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Facts
The assessee, engaged in land plotting, filed his return for AY 2016-17 declaring income of Rs. 15,85,950/-. The case was selected for scrutiny, and despite notices, the assessee failed to provide complete submissions. The AO made additions amounting to Rs. 56,313,381/-, assessing total income at Rs. 5,78,99,331/-.
Held
The Tribunal held that due to the negligence of the assessee's tax consultant, proper representation was not made before the lower authorities, leading to issues. Therefore, the Tribunal set aside the order of the CIT(A)/NFAC and restored the matter to the AO for fresh adjudication.
Key Issues
Whether the assessment order was bad in law due to non-issuance of physical notices and failure to state the charging section, and whether the assessee should be granted an opportunity for fresh adjudication due to negligence of the tax consultant.
Sections Cited
143, 143(3), 143(2), 142(1), 50C, 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA
Assessment Year : 2016-17 Navnath Mahadev Kunjir, Income Tax Officer, Datta Nagar, Theur, Ward – 14(5), Pune Dist.-Pune-412110 Vs. PAN : AOWPK6830L अपीलार्थी / Appellant प्रत्यर्थी / Respondent Assessee by : Shri Sharad A. Vaze Department by : Shri Rajesh Haladkar (through virtual) Date of hearing : 29-10-2025 Date of 09-12-2025 Pronouncement : आदेश / ORDER
PER ASTHA CHANDRA, JM :
The appeal filed by the assessee is directed against the order dated 27.07.2024 of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi [“CIT(A)/NFAC”] pertaining to Assessment Year (“AY) 2016-17.
Briefly stated the facts are that the assessee is engaged in the business of land plotting i.e. purchase of land, sub-dividing it into smaller plots after development and then selling to customers. For AY 2016-17, the assessee filed his return of income on 16.10.2026 declaring income of Rs.15,85,950/-. The return was initially processed u/s 143 of the Income Tax Act, 1961 (the “Act”). Subsequently, the case of the assessee was selected for scrutiny under CASS. Accordingly, statutory notice(s) u/s 143(2) and 142(1) of the Act along with questionnaire were issue and served upon the assessee. Further, show cause notice(s) were also issued and served on the assessee from time to time. The assessee failed to comply to the said notices as well as the show cause letters. The assessee was served with the final show cause notice dated 23.12.2018, in response to which the assessee filed partial compliance. The assessee failed to provide complete submission. The Ld. Assessing Officer (“AO”) therefore proceeded to pass the order based on the material available on record. During the year under consideration, the assessee had purchased and sold multiple properties but he could not provide the information regarding source of funds utilized and therefore, the Ld. AO carried out multiple adjustments in relation to sale/purchase of properties. He completed the assessment by passing an order u/s 143(3) of the Act on 28.12.2018 at assessed income of Rs.5,78,99,331/- by making addition(s) aggregating to Rs.56,313,381/- to the total income of Rs.15,85,950/- returned by the assessee.
Aggrieved, the assessee carried the matter before the Ld. CIT(A)/NFAC raising the multiple grounds of appeal challenging the above addition(s) made by the Ld. AO. The Ld. CIT(A)/NFAC dismissed the various grounds of appeal raised by the assessee for the reason that the assessee has grossly failed to explain the source of funds used to purchase the property and has not filed the sufficient documentary evidences to substantiate his claim.
Dissatisfied, the assessee is in appeal before the Tribunal raising the following grounds of appeal :
1. On the basis of facts and in the circumstances of the case and as per law, the Assessing Officer should have passed the order u/s 144 instead of u/s 143(3), as no information was ever submitted by the assessee.
2. Without prejudice to Ground No 1 above, on the basis of facts and in the circumstances of the case and as per law, the assessee could not submit the details as called by the Assessing Officer as he was not served with various show cause notices issued. No physical notice was ever issued to the assessee. The assessee submits that non-issuance of physical notice vitiates the assessment as such it is bad in law.
3. Without prejudice to Ground No 1 and 2 above, on the basis of facts and in the circumstances of the case and as per law, the assessee could not submit the details as called by the Assessing Officer as he was not served with various show cause notices issued. No physical notice was ever issued to the assessee. The assessee submits that non-issuance of physical notice vitiates the assessment as such it is bad in law.
4. Without prejudice to Ground No 1 to 3 NA above, on the basis of facts and in the circumstances of the case, the assessee could not be represented properly before the Assessing Officer (AO) and the First Appellate Authority (FAA), resulting into huge additions in the returned income. The assessee may please be given one more opportunity of submitting the necessary called by the AO/FAA. The assessee, therefore, pays to set aside the order of FAA dt 27/07/2024.
5. Without prejudice to Ground No 1 to 4 above, on the basis of facts and in the circumstances of the case and as per law, the Assessing Officer has not specifically stated the charging section in making the addition. As such the assessment is bad in law and all the additions need to be deleted on this ground alone.
6. Without prejudice to Ground No 1 to 5 above, on the basis of facts and in the circumstances of the case and as per law, the Commissioner of Income Tax, (Appeals)-NFAC Delhi is not justified in confirming the addition of Rs 1,30,30,628/-in respect of purchase of landed property on 19/10/2015.
7. Without prejudice to Ground No 1 to 5 above, on the basis of facts and in the circumstances of the case and as per law the Commissioner of Income Tax, (Appeals)-NFAC Delhi is not justified in confirming the addition of Rs 1,04,73,434/-in respect of purchase of landed property.
