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Judgment
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :
The captioned appeal preferred by the assessee is against the order of the learned Commissioner of Income Tax-NFAC Delhi dated 29.10.2025 arising out of assessment order passed under section 143(3) r.w.s 147 r.w.s 144B of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 27.03.2022 by the AO, NFAC concerning of the Assessment Year 2016-17.
Brief facts of the case are that the assessee is an individual filed the original return of income on 29.07.2016, declaring a total income of Rs.4,49,450/-. As per the assessment order, the case was not assessed u/s 143(3) of the Act. Subsequently, the case was reopened u/s 147 of the Act on the basis of information received from the Investigation Wing regarding suspicious long-term capital gains (LTCG) from transactions in the shares of M/s Panafic Industrials Ltd., identified as a penny stock company used for accommodation entries. The AO, after issuing notices u/s 148, 142(1), and 143(2), and considering the submissions of the assessee, held that the LTCG claimed exempt u/s 10(38) was not genuine.
In the course of reassessment proceedings, the AO observed that the assessee had purchased 17,500 shares of Panafic Industrials Ltd. for Rs.1,75,000/- and sold them after a year for Rs. 59,03,652/-, thereby showing an astronomical return of around 3300%. The AO concluded that the transactions were sham and the sale proceeds represented unexplained cash credits u/s 68. The learned AO thus added Rs. 59,03,652/- to the total income and assessed it at Rs. 63,53,102/-.
Aggrieved, assessee was in appeal before the CIT(A), which the CIT(A) dismissed ex-parte on account of non-prosecution of the appeal by the assessee. Aggrieved, assessee is before us with the following grounds:
1.“That on the facts and circumstances of the case and in law, the Commissioner of Income tax (Appeals) National Faceless Appeal Centre, Delhi ["the CIT(A)-NFAC"] has erred in upholding assumption of jurisdiction under Section 148 of the Act for the assessment year 2016-17, for the pre-conditions of Sections 147 to 151 of the Income Tax Act, 1961 ('the Act') were not met.
2.That on the facts and circumstances of the case and in law, the CIT(A)-NFAC has erred in not appreciating that neither the notice under Section 148 dated 31.03.2021 bears the signature of the Assessing Officer, nor valid approval was taken from the specified authority under Section 151 of the Act, before assuming jurisdiction to reassess the income, for the assessment year 2016-17.
2.1That the CIT(A)-NFAC erred in not appreciating that since the proceedings under Section 148 were not validly initiated, therefore, the Assessment order dated 27.03.2022 was invalid and bad in law.
2.2Without prejudice, on the facts and circumstances of the case and in law, the CIT(A)-NFAC has erred not appreciating that the principles of natural justice were not followed, inasmuch as, neither the reasons recorded for assuming jurisdiction, nor the approval under Section 151 was provided by the Assessing Officer though the same were called for.
3.That on the facts and circumstances of the case and in law, the CIT(A)-NFAC has erred in upholding the assessment at the total income of Rs.63,53,102/-, as against declared income of Rs.4,49,450/-. The Appellant denies its liability to be assessed at the income of Rs.63,53,102/-.
4.That on the facts and circumstances of the case and in law, CIT(A)-NFAC has erred in upholding addition of Rs.59,03,652/- made under Section 68 of the Act, treating the capital gains on sale of shares of Panafic Industries Ltd as bogus.
4.1That on the facts and circumstances of the case and in law, CIT(A)-NFAC has erred in not appreciating that on 04.02.2014, the Appellant had invested Rs.1,75,000/- to acquire 17500 equity shares of Panafic Industries Ltd and the same were sold for Rs.58,96,689/- during the financial year 2015-16 and as such, the capital gain was rightly claimed as exempt under Section 10(38) of the Act.
4.2That on the facts and circumstances of the case and in law, CIT(A)-NFAC has erred in not appreciating that the pre-conditions of Section 68 were not met, inasmuch as, not only the transaction of sale of shares of Panafic Industries Ltd was through banking channels but the identity, genuineness & creditworthiness of Panafic Industries Ltd was proved and that but for suspicion, there was nothing to treat the transaction as bogus or sham.
That the Appellant craves leave to add, alter, amend or vary any of the ground either at or before the hearing of the appeal.”
At the outset, learned Counsel of the assessee stated that the CIT(A) has passed an order without providing reasons for the decisions and prayed for setting aside the order to the file of CIT(A) for fresh adjudication.
Per contra, learned DR did not raise any serious objection and relied upon the order of authorities below.
We have heard the rival submissions and perused the material available on record. We find that the CIT(A) has passed a cryptic order without determining the issues as per the provisions of section 250(6) of the Act. We are of the considered view therefore, that such an order of the CIT(A) be set aside and the issues involved in the case be remanded to the CIT(A) for fresh adjudication. The CIT(A) is directed to accord three effective opportunities to the assessee and assessee is likewise directed to avail the opportunities and submit documents/evidence as required by the CIT(A). The appeal of the assessee is decided in aforesaid terms.
In the result, appeal of the assessee in ITA No. 8586/DEL/2025 is allowed for statistical purposes.