ADITI THAPAR ,VADODARA vs. THE DY.CIT, CIRCLE-1(1)(1), VADODARA

The brief facts of the case are that the assessee is an individual deriving income from salary, rent, long-term capital gains and other sources. The assessee filed her return of income for the Assessment Year 2014-15 declaring total income of Rs. 11,73,430/-. The case was selected for scrutiny and in the assessment proceedings, the Assessing Officer made the following additions - (i) an addition of Rs. 44,68,850/- under section 68 of the Act on account of alleged bogus long-term capital gains on sale of 9,300 shares of Turbotech Engineering Ltd.; (ii) an addition of Rs. 51,31,150/- under section 69 of the Act on account of unexplained investment in immovable residential property; and (iii) an addition of Rs. 7,16,500/- under section 69A of the Act on account of unexplained cash payments towards credit card accounts. During the assessment proceedings, the assessee submitted that the shares of Turbotech Engineering Ltd. were purchased online through a recognized broker, M/s. Vijay Bhagwandas & Co., a member of the Bombay Stock Exchange, and that the transactions were genuine, duly supported by contract notes, demat statements, and bank records showing that the purchase and sale consideration were routed through banking channels. The assessee also Aditi Thapar vs. DCIT Asst.Year –2014-15 - 3– submitted that the shares were sold through another recognized broker, M/s. Anand Rathi Securities Ltd., on which Securities Transaction Tax (STT) had been paid. The assessee contended that no there is no evidence on record to prove that the transactions were bogus, and that mere reference to certain general statements of third parties could not justify denial of exemption on the genuine capital gains. Regarding the investment in immovable property, the assessee submitted that the investment was made from borrowed funds which were received by the assessee from agriculturist lenders, and in support thereof, she furnished confirmation letters, copies of bank accounts, identity proofs, and income- tax returns of the lenders. With regard to cash payments towards credit card dues, the assessee submitted that the payments were made from rent receipts, agricultural income, and trading business, all of which were disclosed and offered to tax. The Assessing Officer, however, disregarded the submissions and evidences and made the above additions treating the transactions as unexplained and non-genuine.

In appeal, the learned CIT(Appeals) examined the assessment order and submissions filed by the assessee but confirmed all three additions. The CIT(Appeals) held that the assessee failed to rebut the findings of the Assessing Officer that the share transactions were sham and not supported by any direct rebuttal or cogent evidence. On the issue of investment in immovable property, the CIT(Appeals) held that the existence of balances in the lenders’ accounts was not sufficient to prove their creditworthiness, and that the entire transaction appeared questionable. As regards cash Aditi Thapar vs. DCIT Asst.Year –2014-15 - 4– payments towards credit card dues, the CIT(Appeals) found that the invoice relied upon by the assessee to substantiate agricultural income was not in her name and therefore the explanation was not acceptable. Consequently, the appeal of the assessee was dismissed in totality.

The assessee is in appeal before us against the order passed by the CIT(Appeals) dismissing the appeal of the assessee. Before us, the learned counsel for the assessee submitted that the order of the CIT(Appeals) has been passed without properly considering the written submissions, supporting documents, and evidences furnished by the assessee. It was contended that the order is non-speaking, arbitrary, and violative of principles of natural justice, and therefore prayed that the matter be restored to the file of the CIT(Appeals) for denovo consideration in the interest of justice.

We have heard the rival contentions and perused the material on record. On going through the records, we are of the considered view that CIT(Appeals) has not analyzed in detail the submissions of the assessee. We are of the considered view that CIT(Appeals) should have passed a speaking order taking into consideration the submissions of the assessee and giving observations on the same. The Hon’ble Supreme Court in Kapurchand Shrimal v. CIT [1981] 131 ITR 451 (SC) has held that it is the duty of the appellate authority to correct errors in the orders of lower authorities and, if necessary, remit the matter for proper adjudication so that substantial justice is done. Similarly, in CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225 (SC), the Apex Court held that the powers Aditi Thapar vs. DCIT Asst.Year –2014-15 - 5– of the appellate authority are co-extensive with that of the Assessing Officer and include the power to set aside an assessment and direct a fresh adjudication. The Hon’ble Delhi High Court in Gee Vee Enterprises v. Addl. CIT [1975] 99 ITR 375 (Del) further observed that where the order is passed without proper inquiry or without considering relevant material, the matter should be remanded for fresh consideration. In the present case, the order passed by the CIT(Appeals) is cryptic and does not reflect due consideration of the material placed on record. There is no discussion on the evidences filed by the assessee in support of her claims, nor any independent reasoning provided to sustain or reject them. The absence of such findings renders the order non-speaking and violative of the principles of natural justice as enunciated by the Hon’ble Supreme Court in CIT v. Walchand & Co. Pvt. Ltd. [1967] 65 ITR 381 (SC), which held that every judicial or quasi-judicial order must be supported by reasons reflecting proper application of mind. Considering the totality of the facts and circumstances, we deem it appropriate to set aside the impugned order passed by the CIT(Appeals) and restore the matter to his file for de-novo consideration. The CIT(Appeals) shall consider afresh all the submissions, evidences, and documents furnished by the assessee, grant adequate opportunity of hearing, and pass a reasoned and speaking order in accordance with law. The assessee is also directed to extend full cooperation and furnish all relevant evidences in support of her contentions.

We make it clear that we have not made any observations regarding the veracity of submissions of the assessee or the evidence sought to be relied upon the assessee, which shall be examined afresh by CIT(Appeals) and thereafter pass a speaking order in accordance with Law.

In the result, the appeal of the assessee is allowed for statistical purposes, and the matter is restored to the file of the CIT(Appeals) for de- novo adjudication in the interest of justice. This Order pronounced in Open Court on 06/11/2025