Kamal Kumar Jangir (HUF) Vs ITO (ITAT Delhi)
Demand Notice and Computation Sheet Are Integral to Assessment Order; Delay Was 18 Days, Not 614 Days: Delhi ITAT
The assessee-HUF declared income of ₹2,25,780 and claimed exempt long-term capital gain of ₹48,96,230 under section 10(38) from the sale of IndusInd Bank shares.
In reassessment, the AO treated the share transaction as bogus and made additions of ₹52,61,866 under section 69A and ₹2,63,093 under section 69C for alleged commission. Total income was assessed at ₹57,50,739.
However, the computation sheet accompanying the assessment order erroneously showed total income of only ₹4,98,880 and raised a demand of merely ₹47,651. The assessee paid this demand and did not initially file an appeal.
Subsequently, the AO passed a rectification order under section 154 on 3 January 2025, corrected the assessed income to ₹57.50 lakh and raised additional tax of ₹16,81,577 and interest of ₹14,68,203. The assessee filed an appeal on 20 February 2025.
The CIT(A) computed limitation from the original assessment order dated 18 May 2023, treated the appeal as delayed by 614 days and refused to admit it.
The ITAT held that the computation sheet and demand notice under section 156 form an integral part of the assessment order. Since the original computation and demand arose from the AO’s own apparent mistake and the correct liability was communicated only through the rectification order, the relevant delay was only 18 days, not 614 days.
After accepting the explanation for the short delay, the Tribunal condoned it and restored the quantum appeal to the CIT(A) for de novo adjudication on merits. Since the quantum appeal was restored, the connected penalty appeal under section 271(1)(c) was also remanded for fresh adjudication.
The Tribunal clarified that it had expressed no opinion on the merits of the alleged bogus capital gains or penalty. Both appeals were allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT DELHI
The assessee has filed both these appeals in ITA No. 275/Del/2026 and ITA No.276/Del/2026 for Assessment Year: 2016-17, which have arisen form separate learned CIT(A)’s appellate order u/s 250 of the Income-tax Act, 1961(in short “Act”) both dated 14.11.2025, firstly against quantum additions in DIN & Order No: ITBA/NFAC/S/250/2025-26/1082625802(1), which appeal in turn has arisen from the re-assessment order dated 18.05.2023 passed by the AO u/s 147 r.w.s 144B of the Act in DIN No. ITBA/AST/S/147/2023-24/1052944623(1), and secondly ld. CIT(A) order in DIN & Order No. ITBA/NFAC/S/250/2025- 26/1082626231(1), which in turn has arisen from the penalty order dated 27.03.2024 passed by the AO u/s 271(1)(c) of the 1961 Act in DIN No. ITBA/PNL/F/271(1)(c)/2023-24/1063450148(1).
2. Brief facts of the case are that assessee is an HUF having filed its return of income for assessment year 2016-17, on 05.08.2016, declaring total income of Rs.2,25,780/-, wherein long term capital gain to the tune of Rs.48,96,230/- was claimed as an exempt income u/s 10(38) of the 1961 Act. The case of the assessee was reopened by the Revenue by invoking provisions of section 147/148 of the 1961 Act. The assessee participated in the reassessment proceeding, however, no reply was filed by the assessee with respect to its claim of earning of an exempt long term capital gains on sale of 6110 equity shares of Indusind Bank Limited u/s 10(38) of the Act. There was search and seizure action carried out by Revenue u/s 132 of the 1961 Act in the case of Tradenext Securities Limited (Erstwhile Lifeline Securities Limited) along with one beneficiary of LTCG u/s 10(38) of the 1961 Act, i.e. Kundu Group of Rohtak, on 25.02.2021. During search and post search investigations, it was found that the assessee and his family members are beneficiaries of bogus long term capital gains (LTCG) claimed to be exempt u/s 10(38) of the Act, for the financial year 2012-13, 2013-14, 2014-15 and 2015-16. During the search proceedings, It transpired that bogus and forged contract notes were used to claim exemption of LTCG u/s 10(38). Detailed analysis was made by the AO, which is recorded in the re-assessment order. There were also statement on oath recorded by Revenue with respect to some of the beneficiaries of bogus LTCG claimed as an exempt u/s 10(38), wherein these beneficiaries admitted that they have no knowledge of share market, and these sale and purchase transactions of shares are merely bogus entries for claiming exempt long term capital gains u/s 10(38), by paying commission of 2 or 3% in cash. Thereafter, AO after detailed analysis made addition to the tune of Rs.52,61,866/- being unexplained money u/s 69A, and further addition to the tune of Rs. 2,63,093/- u/s 69C being unexplained expenditure with respect to commission paid by the assessee @5% i.e Rs. 2,63,093/- on the said alleged transaction of