8. Without prejudice to Ground No 1 to 5 above, on the basis of facts and in the circumstances of the case and as per law, provisions of sec 50C are applicable to the transferor of the capital asset and NOT to the transferee. As such the Commissioner of Income Tax, (Appeals)-NFAC Delhi is not justified in confirming the addition of Rs 16,32,671/- 9. Without prejudice to Ground No 1 to 5 above, on the basis of facts and in the circumstances of the case and as per law the Commissioner of Income Tax, (Appeals)-NFAC Delhi is not justified in confirming the addition of Rs 4,50,000/- in respect of sale of agricultural land purchase of landed property.
Without prejudice to Ground No 1 to 5 and 9 above, on the basis of facts and in the circumstances of the case and as per law, the Assessing Officer be directed to allow the indexed cost of acquisition from sale value of Rs 4,50,000/- treated as income by the Assessing Officer.
Without prejudice to Ground No 1 to 5 above, on the basis of facts and in the circumstances of the case and as per law the Commissioner of Income Tax, (Appeals)-NFAC Delhi is not justified in confirming the addition of Rs25.20,349/- being the difference between sale and purchase values of the property. The difference is the unsold value of landed property correctly shown as closing inventory.
Without prejudice to Ground No 1 to 5 above, on the basis of facts and in the circumstances of the case and as per law the Commissioner of Income Tax. (Appeals)-NFAC Delhi is not justified in confirming the disallowance of Rs 1,33,79,399/- being the land development expenses.
Without prejudice to Ground No 1 to 5 and 12 above, on the basis of facts and in the circumstances of the case and as per law, the Assessing Officer be directed to allow the reasonable expenses genuinely incurred for land development.
Without prejudice to Ground No 1 to 5. above on the basis of facts and in the circumstances of the case and as per law, the Assessing Officer be directed to treat the sale of property being Rs 19.20,000/- chargeable to tax under the head capital gains and not an income under the head business /profession after allowing the indexed cost of acquisition from sale value of Rs 19,20,000/-.
Without prejudice to Ground No 1 to 5 and 14 above, on the basis of facts and in the circumstances of the case and as per law, the Assessing Officer be directed to allow the cost of acquisition from sale value of Rs 19,20,000/-.
Without prejudice to Ground No 1 to 5. above on the basis of facts and in the circumstances of the case and as per law, the Assessing Officer be directed to treat the sale of property being Rs 1,29,06,900/-chargeable to tax under the head capital gains and not an Income under the head business /profession after allowing the indexed cost of acquisition from sale value of Rs 1,29.06,900/-.
17. Without prejudice to Ground No 1 to 5 and 16 above, on the basis of facts and in the circumstances of the case and as per law, the Assessing Officer be directed to allow the cost of acquisition from sale value of Rs 1,29,06,900/-.
18. The appellant craves leave to add, alter, omit or substitute any of the grounds at the time of hearing of the appeal.”
The Ld. AR submitted that the assessee is not much educated person and also has very limited knowledge about the Income Tax proceedings. He, therefore, completely relied on his Chartered Accountant/Tax Consultant to handle and represent his case before the income tax authorities. However, due to the Tax Consultant’s negligence to take follow-up of the notices, the Ld. AO passed the assessment order to the best of his judgment and on the basis of material available on record thereby making the impugned addition(s). He further submitted that the case of the assessee was not properly presented before the Ld. CIT(A)/NFAC as well. The Tax Consultant of the assessee filed a cryptic reply and it was on account of this poor representation that the case of the assessee has been dismissed by the Ld. CIT(A)/NFAC. It is the contention of the Ld. AR that the Ld. AO has referred to only one transaction of Rs.4.05 lacs without any specific details as to the date of sale, registration number etc., however, there are 20 such transactions done by the assessee during the AY 2016-17 under consideration for which the relevant details/documentation has been placed on record as additional information by the assessee before the Tribunal (page 250 to 312 of the paper book refers). He submitted that that the assessee has a strong case on merits and given an opportunity the assessee is in a position to explain and substantiate his case to the satisfaction of the Ld. AO by filing all the requisite details/documentary evidence in support of his claim. He, therefore, prayed that the matter may be set aside to the file of the Ld. AO for fresh adjudication on merits after affording one more opportunity to the assessee to present and explain his case before the Ld. AO.
The Ld. DR strongly supported the order of the Ld. CIT(A)/NFAC. However, he had no serious objection to the above request of the assessee for remanding the matter back to the file of the Ld. AO.
We have heard the Ld. Representatives of the parties and perused the material available on record and the paper book filed by the Ld. AR on behalf of the assessee. The facts of the case are not in dispute. We find that both the Ld. AO as well as Ld. CIT(A)/NFAC has decided the impugned issues against the assessee based on the material available on record due to lack of proper explanation/documentary evidence furnished by the assessee in support of his claim. Before us, the Ld. AR has pleaded that it was due to the mistake and negligence on the part of the Tax Consultant of the assessee that the case could not be represented properly before the lower authorities and therefore he humbly requested for the matter to be set aside to the file of the Ld. AO for fresh adjudication on merits. Considering the totality of the facts and in the circumstances of the case and without going into the merits of the appeal, we deem it fit to set aside the order of the Ld. CIT(A)/NFAC and restore the matter back to the file of the Ld. AO to adjudicate all the issues raised by the assessee afresh on merits as per fact and law after giving one more opportunity of being heard to the assessee. Needless to say, the assessee shall provide his full support by furnishing its reply/details/evidences as may be required or called upon by the Ld. AO on the appointed date without seeking any adjournment under any pretext failing which the Ld. AO shall be at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purpose.
In the result, the appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open court on 09th December, 2025.