SATYENDRA KUMAR,INDIA vs. DCIT/ACIT(CENTRAL)-2, LUCKNOW, INDIA

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW “A” BENCH, LUCKNOW BEFORE SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SH. NIKHIL CHOUDHARY, ACCOUNTANT MEMBER ITA No. 711/Lkw/2026 A.Y. 2016-17 Satyendra Kumar, vs. DCIT/ACIT (Central)-2, 4/2, Rype-4, Jail Road PWD CIT(CIB), Dtrti Building, Colony, Lucknow, Gomti Nagar, Lucknow, Uttar Pradesh-226029. Uttar Pradesh-226010. PAN: AOFPK7462M (Appellant) (Respondent) Assessee by: None Revenue by: Shri Alok Kumar Singh, JCIT-DR Date of hearing: 16.09.2026 Date of pronouncement: 30.10.2026

O R D E R PER NIKHIL CHOUDHARY, A.M.: This is an appeal filed by the assessee against the order of the ld. CIT(A)-3, Lucknow dated 29.10.2025, wherein the ld. CIT(A) has dismissed the appeal of the assessee that was filed against the order of the ld. AO under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for the AY 2016-17 dated 25.12.2018. The grounds of appeal are as under: “The Appellant (Mr. Satyendra Kumar), being aggrieved by the order passed by the learned Commissioner of Income-tax (Appeals), Lucknow-3 under section 250 of the Income-tax Act, 1961 dated 29.10.2025 for Assessment Year 2016-17, prefers this

ITA No. 711/Lkw/2026 A.Y. 2016-17 Satyendra Kumar appeal on, inter alia, the following grounds, each of which is without prejudice to the others: 1. That the order of the learned Commissioner of Income-tax (Appeals) ["CIT(A)"] is bad in law, contrary to the facts on record and is liable to be quashed. 2. That the learned CIT(A) erred in law and on facts in deciding and dismissing the appeal ex-parte, without affording the Appellant a reasonable and effective opportunity of being heard, in gross violation of the principles of natural justice (audi alteram partem), and the impugned order is therefore unsustainable. 3. That the learned CIT(A) failed to appreciate that none of the notices of hearing issued under section 250 ever came to the actual knowledge of the Appellant, inasmuch as the appeal had been filed and was being conducted through the Appellant's erstwhile Chartered Accountant/Authorised Representative, and all electronic communications/notices were routed to and received only at the e-mail address of the said Authorised Representative, who, unknown to the Appellant, abandoned his practice, surrendered his Certificate of Practice and relocated abroad, as a result of which the Appellant remained wholly unaware of the proceedings. 4. That the learned CIT(A) erred in dismissing the appeal in limine for alleged non- prosecution/default, without adjudicating the grounds of appeal on their merits, whereas the CIT(A) is statutorily obliged under sections 250(6) and 251(1)(a) of the Act to dispose of the appeal on merits by a speaking order, and has no power to dismiss an appeal for default of appearance. 5. That the impugned order is a non-speaking order on the merits of the addition and merely affirms the findings of the Assessing Officer without independent application of mind, and is therefore liable to be set aside and the matter restored for adjudication on merits. 6. That on the merits, the learned CIT(A)/Assessing Officer erred in computing Long Term Capital Gain at Rs. 2,08,02,605/- as against Rs. 12,40,270/- declared by the Appellant, thereby making an addition of Rs. 1,95,62,335/-, without appreciating the facts and the evidence on record. 7. That the learned CIT(A)/Assessing Officer erred in disallowing, while computing the capital gain, the cost of improvement and expenditure incurred wholly and exclusively in connection with the transfer, namely (i) eviction payments of Rs. 68,00,000/- made to unauthorised occupants holding adverse possession, (ii) land- filling/levelling expenses of Rs. 17,75,586/-, (iii) other development expenses of Rs. 8,50,000/-, and (iv) commission/transfer expenses of Rs. 18,80,000/-, which are allowable deductions under section 48 of the Act.

ITA No. 711/Lkw/2026 A.Y. 2016-17 Satyendra Kumar 8. That the authorities below erred in holding the said expenditure to be an "afterthought" and non-genuine, ignoring the documentary evidence (sale and purchase deeds, receipts/acknowledgements of the occupants evicted, and bills/vouchers of land-filling and development) which the Appellant is in a position to produce, and which could not be placed on record on account of the circumstances stated above. 9. That the Appellant craves leave to adduce additional evidence under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, the same being necessary for the substantial adjudication of the appeal and the Appellant having been prevented by sufficient cause from producing it before the authorities below. 10. That the learned CIT(A)/Assessing Officer erred in initiating/relying upon the alleged concealment, and the addition having been made on surmises and conjectures, the consequential interest charged under sections 234A, 234B, 234C and 234D is also disputed. 11. That the Appellant craves leave to add, alter, amend, modify, substitute or withdraw any of the above grounds of appeal at or before the hearing of the appeal. PRAYER In view of the above, the Appellant most respectfully prays that this Hon'ble Tribunal may be pleased to: (a) condone the delay, if any, in filing the present appeal, for the reasons set out in the accompanying application for condonation of delay supported by affidavit; (b) set aside / quash the impugned ex-parte order dated 29.10.2025 passed by the learned CIT(A), Lucknow-3, as being in violation of the principles of natural justice; (c) restore the appeal to the file of the CIT(A) for de novo adjudication on merits after affording the Appellant a reasonable opportunity of being heard, and/or admit the additional evidence and decide the appeal on merits; (d) delete the addition of Rs. 1,95,62,335/- made on account of Long Term Capital Gain; and (e) grant such other and further relief as this Hon'ble Tribunal may deem fit in the facts and circumstances of the case.” 2. At the very outset, it is observed that the appeal is delayed by 169 days. A condonation petition accompanied by an affidavit has been filed wherein it has been submitted, that the appeal before the ld. CIT(A) was at all material times being conducted on behalf of the assessee by his then CA and ld. AR,

