MOHAN HARIBHAU KHEDKAR,PUNE vs. I.T.O WARD-4(4), PUNE, PUNE

The captioned appeal at the instance of assessee pertaining to A.Y. 2014-15 is directed against the order dated 04.02.2025 of National Faceless Appeal Centre(NFAC), Delhi passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of Assessment Order dated 12.03.2022 passed u/s.147 r.w.s144B of the Act.

Registry has informed that the appeal before this Tribunal is time barred by 20 days. Assessee has filed application for condonation of delay stating as under :

Thereafter, on 2nd May 2024, my consultant randomly checked portal and found that in my case order has been passed.

He then enquired with me and asked me about the receipt of order. I informed him that the I had received the order, however, as relief was granted by CIT-A, I was waiting for the further communication from Assessing officer.

I have heard the rival submissions and gone through the averments made in the condonation application. Hon’ble courts by virtue of various judgments observed that when consideration of an appeal on merits is pitted against the rejection of a meritorious claim on the technical ground of the bar of limitation, the Courts lean towards consideration on merits by adopting a liberal approach towards ‘sufficient cause’ to condone the delay. The Court considering an application under section 5 of the Limitation Act may also look into the prima facie merits of an appeal. A liberal approach may be adopted when some plausible cause for delay is shown. Hon’ble Supreme Court in the case of Inder Singh Vs. State of Madhya Pradesh judgment dated 21.03.2025 (2025 INSC 382) condoned delay of 1537 days sub-serving the cause of justice. It was held so while observing that the appeal filed by the appellant with a delay was unintentional, much less due to any deliberate laches, and was well-explained by the State before the High Court. Hon’ble Court further held that in cases where the merits are significant, a more liberal approach may be adopted to allow for the examination of the case on its merits. Having gone through the averments made in the condonation application and considering the ratio laid down by the Hon’ble Court in the case of Inder Singh (supra), I am of the view that due to ‘reasonable cause’ assessee failed to file appeal within the stipulated time. I therefore condone the delay of 20 days and admit the appeal for adjudication.

During the course of hearing before me, Ld. Counsel for the assessee requested for not pressing the legal issue raised vide Ground Nos. 1 and 2 challenging the validity of notice issued u/s.148 of the Act and validity of re-assessment proceedings. Since these grounds have not been pressed, I hereby dismiss Ground Nos. 1 and 2 as ‘not pressed’.

The only effective issue remains for my consideration is that whether ld.CIT(A) erred in confirming the addition of Rs.4,36,520/- made by the Assessing Officer on account of balance receivable from NSEL.

Ld. Counsel for the assessee referring to the ledger account of the broker namely Phillip Commodities India Pvt. Ltd. submitted that the only profit earned by the assessee from the transaction carried out on the exchange is Rs.7132.22 and the remaining amount of Rs.2,25,045.18 which was outstanding as on 31.03.2014 is still not received from the broker and is almost a bad debt.

On other hand, ld. Departmental Representative vehemently argued supporting the orders of the lower authorities.

I have heard the rival contentions and perused the record placed before me. I observe that the assessee is an individual and income of Rs.11,58,660/- declared in the return furnished on 07.07.2014. Case picked up for scrutiny for issue of notice u/s.148 of the Act on the basis of information received from National Spot Exchange in respect of traders/brokers having exposure to NESL exchange platform and that there was alleged misuse and exploitation by unscrupulous brokers and traders to launder huge sums of black money. Ld. Assessing Officer based on the information available from the ledger account of the assessee found that sum of Rs.4,36,520/- was credited by the broker and made addition of the said sum. Income assessed at Rs.14,82,328/-.

Before me, Ld. Counsel for the assessee has referred to the ledger account of the broker namely Phillip Commodities India Pvt. Ltd. On going through the said ledger account, I find that on 15.07.2013 there was a purchase made by the assessee at Rs.4,49,095.10 and the payment for the said purchase was made by the assessee on 16.07.2013. Now the purchase made by the assessee was sold at Rs.4,56,755.52 leaving behind the profit of Rs.7660.42. After 15.07.2013 when the said transaction of purchase and sale was completed, there is credit balance of Rs.4,56,805.52 and there is no further credit transaction indicated in the ledger account and only there are debit transactions which are the amounts paid by the broker to the assessee against the outstanding balance payable to the assessee. I find that the net profit earned by the assessee from the transaction on National Spot Exchange is Rs.7660.42. Before me, it has been stated that the assessee did not disclose this income in the return of income because the outstanding amount receivable from the broker has turned out to be a bad debt and the assessee has landed up into net loss. Under these given facts and circumstances, I am of the considered view that ld. Assessing Officer grossly erred in making the addition of Rs.4,36,520/- because the income earned from the National Spot Exchange is Rs.7660.42 and therefore the remaining amount of addition of Rs.4,28,859.58 is hereby deleted. The additional ground raised by the assessee on merit is hereby partly allowed.

In the result, appeal of the assessee is partly allowed.