Pooja Swami Vs Assessment Unit (ITAT Agra)
Bitcoin Transactions, ₹29.34 Crore Additions—A Blanket Confirmation Will Not Do
The background: Cryptocurrency trading attracts reassessment
The Department initiated reassessment proceedings after receiving information that the assessee had undertaken high-value trading in cryptocurrency, particularly Bitcoin, during FY 2017-18, relevant to AY 2018-19.
A notice under section 148 dated 29 August 2024 was issued and served. In response, the assessee filed a return declaring total income of ₹13,850.
The Assessing Officer subsequently issued statutory notices under sections 143(2) and 142(1), along with show-cause notices, seeking explanations regarding the transactions. The assessee responded only partly. After considering the available material and those responses, the Assessing Officer completed the reassessment on 10 March 2026 under section 147 read with section 144B. viewOrder-11
Two substantial additions followed
The Assessing Officer made an addition of ₹1,61,95,842 as undisclosed capital gains from Bitcoin trading. He separately added ₹27,72,41,266 as unexplained bank credits or cash deposits.
The aggregate additions therefore amounted to ₹29,34,37,108.
These were two distinct components: one concerned the alleged gains arising from cryptocurrency trading, while the other concerned credits and deposits in bank accounts. The order does not reproduce the detailed computations or transaction-level analysis underlying either addition.
The assessee challenged the assessment before the CIT(A), NFAC, but the appeal was dismissed by order dated 29 June 2026. viewOrder-11
The assessee’s grievance: Credits considered, corresponding debits ignored
Before the Tribunal, the assessee contended that the authorities had confirmed the credits appearing in the accounts without giving appropriate consideration to the corresponding debits.
Her specific grievance was that the inflows and outflows relating to cryptocurrency sales and purchases had not been examined together. She sought acceptance of the returned income and challenged the assessment as illegal and unjustified. viewOrder-11
The contention required examination of the relationship between bank movements and trading transactions. It could not be resolved merely by recording that the accounts contained substantial credits.
However, the Tribunal did not decide whether the assessee’s explanation was correct or whether any particular debit adequately explained a credit.
The CIT(A) reproduced submissions but did not analyse them
The Tribunal found that the CIT(A) had narrated the assessee’s detailed submissions in paragraph 5 of the appellate order. Yet, the authority had made no meaningful effort to appreciate the contentions raised in those submissions.
Instead, the CIT(A) concluded that the Assessing Officer’s findings suffered from no factual or legal infirmity and that the assessee’s arguments were untenable.
The Tribunal considered this insufficient. Reproducing submissions is not the same as adjudicating them. The appellate order needed to explain why the contentions failed, rather than move directly from their narration to a general confirmation of the assessment. viewOrder-11
Section 250(6): An appellate order must give reasons
The Tribunal emphasised the statutory obligation under section 250(6). The CIT(A) was expected to state the points for determination, the decision on those points and the reasons supporting the decision. TaxGuru has likewise reported the statutory speaking-order requirement under section 250(6). [TaxGuru](https://taxguru.in/income-tax/itat-remands-reassessment-donation-cash-deposit-issues-speaking-order-250-6.html?utm_source=chatgpt.com)
It found an absence of proper application of mind, critical analysis and objective consideration. As the first appellate authority, the CIT(A) had a responsibility to examine the dispute and provide a reasoned decision.
The Tribunal’s objection was therefore directed at the quality of appellate adjudication. Its ruling did not establish that the Assessing Officer’s additions were necessarily wrong. It established that the CIT(A)’s general endorsement did not adequately decide the appeal. viewOrder-11
Non-appearance did not prevent examination of the order
An adjournment application moved on the assessee’s behalf was rejected, and no representative appeared for her at the Tribunal hearing. The Departmental Representative supported the CIT(A)’s order.
Nevertheless, the Tribunal examined the record and identified the deficiency in the appellate decision. In the interest of justice and fair play, it considered a fresh adjudication appropriate.
At the same time, it directed the assessee to be diligent and cooperative, attend hearings and furnish submissions so that the restored appeal could be disposed of effectively and expeditiously. viewOrder-11
The result: Fresh adjudication by the CIT(A)
The Tribunal set aside the CIT(A)’s order and restored the matter to that authority for adjudication on merits through a speaking order. It also directed observance of the principles of natural justice.
The appeal was allowed for statistical purposes. The Tribunal expressly clarified that it had made no observations on the merits.
