law, the CIT(A) erred upholding the addition of Rs. 93,97,186/- under Section 69A without appreciating that no such money was received by the Appellant and hence the Appellant cannot be said to be the owner of the money. 7.2. That on facts and in law, the CIT(A) erred in upholding the addition of Rs. 93,97,186/- under Section 69A holding that Appellant failed to provide satisfactory explanation despite the fact that Appellant has adequate documentary evidence to substantiate the genuineness of the said receipts. 8. That on facts and in law, the CIT(A) erred in upholding ad hoc addition and disallowances of Rs. 27,50,099/- where the Ld. AO has already estimated the income of the Appellant. 9. That on facts and in law, the C1T(A) erred in sustaining charge of interest u/s 234A, 2348 & 234C of the I T Act 1961. 10. That on facts and in law, the C1T(A) erred in taxing unexplained investment under Section 115BBE for AY 2023-24.” 5. We have heard the ld. AR and the ld. DR and examined the record. Ld. AR at the outset submitted that it is an admitted case that assessee being wife of Mr. Parmod Faujdar was not aware of the financials and accounts of the proprietorship concern in her name because all the financial and legal accounts of her proprietorship concern were being looked after and maintained by her husband, Mr. Pramod Faujdar. It is further argued that Mr. Parmod Faujdar remained in judicial custody in Maharashtra in RCC No. 1566/2024, C.R. No. 59/2024 u/s 406, 419, 420, 465, 468, 471 r.w.s. 34 of the IPC from 16.10.2024 till 01.01.2026 when he was granted bail vide order dated 01.01.2026 passed by the court JMFC,

6 ITA No. 8188/Del/2025 Sarvesh Faujdar Belapur. Copy of the order on bail dated 15.10.2025 and 01.01.2026 has been filed on record during the argument. It is argued that during the assessment proceeding as well as during the appellant proceedings, the appellant could not made proper submissions in the absence of her husband who was in judicial custody and as such the assessment order was passed u/s 144 and subsequently, the appellate order has also been passed an appeal has been also dismissed by the ld. CIT(A) becuase assessee being wife of a person who was in judicial custody could not represent her case and the necessary documents could not be filed as it was her husband who was privy to all the financials and accounts matter of the proprietorship concern allegedly owned by her. It is therefore submitted that the principle of natural justice has not been followed and assessee requires to be given effective opportunity of hearing which was possible only in the presence of her husband to provide the financial and other accounts details during the assessment proceeding as well as during the appellate proceeding, but the same could not be produced as he being in judicial custody at the relevant time or at the time of passing of the assessment order dated 31.03.2025 and the first appellate order dated 30.09.2025. It is therefore submitted that the impugned order be set aside and the matter may be restored to the file of the AO with the direction to give

7 ITA No. 8188/Del/2025 Sarvesh Faujdar effective opportunity of hearing to the assessee for producing necessary documents/material in support of her case.

8 ITA No. 8188/Del/2025 Sarvesh Faujdar of the transaction. It was further observed that a genuine trading concern would have detailed stock records, transport bills, confirmation from parties and VAT/GST compliances, but none were produced in this case. We have further noticed that in para number 8.3 of the impugned order, the ld. CIT(A) has observed that when the multiple pieces of evidence are available, non-cross examination of one individual does not vitiate the proceedings and further that the assessee never requested for cross examination of either before AO or before him {CIT(A)}. In para number 8.4 of the impugned order, it is observed that “at both assessment and appellate stage”, the assessee has not furnished a single invoice, stock proof or party confirmation to prove genuineness of the transaction. The appellant has not shown that any actual money was received as genuine trading margin. In such a situation, the presumption that turnover represents accommodation entries remains unchallenged. In para number 9.3 of the impugned order, it is observed that despite being given opportunity, the assessee did not produce any buyer, confirmation, transportation, proofs or banking trail to establish that the sales were genuine. No explanation has been offered even in appellant proceeding. The silence of the assessee reinforces the AO's conclusion that there were bogus sales.

9 ITA No. 8188/Del/2025 Sarvesh Faujdar 9. Having been recorded the observation of the ld. CIT(A), the question before us is whether the assessee was justified in her claim that she could not effectively represent before the ld. AO as well as before the ld. CIT(A) because her husband was in judicial custody from 16.10.2024 till 01.01.2026. The documentary proof regarding her husband being remained in judicial custody has been filed before us and nothing has been submitted on behalf of the Revenue that the said documents regarding the husband of the assessee being in jail were false or fabricated. It is also noticed by us that at the very beginning of the assessment proceeding, the assessee has made clear to the assessing authorities that she was not aware of any financial or accounts matter of the proprietorship concern in her name as it is her husband who is looking after all the affairs.

10 ITA No. 8188/Del/2025 Sarvesh Faujdar the assessment proceeding as well as during the appellant proceeding. Since, her husband being in jail was beyond the control of the assessee and it is a common factor that assessee being a woman was dependent for running the affairs of her proprietorship concern on her husband who was allegedly looking after the entire affairs of the proprietorship concerned in her name. Nothing has been brought to our notice that the submissions made by the assessee in that regard were false or fabricated.

11 ITA No. 8188/Del/2025 Sarvesh Faujdar the grounds raised in the appeal are allowed in the above manner.