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Facts
The assessee, an army soldier, did not file an income tax return for AY 2010-11, despite department information showing business transactions on a multi-commodity exchange of over Rs. 1 crore. An assessment was made Under Section 144/147, computing income by applying an 8% profit rate on the turnover, which the assessee challenged, citing misuse of personal details and his posting in a remote border area as reasons for non-compliance and a four-year delay in filing the first appeal. The CIT(A) dismissed the first appeal solely on the ground of delay, prompting the current appeal to the Tribunal.
Held
The Tribunal noted that both the assessee and the revenue department agreed to set aside the impugned orders and remand the case back to the Assessing Officer (JAO) for fresh adjudication on a de novo basis. The Assessing Officer is directed to pass a fresh assessment order within six months after considering all aspects of the case. The penalty appeal Under Section 271B, having similar facts, was also remanded on a de novo basis.
Key Issues
Whether the CIT(A) erred in dismissing the appeal due to significant delay in filing, and whether the assessment made on estimated income from multi-commodity exchange transactions, despite claims of identity misuse and procedural irregularities, requires de novo adjudication.
Sections Cited
253, 250, 144, 147, 148, 142(1), 271(1)(b), 246A, 249(3), 249(2), 44AB, 234A, 234B, 234C, 271B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI B.M. BIYANI & SHRI PARESH M JOSHI
the order bearing Number ITBA/APL/S/250/2024- 2025/1071574592(1) dated 26.12.2024 passed by the Ld. CIT(A) u/s 250 of the Act which is hereinafter referred to as the “Impugned order”. The relevant Assessment Year is 2010-11
Kailash Chandra Patidar & 216/Ind/2025 and the corresponding previous year period is from 01.04.2009to 31.03.2010.
FACTUAL MATRIX 2.1 That as and by way of an assessment order made u/s 144/147 of the Act, the assessee’s total income exigible to tax was computed and assessed at Rs.8,13,260/-.
2.2 The assessee for the Assessment Year 2010-11 corresponding to the Financial Year 2009-10 had not filed any income tax return.
2.3 That the department of Income Tax basis ITS-CIB-Data had an information that the assessee in the Financial Year 2009-10 had done business of about Rs.1,01,65,800/- at the multi commodity exchange. That a notice u/s148 of the Act dated 30.03.2017 was issued to the assessee by the ITO, ward-1, Satara.
2.4 That thereafter on account of change in the jurisdiction in regard to the assessee case, a notice u/s 142(1) of the Act dated 07.07.2017 was issued to the assessee whereby the hearing in the assessee case was fixed for 17.07.2017. However on said date of hearing no one was present. Thereafter on Page 2 of 13
Kailash Chandra Patidar & 216/Ind/2025 11.08.2017 & 25.09.2017 notice(s) u/s 142(1) of the Act were once again issued to the assessee whereby hearings in the matter were fixed for 28.08.2017 & 13.10.2017 respectively. However on these dates of hearings also no one was present. No reply was also placed on record. That as and by way of a final opportunity another notice u/s 142(1)/271(1)(b) of the Act in the form of show cause notice was issued to the assessee whereby hearing was fixed for 20.11.2017 however on said date too nobody appeared nor any reply was filed on record. That thereafter once again a notice u/s 142(1) of the Act was issued for 23.11.2017 when on said date no body appeared nor any reply was placed on record.
2.5 Basis above facts the Ld. A.O proceeded to adjudge and adjudicate the assessee’s case and determined and computed income of Rs.8,13,264/- being 8% of the business of Rs.1,01,65,800/- done at multi commodity exchange.
2.6 That the aforesaid assessment order is dated 18.12.2017 of ITO, Shajapur, M.P & that the same is hereinafter referred to as the “impugned assessment order”.