sale of said shares. Thus, the income of the assessee was assessed by the AO to the tune of Rs.57,50,739/- as against the returned income of the assessee of Rs.2,25,780/-, vide reassessment order dated 18.05.2023 passed by the AO u/s 147 read with Section 144B of the 1961 Act. Along with aforesaid reassessment order dated 18.05.2023, The AO issued computation sheet dated 18.05.2023( DIN & Document No. ITBA/AST/S/114/2023-24/1052944658(1), wherein gross total income was reflected as Rs. 57,60,742/-, total income after deduction was reflected as Rs. 4,98,880/-, while amount payable by the assessee towards income-tax and interest thereon was determined at Rs. 47,651/-, vide Demand Identification No. against Original Demand No. 2023201637000841910T dated 18.05.2023. The assessee deposited said amount of Rs. 47,650/- with Government Treasury vide challan number 01319 ( CIN 23062200178078IBKL/Bank Reference No. 2814566144 – IDBI BANK).The matter rested there, and no first appeal was filed by the assessee with ld. CIT(A) against the said reassessment order. Thereafter, the AO passed an rectification order dated 03.01.2025 u/s 154 r.w.s 143(3) of the 1961 Act, wherein the AO rectified the mistake apparent from records, and the assessed income was shown to be Rs. 57,50,739/- (as was original computed vide reassessment order passed on 18.05.2023) as against returned income of Rs. 2,25,780/-, and consequently the AO raised demand of short levy of income-tax to the tune of Rs. 16,81,577/- and interest chargeable to be at Rs. 14,68,203/- as against interest charged to the tune of Rs. 22,016/- u/s 234B vide reassessment order originally passed dated 18.05.2023. The assessee after receiving rectification order dated 03.01.2025 ( original reassessment order is dated 18.05.2023), filed an appeal with ld. CIT(A) on 20.02.2025. The assessee contended before ld. CIT(A) that assessee paid original demand of Rs. 47,650/- raised by the AO vide computation sheet dated 18.05.2023, in good faith and bonafide manner, and no appeal was filed with ld. CIT(A) in order to buy peace. Thus, the first appeal was filed with ld. CIT(A) when the assessee received rectification order dated 03.01.2025. The ld. CIT(A) dismissed appeal of the assessee by not condoning delay of 614 days ( which was calculated by ld. CIT(A) from the date of original reassessment order dated 18.05.2023), as in the view of ld. CIT(A) no sufficient cause is shown by the assessee. Thus, the ld. CIT(A) dismissed the appeal of the assessee by not condoning the delay in filing the appeal belatedly by the assessee, and the appeal was dismissed being un-admitted, as no sufficient cause was shown by the assessee.
3. Aggrieved, the assessee filed second appeal with Tribunal, and reiterated his contentions as were made before ld. CIT(A) that the reassessment order was framed u/s 147 r.w.s. 144B of 1961 Act on 18.05.2023, wherein the income was reassessed at Rs. 57,50,739/-, but while preparing computation sheet dated 18.05.2023, demand of Rs.47,651/- was erroneously raised by the AO showing assessed income at Rs. 4,98,880/-, although gross total income was shown as Rs. 57,60,742/. The ld. Counsel for the assessee submitted that the assessee deposited demand of Rs. 47,650/- raised by Revenue with Government Treasury in good faith in order to buy peace as the assessee was under bonafide belief that the reassessment order passed by the AO u/s 147 r.w.s 144B of the 1961 Act was correct. It was reiterated that since the demand raised towards income-tax and interest was paid by the assessee, no appeal was filed with ld. CIT(A). The said reassessment order was rectified by the AO vide rectification order dated 03.01.2025 passed by the AO u/s 154 read with Section 143(3) of the 1961 Act, wherein assessed income was shown correctly at Rs. 57,50,739/- and additional demand towards income-tax of Rs. 16,81,577/- towards short levy of income-tax and interest of Rs. 14,68,203/- was raised against the assessee. The assessee filed appeal before ld. CIT(A) on 20.02.2025, and there was only delay of 18 days in filing the appeal belatedly with ld. CIT(A), which was due to time taken in finding tax consultant. Prayers were made by ld. Counsel for the assessee to condone the aforesaid delay of filing the appeal belatedly with ld. CIT(A) by 18 days, and further prayers were made by ld. Counsel for the assessee to restore the matter before ld. CIT(A) for adjudication denovo of the appeal of the assessee on merits in accordance with the law, as in the first round the same stood dismissed by ld. CIT(A) unadmitted by not condoning the delay in filing the appeal belatedly beyond the prescribed statutory time under the 1961 Act, and that too with erroneous assumption that there is delay is of 614 days in filing the appeal with ld. CIT(A), while the matter of fact is that the delay was only of 18 days.
