MR. SUBHASH SUMAT PRASAD JAIN ,MUMBAI vs. INCOME TAX OFFICER WARD 19(3)(4), MUMBAI

The grounds of appeal are as under:

The Ld. CIT(A) failed to appreciate that the impugned addition was made by the Assessing Officer solely based on certain information received from investigation wing (one of the vertical of income-tax department itself) and surmises, without conducting any kind of enquiry on his own and ignoring every authentic document furnished by the appellant which proves the genuineness of the transaction undertaken by him.

The Ld. CIT(A) failed to appreciate that the Assessing Officer has neither provided the appellant with confessional statement of any person involved in transaction for generating bogus claims of long-term capital gains wherein appellant’s name has been mentioned as a beneficiary of such transaction nor provide the appellant an opportunity to cross examine any such the person.

The appellant submits that the Ld. CIT(A) has erred in not following the decisions of the jurisdictional bench of the Hon’ble High Court in the case of CIT v. Shyam R Pawar (2015) 229 Taxman 256 (Bom HC) and CIT v Smt. Jamnadevi Agrawal (2010) 328 ITR 656 (Bom HC).

The appellant submits that the Ld. CIT(A) has erred in upholding the impugned addition based on certain incorrect factual understanding and placing reliance on certain judicial pronouncements which are not applicable to the facts involved in appellant’s case Addition of Rs.6,927/- as unexplained expenditure

The Ld. CIT(A) erred in upholding the action of the Assessing Officer in making addition of Rs.6,927/- (2% of Rs.3,64,363/-) as unexplained expenditure based on the allegation that the appellant has paid the said amount as commission to entry provider /operator in connection with the impugned transactions in shares of Nivyah Infrastructure & Telecom Services Ltd.

The Ld. CIT(A) erred in upholding the levy of interest under section 234B and 234D of the Act and the same ought to be deleted.

The appellant prays that the Assessing Officer be directed: (i) to cancel the entire reassessment proceedings conducted under section 147 r.w.s. 143(3) of the Act; or (ii) to delete the addition of Rs.3,64,363/- made under section 68 of the Act and addition of Rs.6,927/- made on account of unexplained expenditure; (iii) to delete the interest levied under section 234B and 234D of the Act and to modify the assessment in accordance with the provisions of the Act.

The appellant prays that the notice issued under section 148 of the Act, the consequent reassessment proceedings as well as the assessment order passed under section 143(3) read with section 147 of the Act be quashed.

At the outset, it was noticed that the instant appeal is delayed by 258 days. The assessee has filed a condonation of delay application alongwith an affidavit stating that he was under the bonafide impression that his earlier Chartered Accountant, Shri Ashok Bansal, who was handling his tax matters, would take care of all communications and proceedings before the tax authorities. The notices and communications relating to the appellate proceedings were being sent to the email ID of the said CA, who stopped handling his tax matters later in last few years. He further submitted that he was unaware of the receipt of the said order, and only in the month

On careful consideration of the submissions of the assessee, we are of was not intentional but due to unavoidable and sufficient cause. Such a bonafide mistake needs to considered liberally.I n this connection, reliance could be placed on the landmark decision of hon’ble Supreme Court which inter alia held in Collector, Land Acquisition v Mst. Katiji And Others- 167 ITR 471 (SC) that “ordinarily, a litigant does not stand to benefit by lodging an appeal late……..Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated….Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period…. A litigant does not stand to benefit by resorting to delay. In fact, he runs serious risk.” We therefore, condone the delay.

Facts of the case are that in the instant case, the assessee filed return declaring income of Rs 8,31,521/-.The case was reopened on the information that the assessee had invested in a tainted penny stock i.e. Nivyah Infrastructure and Telecom Services Ltd. as per the information shared by the Investigation wing of the Department. The assessee had claimed Short Term Capital Loss of Rs 2,11,462/- on sale of 11,250 shares of the company which were acquired for Rs 3,64,363/- and sold during the year for Rs 1,52,900/-.The AO made addition of Rs 3,64,363/-by treating the cost of acquisition u/s 68 of the Act and also added Rs 6,927/- u/s 69C of the Act after detailed reasons stated in the assessment order revealing various attributes of transaction involving a penny stock.The ld.CIT(A) endorsed his conclusion and upheld it.

Before us, the ld.AR has contested the action of the authorities below claiming that the said transaction was genuine and the assessee filed numerous details before them to prove its genuineness. He has placed on record a Paper Book containing 184 pages which comprises of various submissions made before them alongwith necessary evidences on the impugned issue. It is claimed that both of them completely ignored such details and went ahead to take adverse view of the matter.

We have examined the assessment and appellate orders qua the details claimed to have been furnished before them, We find that the contentions of the ld.AR appear to be correct. Evidently, the replies and the materials brought on record have not been appreciated for reasons best known to them. Considering such facts on record, we are of the considered opinion that the case requires a revisit to take into account the replies and details filed by the assessee. Accordingly, we deem it appropriate to remand the entire matter to the file of the AO for framing the assessment order de novo after allowing adequate opportunities of hearing to the assessee.

Before us, the assessee has also filed certain additional grounds. Since the entire matter is now restored to the AO, the assessee would be at liberty to submit any such additional ground or evidence in support of his coontentions. The ld.DR did not have any objection.

In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 16/04/2026. SANDEEP GOSAIN PRABHASH SHANKAR (न्याययक सदस्य /JUDICIAL MEMBER) (लेखाकार सदस्य/ACCOUNTANT MEMBER)

Mumbai गार्ड फाईल / Guard file. 5. सत्यावपि प्रवि //// आदेशानुसार/ BY ORDER,