Deepak Garg HUF vs Assessment Unit

PER RAMIT KOCHAR, AM:

This appeal in ITA No. 467/Del/2026 for assessment year: 2015-16 has arisen from the learned CIT(A)’s appellate order passed u/s 250 of the Income-tax Act, 1961(in Short “Act”) dated 26.11.2025 in DIN & Order No: ITBA/NFAC/S/250/2025-26/1083030441(1), which in turn has arisen from the reassessment order dated 25.04.2023 passed by the AO u/s 147 r.w.s 144B of the 1961 Act(DIN: ITBA/AST/S/147/2023-24/1052333548(1)).

Brief facts of the case are that assessee filed return of income on 17.08.2015 u/s 139 of the Act , declaring an income of Rs.10,02,100/-. As per Information available with the AO, the assessee has received gift of Rs.73,61,000/- from Sh. Rajiv Garg during the year under consideration. As per AO, since the gift was received without consideration, the said gift is to be treated as Income from other source in the hands of the assessee which has escaped assessment , which led AO to reopen the concluded assessment by invoking provisions of Section 147/148 of the 1961 Act. The AO issued notice u/s 148 of the 1961 Act to the assessee, but the assessee did not file return of income pursuant to notice issued by the AO u/s 148 of the 1961 Act. Before issuing notice u/s 148, the AO also conducted enquiry u/s 148A of the 1961 Act, which culminated into an order passed by the AO u/s 148A(d) of the 1961 Act. Statutory notices u/s 142(1) and SCN’s were also issued by the AO during the course of reassessment proceedings. The details are recorded in reassessment order passed by the AO at page 1 and 2. The assessee participated in the reassessment proceedings, and submitted part replies. As per AO , the assessee has received gift of Rs. 73,61,000/- from Shri Rajiv Garg in lieu of consideration of division of business financials. As per AO, the assessee is not related to Shri Rajiv Garg. During the course of reassessment proceedings, the assessee submitted that there was family settlement for division of business financials which were entered into by and between different faction of the family and family owned concerns , of Sh. Sushil Garg s/o Mr. Ramdhan Das and Shri Rajeev Garg s/o Mr. Ramdhan Das, and in context thereto the an amount of Rs.73,61,000/- was received by the assessee. As per the AO, the assessee has no relation with Shri Rajiv Garg. Shri Sushil Garg is father of Shri Deepak Garg. There were cross transactions between various entities and individuals belonging to the family and the assessee. The AO rejected the contentions as the assessee has no relation with Mr. Rajeev Garg , and as per AO the aforesaid amount was received as gift from Mr. Rajeev Garg by the assessee which attract provisions of Section 56(2)(vii)(a) of the 1961 Act. The AO accordingly made the addition of Rs. 73,61,000/- in the hands of the assessee, vide reassessment order dated 25.04.2023 passed u/s 147 read with Section 144B of the 1961 Act.

Aggrieved, the assessee filed first appeal before Ld. CIT(A) . During appellate proceedings, the ld. CIT(A) issued as many as three notices to the assessee but there was no response from the assessee . The Ld. CIT(A) dismissed the appeal of the assessee ex-parte , wherein the order of the AO was confirmed mainly on the ground that the assessee has not submitted any submissions/evidence before ld. CIT(A) to controvert the findings of the AO.

Still, aggrieved , the assessee filed second appeal with the Tribunal. None appeared on behalf of the assessee when this appeal was called for hearing before the Bench. Ld. Sr. DR supported the orders of the authorities below.

5, We have considered the contentions of ld. Sr. DR, and perused the materials on record. Brief facts of the case are enumerated in the preceding para’s of this order , and are not repeated . The ld. CIT(A) issued three notices during appellate proceedings, but there was no response from the assessee. The Ld. CIT(A) dismissed the appeal of the assessee ex-parte and confirmed the additions as were made by the AO, mainly on the ground of non-prosecution of its appeal by the assessee , wherein no further evidences/submissions could be filed by the assesssee before ld. CIT(A) to controvert the findings of the AO. The ld. CIT(A) dismissed the appeal of the assessee ex-parte without deciding the issues arising in the appeal on merits. The ld. CIT(A) issued as many three notices on 27.06.2025, 07.08.2025 and 14.11.2025, but there was no compliance by the assessee. The appellate order passed by ld. CIT(A) is a non speaking order passed ex-parte without deciding the issue arising in the appeal on merits. The ld. CIT(A) is required and obligated to pass appellate order in compliance with the provisions of section 250(6) of the 1961 Act, as ld. CIT(A) is required to pass reasoned and speaking order on merits in accordance with law. Reference is drawn to provisions of Section 250(6) of the 1961 Act, wherein ld. CIT(A) has to state point for determination, his decision and reasons thereof. The ld. CIT(A) even did not made any enquiry as is contemplated u/s 250(4) of the 1961 Act, and not even assessment records were called for by ld. CIT(A). The appellate order passed by ld. CIT(A) is subject to further appeal with ITAT u/s 253. The appellate order passed by ITAT is subject to further appeal before Hon’ble High Court u/s 260A. The judgment and order passed by Hon’ble High Court is also subject to challenge before Hon’ble Supreme Court. Thus, the appellate order passed by ld. CIT(A) is not a final order, as it is subject to challenge before higher appellate authority. Thus, Reasons which weighed in the minds of the adjudicating authority while adjudicating appeal on merits of the issues are cardinal as the higher appellate authority can then adjudicate appeal on the issues arising in appeal before them, based on decision and reasoning of ld. CIT(A) in deciding the issues. If the ld. CIT(A) simply dismiss the appeal merely because the assessee did not comply with the notices issued by ld. CIT(A) in limine without adjudicating issues arising in the appeal on merits, such order is not sustainable in the eyes of law keeping in view provisions of Section 250(6) of the 1961 Act , and also higher appellate authorities will be deprived to see what weighed in the mind of the ld. CIT(A) while adjudicating appeal as it will be an order passed without reasoning on the issues on merits . The appellate order of the CIT(A) is clearly in violation of section 250(6) of the Act and liable to be set aside. Merely stating the assessment order passed by AO is upheld, and that the assessee has not submitted details/documents/evidences before ld. CIT(A) is not sufficient. The ld. CIT(A) is not toothless as his powers are co-terminus with the powers of the AO, which even includes power of enhancement. It is equally true that the assessee also did not complied with the notices issued by ld. CIT(A) and did not file the requisite details/documents to support its contentions. Thus, the assessee is equally responsible for its woes as the assessee did not comply with the notices issued by ld. CIT(A). Keeping in view the entire factual matrix as culled out above in the preceding para’s of this order, it will be fair to both the parties as well in the interest of justice, that the appellate order of ld. CIT(Appeals) be set aside and the matter be remanded back to the file of ld. CIT(Appeals) for fresh adjudication after giving proper opportunity of being heard to both the parties w.r.t. the issues arising in the appeal .The assessee is directed to comply with the notice issued by ld. CIT(Appeals) during the appellate proceedings in set aside remand proceedings, otherwise ld. CIT(A) shall be free to decide the appeal ex-parte on merits in accordance with law, after complying with provisions of Section 250(6) of the 1961 Act (Now Section 359(4) of the Income-tax Act, 2025). We clarify that we have not commented on merits of the issues. Thus, the appellate order passed by ld. CIT(A) is set aside and matter is restored back to the file of ld. CIT(A) for fresh adjudication. The appeal of the assessee is allowed for statistical purposes. We order accordingly.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

Order is pronounced in the Open Court on 23.07. 2026.