Suryakant Jaglal Jaiswal Vs ITO (ITAT Nagpur)
When ₹3.72 Lakh Became ₹3.74 Crore: ITAT Applies the “Hundred-Times Error” Brake &; Restores Additions u/s 56(2)(vii)(b), 144 &; 147
Facts of the Case
The assessee, an individual, had not filed his return of income for AY 2019-20. The Income-tax Department received information relating to the assessee’s purchase of alcoholic liquor, interest income earned from the Life Insurance Corporation of India & investment in immovable property.
Based on this information, the AO reopened the assessment by issuing notice u/s 148. Other statutory notices were also issued & served upon the assessee. As only partial submissions were furnished during the proceedings, the AO completed the reassessment u/s 147 r.w.s. 144 & 144B.
Two major additions were made.
First, relying upon the information appearing in Form 26AS, the AO treated an amount of ₹4,16,82,994 as the assessee’s turnover from the liquor business. Applying an estimated net profit rate of 8%, the AO computed business income at ₹33,34,640.
Secondly, the AO noticed that the assessee had purchased immovable property for a declared consideration of ₹11,75,000, whereas its value for stamp-duty purposes was ₹23,30,000. The difference of ₹11,55,000 was added as income by invoking section 56(2)(vii)(b).
The Tribunal’s order describes the aggregate disputed addition as ₹45,18,532, comprising the estimated profit & the property-related addition.
Appeal Dismissed on Limitation
The assessee filed an appeal before the CIT(A)/NFAC with a delay of 179 days. An application explaining the delay was filed along with submissions on the merits of the additions.
The CIT(A), however, declined to condone the delay & dismissed the appeal in limine, without deciding the substantive grounds raised by the assessee. The assessee, therefore, approached the ITAT.
The assessee had also challenged the validity of the notice issued u/s 148 through Ground Nos. 4 & 5. At the hearing before the Tribunal, these grounds were not pressed by the assessee’s counsel. They were accordingly dismissed as not pressed.
The surviving dispute concerned the refusal to condone the delay & the two additions made in the reassessment.
Delay Caused by Tax Consultant
The assessee explained that the delay before the CIT(A) arose mainly because of the Tax Consultant who was handling his taxation matters.
After examining the explanation, the Tribunal found that the delay was neither intentional nor deliberate. It held that an assessee should not be made to suffer merely because of an inadvertent lapse attributable to the professional handling his tax proceedings.
In the interest of substantial justice, the Tribunal condoned the delay of 179 days by drawing support from the Supreme Court’s decisions in:
Collector, Land Acquisition, Anantnag v. Mst. Katiji & Ors. [1987 (2) SCC 107]; and
Inder Singh v. State of Madhya Pradesh, 2025 INSC 382, dated 21.03.2025.
Accordingly, the CIT(A)’s refusal to condone the delay did not prevent the Tribunal from examining the glaring issues emerging from the assessment record.
A Hundred-Times Inflation in the Purchase Figure
On merits, the Tribunal noticed a striking discrepancy in the turnover adopted by the AO.
While calculating the alleged turnover, the AO had taken purchases from M/s Samadhan Stores at ₹3,74,16,554. However, according to the assessee, the actual amount appearing in Form 26AS was only ₹3,72,440.
Thus, the AO had apparently adopted a figure nearly one hundred times the actual purchase amount. Since this inflated figure constituted the major portion of the alleged turnover of ₹4.16 crore, it materially affected the estimated profit addition of ₹33.34 lakh.
The Tribunal held that this factual discrepancy certainly required proper verification. An addition resting substantially upon a potentially incorrect figure could not be sustained without reconciling it with the underlying Form 26AS information & supporting records.
DVO Reference Not Examined
Regarding the addition arising from the property purchase, the assessee contended that the AO ought to have referred the valuation dispute to the Departmental Valuation Officer as contemplated by the applicable provisions.
The addition had been made merely by comparing the declared purchase consideration of ₹11.75 lakh with the stamp-duty valuation of ₹23.30 lakh. The assessee’s objection concerning the valuation & the requirement of a DVO reference had not received proper examination.
The Tribunal considered this issue also fit for fresh adjudication.
ITAT’s Decision
Instead of finally deleting or confirming the additions, the ITAT restored all surviving issues to the Jurisdictional AO for a de novo assessment.
The AO was directed to provide the assessee a reasonable opportunity of hearing & permit him to furnish the necessary information, reconciliations & supporting evidence.
At the same time, the Tribunal directed the assessee to remain vigilant, cooperate with the proceedings & avoid unnecessary adjournments except where supported by a reasonable cause.
The appeal was consequently allowed for statistical purposes.
Authors’ Comments
The order highlights the danger of making estimated additions through the mechanical adoption of third-party information. A simple data-entry, decimal or digit error can convert a modest transaction into a multi-crore turnover, producing a wholly disproportionate tax demand.
