RAJAIAN RSPRABHU,CHUNKANKADAI vs. JURISDICTIONAL ASSESSING OFFICER, NAGERCOIL

आयकर अपीलीय अधिकरण ‘सी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI माननीय श्री एबी टी. वर्की, न्याययक सदस्य एवं श्री गगन गोयल लेखा सदस्य के समक्ष BEFORE HONOURABLE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 2305/Chny/2026 ननिाारण वर्ा /Assessment Years: 2018-19 Rajaian RSPrabhu v. The Income Tax Officer, No.23-10A, RS Dhanam Illam, Thottiyodu, Nagercoil. TVM Main Road, Chunkankadal Nagercoil, Kanyakumari, Tamil Nadu-629 003. [PAN: AGYPR9094D] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Mr. Bharath, C.A, Ld. AR प्रत्यर्थी की ओर से /Revenue by : Mr. Chilaka Marthi Vijay Raju, Addl. CIT, Ld. DR सुनवाईकीतारीख/Date of Hearing : 18.06.2026 घोषणाकीतारीख /Date of Pronouncement : 29.06.2026 आदेश / O R D E R PER GAGAN GOYAL, AM: This is an appeal preferred by the assessee against the order of Ld. Commissioner of Income Tax (A) / NFAC, (hereinafter referred as the ‘Ld. CIT(A)’) dated 12.11.2025, for the Assessment Year (hereinafter referred as the ‘AY’) 2014- 15.

GROUNDS OF APPEAL GROUND 1: EX-PARTE APPELLATE ORDER BAD IN LAW: On the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals), NFAC, erred in law and on facts in passing an ex-parte order u/s 250 dated 10.09.2025 (Refer Annexure 2) dismissing the appeal for "non-prosecution" and mechanically confirming the assessment order u/s 147 r.w.s. 144, without granting the appellant an effective and meaningful

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ITA No.2305/Chny/2026 (2018-19) Rajaian RSPrabhu opportunity of being heard. The order is bad in law and liable to be quashed. The appellant relies, inter alia, on the following judicial precedents:

(i) Pankaj Gaur v. ITO, ITA No. 59/Alld/2023 (ITAT Allahabad, order dated 08.09.2023) Refer Annexure 10(a) where the Tribunal held that the CIT(A) cannot dismiss an appeal ex-parte without deciding issues on merits; even in default, section 250(6) mandates a reasoned order stating points for determination and decision thereon. (ii) Gita Sharma v. ITO (ITAT Kolkata, order dated 30-12-2025) Refer Annexure 10(b) - Tribunal set aside CIT(A)'s order dismissing the appeal for non-prosecution and restored the matter, holding that appellate authorities are statutorily obliged to adjudicate on merits and cannot summarily dismiss appeals. (iii) Uzhuva Service Co-operative Bank Ltd. v. ITO, W.P.(C) No. 5915 of 2020 (Kerala High Court, judgment dated 27-02-2020) Refer Annexure 10(c) High Court held that even the ITAT cannot dismiss an appeal for non-prosecution and must decide on merits; principles of natural justice require a speaking order. These decisions holding that appellate authorities cannot dismiss appeals for non-prosecution and must pass a reasoned order on merits under section 250.

GROUND 2: FAILURE TO CONSIDER PECULIAR FACTS-6TH-STD EDUCATION AND CONSULTANT'S DEATH: (Refer Annexure 2, 11).

The learned CIT (A) failed to appreciate that all notices u/s 250 issued from July 2025 onwards remained un-complied only because the appellant is educated only up to 6th standard, is not conversant with income-tax or the e-filing portal, and had placed complete reliance on his tax consultant who had become seriously ill and subsequently expired on 14-06-2025, resulting in the appellant being genuinely unaware of the pendency of the appeal proceedings. In such peculiar facts, dismissal for non-prosecution amounts to denial of natural justice.