Kailash Chandra Patidar & 216/Ind/2025 2.7 That the assessee being aggrieved by the aforesaid “impugned assessment order” prefers the first appeal u/s 246A of the Act before the Ld. CIT(A) who by the “impugned order” has dismissed the 1st appeal of the assessee on the grounds and reasons stated therein. The core grounds and reasons are stated hereunder:-
“In view of the above detailed discussion, it is held that the appellant has no "sufficient cause" in terms of section 249(3) of the Act, for not presenting the appeal within the prescribed period. It is well-settled law that an appellant is not entitled to the condonation as a matter of right. For an appellant to succeed, the existence of sufficient cause is sine qua non and a condition precedent. It is manifestly evident that this ingredient is woefully lacking in this belated appeal filed by the appellant. Thus, the delay in filing the appeal by the appellant, is not considered as sufficient cause and delay is therefore, not condoned. Accordingly. the appeal is dismissed without any discussion on merits or on any other aspect.
Considering the above discussion and facts, the appeal filed is not in conformity with the provisions of Sec 249(2) of the Act, and there is no sufficient cause for condonation of the delay in filing of the appeal, the present appeal is dismissed as not maintainable.
In the result, the appeal is dismissed”.
2.8 That the assessee being aggrieved by the “impugned order” has preferred the instant second appeal before this Tribunal and has raised following grounds of appeal in the Form No.36 against the “impugned order” which are as under:-
“1.The Learned CIT (Appeals) National Faceless Appeal Center (NFAC) has grossly erred in confirming addition made by A.O. of Rs. 813264/- on account of assuming 8% Profit on an arbitrary
Kailash Chandra Patidar & 216/Ind/2025 figure taken it to be Turnover of the appellant. The AO Arbitrarily made summation of sale value of exchange traded derivative contracts executed through recognized Commodity Exchange MCX (it comes out to Rs. 1,01,65,800/-) and presumed it to be Turnover of the assessee, without appreciating the provisions of the Income Tax Act, 1961.
2.The Learned CIT (Appeals) National Faceless Appeal Center (NFAC) has grossly erred in calculation of Turnover as summation of sale however turnover in case of contract for the purchase or sale of any commodity through recognized stock exchange without actual delivery of commodity are covered under derivative transactions and under Income Tax Act. The turnover in the case of derivative transactions are taken sto be absolute turnover being total of favorable and unfavorable differences are taken as turnover.
3.The Learned CIT (Appeals) National Faceless Appeal Center (NFAC) has grossly erred and failing to appreciate that compulsory audit of accounts u/s 44AB is applicable when turnover exceeds applicable limit of Rs. 60 Lacs, but the turnover of derivative transactions being derivative contract for the purchase or sale of any commodity through recognized stock exchange is taken to be absolute turnover i.e. total of favorable and unfavorable differences of purchase and sale transactions.
4.The Learned CIT (Appeals) National Faceless Appeal Center (NFAC) has failed to appreciate that assessee is serving to the INDIAN ARMY and posted to the remotest and sensitive location of Indian borders. These areas are so sensitive that government of India has restricted to access to internet and smart phones to them. The appellant posted at Burma Border area for the period of around 4 years i.e. from June, 15 to April, 19. This is the period when learned A.O. issue notices and thereafter passed assessment order ex-parte confirming demand of tax along with interest u/s 234A, 234B, & 234C.
5. Without prejudice to the above, The Learned CIT (Appeals) National Faceless Appeal Center (NFAC) has grossly erred to appreciate that notice under section 148 issued for the first time by A.O. on 30.03.2017 without any sanction from the higher authority which is arbitrary and bad in law.
6. The notice is bad in law because AO has simply considered the sale side but erred to appreciate the purchase of derivatives which is an integral part of record, this act of AO is vindictively or with a bias against the taxpayer.
Kailash Chandra Patidar & 216/Ind/2025
Without prejudice to above, The Learned CIT (Appeals) National Faceless Appeal Center (NFAC) has grossly erred to appreciate that notice under section 148 for the referred year is issued for the first time by A.O. on 30.03.2017 however the same was not served to the appellant in accordance to the procedure laid down in the act and within the time limit specified under the act is bad in law.
