PRITI KUMARI,BHAGALPUR vs. PROPRIETOR, BHAGALPUR

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ITA 3/PAT/2026Status: DisposedITAT Patna27 April 2026AY 2020-217 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the assessment was completed ex-parte by the AO and the appeal was also dismissed ex-parte by the CIT(A) due to non-response from the assessee. Therefore, in the interest of justice, the Tribunal remitted the issue back to the CIT(A) for a fresh decision after providing a reasonable opportunity of being heard to the assessee.

What were the facts?

The assessee's appeal was delayed by 7 days, which was condoned. The Assessing Officer (AO) reopened the assessment under Section 147/148 due to substantial cash deposits in the bank account and fixed deposits, which the assessee failed to explain satisfactorily. The AO made an addition of Rs. 21,00,000/- as unexplained investment and assessed income at Rs. 25,99,650/-.

What were the issues?

Whether the reopening of assessment was valid and whether the addition of unexplained investment was justified, considering the assessee's explanation and the ex-parte nature of the proceedings before the lower authorities.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 144,Section 144B,Section 69A,Section 250,Section 270A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PATNA BENCH, PATNA

Hearing: 15.04.2026Pronounced: 27.04.2026

IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH, PATNA (VIRTUAL HEARING AT KOLKATA) SHRI GEORGE MATHAN, JUDICIAL MEMBER SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER

ITA No.03/PAT/2026 Assessment Year : 2020-2021

Priti Kumari, Vs. ITO, Ward 1(1), W/o Pradip Kumar Sah, Bhagalpur Naugachia, Bhagalpur - 853204 [PAN: FVUPK0149A] APPELLANT RESPONDENT

Assessee by : None Revenue by : Sh. Manab Adak, JCIT

Date of hearing : 15.04.2026 Date of Pronouncement : 27.04.2026

O R D E R PER LAXMI PRASAD SAHU, ACCOUNTANT MEMBER

This is an appeal filed by the assessee against the order passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “the Ld. CIT(A)] dated 10.10.2025, DIN & order No. ITBA/NFAC/S/250/2025-

2 ITA No. 03/PAT/2026 Priti Kumari 26/1081643685(1) challenging the order of the Ld. CIT(A) regarding the income determined by the AO of Rs. 25,99,650/-.

2.

At the outset of hearing, we noted that the appeal filed by the assessee is delayed by 7 days. In this regard, the assessee has filed a condonation petition explaining the reason for not filing appeal within the due date specified time in the provisions of the Act.

3.

On going through the above reasons/explanations, we noted that the assessee had reasonable cause for not filing the appeal within the specified time. Therefore, relying on the judgment of Collector, Land Acquisition vs Mst. Katiji, (1987) 167 ITR 171 (SC), we condone the delay and the appeal is taking for adjudication.

4.

Briefly stated the facts of the case are that as per the insight portal of income tax department, it was observed that the assessee did not file return of income in spite of having substantial deposit of cash into the bank account and fixed deposit made of Rs. 20,00,000/- in the Dakshin Bihar Gramin Bank during the course of assessment proceedings. Therefore, the case was reopened u/s 147/148 of the Act after obtaining necessary approval from the competent authority and notice was issued to the assessee to file return of income and other information was also called for but the assessee did not file return of income in response to notice u/s 148 of the Act. During section 148A proceedings, the assessee filed P & L Account, balance sheet, computation of income, account statement as well as deposit receipt of Fixed Deposits. On perusal of P &

3 ITA No. 03/PAT/2026 Priti Kumari L Account, it was noted that the assessee has shown turnover of Rs. 35,15,957/- but the bank statement did not reflect any trading business, assessee furnish purchase and sale invoice, ledger etc. but could not explain to the source of deposits to the satisfaction of the AO. Accordingly, he made addition and treated Rs. 21,00,000/- as unexplained investment and income was assessed at Rs. 25,99,650/ and he applied section 115BBE of the Act, completed the assessment u/s 147 r.w.s. 144 r.w.s. 144B of the Act on 13.02.2025.

5.

Aggrieved from the above order, the assessee filed appeal before the Ld. CIT(A). During the appellate proceedings, the Ld. CIT(A) issued various notices but there was no any response from the assessee side. Accordingly, he decided the appeal on the basis of material available before him and dismissed the appeal of the assessee.

6.

Aggrieved from the above order, the assessee filed appeal before the ITAT.

7.

None present on behalf of the assessee and the case was heard qua the Ld. DR.

8.

