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Facts
The assessee filed an appeal with a delay of 436 days, citing sufficient cause. The case involves an addition of Rs. 18,38,23,650/- made by the Assessing Officer (AO) under Section 56(2)(vii) for share premium. The assessee argued that the notices were not received due to the accountant's absence during the Covid-19 pandemic.
Held
The Tribunal condoned the delay in filing the appeal due to sufficient cause. The Tribunal remanded the matter back to the CIT(A) for de novo adjudication, granting the assessee one more opportunity to present their case, adhering to principles of natural justice.
Key Issues
Whether the assessee had sufficient cause for the delay in filing the appeal, and whether the addition made under Section 56(2)(vii) for share premium was justified, considering the assessee's non-compliance and request for a fresh opportunity.
Sections Cited
147, 148, 142(1), 131, 144, 56(2)(vii), 11UA, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
(Assessment Year: 2015-16) Jagdish Jamaklal Mansukhani Dy. Commissioner of Income Tax, 43, Jaihind Co. Op. Hsg. Soc., N. S. Central Circle 7(2), Mumbai Road, Juhu Vile Parle (W), Mumbai – Vs. 400049. PAN/GIR No. AACPM2147G (Appellant) : (Respondent) Assessee by : Shri Jainam Sonaiya/ Shri Vishal Shah : Shri Vivek Perampurna (CIT-DR) Respondent by Date of Hearing : 09.07.2025 Date of Pronouncement : 16.07.2025 O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) 49, Mumbai (‘ld. CIT(A)’ for short), passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2015-16.
It is observed that the assessee has filed the present appeal with a delay of 436 days beyond the period of limitation for which the assessee is said to have filed an application along with an affidavit for condoning the said delay. The ld. DR vehemently opposed for condoning the delay. On hearing the contentions and on perusal of the affidavit filed (A.Y. 2015-16) Jagdish Jamakhal Mansukhani by the assessee, we deem it fit to condone the delay on the ground that the assessee had “sufficient cause” for the delay. Delay condoned.
The assessee has raised the following grounds of appeal:
1. On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in passing an Order u/s 250 of Income Tax Act, 1961, which is bad in law.
2. On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs. 18,38,23,650/- made by the Assessing Officer on account of income of share premium as per the provisions of section 56(2)(vii) r.w. rule 11UA, which is bad in law.
3. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) failed to appreciate that access of email ID on which notices were served by the CIT(A) was not available with the appellant and the same was with the erstwhile accountant who had left the job during Covid-19 duration. Thus, the appellant was unaware of the notices served by CIT(A). Without Prejudice 4. a) On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in confirming the action of Assessing Officer of making an addition of the share premium amount without appreciating the fact that the provision of section 56(2)(vii)(c) clearly says that only when an individual or a Hindu Undivided Family "receives" any property for consideration that is less than the FMV, the provisions of section 56(2)(vii) should be considered, however the appellant has been allotted the shares, hence the addition is bad in law. b) On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in confirming the action of Assessing Officer of making an addition of the share premium amount without appreciating the fact that provision of section 56(2)(vii) ought to be applied only in case of transfer of shares and not allotment of shares as is the case of the appellant, hence the addition on the basis of provision of section 56(2)(vii) is bad in law. c) On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in confirming the action of Assessing Officer of making an addition of the share premium amount without appreciating the fact that the shares which had come into existence only when the allotment was made by the company, could not be said to be "received", which is the fundamental requirement for invoking section 56(2)(vii)(c), hence the addition u/s 56(2)(vii) is not justified.”
Brief facts of the case are that the assessee is an individual and had filed his return of income dated 31.08.2015, declaring total income at Rs. 77,21,720/-. The assessee’s case was reopened u/s. 147, for the reason that Rs. 18,38,23,650/- has escaped assessment as being undisclosed share premium and notice u/s. 148 dated 12.03.2019 was duly issued and served upon the assessee after obtaining approval of the competent authority. In response to the notice u/s. 148 of the Act, the assessee failed to file his return of income for the year under consideration. Notice u/s. 142(1) of the Act dated 31.08.2019 was issued and served upon the assessee. Also, summons u/s. 131 were issued to the assessee on 28.11.2019. As the assessee failed to furnish the complete details/information as required vide statutory notices issued by the ld. AO, inspite of several opportunities, the ld. AO passed the assessment order u/s. 144 r.w.s. 147 of the Act, dated 19.12.2019, being the best judgment assessment, determining total income at Rs. 19,15,45,370/- after making an addition of Rs. 18,38,23,650/- u/s. 56(2)(vii) r.w. Rule 11UA on the ground that the assessee has failed to substantiate the difference in the fair market value of shares and the actual consideration paid by the assessee by cogent documentary evidences.
Aggrieved the assessee was in appeal before the first appellate authority, who vide an ex parte order dated 29.11.2023, dismissed the appeal filed by the assessee.
The assessee is in appeal before us, challenging the impugned order of the ld. CIT(A). 7. We have heard the rival submissions and perused the materials available on record. It is observed that the assessee has challenged the addition made by the ld. AO before the (A.Y. 2015-16) Jagdish Jamakhal Mansukhani first appellate authority but has been non-compliant throughout the appellate proceeding.
The learned Authorised Representative ('ld. AR' for short) for the assessee contended that the assessee has got a good case on the merits and prayed that the assessee may be given one more opportunity to present his case before the ld. CIT(A).
The learned Departmental Representative ('ld. DR' for short) vehemently opposed to setting aside the issue to the file of the ld. CIT(A) for the reason that the assessee was given several opportunities by the ld. AO as well as the ld. CIT(A) which was not availed by the assessee.
On the above facts of the case, we are of the considered view that the assessee may be given one more opportunity to present his case before the first appellate authority by adhering to the principles of natural justice and in the interest of justice dispensation. We, therefore, remand all these issues back to the file of the ld. CIT(A) for de novo adjudication. The assessee is directed to strictly comply with the proceedings without any undue delay on his side and the ld. CIT(A) is also directed to decide the issue on the merits of the case based upon the submission of the assessee and in accordance with law.