NEELAM,DELHI vs. ITO WARD 35(5), DELHI, DELHI

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ITA 7464/DEL/2025Status: DisposedITAT Delhi26 May 2026AY 2017-186 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the impugned order was passed without an effective hearing and in violation of the principle of natural justice. Therefore, the order was set aside and the matter was restored to the Assessing Officer for fresh adjudication.

What were the facts?

The assessee's income tax return for AY 2017-18 was selected for scrutiny due to cash deposits and property transactions. The Assessing Officer added cash deposits of Rs. 13,40,000 and property investments of Rs. 65,02,423 as unexplained income under sections 69A and 69 read with 115BBE.

What were the issues?

Whether the CIT(A) order was passed in violation of the principle of natural justice by not providing an effective opportunity of hearing to the assessee. Whether the additions made under sections 69A and 69 read with 115BBE were justified.

Which sections of the Income-tax Act were involved?

Section 69,Section 69A,Section 115BBE,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHIBENCH ‘E’, NEW DELHI

Before: Sh. Raj Kumar Chauhan & Smt. Renu Jauhri

For Appellant: CA &
For Respondent: Ms. Ankush Kalra, Sr. DR
Hearing: 11.03.2026Pronounced: 26.05.2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHIBENCH ‘E’, NEW DELHI Before Sh. Raj Kumar Chauhan, Judicial Member & Smt. Renu Jauhri, Accountant Member ITA No. 7464/Del/2025 :Asstt. Year: 2017-18 Neelam, Vs Income Tax Officer, E-16/467, Sector-8, Rohini, Ward-35(5), New Delhi-110085 New Delhi-110002 (APPELLANT) (RESPONDENT) PAN No. AGJPN3453F Assessee by: Sh. Pranshu Singhal, CA & Sh. Rahul Bhardwaj, Adv. Revenue by: Ms. Ankush Kalra, Sr. DR Date of Hearing: 11.03.2026 Date of Pronouncement: 26.05.2026 ORDER Per Raj Kumar Chauhan, Judicial Member: The appeal is directed against the order dated 25.09.2025 of Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (hereinafter referred to as the “CIT(A)/NFAC”), passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) wherein the addition made u/s 69 of the Act, vide assessment order dated 24.12.2019 was confirmed.

2.

The facts of the case are that the assessee filed her return of income for A.Y. 2017-18 on 02.08.2017 declaring total income of Rs. 3,83,800/-, which was processed u/s 143(1) of the Income Tax Act, 1961. The case was selected for scrutiny

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through CASS on the issue of cash deposits and transactions in property. Notices u/s 143(2) and 142(1) were issued from time to time and the assessee furnished certain details and documents online through the ITBA portal. During the assessment proceedings, the Assessing Officer observed from the bank statements and 360 degree profiling that the assessee had deposited substantial cash in bank accounts during F.Y. 2016-17 and had also purchased immovable properties. The assessee explained that the cash deposits were out of savings and cash-in-hand accumulated from tuition income and commission/renting activities over earlier years. Consequently, cash deposits amounting to Rs. 13,40,000/- were treated as unexplained income u/s 69A r.w.s. 115BBE of the Act. Further, the Assessing Officer noticed that the assessee had purchased two properties situated at Prashant Vihar, New Delhi, for a total consideration of Rs. 65,02,423/-. The assessee was asked to explain the source of investment and furnish supporting evidence such as bank statements, ITRs, confirmations of parties, and sale/purchase deeds. As the assessee failed to satisfactorily establish the genuineness and creditworthiness of the persons from whom loans/repayments were allegedly received, the Assessing Officer treated the investment of Rs. 65,02,423/- as unexplained investment u/s 69 read with section 115BBE of the Act. Accordingly, the Assessing Officer

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made additions of Rs. 13,40,000/- on account of unexplained cash deposits and Rs. 65,02,423/- on account of unexplained investment in properties.

3.

Aggrieved by the assessment order, assessee filed appeal before the ld. CIT(A) which was dismissed the same ex-parte on the ground that the appellant has failed to respond to the various notices sent as find mentioned in paragraph 6.2 of the impugned order.

4.

Aggrieved by the impugned appellate ex-parte order, the assesse is in appeal before us and has raised the following grounds of appeal: “1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in passing the order without giving assessee an opportunity of being heard in violation of the principle of natural justice. 3. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming an addition of Rs. 13,40,000/- under section 69A r.w.s 115BBE of the Act on account of cash deposited in the bank account during the year under consideration. (ii) That the addition has been confirmed despite the assessee explaining the source of cash deposits by submitting detailed cash flow statement before the Assessing Officer during the course of assessment proceedings. 4. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in

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confirming an addition of Rs. 65,02,423/- under section 69 r.w.s. 115BBE of the Act on account of unexplained investment in properties. (ii) That the addition has been confirmed despite the fact that the assessee has duly submitted source of investment in such properties before the Assessing Officer during the course of assessment proceedings. 5. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO in levying tax by invoking the provisions of section 115BBE of the Act despite the fact that the provisions of the said section having came into force w.e.f. 01.04.2017 same cannot be applied in the relevant assessment year considering the same as having retrospective effect. 6. That the appellant craves leave to add, alter or amend any of the grounds of appeal.” 5. We have heard the learned AR and the learned DR. The Ld. AR would submit that the impugned order has resulted into miscarriage of justice as principle of natural justice has not been followed because no effective opportunity of hearing was given as the assessee had never received the notice after 14.08.2023 when adjournment was sought and therefore the matter may be restored to the file of the Ld. CIT(A) for deciding afresh. Learned DR on the other hand while supporting the judgment of the learned CIT(A) has left to the discretion of the court to consider the submissions of the assessee as per law.

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6.

We have considered the rival submission and examined the record, Section 250(2)(a) lays down as under:

“250(2) The following shall have the right to be heard at the hearing of the appeal- (a) the appellant, either in person or by an authorized representative;” 7. Thus, the hearing mandated by Section 250(2)(a) of the Act is not a mere formality but a mandatory statutory requirement for following the principle of natural justice by the quasi-judicial authority.

8.

In view of the above facts and circumstances, it is evident that the impugned order has been passed without effective hearing and principle of natural justice has not been followed For these reasons, the impugned order is not maintainable and accordingly set aside. The end of justice shall be met in case the matter is restored to the file of the Assessing Officer for deciding the issue afresh by affording an effective opportunity of hearing and considering the submissions to be made by the appellant/assessee. The assessee/appellant is also directed to make the necessary submissions/ detailed material before the Assessing Officer within the period of 60 days of this order.

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9.

In the result, the appeal of the assessee is allowed for statistical purposes. Order Pronounced in the Open Court on 26/05/2026. Sd/- Sd/- (Renu Jauhri) (Raj Kumar Chauhan) Accountant Member Judicial Member Dated: 26/05/2026 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR

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