At the outset of hearing, we noted from the appeal filed by the assessee that he has filed grounds of appeal in argumentative in nature. Therefore, considering the grounds of appeal we are taking up for

4 ITA No. 03/PAT/2026 Priti Kumari adjudication. For the sake of convenience, it is reproducing the same as under:-

“The appellant respectfully submits the following grounds of appeal against the order dated 10.10.2025 passed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), under section 250 of the Income-tax Act, 1961 ("the Act"), dismissing the appeal ex parte and thereby confirming the assessment order dated 13.02.2025 passed under section 147 r.w.s. 144 r.w.s. 144B of the Act, assessing the total income at Rs. 25,99,650/-: 1. Invalidity of Reopening of Assessment u/s 148: That the learned CIT(A) erred in law and on facts in upholding the reopening of assessment under: section 148 of the Act, initiated based on information from the Insight Portal regarding time deposits of Rs. 20,75,000/- and interest income of Rs. 75,000/-. The reopening was invalid as there was no tangible material establishing a live link to form a reasonable belief that income had escaped assessment within the meaning of section 147 of the Act, particularly since the appellant's computed total income of Rs. 4,91,663/- (business income Rs. 3,71,834/- + interest Rs. 1,19,829/-) was below the taxable threshold, and the deposits were from past accumulated savings, as evidenced by bank statements showing closing balance of Rs. 21,78,629/- as on 31.03.2019. Reliance is placed on ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC), where the Supreme Court held that there must be a direct nexus between the material and the belief of escapement, and CIT v. Kelvinator of India Ltd. [2010] 320 ITR 561 (SC), ruling that reopening cannot be based on mere change of opinion without fresh tangible material. 2. Violation of Principles of Natural Justice in Assessment Proceedings: That the learned CIT(A) failed to appreciate that the assessment order u/s 147/ 144 was passed without affording adequate and effective opportunity to the appellant, despite multiple replies submitted on 05.11.2024, 28.01.2025, and 09.02.2025, including trading account, profit & loss account, balance sheet, computation of income, bank statements from 09.08.2014 to 31.03.2019, sales details to two parties totaling Rs. 35,15,957/-, and attendance at video conferences on 04.02.2025 where further documents like sales invoices, buyer KYC, and account confirmations were provided. The arbitrary addition of Rs. 21,00,000/- as unexplained investment u/s 69 ignored these submissions without specific rebuttal. Reliance is placed on Tin Box Co. v. CIT [2001] 249 ITR 216 (SC), emphasizing that natural justice requires meaningful opportunity and consideration of submissions, and Colonisers v. ACIT (ITAT Delhi,21.03.2025), holding that ex parte orders violating natural justice are void.

5 ITA No. 03/PAT/2026 Priti Kumari 3. Erroneous Addition u/s 69A as Unexplained Money: That the learned CIT(A) erred in confirming the addition of Rs. 21,00,000/- (FDs of Rs. 20,00,000/- and Rs. 1,00,000/-) as unexplained money u/s 69A of the Act, disregarding the appellant's explanation that these were funded from past business accumulations, supported by bank statements evidencing credits totaling over Rs. 24,11,891/- (opening capital as on 01.04.2019) and closing balances exceeding the deposit amounts (e.g., Rs. 21,78,629/- as on 31.03.2019). The AO's rejection was mechanical, without verifying the submitted evidence or pointing out defects. Further, the initial SCN proposed adding Rs. 10,25,200/- u/s 69A for bank credits but was dropped without explanation, indicating inconsistency and lack of application of mind, while treating the time deposits as unexplained money without establishing that the appellant was the 'owner' within the meaning of section 69A or that the amounts were not recorded in books, as the appellant maintained proper accounts reflecting the sources. The addition cannot be sustained merely on suspicion without cogent evidence disproving the appellant's plausible explanation, especially since the bank transactions were duly accounted for and no incriminating material was found to suggest otherwise. Reliance is placed on CIT v. P.K. Noorjahan [1999] 237 ITR 570 (SC), where the Supreme Court held that plausible explanations supported by evidence preclude additions u/s 69/ 69A, ACIT v. A.R. Enterprises [2013] 350 ITR 489 (Mad HC), shifting the burden back to the Revenue upon satisfactory initial explanation, Namdev Arora v. CIT (Chandigarh HC, 20.07.2016), ruling that section 69A is inapplicable if amounts are entered in books of account, ITAT Ahmedabad in Dinesh Arjav v. ITO (02.12.2025), quashing Rs. 66.95 lakh addition u/s 69A for lack of evidence disproving source, and ITAT Nagpur in relevant case (19.06.2025), holding no addition u/s 69A for cash deposits based on suspicion alone if explanations are provided. 4. Non-Consideration of Business Income and Rejection of Books: That the learned CIT(A) wrongly upheld the implicit rejection of the appellant's business as a small trader in maize (exempt from GST, cash- based transactions with two buyers: Hari Om Traders PAN: AHZPB4132A and Madhu Traders PAN: BDBPK1894B), where turnover of Rs. 35,15,957/-, gross profit Rs. 4,70,767/-, and net profit Rs. 3,71,834/- were declared, supported by detailed invoice-wise sales list, without examining the merits or requiring proof of purchases only after submissions. The AO's observation that bank statements showed no trading activity ignored the cash nature of the business, and no specific defects were identified in the profit & loss account or balance sheet. Reliance is placed on CIT v. Padmavati Raje [1996] 220 ITR 633 (MP HC), holding that books cannot be rejected without specific defects, and Addl. CIT v. Jay Engg. Works Ltd. [1978] 113 ITR 414 (Del HC), mandating evaluation based on submitted evidence without arbitrary disbelief. 5. Ex Parte Dismissal of Appeal by CIT(A): That the learned CIT(A) erred in dismissing the appeal ex parte citing non-response to notices dated 01.03.2025, 31.07.2025, 18.09.2025, and 29.09.2025, without verifying proper service or considering the appellant's grounds in Form No. 35 that the fixed deposits were from past accumulations verifiable from bank statements, and statement of facts explaining the non-filing due to nil tax liability. This violated section 250(6) requiring merit adjudication. Reliance is placed on CIT v. Prem Kumari [1983] 142 ITR 191 (All HC), invalidating