The case also reinforces the liberal approach toward condonation where the default is bona fide & attributable to professional handling. Nevertheless, condonation does not grant relief on merits automatically—it merely reopens the door for proper adjudication.
Interestingly, ₹33,34,640 plus ₹11,55,000 equals ₹44,89,640, whereas the order mentions a total addition of ₹45,18,532. This arithmetical inconsistency is another matter that should be reconciled during the fresh assessment.
Cases Discussed
- Collector, Land Acquisition, Anantnag v. Mst. Katiji & Ors. [1987 (2) SCC 107]
- Inder Singh v. State of Madhya Pradesh, 2025 INSC 382
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT, NAGPUR BENCH
This appeal by the assessee is directed against the order of Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi (for short, “Ld.CIT(A)”) dated 22.04.2026 passed u/sec. 250 of the Income Tax Act, 1961 (for short, “Act”) which is arising out of assessment order dated 06.03.2024 passed u/sec. 147 r.w.s.144 r.w.s. 144B of the Act for the Assessment Year (A.Y.) 2019-20.
2. The assessee has raised 10 grounds of appeal. Ground Nos. 4 & 5 challenges the validity of notice issued u/sec. 148 of the Act. However, these legal grounds were not pressed by the learned counsel for the assessee. Accordingly, Ground Nos. 4 & 5 are dismissed as not pressed. So far assessee remaining grounds of appeal are concerned, the same relate to the addition of Rs. 45,18,532/- comprising of two amounts, namely estimated net profit at Rs. 33,34,640/- and addition made 56(2)(vii)(b) of the Act at Rs. 11,55,000/-.
3. I have heard rival submissions and perused the material placed before me. I observe that assessee is an individual and did not file return of income for A.Y. 2019-20. Based on the information about purchase of alcoholic liquor, interest earned from LIC of India and investment made in immovable property, Ld. Assessing Officer (AO) issued notice u/sec. 148 of the Act followed by validly serving other statutory notices. Partial submissions were made. Ld. AO concluded the assessment proceedings firstly by estimating the income at 8% of the alleged turnover of Rs.4,16,82,994/- based on the information available in Form No.26AS pertaining to alcoholic liquor; secondly, Ld.AO noticed that assessee has purchased immovable property showing purchase consideration of Rs.11,75,000/-, however, as per the stamp duty valuation, the market value is taken at Rs.23,30,000/-. Ld.AO, thus, invoked section 56(2)(vii)(b) of the Act and made the addition of Rs. 11,55,000/-. Aggrieved, assessee preferred appeal before the Ld.CIT(A) with a delay of 179 days. Even though, assessee filed application for condonation of delay and also made other submissions, Ld.CIT(A) has not condoned the delay and dismissed the appeal in limine. Now assessee is in appeal before this Tribunal. I notice that the appeal before the Ld.CIT(A) has been filed belatedly by 179 days. I have gone through the reasons giving rise to the delay and find that the same were mainly on account of Tax Consultant, who handling the taxation matters of the assessee. I also find that the delay was neither intentional nor deliberate and the assessee should not suffer on account of the inadvertent lapse on the part of the Tax Consultant. Therefore, in the interest of justice and also taking guidance from the judgments of Hon’ble Apex Court in the case of Collector Land Acquisition, Anantnag vs. Mst. Katiji & Ors [1987 (2) SCC 107] and also in the case of Inder Singh vs. State of Madhya Pradesh dated 21.03.2025 [(2025) INSC 382)], I hereby condone the delay in filing the appeal before the Ld.CIT(A).
4. So far as merits of the case is concerned, I note that the Ld. AO while calculating the figure of turnover, has adopted the purchase figure from M/s.Samadhan Stores at Rs.3,74,16,554/-, however, the actual figure appearing in Form No. 26AS is only Rs. 3,72,440/-. It is also apparent that the major portion of the alleged turnover is mainly from the figure of the purchase from M/s. Samadhan Stores which the Ld. AO has wrongly adopted hundred times of the actual purchase figure, and certainly this fact needs verification. Similarly, regarding the addition made u/sec. 56(2)(vii)(b) is concerned, it is claimed by the assessee that Ld. AO ought to have referred the matter to the Departmental Valuation Officer (DVO) as provided u/sec. 56(2) of the Act.
5. Considering the contentions of learned counsel for the assessee and also under the given facts and circumstances of the case, I deem it appropriate to restore all the issues raised in the instant appeal to the file of Ld. Jurisdictional Assessing Officer (JAO) for denovo assessment to be carried out after giving reasonable opportunity of hearing to the assessee for furnishing information and relevant details. Assessee is also directed to remain vigilant and not to take unnecessary adjournments unless otherwise required for reasonable cause. The effective grounds of appeal raised by the assessee are allowed for statistical purposes.
6. In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on 02nd September, 2026 under Rule 34(5) of the Income Tax (Appellate Tribunal) Rules, 1963
