BHUPESH GUPTA,NAVI MUMBAI vs. ASSESSING OFFICER, AAYAKAR BHAWAN,MUMBAI

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ITA 585/MUM/2026Status: DisposedITAT Mumbai08 June 2026AY 2020-218 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeal before the CIT(A) by relying on the Supreme Court's decision in Collector, Land Acquisition v Mst. Katiji And Others - 167 ITR 471 (SC), stating that refusing to condone delay can result in a meritorious matter being thrown out at the threshold. The Tribunal found that the CIT(A) dismissed the appeal solely on the ground of delayed filing and failed to adjudicate the issues raised on merits. This dismissal without deciding the appeal on merits was considered contrary to the principles of natural justice. Since the assessee's legal heir requested an opportunity for a de novo assessment by the Assessing Officer, and the revenue did not oppose this request, the Tribunal decided to remand the entire matter back to the Assessing Officer for fresh adjudication. The Assessing Officer is directed to apply the principles of natural justice and afford sufficient opportunity of being heard to the assessee. The ground of appeal is allowed for statistical purposes.

What were the facts?

The assessee, Bhupesh Gupta, is in appeal against the order of the CIT(A) dated 27.11.2025, which upheld the assessment order passed by the ACIT under section 144 r.w.s. 147 of the Income-tax Act, 1961, for Assessment Year 2020-21. The assessment order was passed ex parte, making additions of Rs. 66,00,000/- for purchases, Rs. 3,58,00,000/- for sales, and disallowing a capital loss of Rs. 50,41,273/-. The assessee's legal heir, his wife Mrs. Shobha Bhupesh Gupta, filed an appeal before the CIT(A) after a delay of 161 days. The CIT(A) dismissed the appeal solely on the ground of delay, without adjudicating on the merits. The assessee's legal heir cited reasons for the delay including the assessee's demise, her unawareness of tax matters, relocation due to property renovation, non-operational mobile number, and a prolonged legal dispute. The Tribunal condoned the delay in filing the appeal before the CIT(A).

What were the issues?

1. Whether the CIT(A) erred in dismissing the appeal solely on the ground of delay, without adjudicating on the merits of the additions made by the Assessing Officer, particularly concerning the treatment of purchases as unexplained investment under section 69 and the calculation of capital gains/losses under section 48? Assessee's contention: The assessee argued that the purchases of Rs. 66,00,000/- were genuine, duly declared in audited financials, supported by registered sale deeds, bank statements, and TDS compliance under section 194-IA. The capital gains computation was based on actual cost of acquisition and indexed cost of improvement, with a declared capital loss of Rs. 50,41,273/-, supported by documentary evidence. Reliance was placed on CIT v. Bhaichand H. Gandhi (1983) 141 ITR 67 (Bom.), CIT v. Daulat Ram Rawatmull (1973) 87 ITR 349 (SC), and CIT v. Dhingra Metal Works (2011) 196 Taxman 488 (Del.). The assessee further contended that the ex-parte assessment order was passed without proper adjudication and requested a de novo assessment. Revenue's contention: The revenue did not oppose the request for remanding the matter back to the Assessing Officer.

Which sections of the Income-tax Act were involved?

Section 144,Section 147,Section 69,Section 115BBE,Section 194-IA,Section 48

AI-generated summary — verify with the full judgment below

Before: SHRI SAKTIJIT DEY

For Appellant: Shri Shyam Agarwal,AR
For Respondent: Shri Swapnil Choudhari, (Sr. AR.)
Hearing: 08.04.2026Pronounced: 08.06.2026

आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal emanating from the appellate order dated 27.11.2025 is preferred by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to the assessment order passed u/s. 144 r.w.s. 147 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 28.03.2025 for the Assessment Year [A.Y.] 2020-21.

ITA No. 585/Mum/2026; Bhupesh Gupta. 2. The grounds of appeal are as under: “1) Ground No. 1 Treating the purchases as Unexplained Investment u/s 69 and adding Rs. 66,00,000/- to the total Income, despite the same being duly declared in the Audited Financials while submitting the Form 3CD Report. In the facts and circumstances of the case and in law, the Learned Assessing Officer has grossly erred in treating the investment of Rs. 66,00,000/- made towards purchase of immovable property as unexplained investment u/s 69 r.w.s. 115BBE of the Income-tax Act, 1961. and in adding the same to the total income of the appellant, without appreciating the documentary evidence and material available on record: 1. The Learned Assessing Officer failed to appreciate that the said investment was genuine, duly disclosed, and fully supported by primary documentary evidence including: (a) The registered purchase deed and Index-II extract, duly executed and registered with the Sub-Registrar, which establishes the genuineness of the purchase transaction. (b) The bank statements evidencing payment of purchase consideration through verifiable banking channels, which clearly demonstrate the source of investment. (c) The registered sale deed and Index-11 extract relating to the property sold, which form part of the connected transactions and corroborate the genuineness of the capital gain/loss computation, (d) The July signed Audited financial statements for the Financial Year 2019-20. wherein the said investment has been properly recorded and disclosed investment in (1) not 2 The provisions of section 69 are applicable only where recorded in the books of account, and (ii) the assessee offers no explanation about the nature and source thereof, or the explanation offered is found unsatisfactory. In the appellant's case, neither of these conditions are satisfied, as the investment was duly disclosed in the return of income, properly reflected in the audited financial statements, supported by registered documents and bank records, and further evidenced by deduction and deposit of TDS u's 194-IA. The corresponding Form 26QB challan and Form 168 certificate and payment challan are enclosed, which clearly establish statutory compliance and leave no scope for treating the investment as unexplained. 3. It is well settled in law that when the source of investment is explained through proper banking channels, supported by registered instruments and backed by tax compliance such as deduction and deposit of TDS u/s 194-1A, no addition u/s 69 can be made merely on the basis of assumptions, presumptions, or non-response during the assessment proceedings. The 2

