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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: S/SHRI SANJAY GARG & MAKARAND V.MAHADEOKAR
आदेश आदेश/O R D E R आदेश आदेश
PER MAKARAND V.MAHADEOKAR, AM:
This appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”], dated 23.09.2024, passed under section 250 of the Income-tax Act, 1961 [hereinafter referred to as “the Act”] for the Assessment Year 2018–19, whereby the learned CIT(A) dismissed the appeal ex parte for want of compliance.
Condonation of Delay 2.1 At the outset, it is noted that there is a delay of 109 days in filing the present appeal before us. In support of the application for condonation of delay, the assessee has filed a duly notarised affidavit dated 01.08.2025, explaining the reasons for the delay. It is submitted that the assessee did not receive any intimation or notice of hearing from the CIT(A) in connection with the appellate proceedings under section 250 of the Act, owing to the fact that all communications were sent to the email ID safalamdavad@yahoo.com, which had become defunct and was no longer in use. The assessee had transitioned to a new email ID (safalfinstock@yahoo.com) much before the appellate proceedings but inadvertently failed to update the same on the e-filing portal of the Income Tax Department. The affidavit further states that the assessee became aware of the dismissal of the first appeal only in March 2025 during routine checking by his tax consultant, whereafter he took immediate steps to obtain a copy of the appellate order and filed the present appeal before the Tribunal without any further delay.
2.2 The explanation offered by the assessee is supported by a sworn affidavit, and the factual matrix suggests that the cause of delay was neither deliberate nor contumacious, but attributable to inadvertent technical lapse, i.e., failure to update the current email address on the portal. It is also evident that the assessee was prevented by sufficient cause, as envisaged under section 253(5) of the Act, from filing the appeal within the prescribed period of limitation.
2.3 We also note that the delay in filing the appeal has not resulted in any undue prejudice to the Revenue. It is well-settled law that in matters of condonation, the expression "sufficient cause" should receive a liberal construction so as to advance substantial justice, especially where the delay is neither intentional nor mala fide.
2.4 In view of the foregoing, and in the interest of justice, we are satisfied that the delay in filing the appeal deserves to be condoned. The delay of 109 days is hereby condoned, and the appeal is admitted for adjudication on merits.
Facts of the Case 3.1 The assessee is an individual engaged in the business of share trading. For the year under consideration, the assessee filed his return of income declaring total income under the head “business” from sale and purchase of shares and securities. The return was selected for scrutiny assessment under CASS, and accordingly, notice under section 143(2) was issued.
3.2 The assessment was completed by the Assessing Officer vide order dated 28.03.2023 passed under section 143(3) of the Act, determining total income of the assessee at Rs.2,33,95,658/- by making the following additions:
Sr. Nature of Addition Section Amount (Rs.) No. Invoked 1. Sale proceeds of Kushal Ltd. 68 2,29,10,339/- shares 2. Estimated commission on alleged 69C 4,58,206/- accommodation entries Total 2,33,68,545/- 3.3 The Assessing Officer observed that the assessee had shown sale of scrips of Kushal Ltd., which, in his view, were accommodation entries. Though the assessee submitted copies of demat account, bank statements, and supporting evidence in the course of assessment proceedings, the AO disbelieved the genuineness of the transactions. Based on BSE trade data obtained under section 133(6), abnormal price rise of Kushal Ltd. shares (from Rs. 2 to Rs. 469 without corresponding financials) and information from the Insight Portal indicating involvement of Kushal Ltd. in accommodation entry operations, the AO concluded that the said transaction lacked genuineness. He held that the scrip of Kushal Ltd. was part of a penny stock operation providing accommodation entries. Accordingly, applying the principle of human probability, he treated the entire sale consideration of Rs. 2,29,10,339/- as unexplained cash credit under section 68. In addition, based on the presumption that such entries entail commission ranging from 2%–4%, the AO estimated an amount of Rs.4,58,206/- as commission paid by the assessee and added it under section 69C of the Act. He also initiated penalty proceedings under section 271AAC and levied interest under sections 234B and 234C of the Act.
3.4 The assessee filed an appeal before the CIT(A) who dismissed the appeal for want of compliance. In the impugned order, the learned CIT(A) recorded that notices of hearing were issued electronically, but no response or submissions were received from the assessee. Accordingly, the CIT(A) did not adjudicate the grounds on merits and summarily upheld the action of the Assessing Officer.
Aggrieved by the order of CIT(A), the assessee is in appeal before us raising following grounds of appeal:
1. This in reference to the order passed u/s 250 by CIT (A), wherein the learned CIT has passed on the ground that assessee fails to appear before CIT(A) while hearing so CIT(A) dismissed the appeal. The appellant was absence in hearing as he does not receive any communication just because of he uses different E-mail ID for communication and fails to get change E-mail ID on Income Tax Portal. I sincerely apologize for any inconvenience my absence may have caused to the proceedings. I assure you that I will make every effort to attend future hearings.
2. The Assessing officer has made addition of Rs.2,29,10,339/-as per section 68: Assessee had given demat account and also submitted bank statement or other supporting documents same is not accepted by the assessee officer if everything is explained through documentary evidence in nutshell, the AO is of intention to make addition of Rs.2,29,10,339/- sales amount of shares script of Kushal limited were from the shares which were used accommodation entries, which is added to the income of assessee u/s 68 of IT Act, 1961 and same needed to be deleted. The assessee deals with the transactions in shares and securities i.e. the sale and purchase of shares and whatever income/loss is generated out of such transactions, is offered to tax under head of business income in the ITR filed every year. The AO has ignored the entire material available on the file which was present at the time of assessment proceeding and same is not accepted by the assessing officer even if everything is explained through documentary evidences In a nutshell, the AO is of intention to make addition of sales value of Rs. 2,29,10,339/-, The AO invokes the section 68 of the IT Act which is irrelevant for the present case and hence illegal and bad in law and same need to be deleted.