Reliance is placed on Ila Jignesh Kumar Vakharia v. ITO, ITA No. 600/RJT/2025 (ITAT Rajkot, order dated 15.01.2026) Refer Annexure 10(d)- Tribunal set aside an ex-parte and non-speaking order of the CIT(A) where the assessee could not effectively represent due to lack of proper opportunity, holding that dismissal without discussing merits violates natural justice and the matter must be remanded.

And further on Pankaj Gaur v. ITO, ITA No. 59/Alld/2023 (ITAT Allahabad, order dated 08.09.2023) Refer Annexure 10(a)ITAT observed that appeals cannot be dismissed merely for non-appearance; where the assessee cited difficulties relating to representation, the matter was restored for decision on merits.

GROUND 3: NON-COMPLIANCE WITH SECTION 250(6) NO SPEAKING ORDER ON EACH GROUND: (Refer Annexure 2, 12)

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ITA No.2305/Chny/2026 (2018-19) Rajaian RSPrabhu Without prejudice, the learned CIT(A) erred in disposing of the appeal without framing specific points for determination and without giving a reasoned, speaking finding on each ground raised in Form 35, as mandated by section 250(6). The appellate order is therefore vitiated and deserves to be set aside with directions for fresh adjudication on merits or appropriate relief by this Hon'ble Tribunal.

(Refer Annexure 2) The learned CIT (A), in para 4.2 of the impugned order, has wrongly recorded that the appellant "has not availed any of the opportunities" and that "no submissions, documents or evidences were filed". This finding is factually incorrect and contrary to the record, because along with Form 35 the appellant had already filed detailed grounds of appeal and a comprehensive statement of facts with supporting documents explaining the issues arising from the reassessment order. The CIT (A) has neither referred to nor discussed these materials and has mechanically concluded that nothing was filed, which vitiates the order as being perverse and non-speaking. The appellant relies, inter alia, on the following judicial precedents:

Anjanish Kumar Tiwari v. ITO, ITA No. 59/Alld/2025 (ITAT Allahabad, order dated 30.07.2025) Refer Annexure 10(e) - Tribunal held that dismissal of appeal for non-prosecution without passing a speaking order violates the mandate of section 250(6); CIT (A) is under a statutory obligation to deal with each ground of appeal and give reasons, and failure to do so renders the order unsustainable and liable to be set aside.

Santosh Tukaram Varade v. ΙΤΟ, ΙΤΑ Νο. 1927 & 1928/PUN/2024 (ITAT Pune, order dated 10.01.2025) Refer Annexure 10(f)-ITAT Pune held that section 250(6) enjoins CITIA) to state points for determination and give a reasoned decision on each point, even in ex-parte situations NFAC must address the merits, and non-speaking ex-parte orders were remanded for fresh adjudication.

GROUND 4: INVALID REASSESSMENT U/S 147 R.W.S. 144 PROPER "REASON TO BELIEVE": (Refer Annexure 1) ABSENCE OF

The learned Assessing Officer erred in law in reopening the completed assessment for AY 2018-19 u/s 147 r.w.s. 144B when the original return had already been processed u/s 143(1) and there was no valid "reason to believe", based on tangible material, that income had escaped assessment. The reassessment proceedings and consequent order dated 12.12.2023 are therefore void ab initio and liable to be annulled. The appellant relies, inter alia, on the following judicial precedents:

D.A.V. Educational Trust v. ITO (ITAT Chennai, order dated 21.01.2026) Refer Annexure 10(g) Tribunal quashed a reassessment order passed u/s 147 r.w.s 1448 where (i) there was no new tangible material and (ii) reasons were not properly furnished, it reiterated that "reasons to believe must rest on specific material and comply with procedural safeguards.

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ITA No.2305/Chny/2026 (2018-19) Rajaian RSPrabhu DCIT. Cadila Pharmaceuticals Ltd. (ITAT Ahmedabad, order dated 17.04.2024) Refer Annexure 10/h) reopening of assessment on an issue already examined in the original proceedings, without pointing out any fresh material, was held void ab initio and bad in law.

