HEMANT PRAKASH KANUGO,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(3), MUMBAI, MUMBAI

आदेश / ORDER PER MAKARAND VASANT MAHADEOKAR, AM: The present appeal is directed against the order dated 17.01.2025 passed by the learned Commissioner of Income Tax (Appeals)-48, Mumbai [hereinafter referred to as "CIT(A)"] under section 250 of the Income-tax Act, 1961[hereinafter referred to as "the Act"], arising out of the assessment order passed by the

2 ITA No. 1794/Mum/2025 Hemant Prakash Kanugo Assessing Officer under section 143(3) of the Act dated 06.12.2018. Facts in Brief 2. The assessee, an individual, filed his return of income on 28.07.2016 declaring total income at Rs. 8,63,600/-, which was processed under section 143(1) and thereafter selected for scrutiny under CASS. The assessment was completed under section 143(3) determining the total income at Rs. 46,62,870/-, inter alia, making the following additions: i. Addition of Rs. 24,19,096/- treating exempt income claimed as gift as taxable under section 56(2)(vii); ii. Addition of Rs. 13,80,171/- being full value of consideration of alleged sale of securities treated as income from other sources; iii. Disallowance of long-term capital loss of Rs. 29,60,281/-. 3. The Assessing Officer observed that despite multiple opportunities, the assessee failed to furnish supporting documentary evidence such as gift deeds, demat statements, and proof of identity, creditworthiness and genuineness of transactions. Accordingly, the additions were made. 4. Aggrieved, the assessee preferred an appeal before the CIT(A). However, the learned CIT(A), after issuing several notices during appellate proceedings, noted that the assessee did not effectively pursue the appeal and remained non-compliant.

3 ITA No. 1794/Mum/2025 Hemant Prakash Kanugo Consequently, the appeal was disposed of ex-parte, confirming all additions made by the Assessing Officer.

4 ITA No. 1794/Mum/2025 Hemant Prakash Kanugo of the appellant and therefore the same shall deleted and necessary direction shall be given in this regard. 4. On the facts, circumstance of the case and in law, the Ld. Ld. CIT (A) erred in confirming the order of Ld. AO in respect of addition of Rs. 77,493/- as long term capital gain for the year under consideration. It is submitted that the learned assessing officer has failed to understand that the appellant has already offered the same to taxation for the year under consideration and the fact of the same has already been submitted before the Learned Assessing Officer during the course of assessment proceedings. It is therefore submitted that the learned Assessing officer has made the addition without considering the facts of the case of the appellant. 5. Your appellant craves leave to amend or alter any ground or add a new ground which maybe necessary on or before the date of hearing. 6. The learned Authorised Representative submitted that the additions have been made without proper appreciation of facts. It was contended that the additions made by the Assessing Officer are contrary to the facts on record. It was contended that the addition of Rs. 24,19,096/- under section 56(2)(vii) is unsustainable, as the amount represents gift of shares received from close relatives, namely brother and mother, which fall within the definition of “relative” under the Act and hence are not taxable. Further it was contended that the disallowance of long- term capital loss of Rs. 29,60,281/- and the addition of Rs. 13,80,171/- by treating sale consideration as income from other sources were made without appreciating the factual matrix, as the transactions pertained to sale of securities and the computation was duly reflected in the return of income.

5 ITA No. 1794/Mum/2025 Hemant Prakash Kanugo merits due to non-representation, and therefore, in the interest of justice, the matter may be restored to the file of the CIT(A) for fresh adjudication after granting adequate opportunity of being heard to the assessee. 8. The learned Departmental Representative relied upon the orders of the lower authorities and submitted thatin case the matter is restored, a reasonable cost may be imposed on the assessee to ensure compliance. 9. We have carefully considered the rival submissions and perused the material available on record. From the perusal of the appellate order passed under section 250 dated 17.01.2025, it is evident that the learned CIT(A) has disposed of the appeal ex- parte, recording that despite issuance of multiple notices, the assessee neither appeared nor furnished any documentary evidence in support of the grounds raised in appeal. The learned CIT(A), therefore, proceeded to confirm the additions made by the Assessing Officer mainly on account of non-prosecution of the appeal. 10. In this factual background, we note that the issues involved in the present appeal relate to taxability of gifts received from relatives under section 56(2)(vii), allowability of long-term capital loss; and determination of income from transfer of securities vis- à-vis claim of cost of acquisition. These issues are inherently fact- intensive and require proper verification of evidences such as relationship between donor and donee, supporting gift

6 ITA No. 1794/Mum/2025 Hemant Prakash Kanugo documentation, demat statements, and details of purchase and sale of securities. 11. In the present case, it is apparent that the additions have been sustained by the learned CIT(A) without adjudication on merits, solely on account of absence of representation and supporting evidences. While the conduct of the assessee reflects lack of diligence in pursuing the appellate proceedings, at the same time, it is a settled principle that an appeal should ordinarily be decided on merits after affording reasonable opportunity of being heard. 12. In our considered view, the ends of justice would be met if the assessee is granted one final opportunity to substantiate its claims before the appellate authority. However, such opportunity cannot be granted unconditionally in view of the repeated non- compliance on the part of the assessee both before the Assessing Officer as well as the learned CIT(A). 13. Accordingly, we deem it appropriate to set aside the impugned order of the learned CIT(A) and restore the matter to his file for fresh adjudication on merits, with a direction to afford reasonable opportunity of being heard to the assessee. The assessee is also directed to fully cooperate and furnish all requisite evidences in support of its claims without seeking unwarranted adjournments. 14. At the same time, considering the persistent non-compliance noted in the orders of the lower authorities, we find merit in the

7 ITA No. 1794/Mum/2025 Hemant Prakash Kanugo contention of the learned DR that a deterrent measure is warranted. Therefore, the restoration of the matter is made subject to payment of cost of Rs. 5,000/-, which shall be deposited by the assessee to the credit of Income Tax Department and proof thereof shall be placed on record before the learned CIT(A).

Order pronounced in the open court on 20.04.2026.

Sd/- Sd/- (PAWAN SINGH) (MAKARAND VASANT MAHADEOKAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 20/04/2026 Dhananjay, Sr.PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : अपीलाथी / The Appellant 1. प्रत्यथी / The Respondent. 2. 3. संबंधधत आयकर आयुक्त / The CIT(A) 4. आयकर आयुक्त(अपील) / Concerned CIT धिभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, मुम्बई / DR, ITAT, Mumbai 5. 6. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, सत्याधपत प्रधत //True Copy// 1. उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीिीय अतिकरण, मुम्बई / ITAT, Mumbai