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Judgment
PER KRINWANT SAHAY AM
Appeal in this case has been filed by the assessee against the order dated 31.10.2023 passed by the Ld. CIT(A)/NFAC, Delhi for the A.Y. 2017-18. Grounds of appeal are as under :-
1.That on the facts, circumstances and legal position of the case, Worthy CITIA). NFAC in Appeal No. CIT (A), Delhi-12/11160/2019-20 has erred in passing order dtd. 31.10.2023 in contravention of provisions of S. 250 of the Income Tax Act, 1961(hereinafter referred to as "Act").
2.That on facts, circumstances and legal position of the case, Worthy CITIA) has erred in making additions considering all credits Rs.347,70,77,681/- treated as business receipts/turnover of the assessee and calculated the profits 9% le Rs.31,29,36,990 even when the actual business profits, as per the books accounts, amounts only 2% of the turnover/receipts.
3.That on facts, circumstances and legal position of the case, the orders passed by Worthy CIT(A) deserves to be quashed since the same have been passed without affording reasonable opportunity of being heard to the appellant.
4.That the appellant craves leave for any addition, deletion or amendment in the grounds of appeal on or before the disposal of the same.
It has come to the notice of the registry that there is a delay in filing of the appeal before the Tribunal. The assessee has already filed an application alongwith affidavit for condonation of delay which is reproduced as under :-
Date: 03.03.2026
Before The Hon'ble Income Tax Appellate Tribunal, Bench G, Delhi.
Subject: Prayer for condonation of delay in filing of appeal in ITA No. 4083/DEL/2025 in the case of Sunder Marketing Associates, PAN No. ACXFS6849J, for the AY 2017-18, fixed for hearing on 05.03.2026.
Hon'ble Bench,
Kindly refer to the matter cited as subject above. The appellant had filed appeal before the Hon'ble ITAT on 26.06.2025 against the order dtd. 31.10.2023 of Worthy CIT(A) passed u/s 250 of the Income Tax Act, 1961 (Hereinafter referred to as "Act"). There was a delay of 543 days in filing of this appeal. The facts behind the said delay and prayer for condonation of the same is as under:
1.The appellant firm was engaged in mining operations pursuant to a lease granted through a Joint Venture formed on 18.09.2012. The said mining lease was granted pursuant to auction dtd. 30.12.2013 and letter of intent dtd 03.01.2014 (copy appended as per Annexure 1).
2.The appellant's entire mining operations were the subject matter of prolonged and intense litigation before constitutional courts and statutory authorities, as detailed below :
a. The mining regime in the area was under judicial scrutiny before the Hon'ble Punjab & Haryana High Court in CWP-2599-2014 decided on 04.03.2015 (copy appended as per Annexure 2)
b. The matter travelled to the Hon'ble Supreme Court in SLP (C) No. 19166 of 2017 – M/s Sunder Marketing Associates vs. State of Haryana, wherein the Hon'ble Court vide order dtd. 11.08.2017, made serious adverse observations and considered the issue of lease surrender (copy appended as per Annexure 3)
c. Consequently, the appellant's mining activities ceased entirely, the lease stood effectively extinguished, and the very substratum of its business collapsed, rendering the business wholly unsustainable. Pursuant to the Hon'ble Supreme Court's order dtd. 11.08.2017, the appellant was compelled to close mining operations w.e.f. 30.11.2017. The mining lease was effectively rendered inoperative and subsequently the mines were allotted to another entity.
d. Following the closure of mining operations, regulatory proceedings escalated into criminal prosecution. A Prosecution Complaint was filed by Haryana State Pollution Control Board before the Special Environment Court on 23.05.2022, which led to initiation of proceedings by the Enforcement Directorate under the Prevention of Money Laundering Act (PMLA).