ITA No. 711/Lkw/2026 A.Y. 2016-17 Satyendra Kumar Shri Anup Gupta and all notices and communications including notices of hearing were routed to and received at the email of the said AR. It was submitted, that unknown to the assessee, Shri Anup Gupta surrendered his certificate of practice in the later part of 2025 and relocated to London, UK, without informing the assessee about the status of his case. Consequently, the notices of hearing and the subsequent order never came to the knowledge of the assessee and his order was dismissed ex-parte in such circumstances. It was only after he received the demand /recovery notice issued by the Income Tax Department that he learnt about, both the ex-parte dismissal of his appeal and the circumstances under which his erstwhile counsel had abandoned the matter and left the country. After coming to know about the impugned order, the assessee engaged another counsel, collected and collated the relevant records and filed the appeal at the earliest possible opportunity. It was prayed that assessee was a bonafide litigant and would stand to suffer grave and irreparable injury if the delay was not condoned. It was submitted that the circumstances would show that the delay was not on account of common negligence on the part of the assessee and various Courts had held that a litigation ought not to be made to suffer for the default, negligence or misconduct of his counsel/ representative. It had also been held that the expression, “sufficient cause” in matters of condonation of delay should be construed liberally and he cited certain cases in support of the same. After considering the aforesaid petition of the assessee, in view of the circumstances narrated therein, we hold that there are sufficient reasons to explain the delay and accordingly we condone the same and admit the appeal for adjudication. 3. The facts of the case are that the assessee filed a return of income for the relevant AY which was selected for limited scrutiny for examination of

ITA No. 711/Lkw/2026 A.Y. 2016-17 Satyendra Kumar whether the share capital was genuine and from disclosed sources and also whether capital gains/loss was genuine and had been correctly shown in the return of income. Accordingly notices under section 143(2) and 142(1) of the Act were issued to the assessee during the course of assessment proceedings for seeking explanation in this regard. There is no discussion in the assessment order on the first issue, therefore, it appears that the response submitted by the assessee in this regard satisfied the ld. AO. However with regard to the second issue, whether capital gains/loss was genuine and had been correctly shown in the return of income, it was pointed out that a few pieces of agricultural land, all situated at village Bakkas, Mohanlalganj, Lucknow are purchased by the assessee during the Financial Year 2007-08 as capital investment and prior to pursuing real estate activities as his business activities. The assessee had sold such agricultural properties by consolidating different Gatta Nos., vide two different sale-deeds, both dated 20.02.2016. The valuation of the said properties as assessed by the Stamp Valuation Authority, was identical to the sale consideration actually received by the assessee, as specified in the sale deeds executed on 29.02.2016. In addition to consideration paid along with the registration expenses in connection with the acquisition of such properties, the assessee had also paid total sum of Rs. 68,00,000/- to 23 different and distinct persons before the end of Financial Year 2007-08, for evicting such persons from the concerned properties over which they were holding adverse possession. A list of such unauthorized occupants, wherein they had acknowledged to receive the different sums was also enclosed along with copies of necessary documentary evidences to substantiate their identification. Such payments to unauthorized occupants had been considered, “cost of improvement” in terms of the provisions of section 48 of the Act, as the payments had been made by the assessee for protecting and 5

ITA No. 711/Lkw/2026 A.Y. 2016-17 Satyendra Kumar curing his title over the properties. The assessee also claimed that he had incurred Rs. 17,75,586/- as land filling expenses and the ld. AO noted that the cost of improvement claimed by the assessee came to nearly 9 times the value of land purchased by him and therefore did not seen genuine. He further perused the income tax returns of the assessee over a period of 7 years and came to the conclusion that the assessee did not have the wherewithal to incur expenditure to the extent that he had. Accordingly, he asked the assessee to submit why the cost of improvement claimed should not be disallowed. He recorded the fact that the assessee made a written submission without any corroborative evidences and therefore no reliance could be placed on it. He held that the assessee had not given any details of the source of investments into purchase of properties that he had disclosed from moderate income since the very beginning and did not have the capacity to pay the eviction expenses of Rs. 68,00,000/- and land filling expenses of Rs. 17,75,586/- in the Financial Year 2007-08. Furthermore, perusal of the purchase deed showed that the sellers had mentioned in the same that they were having possession of the lands. The Ld. AO further noted that there was lot of availability of agricultural land in and around Lucknow and therefore it did not make sense that a person would purchase disputed land and pay almost 9 times the cost of the purchase in order to obtain possession of the said land, when he could have purchased other land at same price without any need to incur this extra expenditure. The Ld. AO further pointed out that the assessee had failed to submit any documentary evidences in support of the claimed expenses or other development expenses (Rs. 8,50,000 /-) and the commission expenses (Rs. 18,80,000/-) that he claims to have incurred at the time of the sale of these immovable properties. Therefore, the Ld. AO disallowed the cost of improvement and also disallowed the other development expenses and commission expenses 6

