SMT. SEEMA DAGA, RAIPUR,RAIPUR vs. INCOME TAX OFFICER, WARD-3(1), RAIPUR, RAIPUR

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ITA 487/RPR/2026Status: DisposedITAT Raipur31 July 2026AY 2019-206 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that changing the charging section without affording an opportunity of hearing to the assessee violates the principles of natural justice. The order of the CIT(Appeals) was set aside.

What were the facts?

The Assessing Officer (AO) invoked Section 69A for unexplained money. The CIT(Appeals) changed the charging section to Section 68 for unexplained cash credit without providing the assessee an opportunity to be heard. The CIT(Appeals) confirmed the addition.

What were the issues?

Whether changing the charging section by the appellate authority without providing an opportunity of hearing to the assessee is a violation of natural justice principles.

Which sections of the Income-tax Act were involved?

Section 69A,Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAIPUR BENCH, “DB” RAIPUR

Before: SHRI PARTHA SARATHI CHAUDHURY & DR. DIPAK P. RIPOTE

For Appellant: Shri Prafulla Pendse, CA
For Respondent: Shri Piyush Tripathi, Sr. DR
Hearing: 27.07.2026Pronounced: 31.07.2026

आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM: The present appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, Delhi dated 31.03.2026 for the assessment year 2019-20 as per the grounds of appeal on record.

2.

In this case, charging section applied by the A.O was Section 69A of the Income Tax Act, 1961 (for short ‘the Act’) and finally computation has been done which is extracted as follows:

3 Smt. Seema Daga Vs. ITO, Ward-3(1), Raipur (C.G.) ITA No.487/RPR/2026

3.

The Ld. CIT(Appeals)/NFAC on the other hand had changed the charging section from 69A of the Act to Section 68 of the Act and added the amount as unexplained cash credit. The relevant observation of the Ld. CIT(Appeals)/NFAC is extracted as follows:

“10. As the appellant has failed to furnish the documentary evidences to explain the source of credit entries to the extent of 41,75,602, the same is to be treated as unexplained cash credit u/s 68 of the IT Act as the appellant has maintained the books of accounts. However, the A.O has invoked the provisions of section 69A of the Act. It is a settled position of law that addition made by invoking the wrong section of the IT Act is not fatal. Therefore, the addition made of Rs.41,75,602 is hereby confirmed. Appeal on these grounds is thus dismissed. 11. In the result, the appeal is dismissed.”

4.

At the time of hearing, Ld. Counsel for the assessee submitted that it was mandatory for the Ld. CIT(Appeals)/NFAC to provide an opportunity of hearing to the assessee before changing of charging Section from 69A to Section 68 of the Act. Section 69A of the Act is with regard to addition made in Case of unexplained money etc. in the hands of the assessee, whereas, Section 68 applies to unexplained cash credit. Therefore, whether at all, there was any need for changing the charging section, the assessee

4 Smt. Seema Daga Vs. ITO, Ward-3(1), Raipur (C.G.) ITA No.487/RPR/2026

should have been provided an opportunity to make her submissions before the Ld. CIT(Appeals)/NFAC.

5.

The Hon’ble Supreme Court has consistently emphasized the importance of adequate natural justice in the judicial and quasi-judicial proceedings. This principle ensures fairness, reasonableness and due process preventing arbitrary action and upholding fundamentality of the legal process. In the case of Maneka Gandhi Vs. Union of India (UOI) and Ors. AIR 1978 SC 597, the Hon’ble Apex Court expanded the scope of natural justice holding that any action violating fairness, reasonableness and due process is arbitrary and unconstitutional. In the case of State of Orissa Vs. Dr. (Miss) Binapani Dei, 1967 AIR 1269, the Hon’ble Apex Court has established that even administrative orders affecting a person’s rights must adhere to the principles of natural justice. There are certain principles ensuring within the parameters of natural justice, one of them is “audi alterm partem” which mandates that before taking any action against a party, they must be given an opportunity to be heard and present their case.

6.

The right to be heard is the cornerstone of natural justice and in this regard in the case before the Hon’ble Uttarakhand High Court in 2022 regarding a practising advocate, Dushyant Mainali (CLR No.22/2022) wherein the Hon’ble High Court had observed that the said advocate

5 Smt. Seema Daga Vs. ITO, Ward-3(1), Raipur (C.G.) ITA No.487/RPR/2026

Mainali was accused of professional misconduct for allegedly misleading the litigant and causing the delay in filing revisional petition. The Hon’ble High Court directed the Bar Counsel of Uttarakhand to initiate disciplinary proceedings against the lawyer. Mainali challenged these remarks before the Hon’ble Supreme Court, contending that he was neither a party to the case before the High Court nor was involved in any capacity. The remarks, therefore, not only tarnished his professional reputation but were also made in clear violation of the principles of natural justice. The Hon’ble Apex Court in Civil Appeal No.15191/2022, arising out of a Special Leave Petition filed by Dushyant Mainali examined the Hon’ble High Court’s order and found the approach to be legally untenable. Hon’ble Justice Gavai (as he was at that time) speaking for the bench, noted that “we are of the considered view that the approach of the High Court in making the observations against the appellant without giving him any opportunity of being heard is totally unsustainable in law.” The bench went on to delete the entire portion of the high court’s order that contained the contentious remarks and directives against Mainali, holding that such a move violates the fundamental principles of fairness and due process.

7.

In view thereof, we set-aside the order of the Ld. CIT(Appeals)/NFAC and restore the matter back to its file for denovo adjudication after

6 Smt. Seema Daga Vs. ITO, Ward-3(1), Raipur (C.G.) ITA No.487/RPR/2026

complying with the principles of natural justice. The assessee shall also comply with the hearing notices and represent the matter on merits.

8.

In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 31st July, 2026.

Sd/- Sd/- DR.DIPAK P. RIPOTE PARTHA SARATHI CHAUDHURY (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायपुर/ RAIPUR ; �दनांक / Dated : 31st July, 2026. SB, Sr. PS आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : 1. अपीलाथ� /The Appellant. 2. ��यथ� /The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G.) 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, रायपुर ब�च, रायपुर / DR, ITAT, Raipur Bench, Raipur. 5. गाड� फ़ाइल / Guard File. Samiran आदेशानुसार / BY ORDER, Bera, Sr. PS, // True Copy // Senior Private Secretary ITAT, Raipur आयकर अपील�य अ�धकरण, रायपुर / ITAT, Raipur. Digitally signed by Samiran Bera, Sr. PS, ITAT, Raipur Date: 2026.07.31 14:34:45 +05'30'

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