CIT v. Kelvinator of India Ltd. (18th Jan 2010) No.2520 of 2008 Refer Annexure 10(i) the Supreme Court held that section 147 does not confer review power, reassessment must be founded on "tangible material" and not on a mere change of opinion or re-appreciation of the same facts

GROUND 5: WRONG TREATMENT OF CONTRACTUAL RECEIPTS AS UNEXPLAINED MONEY U/S 69A: (Refer Annexure 2, 3, 4, 5, 9)

On the facts and in the circumstances of the case, the learned Assessing Officer gravely erred in treating contractual receipts of Rs. 43, 58,500 from Hari Narayana Explosives/Shri Kajendran Arumugasami as "unexplained money" u/s 69A. The appellant maintains a regular contract account for FY 2017-18 in which all day-to-day vehicle-hire/contract receipts have been recorded, including major credits of Rs. 12, 00,000, Rs. 5, 00,000, Rs. 4, 58,500 and Rs. 22, 00,000 from the same contract ee. These receipts are fully reflected in the books, bank statements and Form 26AS/TDS certificates and are part of the disclosed business turnover offered to tax in the original return u/s 139(1) as well as return filed u/s 148. Without examining this ledger and bank trail, the CIT (A) has simply lifted the gross contract receipts and again taxed them as "unexplained money", resulting in double taxation of the same disclosed income. The learned CIT (A) has upheld this action without any discussion, contrary to the settled scope of section 69A, and the addition deserves to be deleted. The appellant relies, inter alia, on the following judicial precedents:

CIT v. Devi Prasad Vishwanath Prasad (1969) 72 ITR 194 (SC) Refer Annexure 10(1) the Supreme Court explained that sections 69 and 69A apply where money or investments are not recorded in the books; where receipts are part of business turnover, only the profit embedded therein can be taxed and not the entire gross receipts again.

ACIT v. Mayfair Resorts India Ltd., ITA No. 2008/Del/2021 (ITAT Delhi, order dated 17.08.2023) Refer Annexure 10(p) ITAT Delhi held that an addition u/s 69A cannot be made merely on the basis of a document or figure without corroborative evidence that the assessee actually possessed unexplained money, unsupported 69A additions were deleted.

In the appellant's case, every credit of Rs. 12 lakh, 5 lakh, 4.58 lakh and 22 lakhs from the contractee bi recorded in the contract ledger, bank statements and Form 26AS, the Assessing Officer has accepted the business income and then taxed the same turnover again u/s 69A, which the above rulings hold is not permissible.

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ITA No.2305/Chny/2026 (2018-19) Rajaian RSPrabhu GROUND 6: UNJUSTIFIED TREATMENT OF ASHOK LEYLAND TIPPER PURCHASES AS UNEXPLAINED U/S 69A IGNORING FINANCE AND MARGIN SOURCES: (Refer Annexure 2,5,7,9)

The learned Assessing Officer erred in law and on facts in treating the purchase cost of the Ashok Leyland U-2518 tipper (invoice value Rs. 33, 00,000 including TCS Rs. 32673.27) as unexplained money u/s 69A. The dealer tax invoice dated 23.02.2018 clearly evidences the vehicle particulars and TCS in the appellant's name. The contemporaneous loan documentation and loan account statement shows that Indusind Bank financed Rs. 26, 40,000 directly to the dealer under loan no. TLN00799D, the balance margin money of Rs. 6, 60,000 being paid by the appellant from explained sources. Regular EMIs are debited from the appellant's bank account thereafter. In the face of this complete loan-and-bank trail and the tipper being duly recorded as a business asset, section 69A has been misapplied and the addition is perverse and liable to be deleted in full.

The figure of Rs. 32, 67,327 is merely the gross amount on which TCS/TDS or reporting is based in the information statement, and not unaccounted cash in the hands of the appellant.