The Learned CIT (A) failed to appreciate that non appearance / non submission of reply during appeal does preclude Appellate Authority to adjudicate on the available information / document already placed before the AO.
Assessee most humbly crave leave to add, alter, amend, withdraw, modify the Grounds of Appeal and to submit such statement, documents and papers as may be considered necessary either before or during the hearing of the appeal”.
Record of Hearing 3.1 The hearing in the matter took place before this Tribunal on 17.11.2025 when the Ld. AR for and on behalf of the assessee appeared before us and interalia contended that the “impugned order” is illegal, bad in law and not proper. It thus deserves to be set aside. The Ld. AR has placed on the record of this tribunal a paper book containing pages 1 to 98. It was submitted by the Ld. AR that the assessee is an army soldier. While the notices (supra) were issued by the Ld. Income Tax Officer the assessee was posted at Burma border. Our attention was invited to paper book page 38 which is a certificate issued by Ld. Colonel, Officiating Adm Officer, 970 Rly Eng Regt (TA) wherein it is Page 6 of 13
Kailash Chandra Patidar & 216/Ind/2025 certified that from 07.07.2017 to 18.12.2017 the assessee was on government bonafide duty at HQ 28 Sector Assam Rifle, Kakching, Manipur (on deputation). It was submitted that on date of “impugned assessment order” i.e. 18.12.2017 the assessee was at Manipur on army duty. Basis paper book page 27 which is a document of MCX it was contended that client code U109907 does not belong to the assessee and the same is not registered under any members of the exchange. It was next submitted basis paper book page 28 which is a complaint letter addressed to ITO, Shajapur dated 27.08.2018 that client Id U109907 of multi commodity exchange does not belong to the assessee and that his personal details appears to have been misused by someone and case against the assessee be closed.
Reliance was placed on paper book page 29 and 31. It was revealed by the Ld. DR for revenue basis page 31 of paper book that user Id U109907 is of the Assessing Officer to login on the internal portal of IT Department. Our attention was invited to paper book page 25 & 26 which is a complaint copy form dated 10.07.2018 made by the assessee to MCX about misuse of his personal details. Next our attention was invited to paper book
Kailash Chandra Patidar & 216/Ind/2025 page 35 to 37 which is an affidavit dated 08.11.2017 filed before the Ld. CIT, Ujjain, MP wherein the assessee had deposed that he is a soldier in Indian army since 28.10.1998. That in the year 2009 he had opened an trading account with “Anagram Com Trade Limited” (presently edelweiss Com Trade Ltd.) and that his client code was 12204023. That vide a SBI account of his, he had invested sum of Rs.1,34,000/- for the purpose of trading. The total turnover was of Rs.10,16,5800/- and net loss was of Rs.1,33,290.82. The outstanding balance is Rs.709.18. In the aforesaid affidavit other depositions are too made by him. It was submitted by the Ld. AR that the assessee had requested the Commissioner of Income Tax, Ujjain to withdraw the assessment order and penalty order made against him. The copy of affidavit was also given to ITO, Shajapur, M.P. The Ld. AR submitted that there was no response by the department officials despite filing of the above affidavit. The Ld. AR then invited our attention to paper book page 40 which was a legal notice sent by the assessee to the Income Tax department officials highlighting his ordeal. Basis paper book page 45 our attention was invited to a police complaint made by the assessee. Basis paper book page 45 it
Kailash Chandra Patidar & 216/Ind/2025 was submitted by the Ld. AR that vide letter dated 10.12.2021.
The Addl. Commissioner, Ujjain Circle-1, MP advised him to pursue the 1st appellate proceeding before CIT(A) against assessment order and penalty order for resolving his grievances.
