DATTATREYA BACHEGOWDA LAKSHMANSWAMI,BANGALORE vs. INCOME TAX OFFICER - WARD 1(2)(1), BENGALURU

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ITA 513/BANG/2026Status: DisposedITAT Bangalore31 July 2026AY 2018-194 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal restored the issue to the file of the AO for fresh adjudication, granting the assessee one more opportunity to be heard. A token cost of Rs. 1,000 was imposed on the assessee for continuous negligence.

What were the facts?

The assessee failed to provide a reply to the show cause notice before the AO, leading to an addition of Rs. 21,00,000 as unexplained expenditure. The assessee also failed to submit submissions before the CIT(A)/NFAC despite multiple opportunities.

What were the issues?

Whether the addition of unexplained expenditure was justified without providing sufficient opportunity to the assessee. Whether the principles of natural justice were followed by the lower authorities.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 115BBE,Section 234A,Section 234B,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC’’BENCH: BANGALORE

Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY

For Appellant: CA. Zain Ahmed Khan, AR
For Respondent: Shri Ganesh R. Ghale, Standing Counsel for Revenue
Hearing: 04.06.2026Pronounced: 31.07.2026

PER KESHAV DUBEY, JUDICIAL MEMBER:

This appeal at the instance of the assessee is directed against the order of the ld.CIT(A)/NFAC dated 23.12.2025 vide DIN & Order No. ITBA/NFAC/S/250/2025-26/1084011663(1) passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2018-19.

2.

The assessee has raised the following grounds of appeal:-

ITA No.513/Bang/2026 Dattatreya Bachegowda Lakshmanaswami, Bengaluru Page 2 of 4 Grounds of Appeal Tax effect relating to each Ground of appeal 1 The orders of the lower authorities are opposed to law, Rs. 16,22,250 facts and circumstances of the case. 2 The orders of the lower authorities are passed in haste, Rs. 16,22,250 without providing sufficient and reasonable opportunity of being heard. 3 The orders of the lower authorities are passed against Rs. 16,22,250 the principles of natural justice and are liable to be quashed. 4 The order of assessment passed u/s. 143(3) of the IT Act Rs. 16,22,250 is bad in law and is liable to quashed. 5 The Ld. AO erred in treating a sum of Rs. 21,00,000 as Rs. 16,22,250 unexplained expenditure and taxing it under the provisions of section 115BBE of the Act. 6 The lower authorities failed to appreciate that the Rs. 16,22,250 expenditure was incurred out of drawings made by the Appellant from M/s. Datta Enterprises where he was a Partner. 7 The Ld. AO erred in levying interest u/s. 234A and 234B Rs. 6,16,436 of the Act Total tax effect (see note below) Rs. 22,38,686

3.

Before us, at the outset, the ld. A.R. for the assessee vehemently submitted that in response to show cause notice dated 08/03/2021, the assessee could not furnished any reply before the AO and for this reason the AO concluded the assessment proceedings by making addition of Rs. 21,00,000/- as unexplained expenditure. Further, the ld. AR of the assessee submitted that the assessee also could not represent his case before the ld. CIT(A)/NFAC & accordingly the ld. CIT(A)/NFAC dismissed the appeal of the assessee by observing that inspite of several opportunities granted, the assessee could not furnished any submission in support of the grounds of appeal during the appeal proceedings. Lastly, the ld. AR of the assessee prayed that one more

ITA No.513/Bang/2026 Dattatreya Bachegowda Lakshmanaswami, Bengaluru Page 3 of 4 opportunity of being heard may be granted before the AO in the interest of justice & fair play.

4.

The ld. D.R. on the other hand, supported the orders of the authorities below and contended that the case may be remitted to the file of AO as requested by the assessee provided some nominal cost may be levied on the assessee for his continuous negligence shown before the Authorities below.

5.

We have heard the rival submission and perused the materials available on record. Undisputedly, we take note of the fact that as the assessee could not furnished any reply to the SCN dated 08/03/2021 before the AO and for this reason the AO concluded the assessment proceedings by making addition of Rs. 21,00,000/- as unexplained expenditure. We also observed that even before the ld. CIT(A)/NFAC, inspite of several opportunities granted, the assessee did not furnish any submission in support of the grounds of appeal during the appeal proceedings. Before us, the ld. A.R. of the assessee vehemently submitted that the assessee could not represent his case before both the authorities below and accordingly prayed that one more opportunity may be granted before the AO to substantiate his claim. This being so, in the interest of justice, equity and fair play and as requested by the ld. A.R. of the assessee, we deem it fit and proper to remit the entire issue in dispute to the file of AO to decide a fresh in accordance with law. Needless to say, a reasonable opportunity of being heard must be granted to the assessee.

6.

Further, while remitting the matter to the file of AO, we also consider it necessary to impose a token cost of Rs.1,000/- to the assessee in aggregate owing to the continued negligence shown to the statutory notices at both the levels. The assessee shall deposit

ITA No.513/Bang/2026 Dattatreya Bachegowda Lakshmanaswami, Bengaluru Page 4 of 4 the cost warranted in favour of Prime Minister Relief Fund and the receipt thereof shall be furnished before the AO. With these terms, the appeal of the assessee is restored to the file of AO for denovo adjudication in accordance with law. We hereby make it clear that in case of further default, the assessee shall not be entitled for any leniency. It is ordered accordingly.

7.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes.

Order pronounced in the open court on 31st July, 2026

Sd/- Sd/- (Waseem Ahmed) (Keshav Dubey) Accountant Member Judicial Member

Bangalore, Dated 31st July, 2026. VG/SPS

Copy to:

1.

The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order

Asst. Registrar, ITAT, Bangalore.

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