By misreading this gross amount used for calculating TCS figure as "unexplained money received" and ignoring both the Indusind loan structure and the documented source of margin money, the Assessing Officer has completely misunderstood the nature of the Ashok Leyland transaction. The addition under sections 69/69A on this count is therefore factually incorrect, contrary to the financing and TCS documents on record, and liable to be deleted in full.

The appellant relies, inter alia, on the following judicial precedents:

CIT V. P.K. Noorjahan (1999) 237 ITR 570 (SC) Refer Annexure 10(k) the Supreme Court held that deeming provisions like sections 69 and 69A are discretionary and must be applied having regard to all surrounding circumstances; when the assessee demonstrates that an asset is financed through identifiable, legitimate sources, mechanical additions are not justified.

My tipper is financed exactly like the flat/car cases in these rulings: Indusind Bank loan of Rs. 26.40 lakh straight to the dealer, margin Rs. 6.60 lakh from my bank, EMIS from my account, and the asset in my balance sheet, therefore, there is no unexplained money for section 69A to tax.

GROUND 7: ERRONEOUS TREATMENT OF PURCHASE OF IMMOVABLE PROPERTY U/S 69 IGNORING ORIGINAL COST OF ACQUISITION: (Refer Annexure 2, 5, 8)

The learned Assessing Officer erred in treating a sum of Rs. 18, 24,257 as unexplained investment in immovable property u/s 69. As per the "Purchase of Property FY 2017-18 R.S. Prabhu" statement in my name, the only properties purchased are: (a) S. No. 768/8, Marungur now Nalloor Village, Agasteeswaram Taluk, Idalakudi, purchased from Smt. Chella Thangam for Rs. 2, 72,745 on 20.06.2017 (Doc Ref No. B513480, SRO Idalakudi, paid in cash Rs. 2, 72,745); and (b) S.No. 768/9,

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ITA No.2305/Chny/2026 (2018-19) Rajaian RSPrabhu Marungur now Nalloor Village, purchased from Shri Mahalingam & others for Rs. 1,85,925 on 21.03.2018 (Doc No. D154797, SRO Idalakudi, paid in cash Rs. 1, 85,925). Thus, the total cost of immovable property acquired during FY 2017-18 is only Rs. 4, 58,670, which is duly recorded and explained, and not Rs. 18, 24,257 as wrongly assumed. The figure of Rs. 18, 24,257 does not pertain to me and it does not appear in AIS/26AS, possibly a third-party data mismatch. My machinery purchases (Komatsu excavator financed by SREI Equipment Finance and Ashok Leyland tipper financed by Indusind Bank) are separate business assets supported by bank-loan and margin-money documents and cannot be treated as "immovable property investment" u/s 69. The impugned addition is therefore based on a factual mistake and deserves to be deleted.

The appellant relies, inter alia, on the following judicial precedents:

CIT v. P.K. Noorjahan (1999) 237 ITR 570 (SC) Refer Annexure 10(k) - the Supreme Court held that section 69 is a discretionary deeming provision; even where technically attracted, the authority must consider the surrounding circumstances and cannot make additions mechanically.

ITO v. Ram Gopal (ITAT Jaipur, 2015)-Tribunal held that additions under section 69 for unexplained investments were not justified where the investments were properly recorded in the books and the assessee had given a satisfactory explanation with documentary evidence; AO's reliance only on rough account entries/estimates without corroboration was held insufficient.

ITAT decisions like disclosed above, deleting additions where alleged property investment based on third-party or valuation data was not matched with assessee's actual registered purchase and books.

In the appellant's case, the only registered purchases in S. No. 768/8 and 768/9 total Rs. 4.58 lakh and are in my books, AO has never shown that I actually invested Rs. 18.24 lakh in any property, which, as the above rulings hold, is a basic pre-condition for section 69.

GROUND 8: WRONG AND EXCESSIVE APPLICATION OF SECTION 115BBE:

The learned Assessing Officer erred in invoking section 115BBE and levying tax at the punitive rate of 60% (plus surcharge, cess and heavy interest) on amounts which, in fact, represent explained and disclosed business receipts and assets. On a correct appreciation of facts and law, no income remains that can validly be taxed under section 115BBE.