3. The Assessing officer has made addition of Rs.4,58,206/-as per section 69C: Assessee has fully explained as above, there remains no room that the above mentioned amount of Rs. 2,29,10,339/- is an accommodation entry and hence AO made addition amount of Rs.4,58,206/- is the commission ranging between 2-4% on such accommodation entry has also no legs to stand on. Therefore, addition of this amount of Rs. 4,58,206/- u/s 69C does not arise at all. As such nothing is brought on records as to who and from whom such commission is received/paid despite the fact that the amount added to the total income of the assessee is bad in law and same need to be deleted.
4. Section 271AAC: The Ld. AO has erred in law and on facts in initiated penalty proceedings u/s 271AAC despite the fact that the amount added to the total income of the assessee is bad in law and proposing on penalty on same is also and same need to be deleted. Further, assessee has made true and fair disclosures for every issue covered, Hence the case of assessee does not attract any penal provisions under the IT Act.
5. Section 234B: The Ld. AO has erred in law and on facts in initiated interest proceedings u/s 234B despite the fact that the amount added to the total income of the assessee is bad in law and proposing on interest on same is also and same need to be deleted.
6. Section 234C: The Ld. AO has erred in law and on facts in interest proceedings u/s 234C despite the fact that the amount added to the total income of the assessee is bad in law and proposing on interest on same is also and same need to be deleted.
7. Rule 46A Additional Evidences: The assessee requests your good-self to allow production and submission of additional evidences during the course of appellate proceedings which, for the one reason or the other, the assessee is not able to produce/submit during the assessment proceedings.
8. Modification to the Ground of Appeal:
The assessee reserves his right to add, delete, edit, manipulate, modify, rectify or otherwise change any of the grounds of appeal during the course of appellate proceedings.
9. Charging of Surcharge, health and education cess on Normal Income: The assessing officer charge surcharge, health & education cess based on the wrong addition of Rs.2,33,95,658/- to total income do assessee needs to be deleted.
5. Before us, the learned Authorised Representative (AR) appearing on behalf of the assessee submitted that the assessee is engaged in the business of trading in shares and securities, and the income/loss from such transactions has consistently been offered to tax under the head “profits and gains of business or profession” in the returns of income filed. In respect of the relevant Assessment Year, it was submitted that the trading transactions included sale of shares of Kushal Ltd., the proceeds of which were duly recorded in the books of account and reflected in the demat statement, bank account, and profit and loss account.
5.1 The learned AR further submitted that the assessee had furnished necessary documents and explanations during the course of assessment proceedings, including the demat statement, bank statement, and ledger copies, to substantiate the genuineness of the share transactions. However, the Assessing Officer, without properly appreciating the evidences on record, proceeded to invoke section 68 of the Act and made addition of Rs.2,29,10,339/- on account of the sale proceeds of Kushal Ltd. shares, treating the same as unexplained credit. A consequential addition of Rs.4,58,206/- was also made under section 69C towards alleged commission on accommodation entries.
5.2 With respect to the proceedings before the CIT(A), the learned AR submitted that the assessee was unable to appear or file written submissions as no notice of hearing was received due to the fact that the email ID registered on the Income Tax Portal had become inactive. The AR reiterated that this lapse was inadvertent and not deliberate, and that the assessee came to know about the appellate order only through his tax consultant in March 2025.
5.3 Therefore, the learned AR prayed that the matter may be restored back to the file of the learned CIT(A) for fresh adjudication on merits after affording due opportunity of hearing to the assessee. It was submitted that the assessee is fully prepared to produce all supporting documentary evidences to substantiate the claims and justify the transactions in question.
The learned Departmental Representative (DR) appeared on behalf of the Revenue and did not raise any objection to the prayer of the assessee for restoring the matter back to the file of the learned CIT(A) for fresh adjudication. However, he drew the attention of the Bench to the fact that even during the assessment proceedings, the assessee had not fully complied with the statutory notices issued by the Assessing Officer, and had failed to furnish complete details of the opening stock, purchase, and sale transactions relating to the shares of Kushal Ltd.
We have carefully considered the rival submissions, the material available on record, and the orders of the lower authorities. It is an undisputed fact that the appeal filed by the assessee before the learned CIT(A) was dismissed ex parte, without adjudication on merits, solely on account of non-appearance.
7.1 The AR also stated that the assessee had duly submitted supporting documents during the assessment proceedings, including bank statements and demat account, to substantiate the share transactions in Kushal Ltd. However, according to the Revenue, the assessee had failed to furnish the breakup of opening stock, details of purchases, and proper supporting evidence to explain the source and nature of credits. The Revenue has not objected to the assessee’s request for restoration of the matter to the file of the CIT(A), but has rightly submitted that the assessee must ensure complete compliance before the appellate authority and discharge the burden of proof as per law.
7.2 Considering the totality of facts and in the interest of substantial justice, we are of the view that the assessee deserves one more opportunity to present his case. Accordingly, we set aside the impugned order of the CIT(A) and restore the matter to his file with a direction to decide the appeal afresh, after affording a reasonable opportunity of being heard to the assessee. The assessee shall cooperate in the proceedings and shall not seek undue adjournments.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Court on 5th August, 2025 at Ahmedabad.