SNT Derivative Broking Pvt. Ltd. vs Income Tax Officer, Ward-24(1)

PER RAMIT KOCHAR, AM:

This appeal in ITA No. 2469/Del/2026 filed by the assessee has arisen from learned CIT(A)’s appellate order u/s 250 of the Income-tax Act, 1961(in short “1961 Act”), dated 07.01.2026 in DIN & Order No: ITBA/NFAC/S/250/2025-26/1084512790(1) for assessment year 2015-16, which appeal in turn has arisen from the assessment order dated 29.03.2022 passed by the Assessing Officer, NFAC, Delhi u/s 147 r.w.s 144 read with Section 144B of the 1961 Act , for Assessment Year 2015-16.

The assesse has raised following grounds of appeal in Memo of Appeal filed with the Income Tax Appellate Tribunal, Delhi Benches, New Delhi, which reads as under:-

Brief facts of the case are that the assessee filed its return of income for the impugned assessment year on 17.09.2015, declaring total loss of Rs. (-) Rs.93,178/-. As per the information available with the department, the assessee had fictitious profits from derivative trading of Odyssey Securities Pvt. Ltd.. The AO after taking necessary administrative approvals, issued notice u/s 148 dated 31.03.2021, calling the assessee to file return of income in pursuance thereof. In response to the aforesaid notice u/s 148, the assessee filed return of income on 08.03.2022 , which as per the AO was filed after a long delay just before the time assessment was getting time barred, in order to frustrate the process of law. The AO observed that assessee has deliberately delayed filing of return of income in response to notice issued by the AO u/s 148 of the 1961 Act to the assessee, as other returns of income for ay’s: 2020-21 and 2021-22 were filed on 03.05.2021 and 06.12.2021 respectively, thus, keeping in view aforesaid conduct of the assessee, the assessment proceedings were continued by the AO u/s 144 of the 1961 Act. During the course of assessment proceedings, the assessee furnished its replies through e-filing portal on 11.03.2022 and 15.03. 2022 , wherein the assessee submitted details for purchase of derivative which were sold during the year. The AO after making detailed enquiry based upon the information available with the Department which is recorded in page No.2 to 18 of the assessment order observed that the contract note which were submitted by the assessee itself demonstrate that the assessee has purchased currency derivative and the same were sold within the few minutes. The AO observed that the based upon the satisfactory evidences available on record that the assessee has entered into sham transactions with a view to reduce the taxable income by taking bogus currency derivatives losses , and the paper work was done to give a colour of authenticity and creating a facade of legitimate transactions. The AO held that the assessee had booked bogus derivatives currency profits amounting to Rs.29,52,250/-. The AO after considering the findings of the search/survey , inquiry conducted by the investigation wing of the department and the circumstances in the case of assessee, brokers, operators and entry providers and the nature of transaction entered into by the assessee, the entire loss was disallowed by the AO being sham transactions and added back to the income of the assessee. The AO observed that the notice was issued u/s 148 on 31.03.2021 and was served to the assessee on 31.03.2021 after duly digitally signing the same on the same date i.e. 31.03.2021. The digitally signed notice in the form of electronically record entered in computer resources outside the control of the originator i.e. assessing Officer on 31.03.2021 itself and hence, notice u/s 148 was valid in law , and assessee’s contention is not acceptable. The AO also observed that the assessee has filed return of income from the e-filing account for AY 2020-21 on 03.05.2021 and later for AY 2021-22 on 06.12.2021. Even on both these occasions, the assessee has not filed the necessary return of income called for AY 2015-16 in response to notice u/s 148 , which clearly demonstrate that it was deliberate on the part of the assessee in not filing the return of income in pursuance to notice issued by the AO u/s 148 of the 1961 Act. Thus, AO made additions of Rs.29,52,250/- as income in the hands of the assessee by holding the same as non-genuine , and treated as unexplained cash credits u/s 68 of the 1961 Act r.w.s 115BBE of 1961 Act.

Aggrieved , the assessee field first appeal before the Ld. CIT(A) . The assessee raised both legal/jurisdictional grounds as well challenged the additions made by the AO on the merits of the additions. The assessee participated in the appellate proceedings conducted by the Ld. CIT(A). The Ld. CIT(A) set aside the assessment order passed by the AO , and directed the AO to make fresh assessment after taking into account the provisions of law appropriately , by holding as under:

Still aggrieved , the assessee has now filed second appeal with the Tribunal. The Ld. Counsel for the assessee at the outset submitted that the Ld. CIT(A) has held that the assessment order was not in accordance with the provisions of law as the very foundation of the assessment order is not valid , then in that circumstances , the Ld.CIT(A) ought to have quashed the assessment order, but the same was merely set aside by ld. CIT(A) to the AO. Prayers were made to quash the assessment framed by the AO. It was submitted that the notice u/s 148 was dated 31.03.2021 , but the same was issued belatedly by the AO on 01.04.2021, and hence the entire proceedings are bad in law. The assessee has filed the copy of the proceedings of ITBA portal , which are placed in PB at page No.2 to 4 , wherein it is reflected that notice u/s 148 was issued on 01.04.2021 . It was submitted that the email was received from department on 16.04.2021, wherein notice u/s 148 was enclosed. It was submitted that new provisions for framing reassessment was not followed as no notice u/s 148A(b) was issued by the AO and no order was passed u/s 148A(d). Reference was drawn to the judgment and order of the Hon’ble Supreme Court in the case Union of India v. Ashish Agarwal [2022] 444 ITR 1(SC) . It was also submitted that no notice u/s 143(2) of the 1961 Act were issued , and hence proceedings are bad in law. Prayers were made to quash the entire proceedings. The reliance was also placed on the judgment and order of Hon’ble Delhi High Court in the case of Rajesh Chopra v. ITO , reported in (2025) 175 taxmann.com 84(Del.HC) , judgment and order of Hon’ble Delhi High Court in case of Akasaki Technology Private Limited v. PCIT, reported in (2025) 181 taxmann.com 325(Del). The reliance was also placed on the Delhi ITAT orders in the case of Aseem Sehgal v. ITO in ITA no. 154 to 156/Del/2025 , common order dated 30.07.2025. Further, reliance was also placed on Delhi Tribunal common order in the case of Mukesh Khurana in ITA no. 3902/Del/2024, 3904-3906/Del/2023, 3923/Del/2024 & 3925/Del/2024.