The Ld. AR then brought to our notice that the first appeal u/s 246A was filed for CIT(A) on 24.04.2022 against the “impugned assessment order”. It was submitted that the assessee throughout has remained active and was conscious of case against him. He however was not much aware of intricacies and procedural aspect of income tax proceeding being soldier in the Indian Army. The Ld. AR then submitted that on 24.04.2022 the first appeal was filed before the CIT(A) against the “impugned assessment order” dated 18.12.2017 which was served on 18.01.2018 on the assessee which was beyond the statutory time limit provided for filling the first appeal. The 1st appeal was filed beyond the time limit with delay of 4 years. The 1st appeal ought to have been filed on or before 18.02.2018 in normal course of time. In view of the above factual position the Ld. AR pleaded that the Ld. CIT(A) ought not have dismissed the 1st appeal on the ground of delay. It was submitted by the Ld. AR
Kailash Chandra Patidar & 216/Ind/2025 that the assessee in view of facts cited aforesaid with documents have demonstrated that there was sufficient cause for the delay in filing the 1st appeal.
3.2 In so far as merit of the case is concerned the Ld. AR contended and submitted that 8% of transaction value of business done at MCX has been added and income is computed accordingly by the Ld. Assessing Officer in the “impugned assessment order”. Attention was drawn to the MCX transaction statement from pages 21 to 23 of the paper book. It was urged that the net profit out of the business transaction was only of Rs.7395.00/-. It was urged by the Ld. AR that no amount whatsoever has come back to the assessee’s bank account. It was also stated that “Anagram” was later merged with “Edelweiss Com Trade Ltd”. Per contra Ld. DR appearing for and on behalf of the revenue submitted and contended that in so far as the aspect of delay is concerned he leaves the issue to the wisdom of the Tribunal as the delay had happened before CIT(A) stage. On merits the Ld. DR submitted that before the Ld. A.O as well as before Ld. CIT(A) merits of the case are not analysed at all. He finally stated that the Ld. A.O should take
Kailash Chandra Patidar & 216/Ind/2025 into consideration all the income from all available sources of the assessee and then he should pass a fresh order on merits on denovo basis. The Ld. DR also submitted that the matter should be remanded to JAO as the matter is old one. On issue of penalty u/s 271B of the Act it was submitted by the Ld. AR at the fag end of the argument that sum total of difference between positive position and negative position at ‘MCX’ would be an appropriate and correct way to value the transactions and prayed for the remand to the Ld. A.O & the Ld. DR expressed that he had no objection to this contention of Ld. AR in this regard.
Hearing was then finally concluded.
Observations,findings & conclusions.
4.1 We now have to decide the legality, validity and the proprietery of the “impugned order” basis records of the case and rival contentions canvassed before us.
4.2 We have carefully perused the records of the case as presented to this Tribunal by both the Ld. AR & the Ld. DR to determine the legality, validity of the “impugned order” basis law and by following the due process.
Kailash Chandra Patidar & 216/Ind/2025 4.3 We basis records of the case and after hearing and upon examining the contentions are of the considered view that both the Ld. AR and Ld. DR are “Ad idem” that the “impugned order” should be set aside and that the matter should be remanded back to the file of Ld. A.O (JAO) so as to enable him to pass a fresh order after taking into the consideration the entire gamut of the case from all the angles on denovo basis. Assessee is directed to cooperate with the department.
4.4 In view of the premises drawn up by us, we set aside the “impugned order” and remand the case back to the file of Ld. A.O on denovo basis with a direction to pass fresh assessment order within a period of six months from the date of receipt of this order of the Tribunal.
Order 5.1 In the premises drawn up by us as the “impugned order” is set aside and case of the assessee is remanded back to the file of Ld. A.O on denovo basis.
5.2 In result appeal of the assessee is allowed for statistical purpose. Page 12 of 13 Kailash Chandra Patidar & 216/Ind/2025 5.3 (Penalty u/s 271B)
Since the facts and circumstances are almost identical and similar (Penalty u/s 271B) this appeal too was heard simultaneously and is disposed off by this order and the penalty issue is too remanded back to the file of Ld. A.O on denovo basis mutadis mutandis.
5.4 Finally in result both the appeals are allowed for statistical purpose.
Order pronounced in open court on 20.11.2025.