6 ITA No. 03/PAT/2026 Priti Kumari ex parte dismissals without merit consideration, and CIT v. M.K. Shariff [2012] 346 ITR 344 (Kar HC), ruling that CIT(A) must decide appeals on merits and cannot dismiss for non-prosecution. 6. Invalid Levy of Penalty u/s 270A (Linked Ground): That without prejudice, the learned CIT(A) erred in not addressing the consequential penalty u/s 270A of Rs. 6,241/- (50% of tax on alleged under-reported income of Rs. 4,99,650/-), as there was no under-reporting given the appellant's good faith declaration and submissions; the penalty order dated 24.07.2025 was passed despite appeal pendency. Reliance is placed on Jaina Marketing & Associates v. DCIT (ITAT Delhi, 2025), clarifying conditions for misreporting u/s 270A(8), and Nateshan Sampath v. ITO (ITAT Bangalore, 22.01.2025), holding penalty u/s 270A discretionary and inapplicable in bona fide cases. 7. Computation of Total Income and Tax Demand: That the learned CIT(A) erred in confirming the assessed income at Rs. 25,99,650/- (self- declared Rs. 4,99,650/- + addition Rs. 21,00,000/-) without reconciling with initial flagged escaped income (Rs. 20,75,000/- + Rs. 75,000/-) or verifying dropped proposal to add Rs. 10,25,200/- u/s 69A, leading to arbitrary demand. Reliance is placed on CIT v. Sun Engineering Works (P.) Ltd. [1992] 198 ITR 297 (SC), limiting reassessment to escaped income without recomputing entire income arbitrarily. The appellant craves leave to add, alter, amend, or withdraw any of the above grounds of appeal at or before the hearing of the appeal. 9. On the other hand, the Ld. DR relying on the order of lower authorities.

10.

Considering the order of lower authorities and grounds of appeal raised by the assessee, we noted that the AO completed the assessment u/s 144 r.w.s. 147 r.w.s. 144B of the Act and the case was also decided ex - parte for non-responded from the assessee side before the first appellate authority too. Therefore, considering the facts of the case and in the interests of justice, we are remitting the issue back to the file of Ld. CIT(A) for fresh decision as per law after giving a reasonable opportunity of being heard to the assessee and the assessee is directed to furnish cogent documents to substantiate the cash deposits in his

7 ITA No. 03/PAT/2026 Priti Kumari bank account and not seek unnecessary adjournments for early disposal of the case. In case of failure, no second leniency shall be granted to the assessee.

11.

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

Order pronounced on 27 .04.2026.

Sd/- Sd/- (George Mathan) (Laxmi Prasad Sahu) Judicial Member Accountant Member Dated: 27.04.2026 AK, Sr. P.S. Copy of the order forwarded to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. CIT(DR)

//True copy// By order

Assistant Registrar, Kolkata Benches

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