Sanjeev Jain vs Income Tax Officer

“1.

That on the facts and in the circumstances of the case and in law, the order passed by the Learned CIT(A), NFAC, is bad in law, arbitrary, passed without proper appreciation of facts and evidence, and is liable to be quashed.

2.

That the Learned CIT(A) has grossly erred on facts as well as in law in assessing the taxable income at Rs.1,17,76,184/- as against the returned income of Rs.11,80,820/-.

3.

The Addition of Rs. 1,05,95,364/- is without Jurisdiction, transactions Belong to M/s Adlabs Jeans LLP (A Separate Legal Entity), Not to the Individual Assessee That the Appellant is a partner in M/s Adlabs Jeans LLP. During FY 2021- 22, it was M/s Adlabs Jeans LLP and not the Appellant in his individual capacity that made sales of Rs. 1,87,79,988/- to M/s JM Jain LLP. These transactions were duly recorded in the books of the firm and disclosed in both income tax and GST returns of the firm. That the Appellant explicitly stated in his SCN reply that he carried out NO transactions with M/s JM Jain LLP in his individual capacity. The AO has made no finding rebutting this specific statement. Making an addition in the hands of an individual for transactions of a separate assessable entity (the LLP) is a fundamental jurisdictional error. The Appellant and the LLP are two distinct assessable persons. The firm's income, already disclosed and taxed at the firm level, cannot be added again in the individual partner's hands.

4.

Gross Violation of Natural Justice Cross-Examination Denied, Seized Material Withheld, Addition Based Entirely on Third-Party Search Material That the entire addition is based on material seized during a search u/s 132 conducted on M/s JM Jain LLP on 28.05.2022 a third party to the Appellant. The Appellant specifically requested: (a) copy of seized JSK server data; (b) Copy of the statement of the principal officer of JM Jain LLP; (c) the Excel sheet (line 123) from the investigation wing; (d) Opportunity to cross-examine persons whose statements were relied upon. All these requests were rejected or ignored by the AO without reasons. That the Hon'ble Supreme Court in Andaman Timber Industries v. CCE [2015] 62 taxmann.com 3 (SC) has held that denial of cross-examination of witnesses whose statements form the basis of an order is a serious flaw making the order a nullity. The assessee cited this very judgment before the AO which was ignored.

5.

Assessment Completed in Gross Haste: Show Cause Notice Allowed Only 3 Days; Timely Reply Filed but Ignored; Order Passed Citing Limitation That the SCN was issued on 02/03/2024 with compliance date 05/03/2024 (3 days only). The Appellant filed a detailed 6-page reply on 04/03/2024 one day before the due date. The AO passed the order on 08/03/2024 recording 'nothing found in attachment' without making any attempt to obtain the reply or call for resubmission. The AO himself admitted the proceedings were 'getting time barred,' demonstrating the order was passed in haste. That a 3 day SCN window for a proposed addition of over Rs. 1 crore amounts to no opportunity at all. Even if the attachment was technically missing, the duty to ensure fair hearing required the AO to inform the Appellant and seek resubmission before finalizing the assessment.

6.

Gross Legal Error, Entire Trading Turnover of Rs. 1,05,95,364/- Treated as Income; Turnover is Not Income. Even AO's Own Logic Supports Only 33% Cash Component That even accepting the AO's modus operandi hypothesis, the alleged cash component was approximately 33% of the total transaction value (as per the AO's own illustration: Rs. 50,000 cash out of Rs. 1,50,000 total). Treating 100% of the trading value as income is legally and arithmetically impossible. Turnover includes cost of goods; cost of goods cannot be income. That the AO has not disallowed any purchases, has not computed any profit margin, and has not given any basis for treating the gross trading figure as taxable income. This is contrary to all principles of income computation under the Act.

7.

No Independent Inquiry, Entire Addition is Based on 'Borrowed Satisfaction' from Investigation Wing That the AO conducted no independent verification and relied entirely on CRIU/VRU data uploaded by the investigation wing post the JM Jain LLP search. No specific entry from the JSK server naming this Appellant was placed on record.

8.

The CIT(A) Erred in Dismissing the Appeal Ex-Parte Without Deciding Any Ground on Merits. That the CIT(A) issued three hearing notices (29.10.2025, 06.02.2026 and 17.02.2026) and, recording 'No Response' on each occasion, proceeded to dismiss the appeal without adjudicating a single ground on its merits. The entire 10-page order contains no finding on the legality of the addition, the natural justice violation, or any other substantive issue. That a CIT(A) is a quasi-judicial authority with a duty to decide appeals on merits. Even in ex-parte proceedings, the appellate authority cannot simply confirm the AO's order as a matter of course. The CIT(A) is required to examine the grounds of appeal, the assessment order, and the material on record and pass a reasoned order. A dismissal by default without any merits examination is not a decision in accordance with law.

9.

The CIT(A) ignored the Statement of Facts Which Contained a Material Undisputed Fact That the Transactions Belonged to M/s Adlabs Jeans LLP, Not the Individual Assessee That the CIT(A) himself reproduced the Appellant's Statement of Facts at para 3 of his order. Para 4 of that Statement of Facts clearly discloses: 'During the Financial year 2021-22, M/s Adlabs Jeans LLP (in which Appellant is a partner) has made sales amounting to Rs. 1,87,79,988/- to M/s JM Jain LLP. The same was duly recorded in the books of accounts of M/s Adlabs Jeans LLP and duly disclosed in the returns filed under Income Tax Act as well as Goods and Service Tax.' That having reproduced this critical fact, the CIT(A) made no finding whatsoever on it neither accepting it, nor rejecting it, nor calling for any verification. This is a patent failure of the quasi-judicial function. A fact that goes to the root of the addition cannot be reproduced and then silently ignored. The Statement of Facts constituted a 'submission' within the meaning of Section 250 and had to be considered. That had the CIT(A) applied his mind to this fact, the only lawful conclusion would have been that the addition was made against the wrong person (the individual partner rather than the firm) and deserved to be deleted.

10.

The CIT(A) Failed to Address the Natural Justice Ground Cross-Examination Denied, Seized Material Not Provided Despite These Being Jurisdictional Issues That Ground Nos. 1 and 5 of the appeal before the CIT(A) specifically raised that the AO denied the opportunity of cross-examination and did not provide copies of the seized material from the JSK server. The Appellant had also specifically named the Excel sheet (line no. 123) from the investigation wing which purportedly contained the Appellant's information, and had requested the statement of the principal officer of JM Jain LLP.

11.

The CIT(A) Did Not Verify Whether Hearing Notices Were Actually Served on the Appellant Recording 'No Response' Without Confirmation of Service Is Improper That the CIT(A) records three hearing notices as having received 'No Response' but does not record that the said notices were actually received/served on the Appellant. In a faceless proceeding (NFAC), service of notice is through the e-filing portal. The CIT(A) has not recorded whether the notices were successfully delivered to the Appellant's registered email/portal account. That the Appellant states that he is not tech-savvy (as admitted even in the condonation application before the CIT(A) which was allowed). This background makes it entirely plausible that the NFAC hearing notices were not noticed by him on the portal. Dismissal of a substantial appeal on this basis, without confirming actual service, is unjust.

12.

That the appellant craves leave to add, alter, amend, delete or withdraw any ground of appeal at or before the time of hearing.”