KALPESH HARISH AHUJA,ULHASNAGAR vs. INCOME TAX OFFICER, WARD 2(2), KALYAN, KALYAN

PER SHRI ANIKESH BANERJEE, JUDICIAL MEMBER: Both the appeals pertains to the same assessee arising out from the order of NFAC Delhi [for brevity “Ld. CIT(A)”], order passed under Section 250 of the Income Tax Act, 1961 (for brevity ‘the Act’) for Assessment Year 2016-17 1 and 2017-18, date of order 26.03.2026. Both the impugned orders emanated from the order of Ld. Income Tax Officer Ward 2(2), Kalyan (for brevity ‘Ld. AO’), order passed under Section 147 r.w.s. 144 r.w.s. 144B, date of order 07.03.2022 and 04.03.2022 for A.Y. 2016-17 and 2017-18 respectively. 2. Both the appeals are pertaining to the same assessee and arising out from a common issue. For sake of convenience, both the appeals are taken together, heard together and disposed of by a common order. ITA No.6088/Mum/2026 for A.Y. 2016-17 is taken as lead case and decision rendered there in shall be applied mutatis mutandis to other appeals. 3. The brief facts of the case are that the assessee, an individual, filed his return of income for A.Y. 2016-17 declaring total income of Rs.2,68,000/-, which was processed under section 143(1) of the Act. Subsequently, information was received from DDIT (Inv.)-4(3), Thane, pursuant to search and seizure action conducted in the case of M/s. Renuka Mata Multi State Urban Co-operative Credit Society Ltd. on 26.05.2017. As per the information received, transactions aggregating to Rs.28,90,805/- were reflected in the account pertaining to the assessee maintained with the said society. On the basis of the aforesaid information, reassessment proceedings were initiated under section 147 of the Act. During the reassessment proceedings, statutory notices were issued to the assessee; however, there was no compliance from the assessee. Consequently, the Ld. AO proceeded to complete the assessment ex-parte under section 147 r.w.s. 144 and 144B of the Act on the basis of the material available on record. The Ld. AO treated the deposits/credits aggregating to Rs.28,90,805/- as unexplained money under section 69A of the Act and brought the same to tax by invoking section 115BBE of the Act. Being aggrieved, the assessee preferred an appeal before the Ld. CIT(A). The appeal was filed on 15.01.2024 against the assessment order dated 07.03.2022. The Ld. CIT(A), after condoning the delay in filing the appeal, proceeded with the appellate proceedings. During the appellate proceedings, notices under section 250 of the Act were issued on different dates. 4. The assessee submits that adjournment was sought in response to the notices as the relevant details were being compiled and, subsequently, because the authorised representative possessing the assessment records was out of station. It is further specifically pleaded that against the notice dated 23.03.2026, the date fixed for hearing was 30.03.2026, whereas the impugned appellate order itself came to be passed on 26.03.2026, i.e., before the stated date of hearing. The Ld. CIT(A), however, recorded that except for the Statement of Facts, the assessee did not furnish documentary evidence or effectively respond to the hearing notices and, therefore, proceeded to dispose of the appeal on the basis of the material available on record. The Ld. CIT(A) ultimately sustained the addition, observing that no documentary evidence was furnished to establish the nature and source of the impugned credits. 5. Before us, the Ld. AR submitted that both the assessment proceedings as well as the first appellate proceedings were effectively concluded ex-parte qua the assessee. It was submitted that the assessee could not place the relevant evidence and explanations before the Ld. AO and, therefore, the addition of the entire credits of Rs.28,90,805/- came to be made under section 69A of the Act. 6. The Ld. AR further submitted that even before the Ld. CIT(A), the assessee could not effectively represent his case. It was particularly pointed out that in respect of the notice dated 23.03.2026, the hearing was stated to have been fixed for 30.03.2026, whereas the impugned order was passed on 26.03.2026. The assessee has accordingly pleaded violation of the principles of natural justice. The Ld. AR prayed that one final opportunity may be granted and the entire matter may be restored to the file of the Ld. CIT(A) for fresh adjudication in accordance with law. 7. Per contra, the Ld. DR relied upon the orders of the revenue authorities and submitted that sufficient opportunities had been afforded to the assessee both at the assessment stage and at the first appellate stage. The assessee failed to furnish the requisite explanation and documentary evidence despite repeated opportunities. The Ld. DR, therefore, contended that the assessee cannot derive any advantage from his own non-compliance. 8. We have heard the rival submissions and perused the material available on record. It is an admitted position emerging from the assessment order that the assessee did not comply with the statutory notices during the reassessment proceedings and, consequently, the assessment was completed under section 144 of the Act on the basis of the material available on record. Similarly, the Ld. CIT(A) has recorded that the assessee failed to furnish documentary evidence despite opportunities granted during the appellate proceedings and, accordingly, the appeal was disposed of on the basis of the available record. Thus, substantially, the issues raised by the assessee have not received adjudication after effective participation by the assessee at either stage. 9. At the same time, we cannot lose sight of the conduct of the assessee. The record demonstrates repeated non-compliance during the assessment proceedings as well as lack of effective prosecution of the first appeal. The principles of natural justice confer a right of reasonable opportunity, but such right necessarily carries a corresponding obligation upon the litigant to remain diligent and to cooperate in the proceedings. A remand cannot be permitted to operate as an encouragement for repeated defaults. 10. However, considering the peculiar facts and circumstances of the case, particularly that the assessment was framed ex-parte and the first appellate proceedings also culminated without effective representation by the assessee, we deem it appropriate, without expressing any view on the merits of any of the grounds raised by the assessee, to grant one final opportunity so that the issues may be adjudicated after considering the relevant evidence and submissions. We accordingly set aside the impugned order of the Ld. CIT(A) and restore the entire appeal to the file of the Ld. CIT(A) for fresh adjudication in accordance with law. 11. However, considering the repeated defaults attributable to the assessee, the aforesaid restoration shall be subject to payment of cost of Rs.10,000/- (Rupees Ten Thousand only) by the assessee for each year. The assessee is directed to deposit the said cost within two months from the date of receipt of this order, under the appropriate “Other Head” of the Income Tax Department, and furnish proof of such payment before the Ld. CIT(A). The Ld. CIT(A) shall thereafter proceed to adjudicate the appeal afresh on all the grounds raised by the assessee, both legal as well as on merits, after considering the evidence and submissions placed on record and in accordance with law. 12. Needless to say, the Ld. CIT(A) shall afford a reasonable opportunity of being heard to the assessee. The assessee, on his part, is directed to remain diligent, cooperate with the appellate proceedings, file the requisite documents/evidence within the time permitted and avoid seeking unnecessary adjournments. We have not expressed any opinion on the merits of the reassessment proceedings, the validity of the addition under section 69A, or any other ground raised by the assessee, and all such issues are left open for adjudication by the Ld. CIT(A) in accordance with law. 13. In the result, the appeal of the assessee bearing ITA No.6088 and 6090/Mum/2026 are allowed for statistical purpose. Order pronounced in the open court on 20th day of August 2026 Sd/- Sd/- (OM PRAKASH KANT) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 20/08/2026 SAUMYA Sr.PS Copy of the Order forwarded to: 1. अपीलाथ�/The Appellant , 2. �ितवादी/ The Respondent. 3. आयकरआयु� CIT 4. िवभागीय�ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, Mumbai 5. गाड�फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI