PRIYA NIGAM,LUCKNOW vs. NFAC DELHI/ITO-3(1), LUCKNOW

ITA 1010/LKW/2025Status: DisposedITAT Lucknow24 September 2026AY 2021-229 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal condoned the 60-day delay in filing the appeal before the CIT(A), accepting the assessee's explanation of ignorance of the order due to counsel's failure and noting that the assessee stood to gain nothing by delaying. The Tribunal found that the CIT(A) erred in dismissing the appeal in limine. While acknowledging the assessee's lack of proper compliance during assessment, the Tribunal noted that the AO's requirements were unclear, such as asking for IT returns of suppliers or their creditworthiness when the issue was genuineness of purchases. The estimation of gross profit at 20% was deemed to lack scientific or empirical basis. The Tribunal held that small traders cannot be expected to be fully conversant with intricate electronic communication. Therefore, in the interest of justice, the matter was restored to the AO with a direction for the assessee to produce necessary evidence to demonstrate the genuineness of purchases. The AO was directed to consider this evidence and pass a fresh assessment order. The appeal was allowed for statistical purposes.

What were the facts?

The assessee, Priya Nigam, filed an appeal before the ITAT against the order of the CIT(A), NFAC, dated 08.08.2025, which dismissed her appeal against the assessment order passed by the AO under section 143(3) for AY 2021-22 dated 27.12.2022. The AO had made additions to the assessee's income based on substantial purchases from suppliers who were allegedly non-filers or had filed non-business ITRs, or reflected lower turnover. The AO also noted non-compliance with notices under section 133(6) by these suppliers and rejected the assessee's audited books of accounts. The assessee's appeal before the CIT(A) was dismissed in limine due to a 60-day delay, which the CIT(A) refused to condone, citing the assessee's responsibility to check the income tax portal. The assessee claimed ignorance of the CIT(A)'s order due to her counsel failing to inform her.

What were the issues?

1. Whether the CIT(A) erred in dismissing the assessee's appeal in limine on grounds of delay, thereby violating the principles of natural justice ('Audi Alteram Partem')? - Assessee's Contention: The delay was due to the counsel's failure to inform her of the CIT(A)'s order, and the condonation power should be exercised liberally, citing Voltas Limited vs. DCIT and Collector of Land Acquisition Vs. MST. Katiji & Ors. The assessee argued that the CIT(A) should not have dismissed the appeal summarily and that substantive justice should prevail over technicalities. - Revenue's Contention: The revenue argued that the AO had valid reasons to reopen the assessment and the assessee failed to comply during assessment proceedings. The AO was justified in re-computing the gross profit rate at a higher percentage, as purchases from the grey market involve no tax outlay, thus increasing profits. 2. Whether the AO erred in rejecting the assessee's audited books of accounts and making additions based on estimated profit and unsubstantiated allegations regarding purchases? - Assessee's Contention: The AO arbitrarily assumed a gross profit of 20% (which was later treated as net profit) when the actual gross profit was 2.22%. The AO made no inquiry to prove purchases were not genuine, making disallowances arbitrary. The AO's rejection of audited books without specific defects and making additions based on conjecture is not justified. - Revenue's Contention: The revenue argued that the AO was justified in re-computing the gross profit rate at a higher percentage due to non-compliance and purchases from the grey market.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 145(3),Section 144,Section 133(6),Section 80C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, LUCKNOW ‘B’ BENCH, LUCKNOW

For Respondent: Smt. Pratibha Singh, Addl CIT DR
Hearing: 24.08.2026Pronounced: 24.09.2026

PER NIKHIL CHOUDHARY, A.M.: This is an appeal filed by the assessee against the order of the ld. CIT(A), NFAC dated 8.08.2025, wherein the ld. CIT(A) has dismissed the appeal of the assessee against the order passed by the ld. Assessing Officer under section 143(3) for the assessment year 2021-22 dated 27.12.2022. The grounds of appeal are as under:- “01. Because, the Id. CIT (A) has failed to know the facts and circumstances of the case, and has arbitrarily give the decision thereof is bad in law and liable to quashed. 02.Because, the Id. CIT (A) has erred while not giving an opportunity of being heard and dismissing the appeal merely on the grounds of delay, hence it is bad in law and against the Principles of Natural Justice

The order continues below.

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