BHANSALI & SONS- HUF,AHMEDABAD vs. THE ITO, WARD-1(2)(1), AHMEDABAD

1. This appeal is filed by the assessee against the order of National Faceless Appeal Centre(NFAC), Delhi [hereinafter referred to as ‘CIT(A)’], dated 07.05.2024 for the Assessment Year (A.Y.) 2012-13 in the proceeding u/s 144 r.w.s 147 of the Income Tax Act.

The brief facts of the case are that the assessee had filed its return of income for A.Y. 2012-13 declaring income of Rs. 3,72,740/-. The case of the assessee was reopened u/s. 147 of the Act on the basis of information that it had traded in shares of penny stock company M/s VMS Industries Ltd. and obtained bogus long-term capital benefit. In the course of assessment, no compliance was made before the AO. Therefore, the AO has treated the entire proceed of Rs.1,47,380/- on account of sale of shares of VMS Industries Ltd. as non-genuine and sham transaction and added to the income. Further, the purchase consideration of Rs.13,09,732/- in respect of these shares was also treated as unexplained investment and added to income. The assessment was completed u/s. 144 r.w.s 147 of the Act on 31.10.2019 at total income of Rs.18,49,550/-.

Aggrieved with the order of the AO, the assessee had filed an appeal before the First Appellate Authority which was decided by Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed.

That the Learned CIT[A] as well as Income Tax Officer without giving any opportunity passed the order u/s 147 r.ws 144 of the Income Tax Act, 1961 which is against the principle of natural justice.

The Learned CIT(A) has erred in law and facts to confirm the order of the Learned Assessing Officer by passing the order u/s 147 r.w.s 144 of Income Tax Act, 1961 as no notice has been received by the appellant either through e-mail or physical delivery.

The addition made to the returned income is bad in law as well as on the basis of facts of the case as certain assumptions were made by the authorities below without appreciating the actual facts of the appellant’s case.

Shri Sudhir Mehta, the Ld. AR of the assessee submitted that the AO had issued a notice u/s. 142(1) of the Act on 01.10.2019 calling for general information as well as the details of investment in shares and securities, which could not be complied by the assessee. Thereafter, the AO had issued a show cause notice on 23.10.2019 with hearing date on 30.10.2019. However, the said notice was received by the assessee only on 04.11.2019 and in response thereto the assessee had filed a reply before the AO vide letter dated 05.11.2019. But the said reply was not Bhansali & Sons - HUF Vs. ITO, AY-2012-13 4 considered by the AO on the ground that the assessment order was already passed on 31.10.2019. The Ld. AR submitted that the assessee had furnished all the relevant details as called for by the AO before the Ld. CIT(A) as well, who had, however, refused to admit the additional evidences and dismissed the appeal of the assessee. The Ld. AR submitted that considering the fact that proper opportunity of hearing was not allowed by the AO and the order was passed even before the show cause notice was received by the assessee, the matter may be set aside to the file of the AO with a direction to allow another opportunity to the assessee to explain the investment in shares.

Per contra, Shri. Suresh Chand Meena, the Ld. SR-DR had no objection if the matter was set aside to the AO for allowing another opportunity to the assessee.

We have considered the submissions of the assessee. A copy of the show cause notice dated 23.10.20019 has been brought on record in the paper-book. From the tracking evidences to the show cause notice brought on record, it is found that this notice was delivered to the assessee only on 04.11.2019, whereas the date of compliance as per the notice was 30.10.2019. Further, the AO had already passed the assessment order on 31st October, 2019 without waiting for the reply of the assessee. Thus, the assessee was not allowed any proper opportunity to respond to the show cause notice and furnish the details as requisitioned by the AO. Under the circumstances, the Ld. CIT(A) was not correct in rejecting the additional evidences filed before him. As the assessee was not allowed a proper opportunity of being heard, we deem it proper to set aside the matter to the file of Jurisdictional AO with a direction to allow another Bhansali & Sons - HUF Vs. ITO, AY-2012-13 opportunity to the assessee to explain the share transactions. The assessee is also directed to make compliance before the AO in the course of set aside proceeding and produce the details and documents as required by the AO.

In the result, the appeal of the assessee is allowed for statistical purpose.