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Facts
The assessee filed a return of income, but the case was reopened under Section 147 due to information about accommodation entries related to bogus Long Term Capital Gains. The Assessing Officer treated a trade value of Rs. 1,47,000/- as unexplained income.
Held
The Tribunal noted that the NFAC dismissed the appeal due to delay. Considering the peculiar facts, the Tribunal restored the case to the Assessing Officer to provide the assessee with another opportunity to present its case.
Key Issues
Whether the reassessment order was passed without proper inquiry and based on assumptions, and if the NFAC's dismissal due to delay warrants a restoration of the appeal to the AO.
Sections Cited
147, 148, 132A, 144, 144B, 69A, 115BBE, 274, 271(1)(c), 271(1)(b)
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Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
Assessment Year: 2013-14 Ashish Khemka HUF v. DCIT/ACIT-1 702, Shalimar Titanium Lucknow - New Vibhuti Khand Gomti Nagar, Lucknow (U.P) TAN/PAN:AAEHA6967L (Appellant) (Respondent) Appellant by: Shri Samrat Chandra, C.A. Respondent by: Shri R.R.N. Shukla, D.R. O R D E R
This appeal has been preferred by the Assessee against the order dated 24.06.2025, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2013-14.
2.0 The brief facts of the case are that the e-filed its return of income for the year under consideration on 09.08.2013, declaring a total income of Rs.18,34,450/-. The case of the assessee was reopened under section 147 of the Income Tax Act, 1961 (hereinafter called “the Act’) after issuing notice under section 148 of the Act to the assessee. The case of the assessee was reopened mainly on the basis of information collected by the Department during the course of search conducted under section 132A of the Act on syndicate of persons led by Shri Naresh Jain on 19.03.2019 that Shri Naresh Jain and his associates were involved in providing accommodation entries in the form of bogus Long Term Capital Gain/Losses in several scrips to various beneficiaries across the country and that the assessee under appeal had booked a total trade value of Rs.1,47,000/- for Gems Stone Investment Limited (a concern used for providing accommodation entries by Shri Naresh Jain syndicate/group). In this regard, the assessee was required to explain the details of transaction with supporting evidences. However, inspite of various notices issued to the assessee, the assessee did not respond. The Assessing Officer (AO), therefore, proceeded to complete the assessment on the basis of Best Judgment Assessment, after issuing show cause notice to the assessee. While completing the assessment under section 147 read with sections 144 and 144B of the Act, the AO treated the aforementioned trade value of Rs.1,47,000/- as unexplained income of the assessee and added the same to the total income of the assessee under section 69A of the Act. The AO completed the assessment, assessing the total income of the assessee at Rs.19,81,450/-.
2.1 The AO also invoked the provisions of section 115BBE of the Act and initiated penalty proceedings under sections 274 read with sections 271(1)(c) and 271(1)(b) of the Act, separately.
2.2 Aggrieved, the Assessee preferred appeal before the NFAC, which dismissed the appeal of the assessee for the reason of there being delay of 148 days in filing of the appeal before the NFAC.
2.3 Now, the assessee has approached this Tribunal challenging the dismissal of its appeal by the NFAC by raising the following grounds of appeals:
1. The Assessing Officer erred in law as well as in facts in adding a sum of Rs.1,47,000/-to the returned income of the assessee under Section 69A of the Income Tax Act, 1961, as undisclosed money, without appreciating the facts of the case.
2. The addition made under Section 69A of the Act is based on mere assumptions and presumptions, without being backed by any cogent material or evidence, thereby rendering the assessment order violative of the principles of natural justice.
Various notices issued by the A.O. were not received by the appellant HUF. No physical delivery of notices was done on the appellant, therefore impugned assessment order under section 147 read with section 144 is unsustainable in law, void ab-initio and liable to be quashed.
Reasons have been recorded on borrowed satisfaction without conducting prior independent enquiry, therefore impugned assessment order under section 147 rws 144 of the income tax act 1961 is unsustainable in law and void ab initio, therefore liable to be quashed.
5. The arbitrary addition made by the Ld. AO in the income of the appellant HUF of Rs.1,47,000/- is contrary to the principles of natural justice and deserves to be deleted.
6. The invoking of section 115BBE OF IT Act, 1961 by Ld. AO is without proper basis and unsustainable in law and facts. 7. Any other ground, the assessee may raise during the course of appellate proceedings. 3.0 The Ld. Authorized Representative for the assessee (Ld. A.R.) prayed that the file may be restored to the Office of the AO for being adjudicated on merits.
4.0 Since the order passed by the AO was under section 144 of the Act and the NFAC had dismissed assessee’s appeal for the reason of delay in filing the appeal before the NFAC, the Ld. Sr. D.R. had no objection to the restoration of appeal to the file of the Assessing Officer.
5.0 I have heard the ld. Senior Departmental Representative and have also perused the material on record. It is evident that the order passed by the AO is ex-parte qua the assessee and the NFAC had dismissed the appeal of the assessee for the reason of delay in filing the appeal before the NFAC. Looking into the peculiar facts of this case, I am of the considered view that the assessee deserves one more opportunity to present its case and, therefore, I set aside the order of the NFAC and restore this file to the Office of the Assessing Officer with the direction to provide one more opportunity to the assessee to present its case. I also caution the assessee to fully comply with the directions of the Assessing Officer in the set-aside proceedings when called upon to do so, failing which, the Assessing Officer would be at complete liberty to pass the order in accordance with law, based on material available on record even if it is ex-parte qua the assessee.
6.0 In the result, the appeal of the assessee stands allowed for statistical purposes.
Order pronounced in the open Court on 27/10/2025.