DHIRESH SHASHIKANT GOSALIA ,MUMBAI vs. DCIT, CIRCLE 22(1), MUMBAI

The brief facts of the case are that the assessee, an individual, The brief facts of the case are that the assessee, an individual, The brief facts of the case are that the assessee, an individual, filed his return of income for A.Y. 2017 filed his return of income for A.Y. 2017-18 declaring total income of 18 declaring total income of Rs.5,92,87,600/-. The Department . The Department received information received information that the assessee had earned long assessee had earned long-term capital gains from transactions in shares term capital gains from transactions in shares of M/s Toyam Industries Ltd. (formerly Ojas Asset Reconstruction of M/s Toyam Industries Ltd. (formerly Ojas Asset Reconstruction of M/s Toyam Industries Ltd. (formerly Ojas Asset Reconstruction Company Ltd.), which according to the Department was a penny stock Company Ltd.), which according to the Department was a penny stock Company Ltd.), which according to the Department was a penny stock used for providing accommodation entries. During the reassessment ed for providing accommodation entries. During the reassessment ed for providing accommodation entries. During the reassessment proceedings, the Assessing Officer examined the transactions, proceedings, the Assessing Officer examined the transactions, proceedings, the Assessing Officer examined the transactions, considered the replies and documents furnished by the assessee and considered the replies and documents furnished by the assessee and considered the replies and documents furnished by the assessee and held that the share transactions were not genuine. Accordingly, that the share transactions were not genuine. Accordingly, the that the share transactions were not genuine. Accordingly, Assessing Officer denied Assessing Officer denied the claim of exemption under section 10(38) the claim of exemption under section 10(38) of the Act amounting to Rs.39,07,461/ amounting to Rs.39,07,461/- and the said amount was and the said amount was treated as unexplained money under section 69A of the Act. The treated as unexplained money under section 69A of the Act. The treated as unexplained money under section 69A of the Act. The Assessing Officer also made an addition of Rs.1,30,728/ Assessing Officer also made an addition of Rs.1,30,728/- under section under section 69C of the Act towards commission expenditure incurred for obtaining towards commission expenditure incurred for obtaining towards commission expenditure incurred for obtaining the aforesaid accommodation entries. accommodation entries.

Aggrieved by the reassessment order, the assessee preferred an Aggrieved by the reassessment order, the assessee preferred an Aggrieved by the reassessment order, the assessee preferred an appeal before the Ld. CIT(A) challenging both the validity of the appeal before the Ld. CIT(A) challenging both the validity of the appeal before the Ld. CIT(A) challenging both the validity of the reopening as well as the additions made on merits. However, during reopening as well as the additions made on merits. However, during reopening as well as the additions made on merits. However, during the appellate proceedings, the assessee did not appear in response to the appellate proceedings, the assessee did not appear in re the appellate proceedings, the assessee did not appear in re the notices issued by the Ld. CIT(A). the notices issued by the Ld. CIT(A). The CIT(A) observed The CIT(A) observed that despite several opportunities, no compliance was made no compliance was made by the assessee and he by the assessee and he proceeded to dispose of the appeal ex proceeded to dispose of the appeal ex-parte and confirmed the action parte and confirmed the action of the Assessing Officer without adju of the Assessing Officer without adjudicating the grounds raised by the dicating the grounds raised by the assessee on merits. Consequently, the appeal of the assessee was assessee on merits. Consequently, the appeal of the assessee was assessee on merits. Consequently, the appeal of the assessee was dismissed and the additions made by the Assessing Officer were dismissed and the additions made by the Assessing Officer were dismissed and the additions made by the Assessing Officer were sustained.

The assessee is in appeal before us against the order passed by The assessee is in appeal before us against the order passed by The assessee is in appeal before us against the order passed by CIT(A) dismissing the appeal of the assessee. sing the appeal of the assessee.

We have heard the rival submissions and perused the material We have heard the rival submissions and perused the material We have heard the rival submissions and perused the material available on record. We observe We observe that the Ld. CIT(A) has dismissed the that the Ld. CIT(A) has dismissed the appeal ex-parte primarily on account of non parte primarily on account of non-compliance by the compliance by the assessee and has confirme assessee and has confirmed the additions made by the Assessing d the additions made by the Assessing Officer. At the same time, we find that the assessee had raised various Officer. At the same time, we find that the assessee had raised various Officer. At the same time, we find that the assessee had raised various legal as well as factual grounds challenging the validity of reopening legal as well as factual grounds challenging the validity of reopening legal as well as factual grounds challenging the validity of reopening and the additions made under sections 69A and 69C of the Act. We and the additions made under sections 69A and 69C of the Act. We and the additions made under sections 69A and 69C of the Act. We further note that the assessment order itself te that the assessment order itself shows that submissions that submissions and documents were furnished by the assessee during the reassessment and documents were furnished by the assessee during the reassessment and documents were furnished by the assessee during the reassessment proceedings. In these circumstances, and having regard to the proceedings. In these circumstances, and having regard to the proceedings. In these circumstances, and having regard to the principles of natural justice, we are of the considered view that one principles of natural justice, we are of the considered view that principles of natural justice, we are of the considered view that more opportunity deserves to be granted to the assessee for proper more opportunity deserves to be granted to the assessee for proper more opportunity deserves to be granted to the assessee for proper adjudication of the issues involved. adjudication of the issues involved.

Accordingly, in the interest of justice, we Accordingly, in the interest of justice, we restore the the matter to the file of Ld. CIT(A) of Ld. CIT(A) for fresh adjudication in accordance with law, in accordance with law, after providing adequate opportunity of being heard to the assessee. oviding adequate opportunity of being heard to the assessee. oviding adequate opportunity of being heard to the assessee. The assessee is also directed to extend full cooperation and promptly The assessee is also directed to extend full cooperation and promptly The assessee is also directed to extend full cooperation and promptly comply with the notices and directions that may be issued during the comply with the notices and directions that may be issued during the comply with the notices and directions that may be issued during the remand proceedings. It is made clear that in the event t remand proceedings. It is made clear that in the event the assessee fails he assessee fails to avail the opportunities so granted or does not cooperate in the to avail the opportunities so granted or does not cooperate in the to avail the opportunities so granted or does not cooperate in the appellate proceedings, the Ld. CIT(A) shall be at liberty to dispose of appellate proceedings, the Ld. CIT(A) shall be at liberty to dispose of appellate proceedings, the Ld. CIT(A) shall be at liberty to dispose of the appeal in accordance with law on the basis of the material available the appeal in accordance with law on the basis of the material available the appeal in accordance with law on the basis of the material available on record.

In the result, the appeal of the assessee is allowed for statistical lt, the appeal of the assessee is allowed for statistical lt, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 11.06.2026. Order pronounced in the open Court on 11.06.2026.