ITA No. 585/Mum/2026; Bhupesh Gupta. Learned Assessing Officer failed to conduct independent verification of the documents available with the Department before drawing adverse inference 4. The mechanical invocation of section 115BBE to subject the said addition to penal rate of tax is bad in law, since the foundation addition itself is unsustainable. Penal provisions cannot be applied in absence of clear finding of unexplained or undisclosed nature of investment. 5. The addition of Rs. 66,00,000/- as unexplained investment is thus wholly unjustified, arbitrary, and contrary to the facts and provisions of law, and deserves to be deleted in toto In support of this ground, reliance is placed on the judgment of the Hon'ble Bombay High Court in CIT v. Bhaichand H. Gandhi (1983) 141 ITR 67 (Bom.), wherein it was held that when payments for an investment are duly made through account payee cheques and recorded in the books of account, the same cannot be treated as unexplained under section 69. In the appellant's also, the property purchase of ₹66,00,000/-made entirely through verifiable banking channels and duly disclosed in the audited financials. Similarly, The Hon'ble Supreme Court in CTT v. Daulat Ram Rawatmull (1973) 87 ITR 349 (SC) held that suspicion, however strong, cannot take the place of evidence, and the burden is on the Revenue to prove that an investment is unexplained. The action of the Assessing Officer in mechanically treating the investment as unexplained merely for want of response during assessment proceedings is contrary to this principle. Further, the Delhi High Court in CIT v. Dhingra Metal Works (2011) 196 Taxman 488 (Del.) clarified that section 69 applies only when the investment is not recorded in the books of account. Since the impugned investment was duly reflected in the audited accounts,supported by registered purchase deed and bank statements, the addition made by the Assessing Officer is unsustainable in law. Ground No. 2 Treating the sales of Rs. 3,58,00,000/- as Full value consideration after considering Cost of Acquisition NIL and Capital Loss of Rs.50,41,273/ as declared by the assessee in his ITR filed is also disallowed. In the facts and circumstances of the case and in law, the Learned Assessing Officer has grossly erred in treating the sale consideration of Rs. 3,58,00,000/- from transfer of immovable property as Short Term Capital Gain by adopting the cost of acquisition at Nil, and further in disallowing the claim of capital loss of Rs. 50,41,273/- declared in the return of income, without properly appreciating the provisions of the Act and the documentary evidence available on record. 1. The Learned Assessing Officer failed to appreciate that the appellant had in her possession, and is in a position to produce, the following primary evidences substantiating the capital gain computation:

ITA No. 585/Mum/2026; Bhupesh Gupta. (a) The registered sale deed and Index-11 extract evidencing the sale of immovable property for consideration of Rs. 3,58,00,000/-; (b) The registered purchase deed and Index-11 extract relating to the acquisition of the property, establishing the cost of acquisition; (c)The bank statements evidencing the receipt of sale consideration through verifiable banking channels; (d) The computation of income filed along with the return of income, wherein the capital loss of 150,41,273/- was duly disclosed in accordance with section 48 of the Act (e)) The bank statements evidencing the payment of purchase consideration through banking channels, corroborating the cost of acquisition and directly linking the purchase and sale transactions. 2. The Learned Assessing Officer has erred in law in ignoring the actual cost of acquisition and indexed cost of improvement while computing capital gains. It is a settled principle under section 48 of the Act that computation of capital gain must mandatorily take into account the cost of acquisition and indexed cost of improvement. Adoption of Nil cost is arbitrary, contrary to statute, and without authority of law. 3. The disallowance of the declared capital loss of ₹50,41,273/- is wholly unjustified, since the same was supported by proper computation and documentary evidence. The Assessing Officer has not pointed out any specific defect in the computation or the supporting documents but has merely proceeded to disallow the same on account of alleged non- compliance. 4. It is well settled by judicial precedents that additions disallowances cannot be made merely for want of compliance to notices when the relevant transactions are otherwise supported by record. The action of the Assessing Officer is thus Documentary evidence available contrary to the principles of natural justice. 5. The arbitrary treatment of the transaction as Short Term Capital Gain at full value of consideration without cost and denial of the capital loss is excessive, unjustified, and bad in law. The addition of ₹3,58,00,000/- and disallowance of Rs. 50,41.273/- therefore deserves to be deleted in toto. 3. The case was reopened by the Assessing Officer u/s 148 of the Act based on the information available with the Department that for the year under consideration, the late assessee had purchased a property of Rs.66,00,000/- and sold another immovable property at a consideration of