e. The matter travelled to the Hon'ble NGT as a consequence to complaints and regulatory reports alleging violations of environmental clearance conditions during mining operations at the Dadam Mines. Complaints were regarding illegal mining beyond the permitted area, mining in green belt area and below the permissible water limit. The Hon'ble NGT vide order dtd. 22.08.2022 termed the operations as "illegal and unscientific" as mining was carried out in forest/non-mineable area (1.241 hectares attributed to SMA), conducted on green belt and below water table. As a consequence of the finding, the Hon'ble Tribunal imposed heavy penalties of approximately Rs. 30 crores and directed the Pollution Control Board to take necessary actions.
f. Thereafter, a search operations u/s 17 of PMLA were conducted on 03.08.2023 at the premises of the appellant firm and its partners and FIR No. 449/2023 under Sections 120B, 420, 463, 471 IPC was registered at Police Station Tosham (copy of order in COMI/28/2025 dtd. 10.11.2025 appended at Annexure 4)
3.The partners of the appellant firm were subjected to custodial interrogation and imprisonment during the period relevant to filing of the present appeal. The business premises were searched; documents and electronic data were seized; bank accounts were scrutinized; and the appellant was virtually incapacitated in managing its affairs as there was continuous summons by investigating agencies. As a result, the appellant firm was in a state of legal as well as financial crisis.
4.The firm suffered extreme financial distress following the closure of mining operations pursuant to the Hon'ble Supreme Court's directions, effective extinguishment of the lease, cessation of revenue streams, and subsequent criminal and Enforcement Directorate (ED) proceedings, resulting in complete operational paralysis. Even the filing of income tax returns was disrupted, preventing the Appellant from filing returns for AY 2017-18.
5.The delay of 543 days in filing of the present appeal is not a period of inaction; it overlaps with a phase during which the appellant was under immense criminal investigation and PMLA proceedings. During this phase, partners faced custodial action, records remained under seizure, mining operations had ceased w.e.f. 30.11.2017 (eliminating revenue), decision-making authorities were materially incapacitated, and access to original records essential for appeal preparation was severely restricted.
6.It is respectfully submitted that the delay occurred when key personnel managing the firm's affairs were preoccupied defending criminal and ED proceedings, amid serious apprehensions of asset attachment and ongoing investigation of firm records. In such circumstances, the delay is directly attributable to events beyond the Appellant's control, rather than indifference, negligence, or tactical advantage.
In light of the above facts, it is humbly submitted that the delay in filing the appeal was completely unintentional, bonafide, and caused due to reasons beyond the control of the appellant. The appellant has not derived any benefit by filing the appeal belatedly. A duly sworn & attested affidavit of the appellant, in this regard, is attached herewith. In the interest of natural justice, it is prayed that the delay of 543 days in filing of the appeal may please be condoned by invoking Your Honour's power u/s 253(5) of the Act. We shall be highly obliged
Thanking You,
Yours Faithfully,
For Sundar Marketing and Associates
Appellant
Keeping in view the facts narrated in the application, we are inclined to condone the delay. The Ld. DR stated that the matter may be decided on merit for condonation issue.
During proceedings before us the Ld. Counsel for the assessee submitted that the Ld. CIT(A) has made addition considering all credits of Rs.347,70,77,681/- treating it as business receipt and calculated profit @ 9% whereas the actual business profit was only @ 2% of the turnover.
Per contra the Ld. DR relied on the order of the Ld. CIT(A).
We have considered the findings given by the Ld. CIT(A) in the appellate order and we have considered the arguments made before us by the ld. Counsel for the assessee as well as by the Ld. DR. We are of this considered view that in the mining business over all profit is around @ 3%, therefore, the profit declared by the assessee @2% of the turnover / receipts is low but at the same time the calculation @ 9 % by the Ld. CIT(A) is also very high, therefore, in our considered view @ 3% of the total turnover / receipts will serve the purpose of justice. Accordingly, @3% of the total turnover/ receipts is treated as profit in this business, the AO may calculate the profit accordingly. Thus, assessee’s appeal on this issue is partly allowed.
In the result, the appeal filed by the assessee is partly allowed.