ITA No. 711/Lkw/2026 A.Y. 2016-17 Satyendra Kumar and finally computed the capital gains at Rs. 2,08,02,605/-. As the assessee had already shown LTCG of Rs. 12,40,270/- he restricted the addition to Rs. 1,95,62,335/-. 4. Aggrieved with the said assessment order, the assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) records the facts that he issued 9 notices to the assessee but there was no compliance made by him. Accordingly, he concluded that sufficient opportunities have been given to the assessee and further opportunities were not necessary. He placed reliance on judgments of various Courts to hold, that if no compliance was made during the appeals further opportunities were not required to be given. He thereafter proceeded to decide the issue on the basis of the materials before him. He noted that the assessee had failed to furnish any credible documentary evidence in order to substantiate his claims. He further noted that the sale- deeds that have been furnished, clearly stated that the lands were free from any dispute and possession was delivered to the purchaser on the date of execution of sale-deed. He noted that the assessee did not have sufficient capacity to make the expenditure for eviction expenses and land filing, as he claimed to have made in 2007 and therefore the claim of such expenditure was only an afterthought to reduce his taxable income. He also held that there was no documentary evidence to substantiate other development expenses of Rs. 8,50,000/- and commission expenses of Rs. 18,80,000/- claimed at the time of sale of the properties. Therefore, since the assessee had not furnished any material before him, he confirmed the addition made by the ld. AO. 5. The assessee is aggrieved by the said dismissal of his appeal and has accordingly come before us. In the grounds of appeal, it was submitted that the ld. CIT(A) has failed to appreciate that none of the notices that were

ITA No. 711/Lkw/2026 A.Y. 2016-17 Satyendra Kumar issued to him actually came to the knowledge of the assessee since the proceedings were being conducted by his CA and all electronic communications/notices were routed to and received at the emails of such AR. It was further argued that the Ld. CIT(A) had failed to note that the documentary evidence had been furnished before the lower authorities in the form of receipts/ acknowledgement of the occupants evicted and bills/ vouchers of land filling and development expenses, which the assessee in a position to produce and which could not be produced earlier on account of the circumstances as stated above. He therefore prayed for permission to adduce additional evidences before us. 6. While none was present to argue the case of the assessee on the appointed date of hearing, Shri Alok Kumar Singh JCIT-DR took us through assessment order in order to demonstrate how the Ld. AO had shown that the assessee was incapable to meet the expenditures that he claimed to have made. He also pointed out that since the assessee had not furnished necessary evidences in support of such expense, the lower authorities were justified in disallowing them. 7. We have duly considered the facts and circumstances of the case. We note that in view of the fact that the appeal proceedings were being handled by the assessee’s erstwhile counsel, Shri Anup Gupta and Shri Anup Gupta had some time towards the later part of 2025 surrendered his license and relocated to UK without informing the assessee about the status of his proceedings, the assessee was unaware about the same and this may explain the failure to make compliance at the level of the Ld. CIT(A) after having furnished the necessary replies before the Ld. AO. In view of this fact, it appears that the assessee has not been given an adequate hearing by the Ld. CIT(A). Perusal of the assessment order reveals that the assessee has

ITA No. 711/Lkw/2026 A.Y. 2016-17 Satyendra Kumar submitted some documentary evidences before the Ld. AO and claims that he is in a position to produce more documentary evidences if given the opportunity. In view of the peculiar facts of the case, we hold it to be in the interest of justice to restore the matter to the file of the Ld. CIT(A) with a direction to allow the assessee an opportunity to furnish additional evidence in support of his claim of cost of improvement and eviction payments as claimed by him in his return and other expenses claimed by him while computing the capital gain. The Ld. CIT(A) may also obtain a remand report from the Ld. AO on these additional evidences before deciding the issue. With these comments the appeal is restored to the file of the Ld. CIT(A) for passing a fresh order in accordance with law. 8. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced on 30.10.2026 in the open Court.

Sd/- Sd/- [SUDHANSHU SRIVASTAVA] NIKHIL CHOUDHARY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30/10/2026 SK, Sr. PS Copy forwarded to: 1. Appellant – 2. Respondent – 3. CIT-DR , ITAT, 4. CIT, 5. The CIT(A) By order SHARWAN Digitally signed by SHARWAN KUMAR KUMAR Date: 2026.11.02 11:38:45 +05'30' Sr. P.S.