Accordingly, neither the cryptocurrency capital-gains addition nor the unexplained bank-credit addition was finally deleted. viewOrder-11
Author’s comments: Large figures demand careful reasoning
The practical significance lies in the requirement for a reasoned appellate examination, particularly where the assessee alleges that connected purchases, sales, receipts and payments have been considered incompletely.
A useful presentation before the CIT(A) would reconcile trading records with bank entries and explain the relationship between the two additions. That is a practical inference from the dispute, rather than a finding made by the Tribunal.
This order does not establish that all cryptocurrency-related credits are turnover, that debits must automatically be deducted, or that the returned income is correct. The assessee has secured a fresh hearing; the evidence and reasoning will determine the tax result.
FULL TEXT OF THE ORDER OF ITAT AGRA
1. This appeal is directed against the impugned order dated 29.06.2026 passed in appeal No NFAC/2017-18/10574876 by the ld. Commissioner of Income Tax/NFAC (Delhi) [(hereinafter referred to as the “CIT(A)] u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) for the A.Y. 2018-19, wherein ld CIT(A), has dismissed assessee’s appeal.
2. Perusal of the records shows that the reassessment proceedings u/s 147 of the Act were initiated by the assessing officer on the basis of the information available with the department, that the assessee had undertaken high value trading in Crypto-Currency (Bitcoin) during the F.Y. 2017-18 relevant to A.Y. 2018-19. The notice u/s 148 of the Act dated 29.08.2024 was issued and served upon the assessee. The assessee filed return in compliance thereof, declaring total income at Rs. 13,850/-. Statutory notices u/s 143(2) and 142(1) of the Act and show cause notices were issued, seeking assessee’s response. Assessee responded partly before the assessing officer. After considering assessee’s part response, ld assessing officer completed assessment and added Rs. 1,61,95,842/- as undisclosed capital gains from trading in Crypto-Currency (Bitcoin) and Rs. 27,72,41,266/- as unexplained bank credits/ cash deposits, vide assessment order dated 10.03.2026 passed u/s 147 r.w.s 144B of the Act.
3. Aggrieved, assessee preferred an appeal before ld CIT(A), who dismissed assessee’s appeal.
4. Assessee has preferred this second appeal on the following grounds:
“1) That on the facts and circumstances of the case the Ld. CIT(A), NFAC has erred in confirming the order passed by the Ld. Assessing Officer in the above case is illegal, unjustified and bad in law which may be quashed and appeal may be allowed.
2) That the Ld. CIT(A), NFAC has erred in confirming the credits appearing and not giving benefit of debits appearing in the account thus not considering the inflows and outflows of corresponding sales and purchases of cryptocurrency. That the returned income be accepted and the appeal may be allowed.
3) Any other point if necessary will be raised at the time of hearing.”
5. The adjournment application moved on behalf of the appellant was rejected, none represented for the assessee. Perused records and heard ld CIT DR, who supported the impugned order.
6. Perusal of the impugned order shows that ld CIT(A) has narrated the detailed submission of assessee in para 5 of its order, however made no endeavour to appreciate assessee’s contentions raised therein. Ld CIT(A) has dismissed assessee’s first appeal by observing in para 6 of its order that the findings recorded by the assessing officer in the impugned assessment order do not suffer from any factual or legal infirmity. The arguments tendered by the appellant are not tenable and accordingly dismissed assessee’s first appeal.
7. We notice that there is no due or proper application of mind or any critical analysis or objective consideration by ld CIT(A) in the matter, despite the same being first appellate authority. It is well settled in law that the reason is the life of law. It is that filament that injects soul to the order. Absence of analysis not only evinces non-application of mind but also mummifies the core spirit of the order. Learned CIT(A) was expected to state the points for determination, decision thereon and the reasons for the decision as provided u/s. 250(6) of the Act. In the circumstances and in the interest of justice and fair play, we deem it just and appropriate to remit the matter back to the file of learned CIT(A) for adjudication on merits and to pass speaking order. We direct the assessee to be diligent and cooperative in attending the hearings and making submissions before the learned CIT(A) for the expeditious and effective disposal. Needless to say, that learned CIT(A) shall ensure the observance of the principles of natural justice. It is made clear that we have not made any observation in respect of the merits of the case. The appeal is liable to be allowed for statistical purposes.
8. In the result, the appeal is allowed for statistical purposes. The impugned order dated 29.06.2026 is set aside.
Order pronounced in the Open Court on – 29.09.2026