Madhya Pradesh High Court decision in 2024 (ITA No. 130/2023, Indore Bench) Refer Annexure 10(1)-Court noted that when surrendered income was demonstrably from the assessee's regular business activities and entered in the books, section 115BBE could not be applied, such income was to be taxed at normal slab rates.

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ITA No.2305/Chny/2026 (2018-19) Rajaian RSPrabhu CIT v. Devi Prasad Vishwanath Prasad (1969) 72 ITR 194 (SC) Refer Annexure 10(1)-the Supreme Court held that sections 69/69A apply only to unexplained money or investments not recorded in the books; where such provisions are not validly attracted, there is no "deemed income" on which any special rate (like section 115BBE) can operate.

The appellant submits that once the very additions under sections 69/69A stand deleted and the receipts/assets are accepted as part of regular business income, there remains no "deemed income to attract section 115BBE, and the punitive rate of 60% with surcharge and cess must be withdrawn.

GROUND 9: ADDITIONS EXCESSIVE, UNJUST AND CONTRARY TO FACTS AND LAW: Refer Annexure 1, 4,5,6,7

Without prejudice to the foregoing, the additions under sections 69 and 69A aggregating to Rs. 94, 50,084 and the consequential tax and interest are excessive and unjustified. On a correct appreciation of the contract ledger, machinery and vehicle invoices, loan documents from SREI and Indusind Bank, and the mother's bank statement showing Rs. 37.40 lakh support, the impugned amounts are fully explained and any residual addition, if at all, requires substantial reduction.

Delhi ITAT decision in Bipin Agarwal v. ACIT, ITA No. 2844/Del/2025-section 69A addition based solely on third-party ledger entries was deleted; Tribunal held that without establishing ownership/possession and after ignoring assessee's documentary explanation, such additions are arbitrary.

The appellant submits that in view of the above legal position and the extensive documentary record (contract ledger, vehicle and machinery invoices, SREI and Indusind loan files, and mother's bank account evidencing Rs. 37.40 lakh support). The impugned additions aggregating to Rs. 94, 50,084 are wholly excessive and unsustainable, any residual discrepancy, if at all, can only warrant a substantially reduced and reasonable estimation, not harsh deemed-income treatment under sections 69/69A

GROUND 10: FAILURE TO EXAMINE BOOKS AND PRIMARY EVIDENCE AS FIRST APPELLATE FACT-FINDING AUTHORITY: Refer Annexure 4,6,7,8

The learned CIT (A) has failed to call for or examine the appellant's primary evidences, despite specific references in the Statement of Facts to the contract ledger, Komatsu and Ashok Leyland invoices, property document and other supporting material. Instead of exercising appellate powers to verify these records, the CIT (A) has merely affirmed the assessment order in a cursory manner. This failure of fact-finding duty renders the order contrary to the role of a first appellate authority.

In particular, the appellant had specifically referred to and is now placing on record the SREI Equipment Finance Ltd. loan file and tax invoice for the Komatsu hydraulic excavator (Contract No.

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ITA No.2305/Chny/2026 (2018-19) Rajaian RSPrabhu SEFL/137215/NG237169), as well as the Indusind Bank loan file for the Ashok Leyland tipper. These documents show that major business assets have been acquired through identified bank finance and are duly capitalised in the books. The failure of the CITI(A) to call for or examine such primary evidence, despite being the first appellate fact-finding authority, has led to an incorrect inference of unexplained funds and renders the appellate order contrary to the statutory role under section 250.

B.V. Nagesh v. H.V. Sreenivasa Murthy (2010) 10 SCC 551 (SC) Refer Annexure 10(m) the Supreme Court held that a first appellate court, being the final court of facts, is obliged to independently assess the entire evidence, discuss it in detail, and give its own reasons; failure to do so vitiates the appellate order.

