Bharat Bhushan Vs ITO (ITAT Delhi)
Delhi ITAT Remands Reassessment Where Assessee Claimed PAN and Identity Were Fraudulently Misused to Operate Bank Accounts
The Delhi ITAT set aside the reassessment and remanded the matter to the Assessing Officer after the assessee claimed that his PAN and identity had been fraudulently misused to operate multiple bank accounts. Observing that both the assessment and first appellate orders were passed ex parte without proper examination of the facts, the Tribunal directed a fresh assessment after verifying the assessee’s claim.
The assessee sought condonation of delay in filing the appeal, explaining that he became aware of the NFAC order only on 13.01.2026. He contended that no physical order had been served upon him and that his PAN and personal documents had been fraudulently used by another person to undertake the impugned transactions. Accepting the explanation, the Tribunal condoned the delay and admitted the appeal.
The Assessing Officer had reopened the assessment under section 147 and made an ex parte addition of ₹33.77 crore under section 69A, treating cash deposits and other bank transactions as unexplained money. The NFAC partly allowed the appeal by holding that cash withdrawals could not be taxed under section 69A, restricting the addition to ₹27.39 crore, being the unexplained cash deposits.
Before the Tribunal, the assessee filed an affidavit asserting that one Shri Manish Kumar Kwatra had fraudulently used his identity and PAN to open and operate the bank accounts. The Tribunal observed that the authorities below had passed their orders without any effective participation from the assessee and, consequently, the factual issues regarding the ownership of the bank accounts had never been properly investigated.
Accordingly, the ITAT set aside the CIT(A)’s order and restored the matter to the Assessing Officer for a fresh assessment, directing the assessee to extend full cooperation and the Assessing Officer to verify the claim regarding the true ownership of the bank accounts by exercising his statutory powers. Both the assessee’s and the Revenue’s appeals were treated as partly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. These are a batch of two appeals pertaining to the same assessee for AY 2018-19. Both these appeals arise from order dated 01.11.2024, passed u/s 250 of the Income Tax Act, 1961, (hereafter as “the Act”), by NFAC. While ITA No.2250/D/2026 has been filed by the assessee and is reported to be delayed, the assessee has filed a petition seeking condonation of the said delay. ITA No.5614/D/2024 has been filed by the Revenue on account of relief given by the Ld. CIT(A) to the assessee.
2. The assessee has filed a detailed petition seeking condonation of delay, some portions from which deserve to be extracted as under: –
APPLICATION FOR CONDONATION OF DELAY
“At the outset it is respectfully submitted that the Appellant had discovered the order dated 01.11.2024 under section 250 of the Income Tax Act, 1961 (‘Act’) for Assessment Year 2018-19 passed by the Hon’ble National Faceless Appeal Centre (hereinafter referred to as “NFAC/CIT(A)”) only on January 13, 2026.
In terms of the provisions of the Act, the appeal against the order dated 01.11.2024 passed by the Hon’ble NFAC in terms of Section 250 of the Act, should have been filed with the Hon’ble Tribunal within a period of 60 days from the date of the receipt of the order.
In terms of the Income Tax Rules, 1962, considering the fact that the order has been uploaded on the income tax portal the day on which it is passed, the order would be deemed to be served on the same day being 01.11.2024. However, no physical order was served upon the Appellant and as the PAN and other documents of the appellant were used fraudulently to undertake these transactions the assessee was never aware about the same.
Thus, in this regard, it is humbly submitted that albeit, from the date of passing of the order there is a delay in filing of the appeal however, from the date of coming to know of the passing of the order i.e. January 13, 2026, there is no delay.
In this regard, it is humbly submitted that assessee is himself a victim in
the present proceedings as his documents were fraudulently used by someone to undertake the transactions in question.
In view of the above, your Honour would acknowledge that there is no delay as such on account of the default of the Appellant.”
2.1 Considering the reasons given in the said delay, the delay is hereby condoned and the appeal is admitted for adjudication.
3. In this case, the Ld. AO passed an order u/s 147 dated 14.02.2023 through which it has been mentioned that the assessee had not filed his return of income even though there was a current account maintained in PNB, Kailash Nagar, East Delhi. Information was available with the Ld. AO that the assessee had deposited cash of Rs.210,929,395/- and had also withdrawn cash to the extent of Rs.250,14,630/-. There some was other information available with the Ld. AO that there were several other bank accounts maintained in which certain high value transactions were visible. It is mentioned in the Ld. AO’s order that the assessee did not file any returned of income in response to notice u/s 148 of the Act. It is seen that the Ld. AO passed an ex parte order since there was virtually no compliance by the assessee to the notices issued by the Ld.AO. The Ld. AO completed the assessment after adding Rs.33,77,03,715/-, as an unexplained money u/s 69A of the Act.
3.1 The aggrieved assessee approached the CIT(A) where also he did not make any compliance to the notices from his office. Thereafter, the Ld.CIT(A) granted some relief to the assessee and passed the appellate order in an ex parte manner. For the sake of reference, the operative portion from the Ld. CIT(A)’s order deserves to be extracted as under: –
“7. However, so far section 69A of the Act is concerned, it seeks of ownership of any unrecorded money. That is to say, unexplained deposits in his accounts are only to be considered. Cash withdrawals were made only from such deposits. That is, impugned withdrawals cannot be brought within then fold of section 69A of the Act. Otherwise also, withdrawal of cash would indicate loss of ownership and, therefore, cannot be brought within the mischief of section 69A of the Act. As a result, I would like to restrict the addition to the extent of Rs.27,39,19,085/-, i.e., to the extent of deposits of unexplained cash in the appellant’s bank account. Thus, the AO is directed to delete the balance addition of Rs.6,37,84,630/-. Accordingly, the Grounds of Appeal are decided partially against the appellant.”
3.2 Both the Assessee and Revenue are aggrieved with the action of Ld. CIT(A) and have approached the ITAT with their respective grievance.
4. Regarding ITA No.2250/Del/2026 pertaining to the assessee, the Ld. AR drew our attention to an affidavit filed by the assessee through which it has been stated that the assessee’s identity and PAN etc. were fraudulently used by one Shri Manish Kumar Kwatra, who is now no more as per the death certificate issued on 09.04.2025. It was the submission that the assessee has been a victim of fraud and, therefore, his matter deserves to be heard afresh at the level of Ld. AO so that the exact source of the impugned deposits could be ascertained. The Ld. AR also argued on legal grounds stating that the assumption of jurisdiction by the Ld. AO was not in line with the law.
4.1 The Ld. DR took us through the Ld. AO’s order and pointed out that the Ld. CIT(A) had granted relief to the assessee even when there was non-cooperation by the assessee and no details or explanations had been filed at any stage. The Ld. DR relied on the Ld. AO’s order.
5. We have considered the rival submissions and we have gone through the documents before us. It is seen that the orders of authorities below are more or less ex parte in nature and thus, it is clear that the facts have not been thrashed out at any stage. Accordingly, considering the affidavit (supra) of the assessee that his name and identity has been misused to make him appear as the owner of several bank accounts, we deem it fit to set aside the impugned order of the Ld. CIT(A) and remit this matter back to the file of Ld. AO for fresh assessment. We would expect the assessee to cooperate fully with the Ld. AO and the Ld. AO would use his inherent powers to verify the contention of the assessee about the true ownership of the bank accounts under consideration.
6. In the result, both the appeals are partly allowed for statistical purposes.
Order pronounced in the open court on 05.08.2026
