VIDHUSHI TAYAL,NEW DELHI vs. ITO, WARD- 26(3), DELHI

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ITA 855/DEL/2026Status: DisposedITAT Delhi20 May 2026AY 2009-104 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A) order was passed without an effective hearing and in violation of the principles of natural justice. Therefore, the order was set aside.

What were the facts?

The assessee's claim for cost of improvement was disallowed by the AO due to lack of verifiable evidence, leading to an addition to income. The CIT(A) dismissed the assessee's appeal ex-parte for non-compliance with notices.

What were the issues?

Whether the CIT(A) order passed ex-parte without providing an effective opportunity of hearing is valid. Whether the addition on account of cost of improvement is justified.

Which sections of the Income-tax Act were involved?

Section 250,Section 148,Section 142(1),Section 144,Section 143(2),Section 56(1)(v)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHIBENCH ‘A’, NEW DELHI

Before: Sh. Raj Kumar Chauhan & Sh. Manish Agarwal

Hearing: 20.05.2026Pronounced: 20.05.2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHIBENCH ‘A’, NEW DELHI Before Sh. Raj Kumar Chauhan, Judicial Member & Sh. Manish Agarwal, Accountant Member ITA No. 855/Del/2026 : Asstt. Year: 2009-10 Vidushi Tayal, Vs Income Tax Officer, 37, Kalkaji Rampuri, Ward-26(3), New Delhi-110019 New Delhi (APPELLANT) (RESPONDENT) PAN No. ABGPT5656C Assessee by: Sh. Saurabh Tandon, CA Revenue by: Sh. Ajay Kumar Arora, Sr. DR Date of Hearing: 20.05.2026 Date of Pronouncement: 20.05.2026 ORDER Per Raj Kumar Chauhan, Judicial Member: The appeal is directed against the order dated 03.11.2025 of ld. CIT(A)/NFAC passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) wherein the addition of Rs.16,64,642/- was made by the AO vide assessment order dated 27.03.2023 were confirmed.

2.

The facts of the case are that the assessee is an individual deriving income from house property, business income, and capital gains. In response to a notice issued u/s 148 of the Act, the assessee filed return of income declaring a total income of Rs.92,028/-. The assessment was completed by the Assessing Officer under sections 144/148 of the Act determining the total income at Rs. 17,56,670/-. Further, the Assessing Officer

2 ITA No. 855/Del/2026 Vidhushi Tayal initiated set-aside proceedings and issued various notices u/s 142(1) along with show-cause notices. Although the assessee partly complied with the notices issued, the Assessing Officer held that the claim of cost of improvement amounting to Rs.13,40,000/- was not supported by verifiable documentary evidence. Accordingly, the Assessing Officer disallowed the claim of cost of improvement and added the indexed amount of Rs. 16,64,642/- to the total income of the assessee.

3.

Aggrieved by the assessment order, assessee filed appeal before the ld. CIT(A) which was dismissed ex-pate on the ground that the appellant has failed to respond to the various notices sent as find mentioned in para 5 of the impugned order.

4.

Aggrieved by the impugned appellate ex-parte order, the assesse is in appeal before us and has raised the following grounds of appeal: “1. That on the facts and circumstances of the case and in the law the Assessment Unit Income Tax department grossly erred in making addition of Rs. 16,64,642 being the indexed cost of improvement incurred by the assessee with respect to property which was already sold long ago. 2. That on the facts and circumstances of the case and in the law the Assessment Unit Income Tax department grossly erred in making addition of Rs. 16,64,642 being the indexed cost of improvement incurred by the assessee without appreciating that the cost of improvement as incurred by the assessee was contributed by close relatives of assessee whose contributions by way of gift to the assessee for her requirement is exempt from taxation under the provisions

3 ITA No. 855/Del/2026 Vidhushi Tayal of first proviso to section 56(1 )(v) of the Income tax Act, 1961. 3. That on the facts and circumstances of the case and in the law the Assessment order u/s 144 as framed by Assessment Unit dated 27/03/23 assessing the income at Rs. 17,56,670 is bad in law and the same deserves to be quashed in the absence of issuance of mandatory notice u/s 143(2) before framing the assessment. That the aforesaid grounds are independent and without prejudice to each other.” 5. We have heard the learned AR and the learned DR. The Ld. AR would submit that the impugned order has resulted into miscarriage of justice as principle of natural justice has not been followed because no effective opportunity of hearing was given as the assessee had never received the notice after 30.09.2025 when adjournment was sought and therefore the matter may be restored to the file of the Ld. CIT(A) for deciding afresh. Learned DR on the other hand while supporting the judgment of the learned CIT(A) has left to the discretion of the court to consider the submissions of the assessee as per law.

6.

We have considered the rival submission and examined the record, Section 250(2)(a) lays down as under:

“250(2) The following shall have the right to be heard at the hearing of the appeal- (a) the appellant, either in person or by an authorized representative;”

4 ITA No. 855/Del/2026 Vidhushi Tayal 7. Thus, the hearing mandated by Section 250(2)(a) of the Act is not a mere formality but a mandatory statutory requirement for following the principle of natural justice by the quasi-judicial authority.

8.

In view of the above facts and circumstances, it is evident that the impugned order has been passed without effective hearing and principle of natural justice has not been followed For these reasons, the impugned order is not maintainable and accordingly set aside. The end of justice shall be met in case the matter is restored to the file of the Ld. CIT(A) for deciding the issue afresh by affording an effective opportunity of hearing and considering the submissions to be made by the appellant/assessee. The assessee/appellant is also directed to make the necessary submissions/ detailed material before the Ld. CIT(A) within the period of 60 days of this order.

9.

In the result, the appeal of the assessee is allowed for statistical purposes. Order Pronounced in the Open Court on 20/05/2026. Sd/- Sd/- (Manish Agarwal) (Raj Kumar Chauhan) Accountant Member Judicial Member Dated: 20/05/2026 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR

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