The Ld. Sr. DR relied upon the order of the authorities below.

I have heard the rival submissions and perused the materials available on record. The brief facts are recorded in preceding para’s of this order and are not repeated. I have observed that the AO as well ld. CIT(A) had categorically recorded the finding of the fact that notice u/s 148 was issued and served on 31.03.2021 , but the assessee is contending that the said notice was dated 31.03.2021 but issued on 01.04.2021 on the ITBA Portal and it was served to the assessee on 16.04.2021 by email. The assessee has produced the downloaded ITBA portal order sheet entries which is contrary to the finding recorded concurrently by ld. CIT(A) as well as by the AO. This requires verification of the facts, and correct factual finding is required based on assessment records as well records of proceedings conducted. It is also observed that the Ld. CIT(A) at para 6.2 has recorded a finding of the fact that the AO did not recorded reasons for reopening of the case , whereas the information was obtained under RTI (PB/Page 10-14) , wherein it is clearly stated by department that reasons for reopening of the concluded were duly recorded by the AO (copies furnished under RTI/enclosed at page 11-13/PB), while the Ld. CIT(A) in para 6.2 has observed that the from the assessment order that reopening had been done merely on the basis of information and no reasons were recorded , which as per ld CIT(A) was not sufficient. Thus, this a perverse finding recorded by ld. CIT(A) which is contrary to the record. The decision arrived at by ld. CIT(A) based on perverse findings of fact, has entered into an arena of perversity. It is further observed that the ld. CIT(A) has observed that the AO has taken cognizance of the delay in filing of return of income by the assessee in response to notice u/s 148 of the 1961 Act , and evidently such delay is an inordinate delay. The return of income was filed on 08.03.2022, while the matter was getting time barred on 31.03.2022. The ld. CIT(A) has further observed that the AO based on inordinate delay in filing return of income has invoked provisions of Section 144 of the 1961 Act , but as per ld. CIT(A) Section 144 of the 1961 Act could not be invoked because Section 144 does not take cognizance of default committed by the assessee with reference to Section 148 of the 1961 Act. As per ld. CIT(A), if the AO has taken cognizance of the assessee’s failure to comply with any terms and condition of notice u/s 142(1) of the 1961 Act, the invocation of Section 144 of the 1961 Act would have been as per mandate. The ld. CIT(A) did not noticed that the assessee did not filed return of income in response to the notice issued u/s 148, dated 31.03.2021, until 08.03.2022 , when the assessee came forward and furnished return of income with inordinate delay just before the time limitation for framing assessment which were getting time barred on 31.03.2022. As per ITBA portal submitted by the assessee, the AO has issued notices u/s 142(1) on 15.11.2021 and 24.02.2022, which were not complied with by the assessee. There was no return of income filed by the assessee until 08.03.2022, and also there were no compliances by the assessee to the notices issued by the AO u/s 142(1) dated 15.11.2021 and 24.02.2022. It is only in compliance to notice u/s 142(1) of the 1961 Act, dated 04.03.2022, the assessee came forward and filed return of income on 08.03.2022 and filed its response/reply on 11.03.2022 and 15.03.2022. Section 144 of the 1961 act entails framing of best judgment assessment ,inter-alia, on failure of the assessee to file return of income u/s 139(1) of the 1961 Act or non compliance to notices u/s 142(1) of the 1961 Act. Section 148 of the 1961 Act clearly stipulates that when the return of income is filed in pursuance to notice u/s 148 of the 1961 Act , provisions of the 1961 Act , shall , so far as may be, apply accordingly as if the such return of income were a return of income filed u/s 139 of the 1961 Act. Thus, by virtue of deeming fiction, Section 144 shall apply to non filing return of income in pursuant to notice u/s 148 of the 1961 Act. There has been filing of return of income by the assessee in the instant case at the fag end of limitation, and failure in issuance of notice u/s 143(2) under such circumstance when already failure by the assessee to comply with notices u/s 142(1) has taken place wrt notices dated 15.11.2021 and 24.02.2022, is in my considered view not fatal. Thus, it is observed that the CIT(A) has proceeded on the perverse facts/findings. Moreover, I have observed that assesse has raised various legal/jurisdiction issue which requires proper adjudication by ld. CIT(A) which was not done, while it is observed that Ld. CIT(A) has passed a cryptic non-speaking order, which is now set aside by me . Hence, I am setting aside the appellate order passed by Ld. CIT(A) and remit the matter back to the file of ld. CIT(A) for fresh adjudication. The ld. CIT(A) shall pass a detailed speaking and reasoned order, and shall adjudicate all legal /jurisdictional grounds as well grounds on merits. The ld. CIT(A) shall provide proper opportunity of being heard to the assessee in set aside remand proceedings. I order accordingly.

In the result, the appeal of the assesse is allowed for statistical purposes.