4. The Ld. SR. DR relied on the orders of the authorities below.
5. We have considered rival submissions and perused the materials available on record. We have observed that the reassessment order u/s 147 rw.s 144B of the Act in the case of the assessee was passed by the AO, on 18.05.2023 wherein the additions were made in the hands of the assessee to the tune of Rs.52.61.866/- u/s 69A being unexplained money and further addition to the tune of Rs.2,63,093/- was made by the AO being unexplained expenditure u/s 69C of the Act. Thus, the income of the assessee was reassessed at Rs.57,50,739/- as against the returned income of Rs.2,25,780/-. But, while preparing computation sheet dated 18.05.2023, the AO determined Gross Total Income of Rs. 57,60,742/-, while total income was shown erroneously to be Rs. 4,98,880/-, wherein demand of income-tax and interest thereon of Rs.47,651/- was raised against the assessee. The assessee on its part deposited the amount of Rs.47,650/- with Government Treasury. It is contended that the assessee deposited the said amount in good faith, bonafidly in order to buy peace with the department. Thus, admittedly there was an mistake apparent on record on the part of the AO. On the high moral ground, the assessee ought to have brought this mistake to the notice of the AO by filing rectification application u/s 154, but be it may be, the assessee did not do so. The assessee kept silent, and did not also filed any appeal with ld. CIT(A). Later on vide rectification order dated 03.01.2205 passed by the AO u/s 154 read with Section 143(3) of the 1961 Act, the AO rectified the mistake apparent from record, and the income reassessed was corrected to be at Rs. 57,50,739/- and consequential demand of income-tax and interest was raised against the assessee. At this stage, the assessee filed first appeal with ld. CIT(A) on 20.02.2025, which stood dismissed by ld. CIT(A) being un- admitted as ld. CIT(A) did not condone delay of 614 days in filing the appeal belatedly by the assessee (as the ld. CIT(A) calculated period of delay from the date of original reassessment order dated 18.05.2023 ignoring rectification order dated 03.01.2025). Be it as may be, it was the mistake of the Revenue, the AO ought to have issued correct computation sheet and consequently correct demand of income- tax and interest payable by the assessee while framing reassessment vide order dated 18.05.2023. The computation sheet and notice of demand u/s 156 of the 1961 Act are integral part of the assessment order. Thus, the delay in filing the appeal with ld. CIT(A) is of 18 days and not of 614 days, and the assessee has shown sufficient cause as is referred to in this order also in preceding para’s, and we condone this delay of 18 days, and restore the matter back to the file of ld. CIT(A) to denovo adjudicate the appeal of the assessee on merits in accordance with law, after granting opportunity of being heard to the assessee. All the contentions are kept open. We clarify that we have not commented on the merits of the issue in the appeal. The assessee shall co-operate in set aside proceedings conducted by ld. CIT(A), otherwise ld. CIT(A) shall adjudicate the appeal on merits in accordance with law. Thus, the appeal of the assessee is allowed for statistical purposes. We order accordingly.
6. In the result, appeal of the assessee is allowed for statistical purposes.
ITA No.276/Del/2026
7. This appeal in ITA No.276/Del/2026 filed by the assessee with the Tribunal is against the penalty order passed by the AO u/s 271(1)(c) of the Act, which penalty stood confirmed by ld. CIT(A). Since we have restored the appeal against quantum addition to the file of the Ld. CIT(A) for denovo adjudication of the appeal of the assessee in ITA no. 275/Del/2026, it will be fit and appropriate that the matter in the instant appeal is also set aside back to the file of Ld. CIT(A) for denovo adjudication of the appeal of the assessee. The similar directions shall apply as were given by us while restoring appeal in ITA no. 275/Del/2026. This appeal is also allowed for statistical purposes. We order accordingly.
8. In the result, both the appeals of the assessee are allowed for statistical purposes.
Order is pronounced in the Open Court on 18.08.2026.