ITAT decisions setting aside NFAC/CIT(A) orders where material placed in the paper book or referred in the statement of facts (such as ledgers, invoices, and bank statements) were not examined or discussed, holding that such non-speaking. Affirmations amount to abdication of appellate duty and require remand

Despite clear references in my Statement of Facts to the contract ledger, machinery and vehicle invoices, SREL/Indusind loan files and my mother's bank statement, CIT (A) did not examine any of them, which, in light of the above rulings, means the order fails in its basic fact-finding function.

GROUND 11: IMPROPER USE OF EX-PARTE DISMISSAL AS SUBSTITUTE FOR ADJUDICATION ON MERITS: Refer Annexure 1, 2.

The learned CIT (A) has erred in using the appellant's non-appearance to simply dismiss the appeal and confirm the assessment, without adjudicating the grounds on merits based on available material. Even where an appeal is heard ex-parte, the appellate authority is obliged to consider the records and pass a reasoned order. In the present case, the CIT (A) has not done so, thereby failing to properly exercise appellate jurisdiction.

Vijay Enterprises v. ACIT, ITA No. 91/AILD/2019 (ITAT Allahabad, order dated 22.04.2021) Refer Annexure 10(n) - Tribunal held that the Commissioner (Appeals) cannot dismiss appeal ex-parte without deciding the issues on merits, section 250(6) obliges a speaking order, and mere non- appearance of the assessee is not a ground to summarily confirm the assessment.

Saw Chhaganlal Arjanbhai Thacker Medical && Education Trust v. DCIT/ACIT, CPC (ITAT Ahmedabad, 20.10.2022) Refer Annexure 10(0) the Tribunal ruled that CIT(A) has no power to dismiss appeal for non-prosecution; even in an ex-parte situation, the appellate authority must frame points for determination and adjudicate each ground on merits with reasons.

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ITA No.2305/Chny/2026 (2018-19) Rajaian RSPrabhu Various ITAT and High Court decisions summarized as "CIT (A) can't summanly dismiss appeal on non-appearance; ex-parte order has to be on merits" reaffirm that non-appearance may justify proceeding ex-parte, but never dismissal without considering the record.

In view of the above grounds, the facts placed on record, and the settled legal position, the impugned reassessment and appellate orders suffer from serious factual mistakes, non-consideration of vital evidence, and incorrect application of sections 69, 69A and 115BBE. The additions have resulted in taxing duly recorded business receipts and bank-financed assets as if they were unexplained, which is wholly inconsistent with the scheme of the Act and the judicial precedents relied upon.

VERIFICATION

1, Rajaian R.S. Prabhu, son of Shri R. Subramanian, residing at 23-10A, RS Dhanam Illam, Thottiyodu, TVM Main Road, Villukuri, Kanyakumari, Tamilnadu 629 003., do hereby solemnly affirm and verify that the contents of the above appeal and the statements made in the Grounds of Appeal are true and correct to the best of my knowledge and belief and nothing material has been concealed therefrom.

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ITA No.2305/Chny/2026 (2018-19) Rajaian RSPrabhu before the authorities below and even before us. The assessee has taken total grounds in 8 pages as reproduced (supra) by us. Interestingly, none of the judicial pronouncements relied upon by the assessee are applicable to the facts of the present case. Before us also the affidavit for condonation of delay filed by the assessee is in duplicate, which reflects either the casual approach/poor understanding of the procedural aspects.

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ITA No.2305/Chny/2026 (2018-19) Rajaian RSPrabhu

Sd/- Sd/- (एबी टी. वर्की) (गगन गोयल) (ABY T. VARKEY) (GAGAN GOYAL) न्याययक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER चेन्नई/Chennai, ददनाांक/Dated: 29th June, 2026. KB आदेश की प्रयतललपप अग्रेपषत/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT, Chennai /Madurai/Coimbatore/Salem 4. पवभागीय प्रयतयनधि/DR 5. गार्ड फाईल/GF K Digitally signed by K BABU Date: BABU 2026.07.01 09:33:47 +05'30'

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