LAXMI PANDEY,MUMBAI vs. ITO - 42 (1) (2), MUMBAI

Now we take up the appeal of the assessee having ITA No. 5771/MUM/2026. The grounds raised by the assessee are reproduced as under:-

Briefly stated, the facts of the case are that, on the basis of information available on the Insight Portal, flagged under the Risk Management Strategy formulated by the CBDT for non-filers, the Assessing Officer noticed that the assessee had sold an immovable property for a stated consideration of ₹60,00,000 during the financial year 2015-16, relevant to assessment year 2016-17, and that the transaction was registered with the Sub- Registrar, Borivali, Mumbai. Since the assessee had neither filed her return of income for the relevant assessment year nor furnished any response to the notice issued under section 148A(b) of the Income-tax Act, 1961 (“the Act”), the Assessing Officer, upon forming the requisite opinion in order passed u/s 148A(d) , issued notice under section 148 of the Act on 31/03/2023, which was duly served upon the assessee through her registered e-mail address.

In the course of the reassessment proceedings, the Assessing Officer issued various statutory notices, including a show-cause notice under section 144 of the Act. The assessee, however, did not comply with any of the notices. The Assessing Officer, while proceeding to frame the assessment, referred to the following information available on record:

The learned CIT(A) passed the order observing as under:- “1.1 The assessing officer has sold one property amounting to Rs. 60 Lakh, the AO has considered the full consideration as Income. The AO has not given the deduction for Cost of Acquisition and Cost of Improvement and Indexation Benefit to the assessee while passing the order. In this case as per information available on records , the assessee Sh. LAXMI RAJAN PANDEY had sold immovable property for Rs.60,00,000/- through SUB-REGISTRAR (MSD) BORIVALI 2 during the F.Y 2015- 16 relevant to Assessment year 2016-17. Further, as per bank statement of State Bank of India bearing Account Number 00000010119667921 maintained by the assessee, he had made cash/credit entries of Rs.8,66,450/- (4,62,000/- + 4,04,450/-) and had received interest of Rs.2,931/- during the year under consideration. As per bank statement of ICICI bank Ltd. bearing Account Number 123201000078 maintained by the assessee, he had made cash/credit entries of Rs.36,00,239/- and had received interest of Rs.518/- during the year under consideration. During the course of Assessment proceedings the assessee failed to provide calculation of capital gains earned by him on account of immovable property sold for Rs.54,00,000/- (60,00,000/- - 6,00,000/-), failed to provide the source of cash/credit entries of Rs.8,66,450/- (4,62,000/- + 4,04,450/-) in his bank account maintained with State Bank of India and failed to provide the source of cash/credit entries of RS.36,00,239/- made in his bank account maintained with ICICI Bank Ltd. as stated above and reasons for not offering the interest income for taxation at Rs.2,931/- and Rs.518/- inspite of repeated opportunities given to him as stated. above in para 2. In view of these facts, there is no other alternative but to proceed to complete the time barring assessment, ex-parte, resorting to the provisions of section 144(1)(a) and section 144(1)(b) of the I T Act after considering the material available on record. It is pertinent to mention here that in absence of details, it is not possible to make verification of income of tthe assessee. In this regard, the reliance is placed on the decision rendered in the case of CIT v. Motor General Finance Ltd (2002) 254 ITR 449 (Delhi), the relevant part of which is quoted hereunder:-

We have heard the rival submissions and perused the material available on record. It is evident from the order of the learned CIT(A) that, while observing that the assessee had failed to furnish a satisfactory explanation regarding the nature and source of the bank deposits, the learned CIT(A) has not recorded anywhere in the appellate order the issuance of any notice under section 250 of the Act or the grant of any effective opportunity of being heard to the assessee. The order is conspicuously silent on this fundamental aspect of appellate procedure.

Before us, the assessee has, inter-alia, challenged the validity of the notice issued under section 148 of the Act, contending that the notice was issued beyond the period of three years and that the alleged escaped income was below the statutory threshold of ₹50 lakh. We, however, find that the information available with the Assessing Officer disclosed a sale consideration of ₹60 lakh, i.e., an amount exceeding the aforesaid threshold. Significantly, no explanation or material in support of the assessee’s contention appears to have been furnished either during the proceedings under section 148A(b) or in the appellate proceedings before the learned CIT(A).

Be that as it may, the controversy on the merits of the aforesaid contentions need not detain us at this stage. The order of the learned CIT(A) cannot be sustained for the more fundamental reason that it has been passed without affording the assessee a meaningful and effective opportunity of being heard. Compliance with the principles of natural justice is not a matter of formality; it constitutes an essential safeguard in the exercise of appellate jurisdiction. An order having adverse civil consequences, passed without affording the affected party an opportunity to present its case, cannot ordinarily be sustained.

In the circumstances, we deem it appropriate to set aside the impugned order of the learned CIT(A) and restore the matter to his file for fresh adjudication in accordance with law. The 6 learned CIT(A) shall afford the assessee a reasonable and effective opportunity of being heard and thereafter dispose of the appeal by a speaking and reasoned order, after considering all the grounds raised by the assessee, including the legal challenge to the validity of the proceedings under section 148 of the Act. Needless to say, the assessee shall extend full cooperation and furnish all material and explanations on which she seeks to rely.

In the result, the appeal in ITA No. 5758/Mum/2026 is dismissed, whereas appeal in ITA No.5771/Mum/2026 is allowed for statistical purposes. Order pronounced in the open Court on 15/09/2026.