DAYIBEN DHUDABHAI PRAJAPATI,MUMBAI vs. ITO WARD 41(4)(1), MUMBAI

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ITA 1864/MUM/2026Status: DisposedITAT Mumbai02 September 2026AY 2020-216 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that dismissing an appeal without deciding on merits, even for non-prosecution, violates natural justice. The CIT(A) failed to examine the material on record.

What were the facts?

The assessee purchased immovable properties but did not file a return. The Assessing Officer reopened the case and treated a portion of the investment as unexplained. The CIT(A) dismissed the appeal for non-prosecution without adjudicating the grounds.

What were the issues?

Whether the reassessment proceedings are valid when the CIT(A) dismissed the appeal on non-prosecution without considering the merits, and whether the reopening procedures were correctly followed.

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 148A,Section 151,Section 69,Section 250

AI-generated summary — verify with the full judgment below

Before: SHRI SANDEEP GOSAIN & SHRI PRABHASH SHANKAR

For Appellant: Ms. Kinjal Bhuta,AR
For Respondent: Ms. Bhoomika Patel, Sr.DR
Hearing: 24.06.2026Pronounced: 02.09.2026

आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The instant appeal emanating from the appellate order dated 18.12.2025 is preferred by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to

P a g e | 2 ITA No. 1864/Mum/2026 A.Y. 2020-21 Dayiben Dhudabhai Prajapati assessment order passed u/s. 147 r.w.s. 144B of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 17.12.2024 for the Assessment Year [A.Y.] 2020-21.

2.

The grounds of appeal are as under:- 1. The Ld. Commissioner of Income Tax (Appeals)-NFAC erred in dismissing the appeal, without appreciating that the notice u/s. 148A(b) of the Income Tax Act, 1961 was issued without considering the reply filed by the appellant during the enquiry conducted under clause (a) to Section 148A of the Income Tax Act, 1961. That the issuance of notice w/s. 148A(b) without considering the said reply is bad in law, and the subsequent reassessment proceedings ought to be struck down. 2. The Ld. Commissioner of Income Tax (Appeals)-NFAC erred in dismissing the appeal, without appreciating that the order u/s. 148A(d) of the Income Tax Act, 1961 is erroneous as it mentions the incorrect sanctioning authority, invoking incorrect section for sanction, and implying incorrect time limit of re-opening the assessment. That the order u/s. 148A(d) is passed without any application of mind and renders the reassessment proceedings void and bad in law. 3. The Ld. Commissioner of Income Tax (Appeals) - NFAC erred in dismissing the appeal, without appreciating that the sanction granted by the Pr. CIT, Mumbai-41 u/s. 151 of the Income Tax Act 1961 is an unsigned and granted without any application of mind. That the reassessment proceedings based on such illegal sanction, ought to be quashed. 4. The Ld. Commissioner of Income Tax (Appeals)-NFAC erred in dismissing the appeal and in confirming the addition of Rs. 16,80,000/- u/s. 69 of the Income Tax Act, 1961, without appreciating the factual matrix of the case. Additional grounds of appeal 1. The Ld. Commissioner of Income Tax (Appeals)-NFAC erred in dismissing the appeal, without appreciating that the notice u/s. 148A(b) of the Income Tax Act, 1961 was issued without considering the reply filed by the appellant during the enquiry

P a g e | 3 ITA No. 1864/Mum/2026 A.Y. 2020-21 Dayiben Dhudabhai Prajapati conducted under clause (a) to Section 148A of the Income Tax Act, 1961. That the issuance of notice u/s. 148A(b) without considering the said reply is bad in law, and the subsequent reassessment proceedings ought to be struck down. 2. The Ld. Commissioner of Income Tax (Appeals)-NFAC erred in dismissing the appeal, without appreciating that the order u/s. 148A(d) of the Income Tax Act, 1961 is erroneous as it mentions the incorrect sanctioning authority, invoking incorrect section for sanction, and implying incorrect time limit of re-opening the assessment. That the order u/s. 148A(d) is passed without any application of mind and renders the reassessment proceedings void and bad in law. 3. The Ld. Commissioner of Income Tax (Appeals) -NFAC erred in dismissing the appeal, without appreciating that the sanction granted by the Pr. CIT, Mumbai-41 u/s. 151 of the Income Tax Act 1961 is an unsigned and granted without any application of mind. That the reassessment proceedings based on such illegal sanction, ought to be quashed. 3. Brief facts of the case are that the AO on the basis of information noted that the assessee had purchased certain immovable properties jointly alongwith two others for Rs 4o lakh and Rs 80 lakh respectively during the year but did not file the return u/s 139(1) of the Act. Subsequently, the case was reopened u/s 148 of the Act against which the assessee filed return of Rs 1,75,000/-. She responded to statutory notices issued by the AO, explaining the source of such investments contending inter alia that the other joint owners availed bank loans for such investment. However, the AO not satisfied by the

P a g e | 4 ITA No. 1864/Mum/2026 A.Y. 2020-21 Dayiben Dhudabhai Prajapati explanation, treated 1/3rd of her share being Rs 16,80,000/- as Unexplained investment u/s 69 of the Act in her hands.

4.

Aggreived, the assessee filed appeal before the ld.CIT(A) who however, noted that despite several notices of hearing, the assessee failed to submit anything in support of the grounds. Accordingly, the appeal was dismissed in limine.

5.

In the course of hearing before us, the ld.AR raised certain additional grounds as stated above contesting the reopening and claiming it to be invalid. However, non-compliance before the ld.CIT(A) was not duly explained. The ld.DR on the other hand, supported the action of the authorities below.

6.

We have carefully considered all the relevant facts of the case. We find that the assessee made due compliance before the Assessing Officer explaining the investment from borrowed funds of other joint owners, being her two sons. However, the explanation was not fully accepted by him. The subsequent appeal before the appellate authority was dismissed on account of non prosecution. It is observed that the ld.CIT(A) dismissed the appeal solely on the ground of non- prosecution. He failed to adjudicate the issues raised in the grounds of

P a g e | 5 ITA No. 1864/Mum/2026 A.Y. 2020-21 Dayiben Dhudabhai Prajapati appeal and did not examine the material available on record. Such dismissal without deciding the appeal on merits is contrary to the principles of natural justice. It is settled law that it is the duty of the appellate authority to dispose of an appeal on merits after considering the material on record, even if the appellant fails to appear.

6.1. However, it is equally true that it is the fundamental duty of the assessee to diligently pursue the appeal and comply with the notices and proceedings initiated by the Revenue authorities. Despite the notices under section 250 of the Act by the CIT(A), no substantive explanation was submitted.

7.

Considering the entirety of the facts and the circumstances of the case, we are of the opinion that the scales of justice demand that the matter should be verified and revisited at the level of ld.CIT(A) and accordingly, the matter is remanded back to the file of ld. CIT(A) for de novo adjudication by him while applying the principles of natural justice after affording sufficient opportunity of being heard to the assessee.The assessee would be at liberty to file additional grounds/additional evidences as deemed fit.

P a g e | 6 ITA No. 1864/Mum/2026 A.Y. 2020-21 Dayiben Dhudabhai Prajapati 8. In the result, the appeal is allowed for statistical purposes.

Order pronounced in the open court on 02/09/2026.

Sd/- Sd/- (SANDEEP GOSAIN) (PRABHASH SHANKAR) JUDICIAL MEMBER ACCOUNTANT MEMBER

Place: म ुंबई/Mumbai ददनाुंक /Date 02.09.2026 Lubhna Shaikh / Steno

आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER,

उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अतधकरण/ ITAT, Bench, Mumbai.

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