BABARBHAI MANEKBHAI DESAI,AHMEDABAD vs. INCOME TAX OFFICER WARD 3(3)(1) AHMEDABAD, AHMEDABAD

The assessee has taken the following grounds of appeal:

The brief facts of the case are that the assessee, Babarbhai Manekbhai Desai, is an individual engaged in business activities and deriving income from business and profession, house property and other sources. For Assessment Year 2020-21, the assessee filed original return of income on 24.08.2020 declaring total taxable income of Rs.1,50,040/- along with agricultural income of Rs.2,10,550/. Subsequently, proceedings under section 147 of the Income-tax Act, 1961 ("the Act") were initiated on the basis of information allegedly emanating from search action conducted under section 132 of the Act on 20.07.2022 in the case of Chiripal Group and its key associates. Pursuant thereto, notice under section 148 of the Act was issued by the Income Tax Officer, Ward-3(3)(1), Ahmedabad. In response to the said notice, the assessee filed return of income on 29.05.2024 reiterating the income declared in original return of income.

During the course of reassessment proceedings, the assessee submitted before the Assessing Officer that he was engaged in milk trading and miscellaneous activities and had declared income under section 44AD of the Act and therefore was not required to maintain regular books of account. The assessee further denied having undertaken any transaction with Chiripal Group during the relevant assessment year. Thereafter, the Assessing Officer issued show cause notice dated 28.02.2025 proposing addition of Rs.1,75,46,426/- under section 69 of the Act as unexplained investment and

The basis of the proposed addition, as noted by the Assessing Officer, was certain “Bana Chitthi”, rough notings and loose papers allegedly found during the course of search proceedings in the case of Chiripal Group. According to the Assessing Officer, such documents reflected alleged cash transactions relating to purchase of land bearing Survey No.95/3. The assessee, however, categorically objected to the proposed addition and contended that neither his name nor the names of his relatives appeared in the alleged Bana Chitthi, that there were no signatures attributable to the assessee or his relatives, that the handwriting on the loose papers was not that of the assessee and that the alleged purchaser mentioned in the Bana Chitthi was one Shri Deepak Thakkar. The assessee further submitted that no corroborative material or evidence had been provided by the Assessing Officer to establish that any alleged on-money payment was made by the assessee.

The assessee also contended before the Assessing Officer that land bearing Survey No.95/3 was admittedly purchased in Financial Year 2020- 21 relevant to Assessment Year 2021-22 and sale deed was executed on 04.11.2020. Therefore, according to the assessee, no question arose regarding any unexplained investment during Assessment Year 2020-21. The assessee further submitted that the loose papers relied upon by the Assessing Officer were merely dumb documents having no evidentiary value in absence of corroborative material.

Aggrieved by the reassessment order, the assessee preferred appeal before the ld. CIT(Appeals), National Faceless Appeal Centre.

The order passed by the ld. CIT(Appeals) shows that notices fixing hearing were issued on multiple occasions through the ITBA portal. The order records that hearing notices dated 10.07.2025, 22.07.2025, 13.08.2025 and final show cause notice dated 01.01.2026 were issued. The order further records that on two occasions adjournments were sought by the assessee whereas in response to certain notices no reply was filed. Proceeding on the basis of such alleged non-compliance, the ld. CIT(Appeals) chose to dispose of the appeal ex parte.

The ld. CIT(Appeals), while dismissing the appeal, devoted substantial discussion to the legal principles governing dismissal for non-prosecution. Reliance was placed upon several judicial precedents. The ld. CIT(Appeals) observed that despite sufficient opportunities, the assessee failed to substantiate the grounds raised in appeal and therefore the appeal deserved dismissal for non-prosecution.

The ld. CIT(Appeals) further observed that law assists only those who are vigilant and not persons who sleep over their rights and referred to the

The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.

We have carefully considered the facts of the case, perused the assessment order, appellate order and the material available on record. At the outset, we find that additions under section 69 of the Act amounting to Rs.1,75,46,426/- have been made primarily on the basis of certain loose papers, rough notings and Bana Chitthi allegedly found during search proceedings conducted in the case of third parties. The assessee has throughout disputed the authenticity, ownership and evidentiary value of such documents and has consistently asserted that neither his name nor his signatures appeared in the documents relied upon by the Revenue authorities. The assessee has also raised a specific plea that no corroborative evidence demonstrating actual payment of alleged on-money by the assessee was ever brought on record.

We also find that although the ld. CIT(Appeals) has elaborately discussed the principles relating to dismissal of appeal for non-prosecution, the appellate order substantially proceeds on technical non-compliance

At the same time, we also cannot lose sight of the fact that the assessee itself was not diligent in effectively pursuing the appellate proceedings before the ld. CIT(Appeals). The appellate record clearly reveals repeated non- compliance and failure on the part of the assessee in responding to notices issued during appellate proceedings. Even though adjournments were sought on certain occasions, no effective submissions appear to have been filed before the appellate authority. Therefore, the assessee also cannot be completely absolved of responsibility for the present state of affairs.

Having regard to the entirety of facts and balancing the equities, we are of the considered view that the issues involved require fresh adjudication at the end of the Assessing Officer after granting proper opportunity to the assessee to substantiate his claim. Since the facts and issues involved for Assessment Years 2020-21 and 2021-22 are substantially similar, we deem it appropriate to restore both matters to the file of the Assessing Officer for de novo adjudication.

However, considering the repeated non-compliance and lack of diligence displayed by the assessee both during assessment as well as appellate proceedings, we are also of the view that restoration of the matter should be subject to payment of reasonable cost so that proceedings before the authorities are pursued responsibly and diligently.

The assessee is also directed to fully cooperate in the set aside proceedings and shall not seek unnecessary adjournments. Needless to clarify, all legal and factual contentions raised by the assessee are left open for adjudication before the Assessing Officer.

In the result, both the appeals of the assessee are allowed for statistical purposes subject to payment of cost as directed hereinabove. This Order is pronounced in the Open Court on 18/05/2026