ITA No. 585/Mum/2026; Bhupesh Gupta. Rs.3,58,00,000/-, after claiming deduction u/s.48 of Rs.4,08,41,273/-. He had offered capital loss of Rs.50,41,273/-. During the assessment proceedings, various notices u/s 142(1) of the Act were issued to his wife, being the Legal Heir, however, no reply was received from her. Ultimately, the assessment order passed ex parte u/s 144 of the Act at Rs 9.92 cr. making additions of Rs 60 lakh, Rs 3.58 cr. and Rs 50.41 lakh.

4.

Aggrieved, the L/H filed appeal before the ld.CIT(A) who found that the same was filed after a gap of 161 days from the date of the order. A revised condonation letter was filed by Mrs.Shobha Bhupesh Gupta, wife and legal heir of the assessee submitting that after the demise of the assessee, she discontinued filing his returns. She was unaware of income-tax matters. Death Certificate of the assessee was filed. It was also pleaded that the premises situated at Flat No. 251602, Seawoods Estate were undergoing renovation, which was unduly delayed for a period exceeding three years and consequently, she had to temporarily relocate to a temporary relocation. As such, notices could not be received or acknowledged in a timely manner. The registered mobile number belonging to the assessee was non-operational, and she did not have access to it. The family was simultaneously engaged in a prolonged legal dispute with the Board of Directors of M/s. D-VoiS SSV Broadband Pvt. Ltd., where the late assessee was a director and substantial shareholder. The matters referred to in the ex-parte assessment order had already been duly disclosed in the returns filed earlier, with proper reporting of sale and purchase of properties. Previous assessment was also concluded

ITA No. 585/Mum/2026; Bhupesh Gupta. without any adverse findings, establishing his bona fides. It was requested to condone the delay in filing the appeal and grant an opportunity to present the case on merits, enabling completion of assessment proceedings of a person who is no longer alive and provide his family with a fair chance to clear his name from an adverse order.

5.

The ld.CIT(A), however, rejected the plea of the legal heir claiming that there was no sufficient reason for condonation of the delay. The reasons attributed were entirely vague, general, and wholly unrelated to the period of delay. The assessee failed to demonstrate chronological sufficient cause for each day of the delay of 161 days.

6.

On careful consideration of the submissions of the assessee, we are of the view that the delay was not intentional but due to unavoidable and sufficient cause. In 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

ITA No. 585/Mum/2026; Bhupesh Gupta. resorting to delay. In fact, he runs serious risk.” We therefore, condone the delay in fling of the appeal before the appellate authority.

7.

Before us,the ld.AR contended that as the assessment order was also passed ex parte u/s 144 of the Act,he requested to send back the entire matter to the AO for framing assessment order de novo.It is assured that necessary compliance will be made before him.The ld.DR did not oppose the request.

8.

We have heard the rival parties and perused the material available on records. It is observed that the ld.CIT(A) dismissed the appeal solely on the ground of delayed filing of the appeal before him. He failed to adjudicate the issues raised in the grounds of appeal and did not examine the materials available on record. Such dismissal without deciding the appeal on merits is contrary to the principles of natural justice. It is settled law that it is the duty of the appellate authority to dispose of an appeal on merits after considering the material on record, even if the appellant fails to appear. However, it is equally true that it is the fundamental duty of the assessee to diligently pursue the appeal and comply with the notices and proceedings initiated by the Revenue authorities although in the instant case,there appears to be justifiable reasons for the delay.As the ld. AR has requested before us that the assessee may be accorded one more opportunity and this request which was not objected by the ld.DR, in such a scenario, we are of the opinion that the scales of justice demand that the matter should be verified and revisited at the level of Assessing Officer and accordingly, we are of the considered view that the matter should be remanded back to him for de novo adjudication by him

ITA No. 585/Mum/2026; Bhupesh Gupta. while applying the principles of natural justice after affording sufficient opportunity of being heard to the assessee.The ground of appeal is therefore, allowed for statistical purposes.

9.

In the result, the appeal stands allowed for statistical purposes.

Order pronounced in the open court on 08/06/2026.

Sd/- Sd/- SHRI SAKTIJIT DEY PRABHASH SHANKAR (लेखाकार सदस्य/ACCOUNTANT MEMBER) (उपाध्यक्ष/ VICE PRESIDENT)

Place: म ुंबई/Mumbai ददनाुंक /Date 08.06.2026 Soumili Das / PS

आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER,

उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीली अतधकरण

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